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Real story of this energy crisis is not supply disruption, but demand transformation

Turn on the news, and you hear about war in the Middle East, the Strait of Hormuz, and rising oil and gas prices. Governments talk about supply. Exporters talk about opportunity. But the real story is happening somewhere else in the demand system. And it is moving much faster than most policymakers understand.

The current geopolitical shock—like the Russia–Ukraine war before it—is not strengthening fossil fuels, but accelerating their displacement. Not because of climate policy, but because of basic economics that wouldn’t surprise most consumers.

I recently sat down with energy economist Dr. Chris Bataille to unpack what’s really happening in global energy markets. You can watch the full interview here.

But the system has changed. For decades, fossil fuels had no real competition. When prices rose, consumers absorbed the shock because there were no viable alternatives. Today, electricity—powered by solar, wind, and batteries—competes directly across transport, buildings, and parts of industry.

“One of the things that’s happening is probably the biggest boost to global decarbonization ever, more than any policy that’s ever occurred, that’s trying to make it easier for you to have,” said Bataille.

“The top 20 per cent of the crude oil supply curve is now wildly uncertain. And the top 20 per cent of the LNG supply curve is wildly uncertain. dIn previous crises there just weren’t other options. But the world has really changed in the last five years. Solar and batteries have really come on mainstream.”

That change is now driving behaviour. Countries are not waiting for markets to stabilize. They are redesigning their energy systems.

The system is electrifying faster than expected

The shift is not subtle. It is structural.

Electricity demand is rising rapidly across transport, buildings, and industry as economies electrify. What matters is not just growth, but composition. Electric vehicles, cooling demand, and industrial electrification are becoming the dominant drivers of energy demand growth. That means the system is shifting from fuels to electrons.

Bataille sees this clearly in global markets.

“The new standard is basically solar, and to a certain extent batteries. It’s not coal plants like everyone imagined. The dominant amount of energy that’s being used is from solar,” he said. “That’s really the story globally. And we’re not seeing it because we live in a country with copious amounts of gas.”

The Global South is forcing the transition

The real pressure is coming from emerging economies. After Europe outbid developing countries for LNG following Russia’s invasion of Ukraine, many were forced to rethink their dependence on imported fuels.

That lesson stuck.

“And here we are once again, driving up LNG, driving up oil,” I said during the interview. “The lesson is not lost on the Global South. This is expensive. They have to use US dollars to pay for it. And there are alternatives.”

Bataille agreed—and pushed it further.

“The amount—like as you say—they have to get U.S. dollars to buy it. It becomes a really big macroeconomic problem really quickly. A lot of places are curtailing industrial production because they can’t get LNG or crude oil. They are going to be looking very carefully at alternatives in all sectors. And this is going to take a big structural chunk out of the global fossil fuel market.”

Those alternatives are increasingly clear. Solar is now the dominant source of new power capacity globally. It is cheap, scalable, and deployable without fuel imports. That makes it ideal for countries trying to reduce exposure to volatile global markets.

China is capturing the shift

China has spent two decades preparing for this moment. It built manufacturing capacity across solar, batteries, EVs, and grid infrastructure. Now it is exporting that system into emerging markets.

“And what’s really interesting is everyone keeps looking at what China did five or ten years ago. They’re not looking at what China’s doing right now,” Bataille said. “They’re taking all that industrial policy and turning it on the industrial sector. The next thing that’s going to go is industry and chemical products.”

That expansion is already reshaping global energy flows.

“And that is cascading throughout the world with their overcapacity,” he added. “They’ve moved really quickly to give themselves more options for their electricity system, their chemical products system, and their transport sector.”

The result is a feedback loop:

• Energy shocks raise fossil fuel prices
• Countries seek alternatives
• China supplies those alternatives
• Fossil demand weakens structurally

Oil demand is more fragile than it appears

This has direct implications for oil markets. Roughly half of global oil demand comes from road transport—the sector most exposed to electrification. Electric vehicles are scaling rapidly, particularly in China and increasingly in developing markets.

Bataille does not hedge on the implications: “The crude oil demand for transport is a dead man walking at this point in time. It’s about 50 per cent of global oil demand. That’s the sector that’s going to go.”

Even if that timeline proves aggressive, the direction is clear. And once demand begins to erode, it weakens at the margins first—the highest-cost, least secure supply.

That is exactly the portion of the market now under pressure.

Canada is still telling itself the old story

Canada continues to view the world through a petroleum lens.

“We still see global energy issues through the petroleum lens,” I said during the interview. “From the federal government on down.”

That framing leads to a dangerous assumption: that high prices are a windfall. In reality, they are a catalyst.

“And what they’re not seeing is the shock that that’s still delivering to demand globally,” Bataille said. “This is like a quasi standstill for a lot of places. They’re going to move away from it.”

The risk for Canada is not cyclical. It is structural.

If global demand begins to weaken faster than expected, long-lived infrastructure bets—pipelines, LNG terminals—become harder to justify.

The system is already changing

The global energy system is not waiting. It is being reshaped by price shocks, technological substitution, and industrial strategy. The question is not whether this transition will occur.

It is whether countries like Canada recognize it in time. Because the real story of this energy crisis is not supply disruption. It is demand transformation.

And that story is already underway.

