Q4 Newsletter December 31, 2025
Energy Superpower — present or future tense
In October 2025, Natural Resources Canada released the latest edition of the Energy Factbook. The publication draws on a number of federal sources – Statistics Canada, Canadian Energy Regulator, and Environment and Climate Change Canada – to offer an overview of energy in Canada. This year’s edition is based on data gathered and authenticated in 2023 and 2024. (You can find the publication by following this link.)
The government stated in 2025 that it would like to see Canada become an “energy superpower”. The information in this year’s Factbook suggests that Canada may be there already, with the resources – both natural and human – to shape a prosperous and sustainable future.
Canada is the 6th ranked producer of primary energy (i.e., energy found in nature before processing). Among the 5 nations ranked above Canada the only one with a smaller population than Canada is Saudi Arabia at 36 million people. If that country is considered to be among the energy superpowers – and it is – then it’s reasonable to include Canada in the group. Between 2003 and 2023 world energy production increased 34%; during the same period, Canada’s energy production growth was 42%.
Unlike Saudi Arabia, Canada’s energy comes from a wide range of sources. In fact, we are in the top 10 producers of all major energy sources. For example, Canada is 4th largest in terms of both proved reserves of oil and gas and production. But at the same time, it has the 3rd largest proved reserves of uranium and is 2nd in production.
In 2024, the energy sector accounted for 9.8% of Canadian GDP but only 3.6% of employment. The implicit productivity suggested by a comparison of those measures indicates the capital-intensive nature of energy industries. However, energy sector employment is not negligible. The Factbook reports that direct jobs (i.e., employment within an industry) associated with energy were 316,200, and indirect jobs (i.e., employment outside the industry but providing it with goods and services) was 428,300 in 2024.
The energy sector is also an important source of export earnings. Exports from this sector comprise 29% of Canada’s goods exports. Canadian energy products are sent to 132 countries, although 89% are exported to the U.S. and 94% of oil and gas exports are directed to the U.S.
The Factbook also reports that despite the increase in energy production, Canada has made progress on containing GHG emissions. Energy production and use accounts for 81% of Canadian emissions. However, in the period 2000 – 2023 Canada’s GDP grew by 56% but emissions declined by 7%.
Our plentiful energy sources help to keep energy costs reasonable. In a country with a widely dispersed population over an enormous geographic area living in a severe northern climate, this is critical. Household expenditures on energy in Canada in 2023 were $4,943 per household. This represented 6.4% of average after-tax household spending.
Canada is also competitive in the development of renewable energy, ranking 6th in the world. Once again, it is a major player among countries with larger economies. In part, Canada benefits from the predominance of hydropower in the Canadian electricity industry.
This year’s edition of the Energy Factbook features substantial evidence that Canada is among the pre-eminent energy nations of the world. Canada’s energy portfolio is widely diversified. Our resource base has established a strong energy economy which has made a notable contribution to Canadians’ standard of living. At the same time, the sector has accumulated substantial expertise that has been applied to make energy production and use more economic, more productive, and more environmentally acceptable. If this is what is necessary to be an energy superpower, then we are, indeed, well on our way.
IN THE NEWS
October
International Energy Forecasts Significant Impact of New LNG Supply on World Markets
The International Energy Agency (IEA) released its medium-term natural gas outlook report, Gas 2025. It analyses alternative supply, demand, and trade scenarios to 2040. The IEA expects that new liquefaction capacity in the US and Qatar will add 300 billion cubic metres (bcm) of new LNG capacity per year up to 2030. The report notes that demand growth has slowed to 1% per year recently but its base case scenario projects growth of 1.5% per year. The increase in demand growth is expected to come from a softening of prices due to the additional supply. Read more here: IEA
Microsoft Corp. Signs Deal to Purchase Carbon Removal Credits
Microsoft Corp. announced a deal to purchase 300,000 tonnes of carbon removal credits over 10 years from Arca Climate Technologies Inc. The company uses a technology that it developed to accelerate the natural absorption of CO2 into minerals usually found in mine tailings.
The deal provides Microsoft with the credits and verified proof of carbon removal, offsetting the company’s rising emissions from its operations.
