Carney on the carbon bubble and stranded assets

By some measures, based on science, the scale of the energy revolution required is staggering.

If we had started in 2000, we could have hit the 1.5°C objective by halving emissions every thirty years. Now, we must halve emissions every ten years. If we wait another four years, the challenge will be to halve emissions every year. If we wait another eight years, our 1.5°C carbon budget will be exhausted.

The entrepreneur and engineer Saul Griffith argues that the carbon-emitting properties of our committed physical capital mean that we are locked in to use up the residual carbon budget, even if no one buys another car with an internal combustion engine, installs a new gas-fired hot-water heater or, at a larger scale, constructs a new coal power plant. That’s because, just as we expect a new car to run for a decade or more, we expect our machines to be used until they are fully depreciated. If the committed emissions of all the machines over their useful lives will largely exhaust the 1.5°C carbon budget, going forward we will need almost all new machines, like cars, to be zero carbon. Currently, electric car sales, despite being one of the hottest segments of the market, are as a percentage in single digits. This implies that, if we are to meet society’s objective, there will be scrappage and stranded assets.

…

To meet the 1.5°C target, more than 80 per cent of current fossil fuel reserves (including three-quarters of coal, half of gas, one-third of oil) would need to stay in the ground, stranding these assets. The equivalent for less than 2°C is about 60 per cent of fossil fuel assets staying in the ground (where they would no longer be assets).

When I mentioned the prospect of stranded assets in a speech in 2015, it was met with howls of outrage from the industry. That was in part because many had refused to perform the basic reconcilliation between the objectives society had agreed in Paris (keeping temperature increases below 2°C), the carbon budgets science estimated were necessary to achieve them and the consequences this had for fossil fuel extraction. They couldn’t, or wouldn’t, undertake the basic calculations that a teenager, Greta Thunberg, would easily master and powerfully project. Now recognition is growing, even in the oil and gas industry, that some fossil fuel assets will be stranded — although, as we shall see later in the chapter, pricing in financial markets remains wholly inconsistent with the transition.

Carney, Mark. Value(s): Building a Better World for All. Penguin Random House Canada, 2021. p. 273–4, 278

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. Between 2005 and 2007 I completed an M.Phil in IR at Wadham College, Oxford. I worked for five years for the Canadian federal government, including completing the Accelerated Economist Training Program, and then completed a PhD in Political Science at the University of Toronto in 2023.

31 thoughts on “Carney on the carbon bubble and stranded assets”

  4. There is much I admire in Prime Minister Carney – his experience, his character and his measured approach to problems

    However, I am disappointed that in the mandate letter for his government which was developed after two days of consultation with his ministers, there is no reference to protection of the environment or the fight against climate change among the seven key priorities of government. This absence is very disappointing for me.

  5. Carney is in the classic politician’s position, lying to all sides.

    He knows that building new fossil fuel infrastructure is economically and morally foolhardy — a further investment into a death cult that is killing the world. But he knows he can’t admit that in the context of Canadian politics, and must pander to pro-fossil voters, corporations, and regions.

    He is in this position because Canadian voters insist on being lied to about climate change. They demand leaders who say in a very wooly way that they will definitely deal with the problem, but voters also insist that our climate and energy policies be grossly inadequate to actually meet that objective. Canadians would rather destroy the whole future for everybody than change their lives or accept new constraints on their behaviour: the commonplace psychopathy of our civilization.

    Canadians are like a diabetic patient who demands a doctor who will intone seriously about the risks of diabetes in general, but who will still cheer them on whenever there is a hot fudge sundae or a bag of licorice to eat.

  6. As for Carney’s promise to make Canada an energy superpower, there is reason to believe the PM can do this.

    Unlike former prime minister Justin Trudeau, who was often adamant on environmental issues, Carney has said loudly and clearly that he is above all else a pragmatist. If something isn’t working, he is prepared to reverse the party line. That is exactly what he did on the Trudeau government’s deeply unpopular carbon tax.

    If Carney really intends to make Canada an energy superpower, there is no escaping a hard political fact. The new PM will have to walk away from Bill C-69. The Impact Assessment Act requires assessments for environmental, health, social and economic impacts and the rights of Indigenous people before a major resource project can get off the ground. Critics have nicknamed it the “No More Pipelines Act.” Canada can’t be an energy superpower unless conventional energy resources are significantly expanded.

