Canada has access to all main sources of energy including oil and gas, coal, hydropower, biomass, solar, geothermal, wind, marine and nuclear. It is the world's second largest producer of uranium, third largest producer of hydro-electricity, fifth largest natural gas producer, and the fifth largest producer of crude oil. In 2023, only Russia, China, the United States and Saudi Arabia produced more total energy than Canada.
The United States is Canada's major trade market for energy products and services. Canada sent around 98% of its total energy exports to the United States in 2015, meaning that Canada is the largest supplier of energy exports to the world's largest economy by nominal GDP. Canada also exports significant amounts of uranium and coal to Asia, Europe and Latin America.
Canada is a net exporter of energy products. In 2024, Canada exported $199.1 billion of energy products and imported $57.9 billion for a net of $141.2 billion of exports
Canada has a robust energy profile with abundant and diverse resources. The energy and climate policies in Canada are interrelated. These energy and climate policies are implemented at both the federal and provincial government level. The federal government is responsible for establishing objectives for the entire country and the provincial governments are responsible for enforcing these objectives and developing the methods to achieve these goals. In 2015, the federal and provincial governments created a national agreement for cooperating in boosting the nation's energy industry while transitioning to a low-carbon economy. Provincial governments are developing their own strategies in order to reach the national goals. In 2016, Prince Edward Island Strategy became one of the first provinces to develop their own strategies in response to the federal agreement goals.
Background
Aspects of Canada's "unique" political and economic reality affect its federal energy strategies. Canada has "significant resources of conventional and unconventional oil, natural gas and hydroelectricity" and has become "one of the world’s largest energy producers." According to a 2015 Canadian Global Affairs Institute (CGAI), the "design and structure" of Canadian federalism has resulted in an "unwillingness of the federal government to commit to a national vision in most resource issues for fear of risking political capital in debates with those provinces who resist cooperative resource development." Canada was one of the few OECD countries that did not have a national energy policy. The authors of the 2003 publication, Power Switch: Energy Regulatory Governance in the 21st Century, wrote that "Canada has one of the most divided and decentralized constitutional arrangements for energy among Western industrialized countries."
Since 1867, the rules of Canadian federalism ensure that "individual provinces own, market and control energy exports" of energy resources contained within their own provincial borders. The federal government has the responsibility over infrastructure between provinces, which includes pipelines.
One of the major challenges of energy policy in Canada concerns geography not geology. The majority of energy consumers live in Ontario and Quebec and the major energy producers are located in the east and west. Canada's energy policies attempt to reconcile the economic interests of energy consumers who want the cheapest product, with the challenge of transporting indigenous energy products—such as coal from Nova Scotia in the 19th century for example, or oil and gas from Alberta—over long distances at competitive prices.
In the post-Confederation period one of the most important energy policy debates involved Nova Scotia's coal producers who sought tariffs that would protect their industry against imports of cheaper coal from the American midwest. Coal consumers in central Canada wanted free trade which would ensure access to the less expensive American coal which involved much lower transportation costs. In his 1982 publication entitled Fuels and the National Policy, John N. McDougall wrote that debates on energy policies in Canada pitted those who proposed free markets for energy products, regardless of national origin, against those who called for government intervention through tariffs and other means.
In 1946, the Atomic Energy Control Act was passed and the Atomic Energy Control Board (AECB) was established to regulate the production and uses of uranium in Canada, under the premiership of William Lyon Mackenzie King. The federal government took over the jurisdiction over uranium from the provinces.
The Royal Commission on Energy (1957–1959)−the Borden Commission—established by then-Prime Minister, John Diefenbaker, resulted in new legislation—the National Energy Board Act—Canada's "first integrated federal energy statute". In 1957, oil producers in the western provinces sought federal support for the construction of a pipeline to provide them with access to eastern markets. Eastern oil refiners were purchasing cheap oil mainly from the Middle East. In 1959, the NEB was advised by a New York oil consultant Walter J. Levy to not build the proposed Edmonton-to-Montreal pipeline. Levy also recommended that "Alberta oil should go to U.S. markets."