NOVEMBER
Federal Government Introduces Its First Budget
The federal government, which was elected in April of 2025, introduced its first budget on 4 November. The title of the budget document is Canada Strong. It contains a collection of measures which have been discussed in the months preceding its tabling in the House of Commons. It confirms that the government considers energy sector projects to be critical to building a strong, more self-reliant, and more productive economy. Gowling WLG | CTV
Enbridge and CNRL Are Setting the Stage for a Bigger Alberta Petroleum Industry
Enbridge Pipelines Inc. (Enbridge) and Canadian Natural Resources Limited (CNRL) have recently announced their intention to increase the oil delivered to market from Western Canada over the next 5 years. Enbridge announced its plans to expand mainline capacity by 400,000 barrels of oil equivalent (boe)/day by 2030. It expects to hold an “open season” for shippers to declare their interest and identify the amount of capacity they would like to secure. At the same time, CNRL announced the possibility that it might be able to increase production by 745,000 boe/day in the coming years.
The province of Alberta currently produces about 4.2 million boe/day. The provincial government would like to increase that to 8 million boe/d by 2035. Other producers have also indicated a wish to increase output. The production increases would come from existing assets. They will depend upon government policy, pipeline capacity, demand, and prices. Calgary Herald
2nd Collection of Potential Nation-building Projects Announced by Federal Government
The government has identified additional major projects that will be evaluated by the Major Projects Office to determine whether they are significant enough to be granted the expedited regulatory treatment reserved for proposals considered of national importance. The first tranche of projects to be considered was announced in September. The current collection would represent a total investment of $56 billion.
They cover a wide range of energy and energy-related proposals. LNG, electricity transmission, an energy corridor that includes provision for a conservation corridor, as well a number of mining projects targeting critical minerals. EnergyNow.ca
December
Canadian Oil Production Rises to Record High
The Canadian Energy Regulator (CER) reported an upward trend for oil production over 2024 into the first 6 months of 2025. The increase was led by Alberta, which saw a 4% increase in barrels per day growth. All other oil-producing regions recorded increases except for Saskatchewan, where production declined by 1%. CER
"Canada's Renewable Energy Market Outlook" Report Released
The Canadian Renewable Energy Association (CREA) has published its 2025 market outlook. This inaugural edition of the report reviews costs and market potential for onshore wind, utility-scale solar, and utility-scale battery energy storage. The study examined five markets: British Columbia, Alberta, Ontario, Quebec and Atlantic Canada. The report provides electricity sector stakeholders, renewable energy developers, investors and analysts with market intelligence and insights, grounded in the Canadian context that can support informed decisions.
Globally, Canada ranks 9th in installed wind energy capacity (17+ GW), 20th in utility-scale battery storage capacity (~ 1 GW) and 24th in utility-scale solar energy capacity (2.3 GW) as of July 2025. Executive Summary – Market Outlook
Two Canadian LNG Projects Preparing to Enter Increasingly Competitive International Market
Two Canadian LNG projects need investment commitments to enter a competitive global natural gas market. The Ksi Lisims project and the phase 2 expansion of LNG Canada — both in BC — have federal and provincial support, environmental approvals and have completed successful consultations with affected First Nations. The challenge now is to sign delivery contracts that will back the investment necessary to complete the projects.
They will be entering what is expected to be a competitive LNG world market. While demand for LNG is expected to continue to increase, especially as countries transition electricity away from coal generation, LNG export capacity is increasing worldwide. Some analysts see the potential for price declines as supply increases outpace demand growth. There are a number of projects underway in the US and Qatar. The sooner the Canadian projects can be financed and under construction the stronger will be their competitive challenge.
The Canadian projects do have an advantage in that they have, or will have, access, to a large supply of natural gas and they are well-positioned to supply Asian markets. Energy Now
ECC RECENT ACTIVITIES
Communicating with Industry
The Energy Council of Canada (ECC) works with the Trade Commissioner Service of Global Affairs Canada to help inform members of the energy sector about opportunities in foreign markets. In some cases, Global Affairs Canada organizes webinars to enable firms to expand their knowledge of international energy sectors. It also sponsors trade missions to introduce Canadian businesses to officials and business counterparts overseas. The ECC uses broadcast emails to its contact list of over 7,000 to disseminate the information.
We attempt to monitor the effectiveness of these efforts. We monitor how our contacts receive the messages. At the same time, we recognize that each notification will likely appeal to subsets of our contacts, depending on their activities and the industry in which they operate.
Chart 1 shows that in 2025 ECC sent 34 broadcast emails – just under 3 per month – with various objectives. Messages that simply provided information on ECC activities, including three for our Young Energy Professionals network, totaled 18. Those emails that offered opportunities for businesses to join trade missions or to respond to calls for proposals totaled 16 – more than 1 a month. As chart 2 indicates, they made up 53% of the total. The total number of openings of those emails was well over 24,000.
The federal government is encouraging Canadian industries to diversify the regions where they are seeking international business opportunities. ECC believes that this communication channel can support the efforts of Canadian businesses which choose to respond to the government’s initiative. We will also examine other communication outlets that can serve the energy sector participants’ desire to investigate new markets and new opportunities in existing international markets.
