Since stepping away from the federal cabinet in 2021, Catherine McKenna, Canada’s former Minister of Environment and Climate Change, has shifted her focus from the halls of Parliament to the global stage. As the founder and CEO of Climate and Nature Solutions and the chair of the UN Secretary-General’s High-Level Expert Group on Net-Zero Commitments, McKenna has become a prominent voice in the international effort to standardize climate goals. In a recent series of discussions, McKenna underscored a growing concern: Canada is at risk of falling behind in the global energy transition due to a fundamental misunderstanding of the link between climate policy and economic affordability.
McKenna argues that the current political discourse in Canada, often overshadowed by the volatility of American politics and the influence of the domestic fossil fuel lobby, has failed to convey the economic reality of the shift toward electrification. According to McKenna, the transition away from oil and gas is not merely an environmental necessity but the most effective strategy for protecting Canadians from the "affordability crisis" driven by fluctuating global energy markets.
The Affordability-Climate Nexus: A Shift in Narrative
A central pillar of McKenna’s current advocacy is the direct correlation between fossil fuel dependency and the rising cost of living. While critics of climate policy often point to carbon pricing as a driver of inflation, McKenna posits that the true culprit is the inherent volatility of oil and gas. She notes that approximately 80% of people globally express concern about climate change, yet this concern is often sidelined by immediate financial pressures.
"The thing we need more from leaders right now is to make the direct link between affordability and climate," McKenna stated. She pointed to the price at the pump and the cost of home heating as primary pain points for Canadian families. These costs are tethered to geopolitical instability, such as the ongoing conflicts in Ukraine and the Middle East, which cause sudden spikes in global oil prices.
To enrich this perspective, data from Statistics Canada indicates that energy prices have been a significant contributor to the Consumer Price Index (CPI) fluctuations over the last 24 months. McKenna argues that by transitioning to electric vehicles (EVs) and heat pumps, Canadians can decouple their household budgets from these external shocks. "Heat pumps are better. EVs are better," she emphasized, while acknowledging the need for more affordable, entry-level options in the Canadian market.
Chronology of Canada’s Climate Policy Under McKenna
To understand McKenna’s current stance, it is essential to review the trajectory of Canadian climate policy during her tenure (2015–2019 as Environment Minister; 2019–2021 as Minister of Infrastructure and Communities).
- 2015: The Paris Agreement: McKenna was a key negotiator for Canada during COP21, where the world committed to limiting global warming to well below 2 degrees Celsius.
- 2016: Pan-Canadian Framework: The federal government introduced its first comprehensive climate plan, which included a national floor price on carbon—a policy that remains a point of intense political debate today.
- 2018: Greenhouse Gas Pollution Pricing Act: This legislation codified the carbon pricing system, leading to several legal challenges from provincial governments, which the Supreme Court eventually dismissed in 2021.
- 2021: Net-Zero Emissions Accountability Act: Before leaving office, McKenna supported the legislation that legally binds the Canadian government to reach net-zero emissions by 2050.
Despite these milestones, McKenna expresses frustration that the oil and gas sector has not followed through on its commitments. She notes that while the industry promised significant emissions reductions during her time in office, national emissions from the sector have continued to rise, even as companies report record-breaking profits.
The Risks of Stranded Assets and the LNG Debate
A significant portion of the current debate in Canada surrounds Liquefied Natural Gas (LNG) and whether it should be classified as a "transition fuel." Industry proponents argue that Canadian LNG can help displace coal-fired power in Asia, thereby reducing global emissions. McKenna, however, views this as a dangerous "myth" that risks creating massive stranded assets.
A "stranded asset" refers to an investment that loses its value prematurely due to changes in the market or regulatory environment. McKenna warns that as the world accelerates toward electrification, the demand for natural gas will plummet, leaving Canada with expensive, obsolete infrastructure. She cited her own past approval of an LNG project that ultimately did not proceed due to market risks as evidence of the sector’s instability.
"I think the stranded asset risk is real," McKenna said. She further highlighted the issue of unfunded liabilities in Alberta’s oil sands, including tailings ponds and abandoned wells, which represent a multi-billion dollar environmental cleanup bill that may eventually fall to taxpayers. "The problem is they get to privatize the profits and socialize the risks," she noted, calling for a more rigorous "green taxonomy" that excludes new natural gas projects from being labeled as sustainable investments.
Financial Accountability: The Call for a Windfall Tax
In light of the high profits recorded by energy giants—fueled in part by the energy shortages resulting from the war in Ukraine—McKenna has joined the call for a windfall tax on oil and gas companies. Such a tax would follow the precedent set by the United Kingdom, which implemented an Energy Profits Levy to help fund domestic energy relief programs.
Canadian oil and gas majors, including companies like Suncor and Canadian Natural Resources Ltd., have seen significant revenue increases since 2022. McKenna argues that these "windfall" profits, which she attributes to international conflict rather than innovation, should be reinvested into the Canadian economy to support the transition.
"Why should Canadians give their hard-earned tax dollars to these folks when they have massive profits that they could be reinvesting?" McKenna asked. She suggested that these funds should be used to subsidize the adoption of clean technologies for low- and middle-income households, rather than being distributed as dividends to largely foreign shareholders.
The China Factor and the EV Market
The global race for EV dominance is another area where McKenna sees Canada at a crossroads. China currently leads the world in both the production and adoption of electric vehicles, largely due to its focus on affordable, "basic" models.
In recent months, the Canadian government has faced pressure to protect the domestic auto industry from an influx of cheap Chinese imports. In August 2024, Canada announced a 100% surtax on Chinese-made EVs, mirroring similar moves by the United States and the European Union. While McKenna is wary of China’s role in Canada’s energy infrastructure, she argues that North American manufacturers must learn from China’s focus on affordability.
"If our auto manufacturers want to compete, then they should be producing EVs that are really basic, not expensive EVs," she said. The current trend in North America has focused on luxury electric SUVs and trucks, which remain out of reach for many average consumers. McKenna believes that for the transition to succeed, the market must provide functional, low-cost alternatives to internal combustion engine vehicles.
Empowering Women in Climate Leadership
Beyond policy and economics, McKenna is heavily invested in the social dynamics of climate action. Through her "Women Leading on Climate" network, she aims to amplify the voices of women in boardrooms and government offices.
Research consistently suggests that gender diversity in leadership leads to better environmental outcomes. According to a study by BloombergNEF, companies with at least 30% women on their boards tend to have more transparent climate disclosure practices and more ambitious carbon reduction targets. McKenna echoed this, stating that women are "two and a half times more likely to act on climate change."
She described her own experience as often being the "only person at the table raising climate change" and emphasized that her network serves as a support system for women who are pushing for more sophisticated understandings of climate risk and shareholder obligation.
Broader Impact and Future Implications
As Canada moves toward a federal election cycle, the debate over the energy transition is expected to intensify. The "Trump factor"—the potential for a return to isolationist and fossil-fuel-centric policies in the United States—adds a layer of uncertainty to Canada’s climate trajectory. However, McKenna remains firm that the global momentum is irreversible.
"The climate process is accelerating and the solutions are better," she concluded. For Canada to "win" in this new economy, McKenna argues the country must leverage its existing advantages: a highly skilled workforce, a relatively clean electricity grid, and vast reserves of critical minerals essential for battery production.
While McKenna has ruled out a return to formal politics, her influence remains significant. Her critique of the "status quo" on Bay Street and her demand for industry accountability serve as a blueprint for a more aggressive, realism-based climate strategy. The transition, in McKenna’s view, is no longer an optional environmental goal—it is a mandatory economic survival strategy for the 21st century.
