In a pivotal moment for Canadian climate policy and economic strategy, Prime Minister Mark Carney’s government is set to unveil its first federal budget this week, marking a significant shift in approach from previous administrations. The budget, due the week of November 4, 2025, promises to chart a new course for Canada’s climate competitiveness, but not without controversy and difficult trade-offs.
According to reporting by National Newswatch and sources cited by CBC News, the budget will introduce a comprehensive climate competitiveness strategy aimed squarely at helping Canadian industries thrive in a world that’s rapidly embracing clean energy and electric technologies. The stakes are high: global investment in clean technologies this year is projected to be twice as large as investment in fossil fuels, a seismic shift from just a decade ago, according to the International Energy Agency. Furthermore, more than one in four cars sold worldwide in 2025 are expected to be electric—a figure anticipated to rise to 40 percent by 2030.
Yet, even as the government seeks to position Canada at the forefront of this global transition, it is making tough decisions about which climate policies to prioritize. In a move that has sparked debate, sources revealed to CBC News that the Liberal government is scrapping its high-profile goal to plant two billion trees by 2031, a signature initiative launched by former Prime Minister Justin Trudeau during the 2019 election campaign. The program, originally backed by $3.2 billion over ten years, had struggled to meet its ambitious targets. With only 228 million trees planted so far—leaving more than 1.7 billion to go—the government has opted to fulfill existing contracts to plant one billion trees and redirect uncommitted funds elsewhere.
This decision comes as part of a broader review of government spending and program delivery. Prime Minister Carney has signaled a focus on balancing the budget for day-to-day spending within three years, even as the overall deficit for this budget is expected to be higher than in the last fiscal update. "I will always be straight about the challenges that we have to face and the choices we must make. And to be clear, we won’t transform our economy easily or in a few months — it will take some sacrifices and it will take some time," Carney stated last month in a budget address, as reported by CBC News.
While some see the abandonment of the two billion trees target as a pragmatic recalibration, others view it as a retreat from bold climate action. The government has also rolled back other Trudeau-era climate policies, including ending the consumer carbon tax and delaying the electric vehicle sales mandate. These moves reflect a new set of priorities under Carney’s leadership, with an emphasis on economic competitiveness and fiscal discipline.
So what does the new climate competitiveness strategy entail? Experts at the Canadian Climate Institute, cited by National Newswatch, have outlined a series of policy recommendations they hope the government will adopt. At the top of the list is modernizing industrial carbon pricing systems across the country. This means fixing issues with provincial carbon credit markets and providing long-term certainty for businesses considering major investments beyond 2030. Industrial carbon pricing remains the most powerful tool Canada has for reducing emissions—offering significant impact at minimal cost to businesses and, crucially, with essentially no additional burden for consumers.
Another pillar of the strategy is expanding and modernizing Canada’s electricity grids. Clean electricity is described as Canada’s "natural advantage," but the country will need much more of it to power new industries and support deep decarbonization. The government is expected to build on the Clean Electricity Regulations by finalizing the Clean Electricity Investment Tax Credit and promoting better integration of provincial grids, with an emphasis on partnerships with Indigenous communities. This, experts say, is a cost-effective way to ensure reliable, clean power for both industry and households.
The strategy also calls for the finalization of draft rules to further cut methane emissions from the oil and gas sector—a critical challenge, as these emissions continue to rise. Methane is a particularly potent greenhouse gas, and reducing it will not only build on Canada’s progress but also create opportunities for Canadian firms that have led the way in methane management technologies.
In transportation, maintaining a robust electric vehicle mandate is seen as essential. The transportation sector is Canada’s second-largest source of emissions, and a strong mandate is one of the few policies directly targeting this area. Ensuring a wide variety of affordable, high-quality electric vehicles for Canadians is expected to help drive down emissions and costs alike.
Financial markets are also in focus. The Canadian Climate Institute recommends the creation of a national climate investment taxonomy—essentially a clear set of criteria for determining which economic activities and assets genuinely contribute to climate objectives. This would help investors better assess the risks and opportunities posed by climate change, such as supply chain disruptions or increased costs from extreme weather, and make smarter, more resilient investments.
Perhaps most pressingly, the government is being urged to accelerate implementation of the National Adaptation Strategy. The past two years have underscored the urgency of this task: 2024 saw Canada’s second-worst wildfire season on record, while 2023 shattered records for insured damages from extreme weather. The impacts of climate change are already being felt by Canadians—affecting not just the environment but also health, safety, and the country’s economic prospects. As National Newswatch notes, there is no shortage of cost-effective solutions to make Canada’s energy systems cleaner and more resilient, but governments must act decisively to put them in place.
Beyond climate, the budget will also feature changes to the tax structure designed to promote competition and growth. According to CBC News, adjustments will be made to tax credits that allow businesses to write off capital expenses—an effort to spur investment and modernize operations as part of a broader push to recalibrate government programs.
Prime Minister Carney has been candid about the challenges ahead, noting that building a stronger, more competitive economy in a "more dynamic, more competitive, more hostile world" will not be easy or quick. The government’s expenditure review is focusing on ironing out program delivery, recalibrating initiatives, and ensuring that every dollar spent delivers results.
As Canada prepares to navigate a rapidly changing global landscape, the details of this new climate competitiveness strategy—and the choices made in this week’s budget—will shape the country’s economic and environmental future for years to come. Whether these moves will be enough to keep Canada competitive and resilient in the face of mounting climate risks remains to be seen, but one thing is clear: the decisions made now will have lasting consequences for generations of Canadians.
