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Alberta

RBC boss says the U.S. needs Canada to supply oil and gas to Asia for energy security

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From the Canadian Energy Centre

By Deborah Jaremko

Dave McKay sees the opportunity to ‘lead on both sides’ with conventional energy and cleantech innovation

Despite the rise of “Buy American” policy, the CEO of Canada’s biggest company says there are many opportunities to improve Canada’s sluggish economy by supporting the United States.

Near the top of the list for RBC boss Dave McKay is energy – and not just the multi-billion-dollar trade between Canada and the U.S. The value of Canada’s resources to the U.S. stretches far beyond North America’s borders.

“Canada has to get in sync and create value for our largest trading partner,” McKay told a Canadian Club of Toronto gathering on Sept. 10.

Security, he said, is one of America’s biggest concerns.

“Energy security is a big part of overall security…As we think about these power structures changing, the U.S. needs us to supply Asia with energy. That allows the United States to feed energy to Europe.”

He said that for Canada, that includes oil exports through the new Trans Mountain pipeline expansion and natural gas on LNG carriers.

“Particularly Asia wants our LNG. They need it. It’s cleaner than what they’re using today, the amount of coal being burned…We can’t keep second-guessing ourselves,” McKay said.

Asia’s demand for oil and gas is projected to rise substantially over the coming decades, according to the latest outlook from the U.S. Energy Information Administration (EIA).

The EIA projects that the region’s natural gas use will increase by 55 per cent between 2022 and 2050, while oil demand will increase by 44 per cent.

With completion of the Trans Mountain expansion in May, Canada’s first major oil exports to Asia are now underway. Customers for the 590,000 barrels per day of new export capacity have already come from China, India, Japan and South Korea.

Canada’s long-awaited first LNG exports are also on the horizon, with first shipments from the LNG Canada terminal that could come earlier than expected, before year-end.

According to the Canada Energy Regulator, LNG exports from the coast of British Columbia could rise from virtually nothing today to about six billion cubic feet per day by 2029. That’s nearly as much as natural gas as B.C. currently produces, CER data shows.

But the federal government’s proposed oil and gas emissions cap could threaten this future by reducing production.

Analysis by Deloitte found that meeting the cap obligation in 2030 would result in the loss of about 625,000 barrels of oil per day and 2.2 billion cubic feet of natural gas per day.

This could wipe out significant sales to customers in the United States and Asia, without reducing demand or consumption.

McKay said the “massive complexity” around climate rules around the world and the lack of a cohesive path forward is slowing progress to reduce emissions.

Canada has opportunities to advance, from conventional energy to critical minerals and cleantech innovation, he said.

“We have to continue to leverage our resources…We can lead in clean tech, but in the meantime, there is an opportunity to get more carbon out of the economy sooner,” he said.

“We are in a race. Our planet is heating, and therefore we have to accept there can be transitionary energy sources.”

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Alberta

Temporary Alberta grid limit unlikely to dampen data centre investment, analyst says

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From the Canadian Energy Centre

By Cody Ciona

‘Alberta has never seen this level and volume of load connection requests’

Billions of investment in new data centres is still expected in Alberta despite the province’s electric system operator placing a temporary limit on new large-load grid connections, said Carson Kearl, lead data centre analyst for Enverus Intelligence Research.

Kearl cited NVIDIA CEO Jensen Huang’s estimate from earlier this year that building a one-gigawatt data centre costs between US$60 billion and US$80 billion.

That implies the Alberta Electric System Operator (AESO)’s 1.2 gigawatt temporary limit would still allow for up to C$130 billion of investment.

“It’s got the potential to be extremely impactful to the Alberta power sector and economy,” Kearl said.

Importantly, data centre operators can potentially get around the temporary limit by ‘bringing their own power’ rather than drawing electricity from the existing grid.

In Alberta’s deregulated electricity market – the only one in Canada – large energy consumers like data centres can build the power supply they need by entering project agreements directly with electricity producers.

According to the AESO, there are 30 proposed data centre projects across the province.

The total requested power load for these projects is more than 16 gigawatts, roughly four gigawatts more than Alberta’s demand record in January 2024 during a severe cold snap.

For comparison, Edmonton’s load is around 1.4 gigawatts, the AESO said.

“Alberta has never seen this level and volume of load connection requests,” CEO Aaron Engen said in a statement.

“Because connecting all large loads seeking access would impair grid reliability, we established a limit that preserves system integrity while enabling timely data centre development in Alberta.”

As data centre projects come to the province, so do jobs and other economic benefits.

“You have all of the construction staff associated; electricians, engineers, plumbers, and HVAC people for all the cooling tech that are continuously working on a multi-year time horizon. In the construction phase there’s a lot of spend, and that is just generally good for the ecosystem,” said Kearl.

Investment in local power infrastructure also has long-term job implications for maintenance and upgrades, he said.

“Alberta is a really exciting place when it comes to building data centers,” said Beacon AI CEO Josh Schertzer on a recent ARC Energy Ideas podcast.

“It has really great access to natural gas, it does have some excess grid capacity that can be used in the short term, it’s got a great workforce, and it’s very business-friendly.”

The unaltered reproduction of this content is free of charge with attribution to the Canadian Energy Centre.

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Alberta

Alberta Next: Taxation

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A new video from the Alberta Next panel looks at whether Alberta should stop relying on Ottawa to collect our provincial income taxes. Quebec already does it, and Alberta already collects corporate taxes directly. Doing the same for personal income taxes could mean better tax policy, thousands of new jobs, and less federal interference. But it would take time, cost money, and require building new systems from the ground up.

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