U.S. energy policies are poised for an “immediate and profound” reversal when President-elect Donald Trump takes office – and the changes could mean Canada’s Liberal government will need to rethink its environmental stance so Canadian firms remain competitive, according to a new report by National Bank Financial.
The report, released Tuesday, says the Trump administration’s agenda will likely include approval of TransCanada’s Keystone XL pipeline project, cancelling many regulations regarding fossil fuel production, pulling out of the Paris Climate Agreement and dropping fuel efficiency standards for automobiles.
The changes will come swiftly, according to National Bank geopolitical analyst Angelo Katsoras.
“Energy is one of the sectors where Trump and the Republican Party will have the most immediate and profound impact,” he said in the report.
This is because Trump will not only have the power to undo U.S. President Barack Obama’s executive orders, but also since Trump and the Congressional Republicans are virtually aligned when it comes to energy, Katsoras argued.
The U-turn for U.S. energy policies will be bad news for Canadian companies and Katsoras reckons it could force Prime Minister Justin Trudeau to find ways to “soften the financial impact of its environmental policy.”
Trudeau and his government announced in October plans to impose a minimum carbon tax on provinces by 2018, which will likely mean higher costs for Canada’s energy industry.
“Canada is in the awkward position of tightening environmental regulations just as the United States is poised to move in the opposite direction,” Katsoras said.
National Bank’s report comes as Trump unveiled his plan for day one of his presidency, which includes cancelling restrictions on U.S. energy production – particularly shale oil and “clean coal.”