    But there are consequences if Carney turns his back on Bill C-69 as he did on the carbon tax.

    A lot of Liberals in his cabinet and caucus endorsed that legislation in the Trudeau government. Former environment minister Steven Guilbeault has already raised questions about building new pipelines, and he isn’t the only one.

    Quebec has never been keen on an east-west pipeline, which is the most likely project Carney will eventually back. Quebec’s reflexive opposition eased somewhat after President Trump’s frontal assault on Canadian sovereignty and the economy. But there is still no guarantee that Premier François Legault will sign on.
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    And then there is the Indigenous issue at stake on this file. Unlike Pierre Poilievre, who wants to quick-march energy projects through the regulatory system, Carney has pledged that he will consult with all stakeholders before greenlighting any major project. And that means he might well run up against First Nations’ objections to a pipeline crossing their territories.

    Bottom line on Carney’s energy superpower promise? He can probably do it, but not quickly and not without a political price.

    https://thetyee.ca/Analysis/2025/05/26/How-Know-Carney-Real-Deal/

  7. “Carney has no choice but to meet the West’s sense of aggrievement with a new approach. But the question is how new? It is highly unlikely the PM can agree to Alberta’s demand that it receive equalization payments like Ontario, even though Alberta is a net contributor to federal coffers. The point about Canada’s complex equalization policy is not to reward provinces with high fiscal capacity; rather, it is to level out the system so that all provinces have the same advantages.

    That said, Carney cannot expect Alberta to accept mere rhetoric rather than real change from his government.

    And that means only one thing: getting Alberta’s fossil fuel resources to the world at significantly increased volumes. Ottawa can facilitate or frustrate that effort. And only by making the first choice can Carney enhance national unity. Pipelines rather than environmental purity will be the name of the game.”

  8. Carney discusses ‘partnerships’ with oil and gas executives in Calgary

    https://edmonton.citynews.ca/2025/06/01/carney-partnerships-oil-gas-executives-calgary/

    Prime Minister Mark Carney sat down with oil and gas executives in Calgary Sunday to discuss partnerships and to get their input for his plans to make Canada an energy superpower.

    Carney, in his first visit to Calgary since being sworn in as prime minister, held a closed-door roundtable with more than two dozen members of the energy sector.

    Attendees included Tourmaline Oil CEO Michael Rose, Pathways Alliance President Kendall Dilling, ATCO CEO Nancy Southern, Imperial Oil President John Whelan and Jon McKenzie, president of Cenovus Energy.

    Reporters were only allowed to hear a few comments from the prime minister before being asked to leave the room at the Harry Hays building.

  9. The Alberta premier had sent a letter to Carney in mid-May, saying there are several preconditions necessary to make his nation-building ambitions a success: Include an oil pipeline on the initial list of projects, abandon the “unconstitutional” oil and gas emissions cap, overhaul the Impact Assessment Act and repeal Canada’s industrial carbon tax, as well as clean electricity regulations.

    In a social media post on Monday morning, Smith indicated that her meeting with Carney went well, but said she wants to see more of a commitment to roll back the policies she outlined in her May letter.

    “While there appears to be a desire to move forward with new projects, including a West Coast bitumen pipeline, a clear commitment is needed to act on barriers that have held back private investment,” Smith wrote in a post on X.

    https://www.cbc.ca/news/politics/premiers-meeting-prime-minister-carney-major-projects-1.7549577

  10. Smith said Monday evening that she was encouraged by the inclusion of language endorsing the movement of “decarbonized Canadian oil and gas by pipelines” in the meeting communiqué.

    “Let’s call it the grand bargain,” Smith told reporters in Saskatoon, referring to the idea of twinning new pipeline proposals with large-scale decarbonization projects.

    Carney said Monday that he’d consider fast-tracking a new oil pipeline to the West Coast if it shipped “decarbonized barrels” to new markets.

    “There’s real potential there (and), if further developed, the federal government will look to advance it,” said Carney.

    https://nationalpost.com/news/canada/alberta-and-ottawa-are-touting-a-grand-bargain-on-decarbonized-oil-but-some-are-skeptical

  12. Mark Carney Is Turning His Back on Climate Action

    And Canada is losing a chance for leadership and sustained economic growth.

    https://thetyee.ca/Opinion/2025/06/23/Mark-Carney-Turning-Back-Climate-Action/

    …

    Carney was the United Nations Special Envoy on Climate Action and Finance and was behind the UN-backed Net-Zero Banking Alliance, so some Canadians might have assumed he’d prioritize climate action if he won the election.

