On Sunday, 9 March, Mark Carney was elected as leader of the liberal party and will now replace Justin Trudeau, who announced his intention to resign as party leader earlier this year. Carney, who is the former Governor of the Bank of Canada and Bank of England, ran on a campaign of economic growth, climate leadership, and strengthening the middle class.
In his victory speech, Carney addressed Canada's strained relationship with the United States under President Trump's administration, emphasizing the need for national unity and resilience in the face of challenges, including U.S. trade tariffs and threats of annexation. Carney also reiterated his commitment to canceling Canada's consumer carbon tax, labeling it as "divisive" and ineffective, and criticized Conservative leader Pierre Poilievre's approach to climate policy, stating that Poilievre's "simplistic and misleading 'Axe the Tax' inaction won't work and would cost families more."
Reaction Across The Political Spectrum
Carney’s election has elicited reactions from political figures both domestically and internationally. Former Prime Minister Jean Chrétien interpreted Carney's victory as a public acknowledgment of the challenging times ahead, stating that Canadians recognize Carney's competence and desire him to utilize his talents to address current challenges. Environment and Climate Change Minister Steven Guilbeault also supported Carney, highlighting his crisis management experience and expressing confidence in Carney's ability to lead Canada through its next phase of economic growth and climate change initiatives.
Upon Carney's victory in the Liberal Party leadership race, outgoing Prime Minister Justin Trudeau delivered a farewell speech in which he praised his administration's achievements but also cautioned about the turbulent times ahead.
Transition to Leader
Carney will be sworn in as leader once Trudeau formally resigns, the timing of which will be discussed between the two. Once the date is determined, Trudeau will submit his resignation to the Governor General, who will then invite Carney to form government. Meeting Canada’s premiers as well as engaging in phone calls from world leaders is common practice for a new leader as immediate next steps.
Following this, Carney will begin assembling the new cabinet and outlining his expectations for these members. While Carney has not disclosed potential cabinet selections, his extensive experience in economic and financial matters suggests he may prioritize individuals with strong backgrounds in these areas.
Next Steps for Federal Election
The prorogation of Parliament is set to end on 24 March, which could catalyze a vote of no-confidence. If a federal election is triggered once Parliament reconvenes, a federal election could occur as soon as this spring, making Carney’s tenure as Prime Minister notably short.
Carney may wish to trigger a federal election himself, attempting to leverage his support to secure his term as prime minister. Carney's leadership bid has been bolstered by his firm stance against U.S. President Donald Trump's recent 25% tariffs on Canadian imports. Carney's extensive experience in crisis management and economics positions him as a capable leader to navigate Canada through these tensions.
Recent opinion polls indicate that the gap in support between the Conservative and Liberal leads is closing, with a Léger poll conducted on 10 February 2025 showing that Poilievre is leading by 9 points compared to a previous 18-point lead. A February 2025 Ipsos poll conducted for Global News shows that Liberal support has increased to 28%, an 8-point gain since early January, while Conservative support has decreased to 41%, a 5-point drop. This shift in public sentiment may provide an opportunity for Carney to solidify his leadership and potentially call a federal election to secure a stronger mandate.
Carbon Pricing in Canada
While U.S. and Canada relations have been a focal point of this candidacy race, Carney has also expressed his support for removing the consumer-facing carbon tax, claiming that it is divisive and contributes to less than 10% of emission reductions. This is a notable deviation from the Liberal party’s historical platform, which has centred the consumer-facing carbon price as a core tenet of its policy.
Removing the consumer-facing carbon tax will not eliminate a carbon price in Canada, given that the industrial emitter programs are expected to remain in place and even strengthen under Carney’s climate plan. Several provinces, namely B.C., Alberta, and Quebec, had carbon pricing programs in place prior to the national requirement. The federal carbon pricing schedule is currently set to CAD 95/tCO2e (consumer-facing carbon tax to increase to CAD 95/tCO2e on 01 April 2025). A regulatory review of the federal benchmark used to assess the stringency of industrial emitter programs is scheduled for 2026, which will reevaluate the existing program design. Any changes to the federal benchmark criteria will require provinces and territories to amend their program design to align with the revised benchmark.
Carney’s climate plan also mentioned developing a Carbon Border Adjustment Mechanism, which is a carbon tariff applied on imported carbon-intensive products, strengthening existing oil and gas methane regulations, implementing an efficiency mandate for low-temperature industrial heat, and reducing red tape for clean energy projects. The plan, which follows a carrot over stick approach, aims to incentivize green buildings, electrifying transportation, and provide direct benefits to consumers. Further, Carney’s plan will promote economic growth and foster domestic jobs by finalizing Canada’s transition taxonomy for financial institutions and implementing science-based transition taxonomies for key sectors.
Energy security will likely be a key topic for the coming weeks, given tariff tensions with the U.S. Carney has called for collaboration with First Ministers to advance both clean and conventional energy projects. In the liberal leadership debate at the end of February, he stressed the urgency of moving forward with speed, prioritizing carbon capture and storage, and reducing Canada’s reliance on oil imports from the U.S.
Pierre Poillievre, leader of the conservative party, has campaigned on removing the consumer-facing carbon price, with “Axe the Tax” being a key message of his platform. With Carney also supporting removing the tax, it is unclear how the conservative party will reframe its messaging.
Under a Poillievre government, the future of industrial carbon pricing programs remains uncertain. Should it remain, there may be changes to the federal benchmark, stringency requirements, and other design elements. Complementary policies like the Clean Electricity Regulations and the Oil and Gas Cap may face dismantling.
While there is now clarity, given the inevitability of the removal of the consumer-facing carbon tax, uncertainty remains on what an alternative system may look like and the extent of direct investments. Investments in Canada’s clean energy industry may remain cautious as investors take a “wait and see” approach. ClearBlue will continue monitoring these developments and will provide updates as needed.
Stay in the know: contact us for information about our market intelligence services.