Canada elects new PM amid trade tensions with US; plans to build energy infrastructure

Former central banker and economist Mark Carney was elected to lead the ruling Liberal Party, paving the way for his appointment as Canada's new prime minister, the party said late March 9.

Carney had earlier served as the governor of the Central Bank of Canada from 2008 to 2013 and subsequently as the governor of the Central Bank of England from 2013 to 2020.

The left-of-center Liberal Party, with 153 members, currently has the highest number of seats in the House of Commons (Canadian parliament), followed by the Conservative Party, at 120, Bloc Quebecois, at 33 and the New Democratic Party, at 24. The other members were elected from the Green Party and Independent. The total number of seats in the House of Commons is 338.

Carney's election came after the incumbent Prime Minister, Justin Trudeau, announced Jan. 6 his decision to step down, triggering the election of a new Liberal Party leader who will also be sworn in as the 24th Prime Minister of Canada. The transition is expected to take place shortly.

The selection of a new prime minister comes at a time when Canada and the US are embroiled in a trade conflict. The US has imposed a 25% tariff on major goods exported to Canada, including a 10% tariff on oil and gas.

In the run-up to the Liberal Party leadership race, Carney has spoken in support of building new export pipelines within Canada—including from Alberta in the West to the East Coast—to wean away from supplies to the US.

At present, Alberta exports nearly 4 million b/d of crude oil through multiple pipelines, such as Enbridge's 3 million b/d Mainline System and the 625,000 b/d Keystone pipeline of South Bow Corp., to refineries and hubs in the US Midwest and the US Gulf Coast.

Liberals have opposed oil pipelines

The federal Liberal government of Justin Trudeau, which came into power in 2015, has passed multiple laws since then, making it challenging for pipelines to be built and for new investments to be made in developing the oil sands and conventional resources in Alberta.

Two major proposed pipelines -- the 1.1 million b/d Energy East and the 550,000 b/d Northern Gateway -- were canceled because they did not receive federal government approval.

More recently, the federal government issued a draft regulation in November stipulating a 35% cap on greenhouse gas emissions by its province's oil and gas producers by 2030 compared with 2019 levels, putting at risk nearly 1.2 million b/d of oil production in Alberta being shut down.

"Carney understands finance and international politics, but on energy it is confusing as his focus is on climate policy," Greg Stringham, a former vice president of markets with the Canadian Association of Petroleum Producers, told S&P Global Energy.

"It remains to be seen if he will have the boldness to come out and build the energy infrastructure that's needed in order to address the crisis Canada is now in as his party has been opposed to it."

The verdict will still be out on whether a new intra-Canada crude oil pipeline will be built to accommodate Alberta's growing oil sands production. However, the issue will assume center stage in the months to come as Canada prepares to hold its next general election for its new members of the House of Commons no later than Oct. 20.