This article originally appeared in the Financial Post.
By Heather Exner-Pirot, October 30, 2025
Sound the alarm! Break the glass! Do something! Authorities and observers alike are leaving no doubt about the urgency of getting Ottawa to tackle the economic woes of anemic productivity, falling GDP and capital drain.
Indications are the Carney government is planning to spend — pardon me, invest — its way out of the problem. You don’t need an Oxford PhD in economics to know that won’t do the job. Besides: invest what? The cupboard is bare.
Luckily, addressing four regulatory measures would deliver an enormous upside to the Canadian economy but cost virtually nothing. Taking them in turn:
1. The Clean Electricity Regulations (CERs), finalized in December 2024, aim to achieve a net-zero electricity grid by 2035. They unreasonably constrain power generation, especially by stalling cost-competitive, quick-to-deploy “unabated” natural gas plants (i.e., plants that don’t do carbon capture). With the industrial carbon price adding up to 40 per cent to the cost of power generation from natural gas, Canada has effectively eliminated this decade’s most cost-competitive option for boosting generation capacity.
The current data-centre boom is worth hundreds of billions of dollars in North American alone. But almost every province will be short electricity by the 2030s, and the CERs make it nearly impossible to supply the 99.999 per cent reliable power needed to attract this investment. So Canada is missing out on perhaps the decade’s biggest capital outlay in an area where it should have a natural competitive advantage: abundant energy.
2. The Electric Vehicle Availability Standard (or EV mandate) requires all new vehicles sold in Canada to be zero-emissions by 2035. But consumer demand is collapsing. EV sales fell over the past six months, accounting for only 7.7 per cent of July’s new sales. The mandate was never achievable. Now, as 2026 models arrive, reality has set in: Ottawa has announced a six-month pause while it conducts a review.
Meanwhile American tariffs threaten our auto industry’s existence as Donald Trump tries to force automobile production south. One firm, Stellantis, is already moving. At the same time, China is using high tariffs on our canola to force down our own 100 per cent tariffs on their EVs. With our auto industry under attack from both China and the United States, it’s bewildering that our Ottawa is layering on its own industry-threatening mandate.
3. The emissions cap on oil and gas may be Ottawa’s costliest own-goal, however. It proposes a 35-38 per cent reduction from the industry’s 2019-level emissions by 2030. All credible analysis, including from the Parliamentary Budget Officer, says that can’t happen without shutting-in production, at the cost of tens of billions of dollars over the next five years.
The prime minister promises to turn Canada into a conventional energy superpower and he did put LNG Canada 2 on the privileged major projects list. But with the emissions cap in place there’s no way Canada can be the reliable oil and gas supplier to our allies in Asia and Europe that we have told them we will be. As for investment, the cap is the policy equivalent of putting out a “Not Welcome” mat.
4. Disruptive labour relations in our transportation system are another major growth-killer. Ottawa wants to export more of everything we produce to markets that aren’t the United States. To do so, it is considering spending billions to upgrade Canadian ports and railways. But port and rail capacity aren’t the biggest threat to diversifying exports. Recent strikes in the rail, air and marine sectors have disrupted supply chains and cost the economy billions. Canada experienced 62 work stoppages in the transportation sector in 2023 and 2024.
Ottawa already has the power to address this. Canada Labour Code Section 107 gives the minister of labour broad discretion for actions such as imposing binding arbitration to “maintain or secure industrial peace.” Popular with Canadians, this essential power is fiercely opposed by labour unions.
The government needs to make more muscular use of it, with support from the Conservatives to do so. This is not about being anti-labour; it’s about protecting opportunity for the millions of workers whose livelihoods depend on reliable access to shipping by port, rail and air.
Many other things need to be done to improve Canada’s competitiveness and turn the economy around. But none gives better value than addressing these four issues, which could be done without any new spending or legislation. All they require is political will, though that seems to be Canada’s scarcest resource these days.
Heather Exner-Pirot is director of energy, natural resources and environment at the Macdonald-Laurier Institute.