A Survey of Federal Energy Measures in 2025
Introduction
The year 2025 might have resulted in the most dramatic change in the federal energy policy environment since the National Energy Program of the early 1980s. In January, a new US administration came into office, bringing with it a sudden reconfiguration of the nature of American politics. In the spring, Canada’s general election resulted in a new Parliament and a government with a new leader. The government set out new priorities, arising from events in the US. It also changed Canada’s approach to ongoing energy and environmental challenges.
The following is an overview of the major federal policy developments affecting the energy sector.
Carbon Tax
In April the government effectively scrapped Canada’s carbon tax and the requirement that provinces which haven’t adopted the federal tax have an equivalent provincial measure in place. The provision for a federal levy remains in the legislation (Greenhouse Gas Pollution Pricing Act, 2018); in the associated regulations, however, the rate of the tax has been set to zero.
The government will retain a pollution charge for large emitters instead of all energy consumers. It states that “Industrial carbon pricing is one of the most important greenhouse gas emission reduction policies in the government’s comprehensive Emissions Reduction Plan to … meet Canada’s 2030 greenhouse gas emissions reduction target”.
Major Projects Office (MPO)
In June, Parliament passed the Building Canada Act. The legislation enables the government to streamline federal assessment processes to get critical, major projects built more quickly. The government explained that “These projects … will better connect our economy, diversify our industries, access new markets, and create high-paying careers, while protecting Canada’s rigorous environmental standards and upholding the rights of Indigenous Peoples”.
The government launched the Major Projects Office to enable it to achieve these objectives. The MPO will help identify those projects that qualify as critical to building the Canadian economy. It will facilitate their development by streamlining and accelerating the regulatory approval process and by helping to structure and co-ordinate financing, as needed.
The MPO headquarters will be in Calgary, with offices throughout Canada. The government appointed Ms Dawn Farrell the MPO’s Chief Executive Officer.
Energy Projects Among First to be Considered by MPO
Several important energy and energy-related projects are among the first tranche of projects to be considered by MPO.
LNG Canada Phase 2, Kitimat, British Columbia: This project will double LNG Canada’s production of liquefied natural gas, making it the second-largest facility of its kind in the world.
Darlington New Nuclear Project, Bowmanville, Ontario: This project will make Canada the first G7 country to have an operational small modular reactor (SMR), accelerating the commercialization of a key technology that could support Canadian and global clean energy needs while driving $500 million annually into Ontario’s nuclear supply chain. Once complete, Darlington’s first of four planned SMR units will provide reliable, affordable, clean power to 300,000 homes, while sustaining 3,700 jobs annually, including 18,000 during construction, over the next 65 years. The project has the potential to position Canada as a global leader in the deployment of SMR technology for use across the country and worldwide. (See below.)
McIlvenna Bay Foran Copper Mine Project, East-Central Saskatchewan: Working in close collaboration with the Peter Ballantyne Cree Nation, this project will supply copper and zinc to strengthen Canada’s position as a global supplier of critical minerals for clean energy, advanced manufacturing, and modern infrastructure.
Red Chris Mine expansion, Northwest British Columbia: This major expansion project will extend the lifespan of the mine by over a decade, increase Canada’s annual copper production by over 15%, employ about 1,500 workers during operations, with a peak of approximately 1,800 workers during construction, and reduce greenhouse gas emissions by over 70% when operational. This mine is part of the proposed Northwest Critical Conservation Corridor. This corridor is being moved to the MPO for consideration, as it presents opportunities for critical minerals development, clean power transmission, Indigenous project leadership, and a potential new conservation area the size of Greece.
Critical Minerals Strategy: Canada can be a powerhouse in the extraction and upgrading of critical minerals. A priority for the MPO will be to help more critical minerals projects get to final investment decisions within a two-year window.
Wind West Atlantic Energy: A project that will leverage over 60 GW of wind power potential in Nova Scotia, and more across Atlantic Canada, connecting that renewable, emissions-free energy to Eastern and Atlantic Canada to meet rapidly growing demand – with the potential for exports to the Northeastern United States.
Pathways Plus: An Alberta-based carbon capture, utilization, and storage project and pipeline that will substantially reduce emissions with additional energy infrastructure that will support a strong conventional energy sector while driving down emissions from the oil sands.
Port of Churchill Plus: This project will upgrade the Port of Churchill and expand trade corridors with an all-weather road, an upgraded rail line, a new energy corridor, and marine ice-breaking capacity
Second Tranche of MPO Projects (selected)
Northwest Critical Conservation Corridor: In Northwest British Columbia and the Yukon, this Corridor sits atop vast deposits of critical minerals and has the potential to unlock world-class resources while creating a conservation area the size of Greece.