To watch more energy expert interviews on this topic, you can find them on the following playlists on the Energi Media YouTube channel:
Electrotech Revolution Explained
Electric Vehicles
Energy Transition

To learn more about energy transition theory, take our free one-hour training course: The Energy Transition Explained.

The post The Canadian energy conversation is stuck in the wrong century appeared first on Thoughtful Journalism About Energy's Future.

By Michael J. Armstrong

The United States and Israel have repeatedly boasted about airstrikes in their current war with Iran. In Week 1, they claimed the destruction of 75 per cent of Iran’s missile launchers. By Week 2, they had reduced Iranian missile fire by 90 per cent and said the war was “already won in many ways.”

And yet, Iran keeps damaging refineries and blocking tankers from crossing the Strait of Hormuz.

The country has certainly suffered many tactical losses. But its missiles and drones have been strategically successful.

Iran so far has launched at least 5,400 such projectiles. Surprisingly, less than a tenth of them have targeted Israel, its traditional rival.

Missiles over Israel

Israel faced about 450 Iranian missile attacks during the war’s first four weeks. The rate of fire fell rapidly after the first weekend but has never halted.

Some missiles carry several hundred kilograms of explosives, enough to destroy an entire building. The rest instead dispense dozens of cluster bombs over wide areas. Those are less powerful but still lethal.

Israel’s long-range Arrow interceptors engage the missiles first. Its mid-range David’s Sling and short-range Iron Dome interceptors provide backup. (The country’s Iron Beam lasers are not being used.) Together, they’ve reportedly intercepted 92 per cent of incoming missiles.

But interceptors sometimes miss. And their supply is limited. Consequently, at least nine large warheads and 150 cluster bombs have hit populated areas.

These numbers imply that almost all Iranian missiles are accurate enough to need interception. By contrast, during Israel’s earlier conflicts with Gaza in 2008, 2011 and 2014, less than a third of incoming rockets were so accurate.

Meanwhile, more than 90 per cent of Iran’s missiles and drones have targeted Arab countries in the Persian Gulf.

Drones across the Persian Gulf

Saudi Arabia, Jordan, Iraq, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates (UAE) collectively reported around 4,900 Iranian attacks during the first four weeks. Only one fifth were missiles: the rest were drones.

These countries have stated they are neutral in the war. However, they do have defence agreements with the U.S., and some host American military facilities.

These countries defend themselves using weapons like the U.S.-made Patriot and Israeli-made SPYDER interceptors. Drone experts from Ukraine now advise the defenders too.

For example, the UAE reported attacks by 1,835 drones, 378 ballistic missiles and 15 cruise missiles. As of March 10, it claimed to have intercepted 94 per cent of the drones and 99 per cent of the missiles.

The deadliness of these attacks has varied.

Continuing lethality

In Israel, Iranian missiles have killed 20 people, implying roughly 4.1 deaths per hundred missiles arriving.

That’s less than the 5.1 the country saw during its 2025 war with Iran. But it’s four to 40 times higher than the rates it suffered from rockets in earlier Gaza and Lebanon conflicts.

In the Persian Gulf, Iranian projectiles have killed at least 15 civilians, 13 U.S. soldiers and seven merchant sailors.

There were about 0.6 deaths per hundred Iranian attacks in Kuwait, Bahrain and the UAE combined. That’s much lower than Israel’s rate, presumably because those countries were attacked by drones and short-range missiles carrying smaller warheads.

Interestingly, although the quantity of Iranian attacks fell after the first week, their lethality did not. Death rates per projectile in Arab countries showed little change week-to-week. In Israel, the rates were highest in Week 3.

In fact, Iranian missiles keep hitting precise targets, like U.S. military aircraft parked beside runways.

This implies Iran’s government has recovered from its initial surprise. It’s likely benefiting from Russian intelligence and Chinese technology too.

Tactical U.S. vs strategic Iran

So, U.S. and Israeli warplanes have bombed thousands of targets, killed thousands of civilians, and slowed Iran’s missile fire. But they haven’t stopped it.

That’s not surprising. Airstrikes alone didn’t stop rocket fire during Israel’s previous conflicts in Gaza and Lebanon. Ground invasions were needed for that.

U.S. President Donald Trump can post jingoistic mashup videos and “bullshit” about having “militarily won” the war in Iran. But he hasn’t achieved strategic outcomes like “unconditional surrender” from Iran or regime change there.

By contrast, Iran’s missiles have been strategically effective. They’ve damaged Persian Gulf refineries and halted tanker traffic. They’ve forced Trump to relax sanctions on Russian and Iranian oil, and on Belarusian fertilizer. And they’ve shown Arab monarchies that U.S. defence agreements have limited value.

Trump recently, and inadvertently, admitted this weakness. While discussing Iran’s closure of the Strait of Hormuz, he said “it would be great if we could do something, but they have to open it.”

This strategic failure despite tactical success is reminiscent of the Vietnam War. U.S. units had overwhelming firepower as they killed enemy soldiers. But body counts by themselves indicated little about strategic progress.

Some historians rank that war as the second worst U.S. foreign policy decision ever. The 2003 invasion of Iraq was ranked the worst.

Trump talks about being the greatest U.S. president in history. So, perhaps his Iran war will make him the new leader on that policy failure list.