    Instead, Carney has described developing fossil fuel infrastructure as “pragmatic.”

    …

    Banks that felt pressure to at least recognize sustainable finance during the Joe Biden administration joined Carney’s Net-Zero Banking Alliance.

    But as soon as Trump came to power a second time and walked away from the Paris Agreement, many American banks abandoned the alliance. Canadian banks followed suit, and Carney remarkably missed another moment to show Canadian leadership by stopping their exit.

    In fact, Carney seems to have abandoned his own organization to appease Trump as the president made multiple “51st state” threats.

  13. Samson allows that tradeoffs are inevitable, and that Canadians may have to brace themselves for a new pipeline or two.

    “It seems like he will have to compromise on certain things and that may involve an oil pipeline; it may involve more LNG projects and, and so that certainly will disappoint people who are looking to reduce fossil fuel production,” she says. But Samson remains “cautiously optimistic” that Carney’s overall focus is still fixed on the energy transition. “If some fossil fuel production is a way to get to that – is a way to raise the revenue and get the buy-in to accomplish those things and build out the infrastructure – with that long term goal in mind, I think I can get behind it.”

    But those with a long memory may recall that is precisely the reasoning Justin Trudeau provided for expanding the Trans Mountain pipeline.

    “The TMX project is a significant investment in Canadians and in Canada’s future that will … fund the clean energy solutions that Canada needs to stay competitive on the global stage,” Trudeau said in announcing the purchase in 2019.

    So the question under Carney becomes: when, exactly, does he mean what he says?

    https://www.nationalobserver.com/2025/07/02/analysis/carneys-agenda-climate-nowhere-everywhere

  17. And that might be the real surprise. Not that Carney partnered with the Conservatives, but that after all that climate talk, all that values talk, all that global credentials talk, he didn’t even call the people who were ready to help.

    “I don’t want to condemn Mark Carney as no different than Poilievre or Harper. He could be a climate champion,” said May. But if he is, he sure is keeping it under wraps.

    “The only thing he’s done on climate so far is cancel the carbon tax, which was the one thing the Liberals ever did that was actually working.”

    Carney promised to move fast — and he did.

    The One Canadian Economy Act, which gives cabinet sweeping powers to fast-track “national interest” projects by skipping environmental regulations and laws, passed into law in record time. Only two weeks.

    The Greens, the NDP and the Bloc allied against the bill. That disillusionment isn’t restricted to the Ottawa bubble.

    With the One Canadian Economy law in place, Carney is now promising to speed up the building of energy projects as quickly as you can say “I voted Liberal.”

    The list of environmental organizations turning on him is growing by the day: Citizens’ Climate Lobby, 350.org, Leadnow, the David Suzuki Foundation, For Our Kids, MiningWatch Canada, the Climate Action Network, West Coast Environmental Law, the Canadian Environmental Law Association. All have made public statements calling out the Carney government.

    Keith Stewart of Greenpeace Canada: “Mark Carney ran for prime minister as the banker who cared about climate change, but with Bill C-5, he is governing like Stephen Harper on steroids.”

    Ecojustice’s Charlie Hatt: “This rushed and poorly vetted law could tie our country’s future to fossil fuel industry megaprojects that won’t protect us from the threat of Trump or help us face the growing dangers of climate change and the biodiversity crisis. We hope we’re wrong.”

    The One Canadian Economy Act flew through Parliament so fast it also knocked reconciliation sideways. Some First Nations Chiefs who travelled to Ottawa to testify at second reading didn’t even get to give evidence to the committee — their spots were cut for lack of time.

    https://thetyee.ca/Analysis/2025/07/10/Carney-Redraws-Political-Map-New-Democrats/

  18. Lemann’s book was about the attempt to build an American Mandarin class through systematic educational testing. (Short version: it did create a Mandarin class, but that class didn’t get to lead much.) Mandarins are almost the only leadership class in a place like France, where every president since Georges Pompidou went to Sciences Po. (Nicolas Sarkozy didn’t graduate.) But Mandarins are less common and usually don’t rise as far in North America, where they tend to be mistrusted as elitists, globalists, or what Harper, cribbing David Goodhart, called “Anywheres.”