North Coast Transmission Line (NCTL): Located in Northwest British Columbia, this project will tie the Northwest Critical Conservation Corridor together, delivering low-cost, clean electricity, and bolstered telecommunications to local communities along the West Coast Triangle – while reducing emissions by up to three million tonnes annually.
Ksi Lisims LNG, Pearse Island, British Columbia: Led by the Nisga’a Nation, Ksi Lisims LNG will become Canada’s second-largest LNG facility and one of the world’s lowest-emission LNG operations once fully electrified, with emissions 94% below the global average.
Canada Nickel’s Crawford Project, Timmins, Ontario: This project will serve as an anchor for Canada’s global leadership in clean industrial materials. Located in the world’s second-largest nickel reserve, the Crawford Project will produce high-quality, low-carbon nickel essential for batteries and green steel, with projected emissions 90% below the global average and the potential for a net-negative carbon footprint.
Nouveau Monde Graphite’s Matawinie Mine, Saint‑Michel‑des‑Saints, Québec: This open-pit graphite mine will provide important inputs for defence applications and battery supply chains.
Iqaluit Nukkiksautiit Hydro Project – Iqaluit, Nunavut: It will become Nunavut’s first 100% Inuit-owned hydro energy project, a milestone in Indigenous leadership and clean energy innovation. By replacing Iqaluit’s reliance on 15 million litres of imported diesel each year, this project will deliver affordable, reliable, and emissions-free power to the Arctic.
Support for Small Modular Reactors (SMR) Research
The federal government has directed the Canada Growth Fund to invest $2 billion to support the construction and operation of the four SMRs at the Darlington New Nuclear Project. The Ontario government will also contribute $1 billion through the Building Ontario Fund. Ontario Power Generation remains the majority owner of the project, but the federal and provincial investments will earn 15% and 7.5% ownership interests, respectively.
(For more information: SMR Support)
Budget 2025
Carbon Capture, Utilization, and Storage
The government has enriched supportive tax provisions for the technology of carbon capture, utilization, and storage (CCUS). It has set the rates of the refundable investment tax credit for eligible expenses for CCUS investment incurred from the start 2022 to the end of 2035 (formerly 2030) in the range of 37.5% to 60%. For eligible expenditures incurred between the beginning of 2036 to the end 2040, the range is from 18.75% to 30%. The higher tax refund eligibility in the early years presumably reflects the higher risk the technology faces early in its development.
(For more information see: Budget KPMG)
Competition Act Revision (“Greenwashing Provisions)
In Budget 2025 the government addressed provisions in the Competition Act that had come into effect in 2024, and which raised unmanageable liability risks for energy organizations. The original intent had been to ensure businesses did not seek commercial or reputational advantages by falsely promoting their environmental measures without supporting information that could be used to assess the validity of the claims. Energy businesses were concerned that the legislation included ambiguous and indeterminate standards for substantiation of their claims, such that they would be likely be unable to satisfy themselves that they had met the standard.
The original legislation said the businesses had to substantiate their environmental claims “based on internationally recognized methodology standards”. That left open the question as to what “internationally recognized” meant. Moreover, individuals – and not simply the Competition Bureau – could file complaints about businesses under this provision. There was evidence that the uncertainty did result in businesses refraining from making any claims about the environmental measures they undertook. At the same time, businesses also stopped implementing the environmental measures altogether.
In budget 2025, the government removed:
- the requirement for businesses to substantiate their environmental claims based on internationally recognized methodology standards.
- the ability for third parties to bring cases directly to the Competition Tribunal for greenwashing complaints.
Businesses must still be prepared to substantiate their claims, but they are not held to an undefined “internationally recognized methodology” standard. For private parties, the pre-existing provisions allowing them to register complaints on the basis of false advertising remain in place.
(For more information see: Norton Rose Fulbright)
One Economy
On 1 January 2026, the Free Trade and Labour Mobility in Canada Act and its regulations came into force. The Act and its associated regulations achieve the following objectives:
- A good produced, used or distributed in line with the requirements of a province or territory will be recognized as meeting comparable federal requirements.
- A service provided in line with the requirements of a province or territory will be recognized as meeting comparable federal requirements.
- A worker licensed or certified by a province or territory will be able to work in a comparable occupation in federal jurisdiction.
The federal government is also working with provinces and territories through First Ministers and the Committee on Internal Trade (CIT) to further eliminate barriers to trade and labour mobility.
(For more information: One Economy and User Guide)