Muhannad Malas, law reform director of environmental law charity Ecojustice, has criticized the Climate Competitiveness Strategy in the recently tabled 2025–26 federal budget, as demonstrating the Canadian government’s “retreat on oil and gas emissions caps.”
While acknowledging the strategy’s efforts to provide a pathway for strengthening the industrial carbon price, Malas drew attention to the strategy’s lack of support for electric vehicles (EVs) or heat pump adoption, which would assist Canadians in reducing their energy costs and emissions.
Malas added that the strategy benefits prospective corporate greenwashers by abolishing the private right of action under the Competition Act, 1985.
“The federal government may wish to forget about emissions in making climate policy, but this will not make its legal obligations go away,” Malas said in a statement Ecojustice released in response to Canada’s Budget 2025.
New strategy
Julie Dabrusin, federal environment and climate change minister, and Tim Hodgson, federal energy and natural resources minister, recently discussed Canada’s new Climate Competitiveness Strategy at the Pearl Street Energy Centre in Toronto.
According to a news release from Environment and Climate Change Canada (ECCC), under Budget 2025, Canada will commit more than $1 trillion in investments over the next five years to help grow nuclear, hydro, wind, energy storage, and grid infrastructure, thereby helping achieve a low-carbon economy.
“With the Climate Competitiveness Strategy, we are positioning climate action and economic growth as inseparable, aiming to build a stronger, more sustainable, and more competitive Canada for decades to come,” Dabrusin said in the news release. “This will help us take action in a way that prioritises affordability for Canadians and strengthens our economy.”
“We know what a strong economy and clean environment require, and our Strategy provides it: clarity and predictability that drives innovation, attracts investment, and mobilises capital,” Hodgson added. “We have a responsibility to protect Canada’s environment and economy for generations to come, and that delivery starts now.”
In its news release, ECCC explained that the following pillars anchor Canada’s new Climate Competitiveness Strategy:
- Boosting investment through clean economy investment tax credits
- Strengthening industrial carbon pricing
- Clarifying greenhouse gas (GHG) regulations
Tax credits
According to the ECCC, promoting investment via clean economy investment tax credits seeks to make it cheaper for Canadian industries to transition to clean energy, modernize electricity grids, expand renewable energy sources, add energy storage, and fortify power connections across provinces.
The federal government said it aims to:
- Implement the 15 percent clean electricity investment tax credit and delete the eligibility conditions for provincial and territorial governments’ Crown corporations
- Expand the list of critical minerals eligible for the 30 percent clean technology manufacturing investment tax credit
- Supercharge affordable and net-zero energy projects with the clean technology and clean hydrogen tax credits
- Extend the full value of the carbon capture, utilization, and storage investment tax credit by five years through 2035
Carbon pricing
According to the ECCC, strengthening the benchmark for industrial carbon pricing seeks to decrease emissions, improve the country’s carbon markets, and offer long-term certainty, confidence, and predictability for businesses and investors to grow and invest in climate competitiveness.
The federal government said it intends to:
- Engage with provinces and territories to set a post-2030 carbon pricing trajectory that supports net-zero by 2050 and fortify the federal benchmark for pricing systems across Canada
- Consider opportunities to harmonize or link carbon credit markets
- Apply the federal backstop when a provincial or territorial pricing system fails to meet the strengthened federal benchmark
GHG regulations
According to the ECCC, clarifying GHG regulations will include tightening methane regulations for the oil and gas sector to substantially decrease emissions across the country and ensure clarity and predictability for industry.
The federal government said it also plans to finalize new methane regulations for landfills.
Mineral investments
According to the ECCC’s news release, Canada’s new government will also invest in critical minerals that promote a clean energy future, with Budget 2025 committing more than $2 billion in investments over five years to hasten production and generate careers.
The federal government said it seeks to increase the critical minerals projects in production and unlock clean technology supply chains in EVs and advanced manufacturing, among others, by introducing the critical minerals sovereign fund and the first and last mile fund and expanding eligibility for the critical mineral exploration tax credit.