The post Iran’s attacks drone on, with the U.S. at risk of losing the war appeared first on Thoughtful Journalism About Energy's Future.

by John Duncan

The Iranian regime is certainly brutal. But it’s also powerful as it continues to project its might after a month of illegal air strikes by the United States and Israel.

Read more: Iran’s attacks drone on, with the U.S. at risk of losing the war

Iran is in the top 10 per cent of countries by size and population, has the third largest proven petroleum reserves and controls strategically crucial geography.

Furthermore, both the regime and many ordinary Iranians are prepared to defend the country. Since 1953, when the U.S. helped orchestrate a coup to overthrow Iran’s democratically elected Prime Minister Mohammad Mosaddegh, Iranians have understood they’re in America’s crosshairs.

This was especially true after the 1979 Islamic Revolution that overthrew the shah and during the U.S.-backed Iraq war against Iran that killed a million Iranians in the 1980s. As a result, Iran has spent decades beefing up and decentralizing its military capability.

In contrast, Dan Caine, chairman of the Joint Chiefs of Staff, warned U.S. President Donald Trump in February that the U.S. was short on both munitions and allied support for a war against Iran. Israel, America’s partner in war, is also short, especially in interceptor munitions. Trump and Israeli leader Benjamin Netanyahu dismissed the concerns, which suggests they planned a short war.

What are Trump’s options?

Critics have accused Trump of dragging the U.S. — or allowing it to be dragged — into a “forever war.” Those critics include those in his MAGA base, a problem for Trump as he anticipates November’s mid-term elections.

One unconventional option that might expedite victory, discussed during Trump’s first term, is to use nuclear weapons against Iran. Trump has said nukes won’t be used, but he’s well-known for erratic reversals.

A nuclear strike might expedite surrender, but it took two strikes on Japan in 1945 before the Japanese surrendered, and, failing an Iranian surrender, several strikes might be required to destroy the military capability distributed across Iran’s 31 provinces. Because many Americans would be appalled by a nuclear attack, putting the mid-terms at risk, the nuclear option is unlikely.

Much of the concern about Trump’s election machinations heading into the mid-terms is focused on the manipulation of procedures and officials. The legacy of the Jan. 6, 2021 attacks on the U.S. Capitol is one extreme possibility, as is manipulating the Iran war to achieve electoral gains.

Trump will probably lean into his rhetorical strengths and try to convince Americans the U.S. has won when it hasn’t. Claiming victory in the face of its absence is not new to him. Even in his second term, Trump continues to push the false claim that he won the 2020 election.

Consider the bizarre drama that started on March 21 when Trump and Iran exchanged dire threats. Then, out of the blue, Trump declared the existence of peace talks, which Iran denied. Perhaps they are imaginary talks on the way to an imaginary victory for Trump.

Read more: Why Donald Trump is such a relentless bullshitter

Mission accomplished?

It seems clear Trump is planning to declare victory well ahead of the mid-terms — and in part because of them. Such a strategy would involve baiting opponents into “forever war” criticisms, only to ridicule them in stump speeches, generating the image of a president who finishes his wars.

A declared victory in Iran and a timely exit, in addition to the liberation of Venezuela and a possible Cuban coup, might all coalesce into potent election messaging for the Republicans.

Soon enough, Trump may announce something akin to former president George W. Bush’s premature proclamations about the Iraq War in 2003 by saying something like this:

“Major combat operations in Iran have ended. The United States and Israel have prevailed. We do not know the day of final victory, but we have seen the turning of the tide.”

If successful, he will secure two more years “like nobody’s ever seen before” of Republican congressional dominance.

Major obstacles

The battle for November will feature a few competing narratives in the U.S. But there are four major hurdles for Trump in particular.

• Information: For voters to be convinced that Trump is a decisive crusader against evil rather than another “forever war” president, right-wing media must sell yet another big lie, mainstream media must continue to pull its punches and the Democrats must continue to flounder.
• Affordability crisis: Trump also has to ensure he doesn’t “win” in Iran while losing on affordability at home. Most American oil comes from the U.S., Canada and Mexico, so the U.S. is protected from global supply disruptions, but global markets push up prices everywhere. Trump’s mere declaration of talks recently brought oil prices down, but only temporarily.
• Allies needed: Because voters will want to see a significant military withdrawal, Trump needs other countries to manage the chaos he’s created. But after disrespecting allies for months, he is struggling to establish a “coalition of the willing” on which to offload the conflict.
• Iranians must co-operate: But because the U.S. and Israel have twice attacked Iran during diplomatic negotiations, Iran needs other stakeholders in the process. Without them, Iran will not be incentivized to stop fighting and nothing will belie an imaginary Trump victory more than ongoing Iranian attacks.

Democracy waning

Whichever scenario prevails, Americans will likely lose. Their complete war costs could include repercussions from the unprecedented illegal bombing of Iran, as well as from unnecessarily turning regional allies into targets.

All of this is tied to what many Americans regard as increasing Israeli aggression, including the killing of 70,000 people in Gaza, which the U.S. has facilitated with funding, political cover and its widely mocked Board of Peace.

America’s democracy, economy and credibility are waning as Trump shamelessly pursues self-aggrandizement and self-enrichment.

“That makes me smart,” he might say, but only a failed leader serves his own interests at the expense of his country.

