Finally, some relief: Energy and resources in the Budget

As published in The Hub

It’s been a long time since the energy sector got good news in a federal budget. During the Trudeau era, new investment-killing policies were conceived and announced constantly. Since Prime Minister Carney was elected in April, it could at least be said that bad things were no longer being layered on.

With Budget 2025, some of the bad things could be taken away soon, and what’s more, some good things have been announced. There is a glimmer of hope that we are moving from an era of sticks to an era of carrots.

At the top of the list of bad things was the much-reviled emissions cap. Budget 2025 identifies a series of climate actions that “would create the circumstances whereby the oil and gas emissions cap would no longer be required.”

That doesn’t say the emissions cap is scrapped! Some may quibble. But as the cap is not yet enacted, all the federal government has to do is nothing, and they are signaling they will do just that. At any rate, the limited political space they’ve left to revive it, the bait and switch that would represent to the markets, and the howls it would elicit from the West, make us confident the oil and gas emissions cap is dead.

The elimination of the greenwashing amendment, which made improperly substantiated climate goals punishable with heavy fines, is the icing on the cake.

And then there are the carrots. Calls to amend the investment tax credit regime were heard; the mining exploration tax credit was renewed; there are accelerated capital cost allowances for LNG facilities; and meaningful funding for defence-related critical minerals projects. Further, the federal government has created space for a collaborative conversation with the provinces about the competitiveness of Canada’s industrial carbon pricing regime.

Expectations for the Major Projects Office have gotten higher. It remains to be seen if billions in new infrastructure funding will crowd in private capital for energy projects and trade corridors.

Directionally, the budget is positive. If you’re an energy or mining investor, Canada looks more attractive today than it did yesterday. But there are ways to make it more attractive yet. The budget made some steps, but there is still a way to go yet.