Canada's Energy Superpower Future

Over the past few months we've heard Prime Minister Carney's promise to make Canada an 'energy superpower' with both clean and conventional energy resources. This is not a new idea...in fact it's been talked about for decades...but the stars are now aligned to turn this potential into reality in order to protect our sovereignty & grow our economy as we transition to a clean energy future. Developing an ‘energy corridor' across Canada was in fact a major campaign promise by both PM Mark Carney & Conservative leader Pierre Poilievre, although Poilievre's focus was more on fossil fuel pipelines from Alberta & Saskatchewan than Carney's broader vision.

Canada has the 2nd largest landmass in the world, rich with resources, including critical minerals needed for clean energy development, hydroelectric power potential, plenty of fresh water, huge forests and more. There are many practical and economic benefits of developing our vast energy resources and building the infrastructure to transport them between provinces. Getting these resources to tidewater on the Pacific & Atlantic coasts for export primarily to Asia and Europe, are key to Canada's future economic growth and stability.

As Prime Minister Carney repeatedly said - it's time to build.

Coal, oil and natural gas are considered Canada's conventional energy sources. Coal is by far the dirtiest and is on track to be phased out by 2030 as older coal-fired power plants are decommissioned or converted to cleaner natural gas sources. Oil and natural gas will continue to be valuable energy sources as we transition to clean energy over the coming decades.

Solar, wind, hydro, geothermal, green hydrogen and nuclear are all considered clean energy sources...meaning they don't produce greenhouse gases that contribute to climate change. Canada is well-positioned with the natural resources required for the clean energy we'll rely on in the future.

While wind and solar are by far the cheapest renewable sources...they supply intermittent power depending on weather conditions or at night in the case of solar. Hydro, nuclear and grid-scale battery storage take up the slack or provide baseline power to local or regional power grids to keep the system in balance.

Green hydrogen is produced by using power from renewable sources - usually wind or solar. It's liquid form will play a key role in industrial sectors that are hard to electrify such as shipping & aviation, as well as in some industrial chemical processes.

Green hydrogen is a clean fuel extracted through a process called electrolysis, which involves splitting water molecules into hydrogen and oxygen using renewable electricity, like wind and solar. Unlike conventional hydrogen production methods that rely on fossil fuels, green hydrogen production emits no greenhouse gases, making it a clean and sustainable energy carrier. This versatility makes it especially well-suited for large emissions sector such as long-distance commercial transportation and shipping, agriculture and green fertilizer production, as well as high-heat industries such as metal manufacturing.

Leveraging green hydrogen’s power

Some of the most advanced and innovative projects in this space can be found in Atlantic Canada, where close to a dozen investments have been announced and whose plants will be up and running by 2030. By leveraging the region’s abundant wind, it is emerging as a hub for green hydrogen production, driving down emissions and decarbonizing Canada.

The impact of this sustainable transition presents benefits for generations to come, particularly so for rural areas, which are seeing new economic opportunities emerge from these endeavors. In fact, green hydrogen is part of Canada’s clean energy sector, which employed nearly half-a-million people as of 2021, and is expected to grow nearly 50% by 2030.

Additionally, green hydrogen enhances energy security by diversifying the energy mix. As Canada strives to reduce reliance on fossil fuels and transitions towards renewable energy sources, hydrogen emerges as a key enabler of this transition.

Canada is strategically focusing on six critical minerals – lithium, graphite, cobalt, nickel, copper, and rare earth elements – to support a clean energy transition and global supply chains, according to Natural Resources Canada. These minerals are crucial for technologies like rechargeable batteries, wind turbines, and energy storage, which are essential for renewable energy sources.

Uranium can also be added to that list as it will play a role in Canada's technological advancement in Small Modular Reactors (SMR).

Small modular reactors are viewed in many jurisdictions as a promising source of reliable, emissions-free electricity that could come to serve some crucial roles in the energy transition. As electricity systems get bigger, cleaner, and smarter, SMRs could replace fossil-fuel baseload power plants on grids and diesel-powered generators in remote and northern communities. And as a source of baseload power capable of operating at a wide range of scales, small nuclear reactors could pair well with variable renewable energy as power grids decarbonize. The International Energy Agency estimates that nuclear power capacity (of all kinds) will double globally by 2050.

Canada could play a leading role in this growth of SMRs, as it is one of few countries with an established nuclear industry, a strong track record in nuclear research and development, and ample supplies of nuclear fuel. Building on these advantages, the federal government and several provincial governments have already made significant investments in advancing the technology.

Federally, this includes an investment of $70 million in the 2022 budget to expand capacity for producing fuel and handling waste, as well as $51 million to develop better regulatory capacity.

Provincially, the Ontario, New Brunswick, Saskatchewan, and Alberta governments have formulated a joint strategic plan to accelerate SMR development, and Ontario Power Generation is now undergoing licensing and technical review to construct a single reactor of up to 300 megawatts at the Darlington nuclear site in Ontario, for completion around the end of the decade.

Saskatchewan intends to have its first SMR up and running in 2034. New Brunswick is developing SMR technology that would be capable of providing both electricity and steam heat, while a start-up company called Global First Power is working at the federal government’s research facility at Chalk River, Ontario, to develop a micro-reactor, less than five megawatts in size, for potential use in remote, off-grid locations.

We can mine these minerals for further processing and use within Canada for domestic industrial applications as well as develop export markets beyond our borders as demand for clean energy increases around the world.

The bottom line is Canada can be both self-sufficient and a net exporter of a wide variety of energy resources that will see increasing global demand well into the future.