The post Why Donald Trump will try to declare victory in Iran well before November appeared first on Thoughtful Journalism About Energy's Future.

By Mitchell Beer

With the federal government expected to release its long-awaited national electricity strategy this week, Canada could be in line to lose $110 to $220 billion in new investment and 40,000 to 80,000 direct jobs if it fails to deliver a clean power grid “at the scale and speed that industry and investors need,” a recent report concludes.

While senior executives across Canada’s finance, technology, heavy industry, mining, and clean energy sectors recognize that clean power is essential, it’s only worth pursuing “when it is predictable, cost-competitive, and available at scale,” states the report released earlier this month by the Shareholder Association for Research and Education (SHARE).

Canada enters the energy transition with an advantage over many other industrialized nations, with about 85% of its power coming from non-emitting sources, consultants at Dunsky Energy + Climate report. Clean economy sectors like electric vehicles, batteries, and the grid itself have received about $65 billion in new investment, producing at least 26,000 direct jobs and tens of thousands more across related supply chains.

That investment is taking place at a moment when access to electricity is central to site selection and capital allocation for new projects, adding asset value and enabling market access for new investments in tech, artificial intelligence, and mining.

But “Canada’s clean electricity edge is under threat,” Dunsky warns. “Grid constraints, permitting delays, and interconnection uncertainty are already slowing or cancelling investments.”

Canada faces those challenges in a moment of intensifying global competition, the report adds, with other jurisdictions “rapidly decarbonize their grids with the aim of attracting clean investment.”

The national electricity strategy has been in development for some time. Insiders say its release is now just days away, and it’s expected to focus on east-west transmission, Indigenous leadership, and better collaboration among provinces. Earlier this month, Ontario announced a “major nation-building milestone” when 10 provinces and territories—everyone but Quebec, Newfoundland and Labrador, and Nunavut—agreed to work together on new transmission infrastructure.

There was no official word on the national strategy’s release as this story went to virtual press. But The Energy Mix has learned that it may appear as soon as this Wednesday or Thursday and feature federal investment in grid interties between provinces, though the form of investment—through loans, grants, federal ownership, of investment tax credits—remains to be seen. The strategy is expected to remain silent on the fate of the federal Clean Electricity Regulations, and it isn’t clear whether it will address the role of gas-fired electricity or carbon capture and storage on the grid.

The Dunsky report calls for long-term coordination and policy certainty across federal, provincial, and territorial governments to make permitting and grid interconnections faster and more transparent, all with the goal of accelerating the buildout of clean generation, storage, and transmission. It points to Indigenous partnerships as an element that could “unlock project development”, and stresses the role of demand-side solutions to “lower system costs, defer infrastructure, and improve reliability—especially for fast-growing data centre and industrial loads.”

SHARE Public Affairs Director Jennifer Story said the consultants sought interviews with executives whose companies will need reliable supplies of green energy. “There’s a growing number of investors and companies that are hearing back from regulators, hearing back from provincial decision-makers, that they’re in the queue or that their needs can’t be met.,” she told The Energy Mix in an interview.

“If Canada is really serious about creating new opportunities in our economy to buffer the effects of the worsening relationship with the United States, this is a really obvious place to do it,” she added. “We’ll certainly be looking to see whether or not [the federal electricity strategy] goes the distance to meet this need.”

With net-zero commitments and carbon pricing systems in place in 10 of Canada’s 11 biggest trading partners—the U.S. is the outlier—Story said faster buildout of a clean electricity grid could be an essential nation-building project to protect Canadian sovereignty.

“It does tie in to trade strategy,” she told The Mix. “Some countries and regions are imposing carbon border adjustments, for example. Responding to that reality means again demonstrating clearly that we can supply our issuers, our publicly-traded and private companies, with the clean power they need to not have those border adjustments be a barrier to market access in other parts of the world.”

And to attract climate-aligned investment, “we also need to demonstrate to those investors that the companies they’re considering, the projects they’re considering, have not just green but also reliable, affordable, consistently available clean power.”

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New data from the U.S. Energy Information Administration (EIA) shows output rose by about 3 per cent, or 350,000 b/d, compared to 2024. The increase came despite a 5 per cent drop in active rigs and fewer wells drilled, highlighting a structural shift in how U.S. producers are growing supply.

The gains reinforce the United States’ position as the world’s largest oil producer and contribute to expectations of a global supply surplus. Reuters has reported that rising U.S. output is a key factor behind forecasts of an oversupplied global market, with production expected to average roughly 13.6 million b/d in 2025.

Efficiency offsets lower prices

The 2025 production increase came as benchmark West Texas Intermediate (WTI) crude prices fell to about $65 per barrel, down from $77 in 2024. Normally, lower prices would dampen output, but U.S. producers continued to extract more oil from fewer wells.

New wells added 2.9 million b/d of production in 2025, while existing wells accounted for 8.3 million b/d. Industry analysts have increasingly pointed to productivity gains — including longer laterals, improved fracking techniques, and better data analytics — as the main driver of growth.

Bloomberg has similarly reported that U.S. shale producers are pumping more oil per dollar invested, allowing output to rise even as capital spending and rig counts decline.

This decoupling of production from drilling activity marks a significant evolution in the shale sector, where companies have shifted focus from rapid expansion to capital discipline and efficiency.

