Energy Minister signals support for carbon capture as key to Carney’s climate strategy

As Prime Minister Mark Carney’s government prepares to unveil its long-awaited climate competitiveness strategy in next week’s federal budget, Energy and Natural Resources Minister Tim Hodgson has offered clues about its direction — emphasizing support for carbon capture while making no mention of the long-promised oil and gas emissions cap.

Speaking ahead of a G7 energy ministers’ meeting, Hodgson said the government’s climate and energy policy rests on three main “levers”: public investment in clean technology, regulatory certainty for industry, and the use of artificial intelligence to modernize energy systems.

He said Ottawa plans to use tax credits and public funding to “de-risk” first-of-a-kind clean tech ventures and ensure Canada’s industries remain competitive in a low-carbon economy. As an example, Hodgson cited Arca, a Canadian company supported by Natural Resources Canada that recently signed a carbon removal deal with Microsoft.

Hodgson also underscored the importance of predictable regulations and streamlined project approvals, describing AI as a transformative force for optimizing renewable energy, forecasting grid demand, and improving battery design.

Notably absent from his remarks was any reference to the proposed industrial emissions cap, announced a year ago but still not finalized. Insiders suggest the Carney government may be shifting away from strict limits toward investment-driven solutions like carbon capture, storage, and removal.

Former federal climate adviser Louise Comeau said Hodgson’s comments confirm that approach. “It’s no secret that the government appears to favour carbon capture over regulating emissions,” she said.

Hodgson also pointed to investments in low-carbon power — including nuclear, small modular reactors, natural gas with carbon capture, and large-scale battery storage — as well as efforts to advance clean hydrogen and biofuels for hard-to-decarbonize sectors.

But despite these measures, both independent analyses and federal projections indicate Canada remains off track to meet its 2030 climate targets, even as Carney’s government rolls back key consumer climate policies such as the carbon price and the EV sales mandate.