In 1961, the National Oil Policy (NOP) was adopted through which the NEB accepted Mr. Levy's recommendations, and was the cornerstone of Canada's energy policy until the NOP ended in September 1973. The NOP fostered growth of the fledgling oil industry in Western Canada, which had begun with discovery of oil in Leduc, Alberta in 1947. According to a 2009 article in the Alberta Oil Magazine, the NOP made "consumers buy more Alberta oil and pay a premium over international prices that were depressed at the time. All of Canada west of the Ottawa River was reserved as an exclusive market for domestic production by a federal ban against cheaper imports." The NOP "established a protected market for domestic oil west of the Ottawa Valley, which freed the industry from foreign competition", while the five eastern provinces, which included major refineries in Ontario and Quebec, continued to rely on foreign imports of crude oil, for example from Venezuela. There were no major oil and gas policies made during the rest of the 1960s, a period marked stable fuel prices by increase in oil and gas consumption.
During the Premiership of John Diefenbaker from 1957 to 1963, and that of his successor, Lester B. Pearson, there was a focus on increased development of electricity resources for both domestic and export to the United States and to improve interprovincial transmission systems which many hoped would become a national electricity grid. In 1963, Pearson's administration introduced the National Power Policy. However, the installation of interprovincial transmission lines was politically sensitive. If federal policies forced provinces to comply they would be accused of being heavy-handed. Some provinces preferred to market their excess power to the United States to escape the perceived burden of federalism. The premiers of Newfoundland and Quebec were engaged in a decades-long dispute over transmission of electricity from Newfoundland's Churchill Falls hydroelectric project on the lower portion of the Churchill River through the province of Quebec. Then Newfoundland Premier Smallwood, had appealed to Prime Minister Pearson to "strengthen provisions for interprovincial transmission of electricity".
In response to the provinces' increasing concerns about federal funding programs, the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act of 1977 was passed which gave the provinces more autonomy. It resulted in significant decentralization of government that favoured the provinces.
The 1980 National Energy Program (NEP), which was introduced during the Premiership of Pierre Trudeau, was one of the "most controversial policy initiatives in Canadian history". It was introduced by the federal Liberal government, against the backdrop of the global recession following the Energy crisis of the 1970s—which included two major oil price shocks: the 1973 oil crisis and the 1979 oil crisis, From the mid-1970s to mid-1980s, energy policies—particularly policy regarding the oil and gas industry—was a very "contentious", and "high profile" intergovernmental issue, which had a "deletrious effect on federal-provincial relations".
By 1986, during the Premiership of Brian Mulroney, provincial-federal relationships improved with greater cooperation regarding energy policies, largely because the international energy situation had changed. Prime Minister Mulroney entered into three "important intergovernmental agreements in the energy sector". Federal-provincial accords and agreements included policies related to "management of Newfoundland's offshore resources, oil pricing and taxation in the western provinces, and natural gas pricing in western Canada." The NEP was dismantled through the Western Accord, market oriented agreement which brought in full deregulation of oil prices, "abolished import subsidies, the export tax on crude and oil products, and the petroleum compensation charge. It also phased out PIP grants and the PGRT. In addition, controls were lifted on oil exports."
Other major agreements and accords between the provinces and the federal government include the 1994 Agreement on Internal Trade (AIT), the 1999 Social Union Framework Agreement (SUFA) and the 2003 Council of the Federation (COF).
Energy production, energy resource marketing, equity investment in the energy sector, environmental issues, relationships First Nations peoples, are more complex because of the nature of Canadian federalism. Throughout Canada's history, federal powers and policies have fluctuated between centralizaton and de-centralization. By 2015, Canada faced a deepening dilemma regarding energy export potential.
In 2014, under the Premiership of Stephen Harper, the federal government focused on three main principles underlying its energy policies—market orientation, "respect for jurisdictional authority and the role of the provinces", and when necessary, "targeted intervention in the market process to achieve specific policy objectives through regulation or other means." In 2014, Canada Natural Resources described how federal-provincial agreements and accords had informed Canada's energy policy including the Western Accord on oil and gas pricing and taxation with the provinces of Alberta, Saskatchewan and British Columbia, the Agreement on Natural Gas Markets and Prices with Alberta, Saskatchewan and British Columbia, and the Atlantic Accords with Nova Scotia, Newfoundland and Labrador, which included the creation of the Offshore Boards. International agreements that impact on Canada's energy policy include the North American Free Trade Agreement (NAFTA). In 2014, the NRC listed the National Energy Board (NEB) (1959-2019) the Canadian Nuclear Safety Commission, the Atomic Energy of Canada Limited, and the Program on Energy Research and Development as contributors to the development of Canada's energy policy.