Permian dominates growth

As in previous years, the Permian Basin remained the engine of U.S. production growth. Output in the region rose by 280,000 b/d in 2025 to reach 6.6 million b/d — nearly half of total U.S. supply.

Low breakeven costs continue to underpin Permian growth. According to the Dallas Fed Energy Survey, operators in the Midland and Delaware basins reported breakeven prices of roughly $61–$62 per barrel in 2025, below the annual average oil price. That cost advantage has allowed producers to sustain output even in a weaker price environment.

By contrast, other major shale regions showed limited growth. Production in the Eagle Ford rose modestly to 1.2 million b/d, while the Bakken saw a slight decline to a similar level.

Together, the Permian, Eagle Ford, and Bakken account for nearly two-thirds of total U.S. crude production.

Offshore projects add supply

Production in the Gulf of America also contributed to overall growth, rising by 111,000 b/d to average 1.9 million b/d in 2025.

Five new offshore projects — Whale, Ballymore, Dover, Shenandoah, and Leon-Castile — came online during the year. Unlike shale operations, offshore developments are less sensitive to short-term price fluctuations due to their long lead times and high upfront capital costs.

This steady pipeline of offshore projects is helping to diversify U.S. supply growth beyond shale basins.

Global implications

The global outlook for oil markets has shifted rapidly in recent weeks. The war in Iran and severe disruptions to shipping through the Strait of Hormuz — which typically carries about one-fifth of global oil — have tightened supply and driven prices sharply higher. With tanker traffic collapsing and infrastructure under attack, the market is moving away from fears of oversupply toward a more constrained and volatile environment.

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By Bob Weber

Prime Minister Mark Carney’s Major Projects Office is now six months old, just a baby in government years. But those gathered around the newborn’s crib already have plenty of ideas on how they’d like the infant to grow up.

Some look for an umpire—a neutral agency that simply evaluates big proposals and advises cabinet. “I hope they want someone who’s there to call balls and strikes,” Andrew Leach, an energy and environmental economist at the University of Alberta, told The Energy Mix. He said the MPO’s role should be to advance such projects, but also to ensure proponents have covered the environmental and consultation bases.

“You want someone in the room that when a company comes in and says, ‘Our project’s just not moving forward,’ (asks) ‘Have you done the work right?’”   Others want something more activist, pushing projects that further decarbonization, such as linking interprovincial electricity grids. “It needs to be a ramp up for renewable energy projects,” said Mark Kalegha, energy finance analyst at the Institute for Energy Economics and Financial Analysis. “Interconnectedness seems to be on their priority list and the MPO is able to help with the regulatory hurdles.”

A giant lab on regulatory reform would be welcome, say some. “What we’re hoping comes out of the Major Projects Office is learnings on how to accelerate reviews and processes without denuding them or making them any less stringent,” said Fernando Melo, public affairs director with the Canadian Renewable Energy Association (CanREA). “I’ve been out to many a project site where you ask, ‘How many permits are you filing?’ and the answer comes ‘Oh, five or ten’ … And I go, ‘One field.’”

Others expect it to serve an overall policy goal. “They’ve been focused on resources and infrastructure, in particular, trade facilitating infrastructure,” said University of Calgary economist Trevor Tombe. “That, to me, really speaks to the priority on trade diversification that the government has laid out.”

And some will be grateful if the whole thing doesn’t just turn into another deadening layer of lobbyist-ridden government bureaucracy. “

It does signal to investors that (their proposal) won’t be one of those Canadian proposals that takes 12 years. That’s the generous side of it,” said Heather Exner-Pirot, senior fellow at the Macdonald-Laurier Institute. But she asks, if excessive regulation is the problem, why not just reduce regulation?

“They’ve listed all these regulations that the MPO can bypass—why don’t they work on fixing those if they can be bypassed safely?”

But all say that attempts to assess the MPO’s direction need context. The office is just one part of a policy package aiming to reduce Canada’s dependence on increasingly unreliable United States trade, boost the country’s economic self-reliance, and move its economy toward a low-carbon future—all at once.

“Just as important, if not more important than the major projects themselves, is the policy,” said Janetta McKenzie, oil and gas director at the Calgary-based Pembina Institute. She said industrial carbon pricing, methane regulations, clean electricity regulations, and federal investment tax credits are just as big an influence on where investment goes as anything the MPO does. “

If the goal is to build a future-proofed Canadian economy that is more resilient to ongoing geopolitical shocks and volatility, then the investment signals need to be strong,” McKenzie said.

The Signals So Far

The signals, so far, haven’t been encouraging for climate goals. The federal government has junked consumer carbon pricing, tossed oil sands emissions caps, and weakened EV sales mandates. Tough economic times have proved tough for environmental policy, too, said Leach.

“Once people became convinced, rightly or wrongly, that Canadian environmental policy was the source of all their woes, there wasn’t much ground there left for the PM. “Voters are very keen on environmental policy as long as it doesn’t cost them anything.”

For example, the memorandum of understanding now being finalized between Alberta and Ottawa includes a promise of industrial carbon pricing—but also support for a new pipeline, which a Pembina analysis concluded would increase Alberta’s carbon emissions even if that oil was “decarbonized” through capture and storage.