    “People become Mandarins by performing well in school,” Lemann wrote. “Educational credentials, the more elite the better, are the coin of their realm. . . . The default activity for them is to go into limited-access fields where their degrees confer the maximum benefit, mainly the professions of law, medicine, academia and the Wall Street side of business.” You see where I’m going: Mark Carney, who went from Harvard to Oxford to Goldman Sachs to the Banks of Canada and England, is a Mandarin.

    The big day for the Mandarin is the entrance exam. Mandarins’ skills are portable—analysis, synthesis, the social grace that allows you to avoid making a target of yourself in a workplace where you don’t necessarily arrive with allies. Mandarins sit in the desk they’re assigned, and for all their learning, they tend to leave organizations unchanged. You don’t rethink Oxford, or Goldman Sachs, or the Bank of England.

    https://thewalrus.ca/mark-carney-and-the-illusion-of-control/

  20. Carney strides into Northern Gateway minefield

    https://www.nationalobserver.com/2025/07/21/opinion/carney-oil-pipelines-northern-gateway

    Prime Minister Mark Carney set off alarm bells across British Columbia when he told a journalist at the Calgary Stampede that a new bitumen pipeline to BC’s north coast is “highly, highly likely.” Nowhere have those bells been ringing more strongly than in the dozens of First Nations communities who spent a decade fighting the Northern Gateway pipeline proposal.

  22. Carney and Smith want a new pipeline. So far, no company has stepped up to build it

    None of the major pipeline companies have announced new projects in Western Canada

    https://www.cbc.ca/news/canada/calgary/bakx-alberta-pipeline-oil-wti-carney-hodgson-1.7628310

    …

    Oil production in Alberta continues to grow and set new records. Export pipelines could fill up by 2030, according to some forecasts.

    …

    Still, the construction of a new pipeline would raise questions about whether the country is serious about transitioning to cleaner energy, Mabee said.

    Companies may also be discouraged from proposing a new pipeline, he said, knowing how much opposition there could be, such as the protests against the Trans Mountain expansion and Coastal GasLink, a natural gas pipeline in B.C.

    “Another project following hot on the heels [of these pipelines] is very likely to face quite a bit of pushback from those groups,” he said.

  26. He scrapped the carbon tax, which had become politically untenable, and is reviewing federal rules that mandate all new vehicle sales must be zero-emission vehicles by 2035. Carmakers have argued that slow uptake of EVs and the continuing trade war will make the target impossible. And he is openly supportive of fossil fuel projects, speaking positively about a potential new pipeline to the West Coast. This September, his government’s Major Projects Office announced its first tranche of nation-building projects, including an expansion of LNG production in B.C.

    The man who admiringly quoted Greta Thunberg in his book is now rolling back climate plans and approving pipelines and mines. Politically, this is risky business: the NDP is likely to make a comeback eventually and secure some of those voters alienated by these moves. Some MPs have formed a “climate caucus” to make sure their issues are heard—though, for now, they are not openly criticizing Carney himself. “At some point there’s going to be the straw that broke the camel’s back,” says Supriya Dwivedi, a former senior adviser to Trudeau. “You’re just going to have a lot of the discontent gushing out at once.”

    https://macleans.ca/politics/mark-carney-prime-minister-of-canada/

  31. Ottawa and Alberta appear close to striking an energy accord long sought by Premier Danielle Smith to boost her province’s oil and natural gas sector, with Privy Council Clerk Michael Sabia playing a key role in the negotiations, two sources say.

    Two federal insiders said the broad outlines of the agreement, which would take the form of a memorandum of understanding, involve an oil pipeline running from Alberta to the northwest coast of British Columbia.

    On the table to support it would be a limited exemption to the current ban on oil tankers on the B.C. coast, a plan to move ahead with changes to industrial carbon pricing in support of scaling up carbon capture technology, and a lowering or removal of the industrial emissions cap.

    Players in the federal and Alberta governments are expressing optimism that a deal is within reach and could be announced in time for next weekend’s United Conservative Party of Alberta convention.

    …

    The sources said a northwest B.C. pipeline would require a private sector proponent, buy-in from coastal Indigenous communities and environmental approvals. It’s unclear whether the MOU would require the approval of B.C.’s NDP government, which is publicly opposed.

    The MOU could include revival of the cancelled Keystone pipeline to the United States, but that remains part of the stalled trade talks with Washington, the sources said.

    https://www.theglobeandmail.com/politics/article-alberta-ottawa-energy-accord-oil-pipeline/

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