Canada Rebukes Trump—But That May Just Be the Start of Mark Carney's Role in History
I’ve been watching Carney for a long time and there's a few things you should know about this man, especially as the U.S. president tries to drag the world back onto the dead-end street of fossil fuels.
I want to tell you today about two potential bright spots.
The most obvious joy, of course, came last night in Canada, where citizens of the not-51st-state rejected a Trump-lite figure named Pierre Poilievre (who had been leading by 23 points on January 20!) and instead elected Mark Carney to lead their country. This has been correctly interpreted by all as a reaction to the ham-handed bullying of the canned ham currently resident in the White House. But though he was elected a little by accident (albeit after a brilliant campaign) it means something far more: in Carney we now have the world leader who knows more than any of his peers about climate change. And who knows roughly twenty times as much about climate and energy economics as anyone else in power. He may turn out to be a truly crucial figure in the fight to turn the climate tide.
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I’ve been watching Carney for a long time. A graduate, of course, of both Harvard and Goldman Sachs, he was governor of the Bank of Canada during the 2008 financial crisis and performed admirably enough that the queen asked him over to run the Bank of England. (It’s probably not quite how that works, but close enough). While in that job, he had the fun of trying to deal with the UK’s Brexit decision, and by all accounts again performed better than one might have expected. So now he gets the task of cleaning up after Trump’s insane tariffs.
But actually it’s the much bigger mess—the one in the atmosphere—that I suspect has long interested him most. In 2014, at a World Bank panel, he quite forthrightly pointed out that we would need to leave the “vast majority” of fossil fuel reserves in the ground if we were at all serious about holding the increase in the temperature of the planet below two degrees. This was, on the one hand, clearly obvious to anyone who had looked at the physics, but on the other hand not something that most leaders were willing to say at the time, or to this day. Those of us who had recently launched the fossil fuel divestment campaign found it to be a great boost—one of three or four crucial moments that turned this into one of the largest anti-corporate campaigns in history.
A year later, wearing a tux and speaking at an opulent dinner to the “names” who run the premier insurance brokerage Lloyds of London, Carney went further, giving one of the most important speeches of the climate era. It is well worth reading in its entirety, but here is the crucial section
Climate change is the Tragedy of the Horizon.
We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix.
That means beyond: - the business cycle; - the political cycle; and - the horizon of technocratic authorities, like central banks, who are bound by their mandates.
The horizon for monetary policy extends out to 2-3 years. For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade.
In other words, once climate change becomes a defining issue for financial stability, it may already be too late.
This talk came in the run-up to the Paris climate talks, and it was one important reason they succeeded; Carney’s sober warning, and his insistence on the need for disclosure by countries and companies of their emissions, helped smooth the way for what is still the high water mark of climate progress.
And the next year, in 2016, he gave the Arthur Burns Memorial Lecture in Berlin. Again, it is worth reading in its entirety, but for a man who is now fully a politician, here is an important passage.
Underpinning the Paris Agreement is recognition that the stock of greenhouse gases in the atmosphere should not exceed the remaining carbon budget, which according to the Intergovernmental Panel on Climate Change (IPCC) amounts to 1000 gigatonnes of CO2 from 2011 onwards.
Countries have set their ambitions by submitting their Nationally Determined Contributions (NDCs). At present, these commitments are of varying degrees of specificity, and most still need to be fleshed out to be consistent with the aggregate carbon budget. The Paris Agreement requires that NDCs be updated regularly and that each should be a progression on the last.
Crucially, the Paris Agreement provided an objective assessment that, even if all of the policies implied by the Agreement were implemented, global temperatures would rise by at least 2.7 degrees by 2100. In other words, the world has committed to do something, but not yet enough to meet its stated goals.
The man who said those clear and bold words now finds himself leading a nation hard hit by climate change: Canada has a front row seat the melt of the Arctic, which is the fastest-heating part of the earth; it has watched its boreal forests burn like never before in recent years.