Leach said national security concerns may now support the project. “All our pipelines in the U.S. are subject to a presidential permit the president can revoke at any time at our expense,” he said. “It’s still a conversation that’s in a dark corner, so to speak, but it’s a conversation we should be having.”

A Pipeline Full of Obstacles

But any new line faces considerable obstacles.

There’s neither a route nor a proponent, and the increased production needed to fill one would require massive upstream investment.

The MOU signed between Alberta and the feds rules out public financing, but former Alberta energy minister Sonya Savage recently told a CBC podcast that without public support a private proponent is, at best, highly unlikely.

Still, there may be a financial case to be made, suggested Leach, pointing to 2010, when pipeline bottlenecks forced producers to discount Canadian oil. If that happened again, the discount would now be on roughly twice as much oil.

“This is the math that people miss,” he told The Mix. “Even if you said this (pipeline) would reduce the differential by a buck, that’s four million barrels a day, 365 days a year times 15 years. (The investment) doesn’t look terrible.” Price, he said, is far more important than sheer volume.

But Canada will likely need to reduce that discount and squeeze out every petrodollar it can, and sustain it over a longer haul that may not be realistic. Before the current war launched the price of oil, it was languishing around $60 a barrel, with most experts predicting further falls. That market is likely to eventually return once the U.S.-Iran conflict ends. When the missiles stop flying, so will the value of oil.

Diversified Trade Could Boost Climate Goals

But the Carney objective of diversifying Canada’s trading partners could also advance climate goals. The projects currently before the MPO suggest at least some emphasis on clean energy, with wind power and minerals critical to electrification in the mix.

There’s also a proposal to link electricity gids in northern British Columbia and the Yukon.Climate and energy transition advocates say that is exactly the sort of thing the MPO should be doing to move Canada towards electrons and away from molecules.

“The more we integrate provinces and (make them) able to call on each other’s resources, it’s going to be better,” said CanREA’s Melo. “Having more connectivity will help enable greater decarbonization of the grid.”

In fact, grid ties are probably the only electricity-related projects big enough to appear on the MPO’s “nation-building” agenda. Solar panels and wind farms are also regulated provincially, putting them outside the MPO’s purview.

“The barriers to renewable penetration of electricity generation are provincial policies,” said the University of Calgary’s Tombe.

Trade diversification could provide another decarbonization prod. Canada will have to meet the environmental standards of those it seeks to trade with. Europe, for example, implemented its carbon border adjustment program in January. The policy imposes a tariff on imports of carbon-intensive products such as steel, cement, and energy that don’t meet EU standards. Melo said if Canada wants to play in those markets, it will have to comply.

“With the Canadian government’s stated goal of 50% of exports reaching alternative markets— the European Union, Japan, and China, which everyone forgets has an industrial carbon price— there’ll be more and more demand that the goods they import have low-carbon attributes built in.”

Weighing the Consequences

It’s unlikely that Mark Carney, once the UN’s special envoy on climate action, has forgotten the need to reduce carbon emissions. But he’s a central banker, too, used to weighing consequences of action against each other.

“The end game is going to be overall policies on consumption and overall policies on production,” Leach said. This may mean a little water in the wine of carbon cuts. Rather than absolute targets—the meeting of which has failed dismally—Canada may instead focus on simply being better than our competitors, some analysts say.

“Sustainability includes financial sustainability,” said Exner-Pirot. “The goal is not to kill Canadian production, but to make it better. Trying to square the circle involves making Canadian products competitive on carbon intensity, aiming for the good rather than the perfect.”

The Carney government must now make tough choices in the face of a new world order different than the one we were told to expect, Tombe said. “Reality has just thrown a few curve balls at Canada.”

“I do not see the government having abandoned any consideration at all about climate objectives,” he added. “But it also keeps in mind other criteria like trade diversification, economic and productivity growth … (Government) could achieve a lot more if it was singularly focused on climate goals. But it is not. It is balancing lots of objectives.”

The MPO itself has offered few clues as to its direction and intent. Although CEO Dawn Farrell is a longtime fossil energy executive who shepherded the controversial Trans Mountain pipeline expansion project, she has a non-partisan and even-handed reputation. Still, in testimony last fall before a Senate committee, she spoke approvingly of the carbon intensity of Canadian LNG. She also suggested a new oil pipeline to the west coast would have climate benefits, since much if that oil is used to make components for electric vehicles.

Some other senior staff bring past background in renewable energy and in reconciliation with Indigenous communities, but staffers have provided little information about where the office is going. Federal officials have told The Mix that Farrell maintains close contact with Carney and his senior staff, and that “all the major calls” will be made by the Prime Minister’s Office.

It’s early days for the MPO and the baby is barely walking. Where its first steps take it will be determined as much by the paths other policies have opened for it as its own inclinations.

But like any infant, observers broadly agree that it will take a while to mature. A $3.3-trillion economy does not turn around overnight.

“This process of diversifying trade, of boosting investment and growth, is going to be a multi-year, potentially multi-decade road that we’re on,” Tombe said. “We’re only at the very, very beginning. There’s so much left to do and so many unanswered questions still that need resolving.”

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by Mitchell Beer

The federal and Alberta governments have reached a preliminary agreement that will allow the province to set its own regulations on climate-busting methane emissions and postpone its emission reduction deadline by five years.

