Carney’s Long Game: Competitiveness as Climate Policy

Abstract: This op-ed argues that Budget 2025 marks a decisive shift in Canada’s climate strategy — one that embeds sustainability inside a broader economic modernization agenda. Instead of framing climate action as regulatory burden, the budget positions clean growth as the foundation of national competitiveness, anchored by large-scale investments in renewable and next-generation energy, critical minerals, advanced manufacturing, AI, and workforce development. Major commitments in housing, construction innovation, infrastructure, and productivity policy are presented as economic measures but function as climate levers in practice. Yet the approach also carries trade-offs: the absence of urban climate programs, ambiguity on fossil fuels, the carbon-pricing reset, and softer greenwashing rules risk diluting the climate signal. Ultimately, Canada’s transition hinges not on household-level measures but on industrial strategy, capital mobilization, and execution. Whether competitiveness-driven climate policy delivers real emissions reductions and resilience will depend on how effectively these investments reshape energy systems, infrastructure, workforce pathways, and long-term economic capacity.

Carney’s strength lies in narrative reframing. Rather than positioning climate action as a compliance burden, Budget 2025 presents it as a competitiveness agenda intended to “build for the future, leveraging nuclear, solar, wind, clean hydrogen, and other renewable energy.”²

Through the new Climate Competitiveness Strategy, the government commits to strengthening leadership in the low-carbon economy. This includes unlocking the “full value of our critical minerals”³ and accelerating innovation in AI, advanced manufacturing, and other productivity drivers, all of which carry climate implications.

Key Sustainability Measures

1. Renewable and Next-Generation Energy Build-Out

These credits are presented as the backbone of the Climate Competitiveness Strategy. They are framed as tools to “supercharge affordable, net-zero energy projects”⁴ by lowering capital costs and accelerating deployment timelines. By rooting climate ambition in industrial investment rather than regulation, the budget signals that emissions reductions will be driven by market mobilization and technology adoption rather than direct mandates.

2. Renewable and Next-Generation Energy Build-Out

The commitment that Canada will” build for the future, leveraging nuclear, solar, wind, clean hydrogen, and other renewable energy”⁵ highlights the breadth of technologies prioritized. By naming both traditional renewables and emerging solutions such as hydrogen and next-generation nuclear, the government is signaling an ‘all technologies on deck’ approach.

3. Youth Climate Workforce Development

The Youth Climate Corps is presented as a generational investment in the future workforce. It reinforces the idea that climate action can deliver opportunity, not only cost, by helping young Canadians “transition into the workforce and launch successful careers.”⁶ It also advances the broader narrative that climate policy must feel tangible and aspirational to the next generation.

4. Housing and Construction Modernization (25 billion dollars)

The 25-billion-dollar housing commitment is framed primarily as an affordability response but embeds significant sustainability and industrial transformation levers. Advanced and manufacturing-based construction methods aim to:

• Cut timelines by up to 50%;
• Lower costs by up to 20%;
• Reduce emissions during construction by roughly 20%.

The budget positions this as an opportunity for Canada to become “a global leader in housing innovation, sustainable materials, and leading-edge manufacturing.”⁷

5. Sustainable Finance Taxonomy and CSA Climate Disclosure Rules

The budget reaffirms commitments to develop a Sustainable Finance Taxonomy to guide capital toward credible green investments. It also commits to working with provinces and the CSA to align reporting regulations with ISSB standards through new CSA climate disclosure rules.

Misses and Strategic Trade-Offs

1. Urban Climate Action

Although the budget invests heavily in core infrastructure, it provides no targeted, city-focused climate program. Urban governments, which often deliver frontline climate measures, receive limited new climate-dedicated funding. The 54 billion dollars for transit, water, and wastewater systems lacks explicit urban climate or resilience framing.

2. Equity and Affordability

Affordability is a central theme, reflected in tax changes, housing initiatives, and supply-side interventions. The government highlights the steep housing supply gap and allocates 19 billion dollars to Indigenous communities and municipal infrastructure under Build Canada Homes. However, there is no dedicated support for urban or vulnerable communities for climate action.

3. Signals on Fossil Fuels

The budget states that Canada intends to remain “an energy superpower in both clean and conventional energies.”⁸ This explicitly includes LNG and natural gas. The result is mixed signals about long-term decarbonization pathways at a time when many peer jurisdictions are phasing down natural-gas infrastructure.

4. Carbon Pricing Reset

The decision to cancel the consumer carbon price, which the government states will “cut gas prices by approximately 18 cents per litre in most provinces and territories,”⁹ represents a major shift in climate policy. The change signals a pivot away from household-level tools toward industrial, market-based, and competitiveness-oriented approaches.

5. Greenwashing Regulation (Bill C-59)

Budget 2025 proposes amendments to the Competition Act that would remove the requirement for businesses to substantiate environmental benefit claims using internationally recognized methodologies. It would also allow third parties to bring cases directly to the Competition Bureau.