But the man who said those bold words also finds himself leading a nation that contains Alberta, whose vast pool of tarsands makes its one of the biggest carbon deposits on planet earth.
His predecessor Justin Trudeau could never figure out how to square those facts, because they are not easy to square (and also because Trudeau was a nepo baby to the max). But also because he came into power at a moment when fossil fuel was still cheaper than renewable energy, and hence clearly valuable. Carney comes into power when that equation has flipped: we now live on a planet where wind and sun provide energy more cheaply than gas and oil (and where the sane if brutal superpower, China, has clearly figured that out). That fact may give him room to move his country decisively in the right direction.
So here’s the second good thing I wanted to talk about, one that underscores the point I’m trying to make about Carney’s opportunity.
Over the weekend, American officials were in London as part of a large International Energy Agency Summit on the Future of Energy Security. It wasn’t about climate, really, though it did begin with a letter from the King pointing out that “events over recent years have shown that, when well-managed, the transition to more sustainable energy systems can lead itself to more resilient and secure energy systems.”
The U.S. was having none of that. Our man—someone named Tommy Joyce whose biography points out that he has sailed his monohull across the Pacific ocean with his wife, so that’s good—used the occasion to criticize renewables because they depended on China. He recommended that everyone buy a lot of American LNG to power their countries instead. As he put it:
“A typical offshore wind turbine requires four tonnes of a permanent magnet made in the form of rare earth elements and, since China, the supplier of nearly all of them, restricted their sale, there are no wind turbines without concessions or coercion from China.”
Which, true enough. But if your point is that countries don’t want to rely on undependable foreign nations for their energy supply, have you noticed that America has gone crazy in the last hundred days? China is ruthless, but they’re not erratic. (And they’re busy shoring up their climate bona fides). No one was going to say so to his face, but Joyce was describing last year’s world.
More to the point, even if you need to rely on China to build your wind turbine or your solar panel, you need to rely on them once. Because once it’s up, then you’re relying on the wind, the sun, and your stock of batteries, all of which seem eminently more dependable than Donald Trump or J.D. Vance.
And so, as Politico put it, Joyce received a “shrug.”
Joyce’s speech was met with silence. The “awkward but unanimous” moment was “telling,” said one European official who was in the room.
Responding to Joyce’s comments, U.K. Energy Secretary Ed Miliband told POLITICO: “I think overall, I would say that the general tenor of these discussions indicates where people are going, which is toward a clean energy transition.”
The U.S. won’t want to hear that—Trump’s plan is all about “energy dominance” through our control of hydrocarbons. And he’s still got people buying into it: LNG exporter Woodside today announced a $17.5 billion investment in new export terminals, with its CEO exulting over its “asset lifespan of more tha forty years.” Trump will do his best to help—he’s essentially compelling Asian nations to sign up for more LNG contracts on the threat of being tariffed. But my guess is that countries will look to buy as little as they can get away with, while they build up their renewable portfolios as fast as they can. For instance, here’s what Barbados’ energy minister Lisa Cummins explained to the London summit:
She added that, as well as suffering from fossil fuels through the climate crisis, Barbados spent over $1 billion importing fossil fuels to generate electricity in 2024. The Caribbean country’s biggest fossil fuel suppliers are Trinidad and Tobago and the US, but it aims to generate all of its electricity from renewables in 2030, using solar, wind and battery storage.
In the very short run, Trump’s insanity may help Alberta—if I had no choice but to depend on LNG, I’d rather buy it from Carney’s Canada, confident that a longtime central banker realizes a deal is a deal. (He seems unlikely, say, to put judges in jail when they disagree with him). But over the slightly longer term the same logic applies to Canada as the U.S., and it all complements Carney’s original 2014 insight: this stuff needs to stay in the ground. It will wreck the climate, and now it will wreck your economy.
I’d say that the rest of the world is going to recognize Carney as the most likely person to midwife us through this transition. I think he’s not done playing a world-historical role, and for that if nothing else we can thank Donald Trump.