The deal’s effectiveness in putting a lid on methane pollution will depend on details that are still under development. But experts say Ottawa already traded away the equivalent of 53 million tonnes of carbon reductions last November, when it first signalled that it would allow Alberta to postpone methane controls from 2030 to 2035.

Methane carries about 84 times the global warming potential of carbon dioxide over the crucial 20-year period when humanity will be scrambling to get climate change under control. The Intergovernmental Panel on Climate Change identifies methane reductions as one of the cheapest paths to the quickest, deepest greenhouse gas emission reductions by 2030.

The agreement in principle, released Wednesday, cements a five-year postponement in Ottawa’s 2030 methane target that first appeared in the November, 2025 memorandum of understanding (MOU) between Canada and Alberta. If the two governments can agree on an “outcome-based equivalency agreement” under the Canadian Environmental Protection Act, Canada will stand down its own methane regulations in deference to Alberta’s.

The two governments have also agreed to identify an independent third party “to conduct methane modelling, analysis of emissions reductions, and to assess methane reduction results”. That provision is being hailed as an important step, a week after analysis by the Calgary-based Pembina Institute concluded that Alberta’s methane emissions are up to 90% higher than the province’s official estimate, which relies on self-reporting by industry.

The agreement is to take effect on January 1, 2027, following a 60-day consultation on the draft plan.

The methane equivalency agreement was one of several commitments in the Canada-Alberta MOU that were meant to be finalized by April 1. Alberta Premier Danielle Smith now says other elements of the deal, including a proposed new oil pipeline to Canada’s West Coast, will be delayed beyond next week’s deadline.

Canadian Climate Institute (CCI) President Rick Smith declared the agreement in principle a “positive step forward”. He called the provision for an independent third party “an important approach to reinforce policy ambition and integrity, and help ensure the regulations cover the true extent of methane pollution levels from Alberta’s oil and gas sector.”

But he cautioned that “the final details of the equivalency agreement, and follow-through on the commitment to independent and transparent verification of outcomes, will be critical to determine the agreement’s success.”

CCI Senior Research Associate Alison Bailie said she had confidence in the agreement’s focus on “looking at the Alberta numbers, not just accepting them,” adding that methane measurement technologies have improved in recent years—with some of the gains achieved by Emissions Reduction Alberta with funding from the province’s Technology Innovation and Emissions Reduction (TIER) system.

“That’s where I see the hope and the benefits of doing this properly,” she told The Energy Mix. “It helps Alberta’s own companies,” creating a business case for methane controls in Canada and enabling them to position themselves for methane abatement projects overseas.

Bailie added that Canada has “tended to see greater emission reductions” when federal and provincial governments actually work together. “That can work really well,” she said. “We’d like to see more.”

Aly Hyder Ali, senior program manager, oil and gas at Environmental Defence Canada, called the five-year delay an “unnecessary concession” that represents a “bad deal for everyone outside the oil patch.” Citing Pembina Institute modelling, he said the carveout would pour 1.9 million extra tonnes of methane into the atmosphere, the equivalent of 53 million tonnes of carbon dioxide over a 100-year period—or far more over a 20-year span.

Amanda Bryant, manager of Pembina’s oil and gas program, agreed in a release that independent, third-party verification is a “vitally important and positive step”, allowing Alberta to “report its methane progress more credibly”. She said the agreement “signals an end to the roadblock that had been preventing progress on this crucial element of climate and energy policy,” enabling industry to “invest and hire with confidence to advance the next stage of methane mitigation work.”

But so far there’s no clarity on whether the “independent party” responsible for monitoring Alberta’s methane controls will rely on theoretical modelling or actual measurement of releases from oil and gas infrastructure, or on whose data the monitor will rely. Real measurement “will be vital, both for an effective response to climate change and to ensure ongoing access to major international natural gas markets that are demanding provably low-emissions-intensity fossil fuel imports, such as the European Union, South Korea, and Japan,” Bryant said.

Last week, a Pembina technical analysis flagged data and regulatory gaps in Alberta’s current approach to methane controls, resulting in actual emissions that have been up to 90% higher than official government figures.

“Alberta should not be afraid modernize its measurement data and methods, including vehicle-based systems, aircraft, and satellites to effectively reduce its methane emissions,” Bryant said at the time.

But Alberta Premier Smith may have a different take on what to expect from the independent third party. During an unrelated media conference Wednesday, she said the goal is to arrive at “a common set of facts” after “some other reports that have been put out there kind of put us at odds,” iPolitics reports.

The agreement in principle states that, “should third party analysis determine that emissions are higher than expected, Alberta commits to take the necessary corrective actions.”

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By Samuel Buckstein

Nuclear power is experiencing a resurgence worldwide and Ontario is no exception. The province has a long history with this awesome and terrifying energy technology, and it is once again turning to nuclear power in response to concerns over national sovereignty, economic growth, electrification and decarbonization.

The persistent shortcomings of nuclear power

Finding pathways out of Ontario’s hydro and climate mess

Looking back over Ontario’s troubled history with nuclear energy, it is concerning to see the Ford government stumbling back to the bar for another round of nuclear cool-aid. Yet Ontario’s plan shows little evidence of having done its homework. Contrary to the government’s claims, it is fiscally irresponsible, incapable of delivering the energy the province needs in the time required, and compromises Ontario’s energy security.