While there are several pipelines that facilitate distribution of Alberta & Saskatchewan oil and natural gas within certain regions of Canada, export through pipelines to the US represents the major market for these landlocked resources, although at a considerable discount. The recently completed Trans Mountain pipeline to BC now allows Canada to shift some oil exports from the US to Asia where it can command a higher price. In 2025 a new LNG terminal near Kitimat BC will begin shipping liquified natural gas to Asia.

New pipelines were definitely a topic of discussion during the recent election campaign and both major parties agreed that getting oil & natural gas from the western provinces to tidewater on the east coast is a high priority. This will require co-operation between the federal government, the Provinces and indigenous leaders across the country. Currently Canada both exports and imports oil and gas to and from the US on a regional basis due to lack of east-west pipelines within Canada.

There's certainly a case to made for western oil & gas pipelines to the east coast if all the parties can find common ground on a variety of economic and environmental issues. This may be a component of the inter-Provincial trade agreements being negotiated as a bulwark to protect Canada's economy against the trade war with the US initiated by Donald Trump.

The path to our clean energy future leads to one goal...electrifying everything we can...heating & cooling systems for buildings, electric vehicles, mass transit, industrial induction furnaces, appliances, lawn & garden equipment...everything. Because if it runs on electricity... it can be powered by an array of clean, renewable energy sources. We're well on the way to having all the reliable technology to do this at scale but we need to ramp up our transmission capacity to a level to meet the increasing demand for the future.

There's already an incredible amount of renewable energy in service or in development across Canada as new solar and wind projects...along with grid-scale battery storage coming online each year. Many of these projects are lead by indigenous communities who benefit directly through jobs, local economic growth & stability.

Grid-scale storage will play an important role in hitting net-zero emissions by 2050, the International Energy Agency says, offering flexibility and backup during the energy transition. Battery storage is a newer form of storage, and it holds promise because it can be installed virtually anywhere, unlike the more commonly used hydropower storage that pumps water into a reservoir to be used later.

In a statement to mark the facility launch, Ontario Energy Minister Stephen Lecce called it a “critical step” in delivering the energy capacity that Canada’s most populous province needs. Lesley Gallinger, president and CEO of IESO, said in a press release it “marks a new era in the evolution of our electricity system.”

Grid-tied home rooftop solar systems have become economically viable now that smart meters allow residential users to sell excess power back to their utility to reduce their electric bills.

Along with the examples I've noted previously, we need to focus on developing sustainable economic growth for Canada's future. That includes expanding our domestic secondary manufacturing, adding value to our natural resources as well as making Canada an attractive and secure country for foreign business investment. Access to inexpensive clean energy is a huge factor when considering where to locate industries that consume large amounts of power. This is where Canada's energy superpower potential comes in.

Processing steel & aluminum require enormous amounts of power. The pulp & paper industry is another heavy power user. This type of heavy industrial base are the foundation of Canada's economy and are currently under pressure from tariffs on our exports to the United States. As we build out a more robust cross-Canada clean energy system and trade relationships, these industries can benefit from both less expensive energy costs as well as more secure domestic demand.

Artificial Intelligence (AI) - the latest energy intensive industry is advancing quickly and Canada can be at the forefront of this evolving new technology. Server farms and AI data centers require huge amounts of electricity for computational modeling and large quantities of water for cooling. Canada's cool climate, vast fresh water resources in concert with lots of reliable clean hydroelectric power and growing renewable wind and solar sources make Canada an attractive, economically viable and stable location for investments in this new frontier.

The data centers used to train and operate these models require vast amounts of electricity. GPT-4, for example, required over 50 gigawatt-hours, approximately 0.02% of the electricity California generates in a year, and 50 times the amount it took to train GPT-3, the previous iteration. As AI proliferates across industries, this energy demand will only grow. When AI is used to optimize energy-intensive manufacturing, which will need experimentation and more data, this problem will grow further.

Data centers and their associated transmission networks have become a primary driver of global energy consumption. At present, this accounts for 3% of global consumption, emitting as much CO2 as Brazil. Increasing energy requirements show no sign of slowing down either, as consumption could grow from 460 terawatt-hours in 2022 to 1000 twh in 2026. In the United States alone, the increase in power demand due to data center demand is expected to rise from 200 twh as of 2022 to 260 twh in 2026, equivalent to 6% of all power use across the country. Now, data centers’ energy demands are expected to double by 2030.

So...from an energy-cost perspective in a warming world...where do you think it would make more sense to locate an AI data center...Edmonton, Alberta or Austin Texas?

Since Canada is such a large country, with much of it sparsely inhabited including many remote Northern communities there's a need for both interconnecting our grid in the densely populated south and reliable stand alone clean energy in remote northern regions. Canada's unique mix of clean energy sources allows us to develop region specific solutions that work best for each situation.

To paint a picture of how a modern, well planned clean energy system would work, assume that the transmission capacity upgrades and necessary inter-Provincial grid ties would be the priority and brought online as each leg is completed.

Solar and wind would be used as much as possible when available, backed up by hydro power and grid batteries which can be quickly ramped up or down as needed. Solar by day...hydro by night would be a typical scenario… so when Alberta’s solar arrays go offline at dusk, BC opens the gates to release water stored in huge reservoirs to supply additional hydro power to meet Alberta’s demand. Hydro and grid-scale battery storage would keep the system balanced when wind turbines go offline or during power disruptions. Baseline industrial load and demand peaks could be supported by existing nuclear plants and locally located small modular reactors. Excess power generated during off peak hours recharges batteries on the grid as well as in your car and home at a lower rate.

Remote northern communities currently relying on diesel generators, proposed Arctic ports and military installations could use SMRs for base load supplemented by wind and solar under the right conditions.

I’ve just laid out a simplified vision of what's possible for us to achieve if we... as Canadians... pull together and do our part to actively participate in this nation building effort to make Canada a true energy superpower...from coast to coast to coast.