Fresh Takes

Regulating Canada’s Energy Industry Out of Existence Won’t Do Anything for Climate Change

More layers of red tape piled onto Canada’s energy industry are not likely to reduce emissions.

This hasn’t stopped radical environmentalist groups like Greenpeace from calling on the government to enact new laws and regulations to prohibit banks from investing in legitimate Canadian energy companies active in the oil and gas sector.

Let’s be clear: even if Ottawa were to regulate Canada’s energy industry out of existence, it would likely have very little impact on the fight against climate change.

We live in an interconnected world. The goods and services we produce meet a share of the global demand for them—oil and gas as much as wheat and aluminum—but any stoppage in Canadian production is quickly met with an increase in supply from other sources.

Just look at what’s been happening since Russia invaded Ukraine: European nations have rushed to reduce their dependency on Russian gas, signing agreements with Qatar, Libya, and Algeria, just to name a few.

While the circumstances would of course be different, any reduction in the Canadian energy supply would quickly be seized as an opportunity for other energy-producing countries to increase their production and exports. And many of these producers don’t have the kinds of stringent environmental regulations and standards Canada has.

Preventing banks from investing in tightly regulated Canadian energy players might change the composition of the global market somewhat, but it won’t achieve much more than that.

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