From the editor: Another Trudeau, another walk in the snow [Global Gas Perspectives]

Canadian Prime Minister Justin Trudeau’s bombshell announcement January 6 that he would step down as leader of the Liberal party as soon as a replacement could be named marked the beginning of the end of a turbulent and divisive decade in Canadian politics.

Trudeau’s resignation was delivered on a snowy day outside the prime minister’s official Rideau Cottage residence in Ottawa and was compared by some to the resignation, more than 40 years ago, of his father, the late Pierre Elliot Trudeau, whose equally divisive term in Ottawa came to an end in 1984 after he took a solitary stroll in the snow to consider his future.

In order to keep the business of government – if not politics – going, Trudeau did not ask Governor General Mary Simon to dissolve Parliament, which would have triggered an immediate election. Instead, he asked that the House of Commons be prorogued until March 24. 

When Parliament returns, a new prime minister, who will be chosen in a Liberal Party leadership race culminating in a March 9 vote by party members, will begin the session with a Speech from the Throne. That speech is subject to a confidence vote in the House and all Opposition parties have said they will vote against it, toppling the Liberal minority government and triggering a new election, perhaps as early as late April or early May.

The fallout from Trudeau’s long-awaited decision has given hope to a beleaguered Canadian oil and gas industry that his misguided policies, engineered to make Canada a leader on the global climate change front at the expense of the engine of Canada’s economy would soon end.

We should have seen this coming. In the spring of 2013, as Trudeau was stumping to become leader of the federal Liberals, his first foray into the heart of the Canadian oil and gas industry wasn’t to its power centre, the Calgary Petroleum Club, but to a bougie hotel on the fringes of the downtown. There, he held sway over a small coterie of Liberal faithful (there were some then in Calgary, even three decades after his father’s National Energy Program nearly decimated the oil and gas industry) and delivered vapid responses to vapid questions.

Fast forward 18 months to his 2015 election victory – in a country he labeled the world’s first “post-national” state, without a national identity. Ever since then, Trudeau has sought to curry favour amongst the global environmental elite, imposing the world’s first – and still only – national carbon tax and appointing Steven Guilbeault, a former Greenpeace activist who in 2001 scaled part way up Toronto’s CN Tower to protest Canada’s climate change role, as his environment minister.

At the same time, a series of milquetoast back-benchers were appointed to lead the energy portfolio, all but assuring that environmental concerns would lead policy direction at the expense of energy matters.

But now an election looms, and with it the prospects for a much more industry-friendly government in Ottawa, led by Pierre Poilievre, who has promised to run his next campaign on eliminating the consumer carbon tax and reversing a host of other Trudeau-era environmental policies, including the much-maligned oil and gas emissions cap and Clean Electricity Regulations aimed at knee-capping gas-fired power generation across the country – but most particularly in Alberta.

It's also likely that the Impact Assessment Act (IAA), large portions of which were judged unconstitutional for their federal intrusion into areas of provincial jurisdiction, will be overhauled.

Poilievre already held a significant lead over the Liberals in polling prior to Trudeau’s resignation, and that lead grew in the days following the Rideau Cottage announcement. Abacus Data had 47% of committed voters ready to choose the Conservatives, against 20% still backing the leaderless Liberals, while Ipsos Reid measured CPC support at 46%.

In other post-resignation polling, Ipsos Reid found 81% of Canadians approved of Trudeau’s decision to step down, with a telling 70% of Liberal supporters registering their approval, while 38% of those polled gave Trudeau a failing grade during his decade in power.

Under an expected CPC government, and with an eventually restructured IAA, many expect new energy projects in the country will face a smoother regulatory path. That’s good news for the LNG sector, for new oil and gas pipelines and, potentially, for new generating projects to power the expected growth of data centres.

But Canada’s change in political direction also brings a measure of uncertainty for the country’s carbon capture and storage (CCS) sector, which is being built on industrial carbon pricing, including carbon contracts for differences, which protect CCS investors from future carbon pricing volatility, and federal and provincial investment tax credits, which offset capital costs, much as the Inflation Reduction Act does in the US. 

Final investment decisions on a host of CCS projects, including the massive $16.5bn Pathways Alliance project to capture and store emissions from Alberta’s oil sands, and several proposed CCS hubs across Alberta, are dependent on those measures, and it’s unclear what their fate might be under a Poilievre regime.

That uncertainty extends to who might replace Trudeau. Early frontrunners include Chrystia Freeland, the former finance minister whose abrupt resignation precipitated Trudeau’s resignation, and former Bank of Canada and Bank of England Governor Mark Carney, who also happens to be the UN’s current special envoy for climate action.

About the only certainty for Canadians right now is the March 24 return of Parliament and a subsequent non-confidence vote that will send them to the polls in the spring, to finally end what has been the most divisive 10 years in national politics.