Forget pipelines — the U.S. trade war is our chance to decarbonize

Don’t believe the hype: no trade war is going to keep Canadian fossil fuel schemes alive in the long run. The most efficient route to economic independence is decarbonization, not pipelines and refineries.

In the days and weeks since the current American president began his trade war, Canada’s oil and gas sector and its supporters have been lobbying to revive a host of otherwise dead infrastructure projects. Their argument is that Canada needs to shift away from its economic dependence on the United States, and that sending oil to more countries is the solution.

It seems like a convincing, common sense argument. The first part is certainly true. If the Trump administration is going to undermine a continental trade agreement and wage economic warfare without cause, it stands to reason that Canada has no choice but to quickly build new trade relationships elsewhere.

But there is no untapped export market for Canada’s oil and gas. 

The International Energy Agency expects global demand for oil will continue to fall and that a glut may develop this decade. If the past is any indication, this will cause oil prices to fall and make Canadian oil too expensive for export, let alone justify new infrastructure. Oil prices have declined for two years in a row, down three per cent in 2024, aligning with forecasts of an overall decline in prices amid a global oversupply. Analysis reveals the likelihood of an LNG glut developing as well, as Asian and European markets make the jump to renewables without using LNG as a bridge fuel. A report published this week found Europe’s LNG imports declined by 19 per cent in 2024. The Institute for Energy Economics and Financial Analysis further reveals that Europe’s gas consumption fell by 20 percent between 2021 and 2024, mostly because of added renewables and energy saving measures.  

The long-term danger to Canada right now isn’t tariffs or trade war (though these are both alarming), but of Canadian politicians, seeking to capitalize on the current political climate.

This concern is not without cause: major projects like the Pathways Alliance carbon capture effort (which is expected to exacerbate emissions rather than reign them in, and also doesn’t appear to be economically viable), are already exerting considerable political pressure to avoid environmental impact assessments. British Columbia Premier David Eby appears intent on fast-tracking 18 energy and mining projects, ignoring environmental concerns. The Quebec government also appears ready to reconsider a gas pipeline, liquefaction and export terminal project that was previously abandoned on environmental grounds. 

Unless the public pushes back, Canadian politicians may soon commit billions more in public subsidies to an already highly subsidized fossil fuel sector with little hope of reclaiming their investment. Again. Last December, the Trudeau government quietly authorized another $20 billion loan to further support the TMX pipeline, which is both underutilized and for which the government is undercharging on tolls. 

Intimidating Canadians into committing tens of billions of dollars to fund fossil fuel projects that have little hope of ever paying for themselves or turning a profit, may do more to destroy Canada’s economy than tariffs alone. 

Yet somehow, pro-oil pundits and politicians are now seriously proposing Canada re-examine pipeline projects that were cancelled because they weren’t financially viable nearly a decade ago, without any evidence they’ll fare any better today. Energy East is an excellent example of this. Its cancellation had nothing to do with policy or politics, and everything to do with economics, and this underlying factor hasn’t changed because of Trump’s tariffs. 

The opportunity here lies not in export markets for fossil fuels, but rather in decarbonization.

Energy sovereignty is economic sovereignty, and there’s no faster route to energy sovereignty than by harnessing the fully renewable energy resources that are already abundant within Canada and whose value is not dependent on export markets. 

Why look for income elsewhere when we can save money at home?

It’s ironic that Canada’s over-reliance on oil exports to the U.S. is a consequence of the oil industry’s reaction to the National Energy Program (NEP) of the early-1980s. The NEP was an effort to achieve energy security and sovereignty by making Canada’s oil and gas work for Canadians. The Canada-U.S. free trade agreement of 1988 and the privatization of Petro-Canada dismantled energy nationalism (and the east-west development orientation) of Canada’s oil and gas sector under Pierre Trudeau. Canada’s fossil fuel sector subsequently became even more dependent on the American export market. Changing this orientation is not as simple as building new infrastructure, however. Canada’s fossil fuel sector is largely foreign owned and as such has no interest nor reason to support economically nationalist reactions to American threats of a trade war.

Rather than committing tens of billions of dollars of public money to further entrench a largely foreign-owned oil and gas sector’s stranglehold of Canada’s economy and politics, we should instead strive to eliminate fossil fuels in Canada altogether. This is the only way to achieve genuine political independence and ensure our economic sovereignty into the future. 

Full decarbonization through building new renewable energy systems will stimulate the development of new industries and create new jobs, sustain the economy through its decoupling from the United States, and, best of all, radically reduce Canada’s carbon emissions. It would be the single strongest individual action we could possibly take in the fight against climate change, and would put Canadians back in charge of their economic and political future.

Trump has given us a golden opportunity to end free trade and our dependence on fossil fuels simultaneously. Let’s not waste it.