Canada’s carbon energy overhang

Abstract

Canada’s historical legal framework for hydrocarbon development persists, creating a ‘carbon energy overhang’ that impedes the transition to a low-carbon economy on which Canadian governments have embarked. As a result, Canada remains a petro-state, the fourth largest global oil producer with the third largest reserves. There have been greenhouse gas emission reduction initiatives, particularly by the federal government, including a national carbon tax (that survived constitutional challenge), renewable energy initiatives, energy transition legislation establishing net zero goals, and a promised cap on oil and gas industry emissions. However, two major barriers remain, notably (1) the national economic importance of the oil and gas industry with its oil sands centrepiece, located mainly in the province of Alberta; and (2) very limited room to cut electricity generation emissions, with over 80 per cent of electricity already produced by renewables and nuclear, and a lack of interprovincial transmission interties with these renewable electricity (mainly hydro)-producing provinces that export large quantities of energy to the United States.