Introduction

By 2021, as the world struggled to emerge from the grip of the COVID pandemic, there was consensus among Western societies that strong steps towards environmentalism were imperative. However, recent geopolitical events and polarization have since moved the pendulum to the other side. For example, our new Prime Minister went from arguing in 2021 that “[Canada’s] carbon prices should increase in a gradual and predictable way to support an orderly adjustment to a net-zero carbon economy” (Carney, 2022, p. 440) to promising to axe the consumer carbon tax during his campaign and removing it effective April 1, 2025.

The unpredictable U.S. tariff hikes have made Canada’s energy sector, its top export, highly vulnerable, raising questions about the viability of its 2030 emissions and 2050 net-zero targets. This article proposes that natural gas production and export offer a transitional path to balance economic growth with targeted emissions reductions (Aliakbari & Mejia, 2025). Cost-competitive Canadian LNG produces significantly fewer GHGs than coal (50% less) and oil (20-30% less) (Canada Energy Regulator, 2024). Further, Canada’s vast unconventional gas reserves can position it as a global supplier for decades. This article proposes energy policy options aligned with current geopolitical and environmental realities.

Geopolitical Events and Their Economic Impact

The intersection of geopolitical instability, climate policy, and energy security has created a window of opportunity for Canada to emerge as a dominant global energy supplier. For example:

1. Russo-Ukrainian War: Europe’s pivot from Russian gas initially spotlighted Canada as a potential stable supplier (Henderson & Mitrova, 2015), although infrastructure bottlenecks prevented the latter from gaining immediate market access. Despite record Alberta gas production in 2023 (10.9 Bcf/d), Canada’s LNG export capacity remained near zero, with the U.S. capturing 90% of new European demand (Stephenson, 2023)
2. U.S. Uncertainty, Tariffs and Sovereignty Threats: The Trump tariffs could cost over 500,000 Canadian jobs, raising unemployment to 7.5–10% from a 4.7% average for 2022-2024 (Tombe, 2025; TD Bank, 2025). Though oil and gas tariffs remain lower at 10% with some CUSMA exemptions, rising U.S. protectionism heightens trade uncertainty. Energy makes up 33% of Canada’s exports, 90% of which go to the U.S., making it particularly vulnerable to unpredictable US trade policy (Natural Resources Canada, 2023). 
3. U.S.-China trade war: The ongoing trade hostilities between the U.S. and China create an opening for Canada. China went from the second-largest US oil importer in 2023 (EIA, 2024) to practically halting its U.S. imports in 2025 (Paraskova, 2025). Meanwhile, the federally owned Trans Mountain Expansion (TMX) pipeline, operational since May 2024, has been able to increase Canada’s crude exports to China from 25,040 to 353,674 barrels per day (bpd) (Lincoln, Rheault & Malkin, 2025). This market access to Asia offers an avenue for diversification to counter U.S. market dominance, roughly 4 million bpd at discounted prices. Regarding LNG, regulatory delays (e.g., 10-year waits for LNG Canada vs. 3–4 years for U.S. projects) undermine competitiveness. 
4. Alberta’s O&G and the Separatist Movement: Despite frequent complaints about federal constraints, O&G production continues to achieve record highs (AER, 2025).. The O&G sector forms nearly one-quarter of Alberta’s GDP and employs over one-third of its workforce (Government of Alberta, 2023). Nationally, O&G extraction contributes about 5% of the national GDP, with the broader energy sector accounting for 10.3% in 2023 (Canadian Centre for Energy Information, 2024). There is a rising separatist movement in  Alberta, driven by perceived grievances over federal energy and climate policies, and a quest for resource autonomy (Chin, 2025). However, separation could gravely harm the province and Canada, making collaboration essential (Freire-Gibb, 2024).  

The CEM framework

This article proposes the CEM framework, based on three policies for the energy sector: a) CCUS scale-up through more DAC integration, b) Export market development for LNG, and c) the Methane Innovation Acceleration Program. See below:

1. Scaling CCUS through DAC integration: The success of Canada’s climate action policy depends on scaling up Carbon Capture, Utilization, and Storage (CCUS), especially given that Alberta’s oil sands emit 70 Mt CO2 annually (Canada Energy Regulator, 2025). While Canada leads globally with eight major CCUS projects, accounting for 11.5% of planned storage capacity (Ingelson & Czaikowski, 2025), most prevent emissions from point sources like refineries and power plants, which emit CO2 at high concentrations, from reaching the atmosphere (IEA, n.d.; CAPP, 2025).
   However, achieving net-negative carbon intensity for LNG exports necessitates expanding Direct Air Capture (DAC), which, unlike point source capture, removes CO2 directly from ambient air, regardless of its origin (Larsen & Grant, 2021). However, use of DAC technology remains limited in Canada due to high costs, high energy intensity, and the lack of targeted policy incentives (Bataille & Sivaram, 2021).
   Despite being less mature and more expensive, DAC technology is important for removing diffuse emissions. Canada’s Deep Sky Labs, its first commercial DAC facility, captures only 3,000t of CO2 annually despite 389 Gt geological storage capacity (Arteaga, 2024). Therefore, Canada should mandate integrated CCUS, including point-source and DAC, for all new LNG export facilities and extend the CCUS Investment Tax Credit to 2035 with enhanced DAC incentives (Government of Canada, 2024). Such a policy would position Canada as a leading supplier of carbon-neutral LNG (Stapczynski & Rathi, 2021).
2. Export Market Development (LNG Focus): Canada’s energy security strategy demands international LNG market development, leveraging both geopolitical disruptions and Asia-Pacific growth trajectories. Canada’s geostrategic advantage lies in its West Coast access to Asian markets (Ghosh & Islam, 2023). However, out of 18 LNG export facilities proposed in Canada by 2011 (CGAI, 2019), most have been cancelled, with only one finally opening this year, in Kitimat, BC (Jang, 2025). Recognizing the strategic importance of Asian energy markets, this policy framework would streamline regulatory approval for LNG export facilities along British Columbia’s coast while mandating integration with renewable energy sources. This streamlining should be part of the “one project, one approval” principle in PM Carney’s Energy Policy promise (Atlantica Centre for Energy, 2025). Canada should also negotiate long-term LNG offtake agreements with countries like Japan, South Korea, the Philippines, or Bangladesh (Canada Action, 2024).
3. Methane Innovation Acceleration Program: Alberta’s 2021 methane emissions (much more potent than CO2 emissions) equaled 15 Mt CO₂ annually but may be underestimated by up to 50% (Weber, 2023). As such, Canada should invest in advanced monitoring (e.g., drones, satellites) and mitigation (e.g., biogas conversion, electric compressors) via programs like the Energy Innovation Program, aiming to raise methane capture from 45% to 90% by 2030 (Natural Resources Canada, 2025; Canada Energy Regulator, 2024). Such a program would cut emissions and enhance Canada’s LNG competitiveness. An example of innovation in this sphere is the Montreal-based GHGSat, which uses high-resolution satellites to detect methane leaks in real time, achieving a 90% cost reduction per scan since 2016. Its data is used by Canadian regulators and companies like Shell to pinpoint leaks in remote Canadian sites (Government of Canada, 2023B).

Conclusion

Canada’s energy future depends on adapting to the rapidly evolving geopolitical and climatic challenges and transforming them into strategic advantages. This article proposes the CEM framework as laid out above. This innovation policy framework can contribute to the ongoing discussion on energy transformation, which we believe should be supported by broader renewable and sustainability-oriented energy policies.

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