Key energy takeaways from Canada’s 2025 election

Newly elected Prime Minister of Canada, Mark Carney, has made energy a key initiative of the new government, with goals to expand both conventional and clean energy, but decoupling energy flows away from the US may prove to be a challenge, according to Wood Mackenzie.

Both major parties, Liberals and Conservatives, were largely aligned in vocally supporting the energy sector throughout the campaign but had nuanced policy directions on carbon taxes, emissions caps, the role of CCS, and project regulatory approval processes.

“Canada’s energy sector is already world-class and increasingly global with new infrastructure access for oil via TMX, NGLs and soon gas via the imminent startup of LNG Canada Phase 1,” said Mark Oberstoetter, vice president of research for Wood Mackenzie. “This market diversification is well timed with supply growth occurring in Canada’s legacy trading partner, the US, and US President Donald Trump’s tariff escalations. But decoupling energy flows from the US is difficult.”

“Both party leaders advocated for ‘all energy’ development and acknowledged the oil and gas sector’s critical role in today’s economy and Canada’s future, mainly addressing the need for improving regulatory approval timelines, encouraging and aiding the financing of Indigenous involvement, and diversifying export markets.”

Zero carbon power
Wood Mackenzie expects that renewable power will remain a priority, and that the government will address interconnection challenges. For Canada’s solar sector, pipeline stabilization is expected after the lift of the Alberta moratorium. The Liberal government will expand Canada's nuclear energy sector to enhance energy independence. Over CAD$100 million of funding for nuclear SMRs has been announced so far this year.

CCUS projects may leave regulatory purgatory. 
“CCUS is a winning technology in this election,” said Jack Mageau, research analyst. “Sustained industrial carbon pricing, the desire to greenlight large Canadian projects and the proposed extension of the full value of the CCUS investment tax credit will all act in CCUS development’s favor. Broader economic challenges, coupled with uncertainty surrounding the future value of industrial carbon pricing could limit uptake unless reforms are made. Also weighing on long-term projects will be the fact that Canadian minority governments can be unstable; another election may be around the corner, which could bring back the clouds of policy uncertainty.”

Canada’s LNG era is dawning, but two pre-sanction projects still have hurdles. 
First shipments from LNG Canada Phase 1 are imminent, but questions remain if that LNG construction momentum can continue in the 2030s, even as LNG has increasing approval from both Liberal and Conservative leaders.

Canada and US energy products including crude, gas, propane, diluent, minerals and power flows go both ways and are not easily de-coupled.  
Wood Mackenzie analysis shows there could be increased energy trading flows with the US during this government’s tenure. Canadian heavy oil pipeline flows will increase to the US as Enbridge and Alberta government progress expansions to the Mainline pipeline. And more northeast US gas economically flows into eastern Canada once TC Energy’s Dawn Long Term Fixed Price pipeline tolling contract expires in 2027.

Bill C69: Fast-tracking project approvals
The Prime Minister aims to balance regulatory rigor with faster approvals. "One plan, one review" will reduce federal duplication by collaborating with provinces and stakeholders on national interest projects. Initial projects include Cedar LNG, Ring of Fire mining, and Grays Bay Road and Port. Oil sands projects are not listed. Approval process is expected to take two years, down from five, but longer than the Conservatives' proposed six-month timeline.

Pipe infrastructure challenges persist. Campaign attention was given to promoting a west-east energy corridor, but the details and inclusion of oil in that corridor are unclear and unlikely under coalition rule. Wood Mackenzie does not currently expect any zombie projects like Energy East or Northern Gateway to be revived, especially with no midstream proponent. A close watch should be on potential expansions into the US via Enbridge Mainline system, the ability to export from the US Gulf Coast, and potential tweaks and expansions to TMX, rail, and port infrastructure to further develop non-US export routes.

Can oil sands expand alongside an emissions cap? 
The proposed oil and gas emissions cap aims to reduce sector emissions 35% below 2019 levels by 2032 and has received heavy opposition from western Premiers and industry. The election result relinks oil sands growth to the need for large scale CCS.

Can critical Atlantic projects get across the threshold? 
Newfoundland & Labrador leaders and energy advocacy groups have also pushed back against the oil and gas emissions cap. A key pre-sanction project, Bay du Nord, has regulatory approval but with 137 legally binding conditions, including being net zero by 2050.

Corporate strategies will conflict with federal conventional energy building ambitions. 
“Over US$128 billion in consolidating acquisitions and mergers since 2015 means that Canadian-domiciled companies are the dominant operators and decision makers for investing in Canadian oil and gas,” said Oberstoetter. “These companies, like others outside of Canada, prioritise shareholder returns over growth and will have limited risk appetite for country-level diversification ambitions. A cautious corporate approach to large infrastructure investments may require unique government support for any nation-building infrastructure.”