Green…maybe?

1. Strategic Response Fund for Trade and Industrial Resilience

This fund is presented as both defensive and forward-looking, intended to help producers “reach new markets globally”¹⁰ and adapt to shifting global conditions. It is paired with a major reskilling initiative for workers in high-emitting and trade-exposed sectors such as steel, aluminum, autos, and forestry. Although not framed as climate policy, the fund blends competitiveness, resilience, and workforce transition.

2. Building an Energy Superpower

The commitment to be an “energy superpower in both clean and conventional energies”¹¹ may reflect a dual-track strategy: preserve economic value from existing systems while scaling next-generation clean power. This signals a pragmatic, diversified approach rather than an abrupt transition.

3. Infrastructure (115 billion dollars)

The 54 billion dollars for core public infrastructure supports long-term resilience and emissions reductions at the provincial and municipal levels. By embedding these investments in a competitiveness narrative rather than labeling them as climate measures, the government avoids politicizing climate spending while still advancing material progress.

4. Productivity and Competitiveness (110 billion dollars)

The productivity package includes:

• 12 billion dollars for AI, quantum, and EV technologies;
• 23 billion dollars for innovation programs;
• 27 billion dollars for SR and ED modernization.

These measures are positioned as essential to “supercharge growth” and maintain global competitiveness. However, they also underpin the clean-economy transition by scaling low-carbon technologies and strengthening Canada’s industrial innovation ecosystem. Productivity policy becomes climate policy in practice, even if not in name.

So… Is Climate Hidden in Economic Policy?

Budget 2025 integrates climate ambition throughout the architecture of national competitiveness. The Clean Economy Investment Tax Credits, the expanded renewable and next-generation energy build-out, the Strategic Response Fund, and the productivity package all point to a transition strategy rooted in industrial policy, capital attraction, and workforce development. These measures reflect a belief that Canada’s economic strengths, including critical minerals and AI-enabled clean manufacturing, will drive long-term decarbonization.

At the same time, the focus on affordability, infrastructure, and energy security are laudable as they address critical sustainability needs in Canada; but without clarity can obscure climate objectives. The absence of targeted urban climate programs, mixed signals on LNG, and the reset of household-level incentives all highlight the trade-offs that come with framing climate action as economic policy.

Whether the budget represents climate policy embedded within economic strategy, or economic strategy placed adjacent to climate ambition, will depend on execution. The durability of industrial investments, the integration of climate objectives into the 115-billion-dollar infrastructure plan and 25-billion-dollar housing package, and the strength of guardrails such as greenwashing protections will shape whether this competitiveness-led approach results in measurable emissions reductions and resilience.

Economics is not simply a backdrop to climate action in Budget 2025. It is the mechanism through which the government intends to deliver it. By positioning climate as an engine of productivity, industrial growth, and competitiveness, the budget makes a deliberate bet that Canada’s transition will be driven by innovation, capital, and large-scale infrastructure rather than household-level pricing or regulation.

But for these ambitions to translate into outcomes, Canadians will need evidence that investments in clean technology, housing innovation, Indigenous and municipal infrastructure, and a modernized energy system are delivering both prosperity and climate progress. If sustainability is to become synonymous with “Canada Strong,” success will depend on whether workers, communities, and households can see tangible benefits such as lower emissions, smarter infrastructure, resilient cities, and accessible opportunities in a growing clean economy.

All footnotes with reference to: Government of Canada. (2025). Budget 2025: Canada Strong. https://budget.canada.ca/2025/report-rapport/pdf/budget-2025.pdf

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Disclaimer: AI contributed to the creation of this article, but it was guided, reviewed and fact-checked by ESG Global’s human experts. Please note that the content and material provided in this article is for general information purposes only. It is not to be taken or relied upon as legal advice and should not be used for professional or commercial purposes. This article is intended to communicate general information about relevant sustainability matters and reporting requirements as of the indicated date. The content is subject to change based on evolving regulatory reporting requirements.

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Five Key Bullets

• Climate reframed as competitiveness: Budget 2025 recasts climate action as an engine of economic leadership, embedding decarbonization inside industrial strategy, productivity, and global market positioning.

• Industrial policy at the center: Massive investments in renewable energy, critical minerals, AI, advanced manufacturing, and construction modernization drive a transition fueled by capital mobilization rather than regulation.

• Climate embedded in economic programs: Housing, infrastructure, and productivity measures — totaling over 250 billion dollars — advance emissions reduction and resilience even when not explicitly labeled as climate policy.

• Mixed signals and trade-offs: LNG support, the carbon-price reset, lack of targeted urban climate funding, and diluted greenwashing rules introduce uncertainty and complicate long-term decarbonization pathways.

• Execution will determine success: The competitiveness-led strategy will only deliver climate outcomes if industrial investments translate into measurable emissions reductions, resilient infrastructure, and visible benefits for workers and communities.