When it should be investing in much cheaper and more easily deployed renewables, the province is recklessly doubling down on nuclear despite the evidence against it.

A legacy mired in debt

To understand Ontario’s nuclear trajectory, it is helpful to reflect on its origins. When civilian nuclear power was commercialized after the Second World War, its advocates promised it would be “too cheap to meter.” Buoyed by encouragement and financing from both provincial and federal governments, Ontario Hydro duly invested in a fleet of 20 CANDU reactors at three nuclear power stations over the course of 30 years.

By the turn of the millennium, Ontario Hydro’s nuclear obsession had saddled it with $38.1 billion in debt — $20.9 billion of it stranded (unsupported by assets). This burden was so immense that it toppled the once proud flagship Crown corporation. Ontarians continue to pay for this nuclear hangover today. As of March 2023, ratepayers were still on the hook for $13.8 billion.

Even as late as 1989, with Ontario Hydro already buckling under its crushing debt, the utility was forecasting the need for 10 to 15 new reactors by 2014. Reality proved otherwise, with peak electricity demand in 2014 lower than it had been 25 years earlier.

After a generation of staggering cost overruns and catastrophic international incidents at Three Mile Island, Chernobyl and Fukushima, nuclear power fell out of favour in much of the developed world. Cheaper, more flexible and faster-to-deploy alternatives took its place, first gas and then renewables.

Today, China is the only country in the world that can bring three to four new reactors online every year while steadily improving cost efficiency and construction timelines. China is also installing nearly 100 times more renewable capacity annually, accounting for more than half the world’s newly added generation.

Lessons from the U.K. and Ukraine

However, Ontario should learn from the United Kingdom, not authoritarian China. The experience of Hinkley Point C, the first new nuclear power plant to be built in the U.K. in more than 20 years, should be a cautionary tale.

At least five years behind schedule and two times over budget, Hinkley Point C will likely be the most expensive nuclear power plant yet. The electricity generated by this colossal waste of rate-payer dollars will cost between two to four times more than renewable energy, which can be brought online in half the time. This is what the provincial government has in store for Ontario.

The scale of Ontario’s plan is immense. In addition to the CANDU refurbishments at Darlington and Bruce, Ontario has announced the refurbishment of Pickering B, one of the oldest and most urban nuclear power stations in the world.

Canada needs to accelerate its transition to renewable energy

Focus on renewables, not nuclear, to fuel Canada’s electric needs

Sovereignty concerns

Ontario has also contracted with GE Vernova Hitachi to build up to four small modular reactors (SMRs) at the Darlington site. It is unclear why the government has committed to building four SMRs before even the first is constructed. The greater concern with this arrangement is GE Vernova Hitachi is a U.S.-controlled company and the fuel supply chain is in the U.S. and France, not Canada.

To understand how fragile such a dependency can become, consider the situation facing Ukraine and its Soviet-built RMBK reactors. After Russia’s illegal annexation of Crimea and Donbas in 2014, Ukraine found itself dependent on its aggressor to fuel the reactors. At the time, nuclear power generated approximately half of Ukraine’s pre-war electricity, similar to the proportion of Ontario’s reliance on nuclear energy. Ukrainians are now facing severe energy insecurity, with freezing temperatures and blackouts.

As if this were not concerning enough, Ontarians are subsidizing the first commercial demonstration of an unproven foreign nuclear technology while the government continues to naively claim Ontario will remain the industrial base from which the U.S.-controlled company will scale. Given the trade policies of the current U.S. government, not least of all its efforts to gut Ontario’s auto sector, it is hard not to see this belief as a fool’s hope.

No price tag and no certainty it will pay

Despite these red flags, Ontario’s nuclear ambitions do not stop there. The government is also considering building two new large nuclear power stations at the Bruce site and at a new location near Port Hope. This despite the fact that, like the U.K., the domestic nuclear supply chain has all but vanished. This is precisely the kind of multi-billion-dollar, multi-decade infrastructure lock-in that bankrupted Ontario Hydro.

The government has been silent on how much this plan will cost. No one can predict whether demand will materialize to justify this massive supply expansion, or what electricity prices will be when these reactors finally come online. Committing to decades of investment in such an uncertain environment is sheer folly.

To top it all off, nuclear power is not even operationally flexible. Generation cannot be adjusted rapidly enough to follow demand, and the reactors can only be quickly turned off, but not back on again (it took Ontario more than a day to restore power after the 2003 Great Northeastern Blackout due to neutron poisoning in the reactors).

Renewable options

It does not have to be this way. Much has changed since the last wave of nuclear infatuation. Renewables are now the cheapest source of energy on a levelized basis. While renewables may be intermittent, they are reasonably predictable, and for the first time since the inception of the electricity industry, generation no longer needs to coincide perfectly with consumption. Rapidly falling battery costs have made energy storage a commercially viable reality.

It is true that China currently dominates the supply chains for solar, wind and batteries, but once the equipment is installed it is virtually impervious to foreign interference. Unlike the supply of nuclear fuel, the sun shines everywhere.

Ontario and Canada should be collaborating with other democratic allies to reduce dependence on Chinese suppliers. In the meantime, the fact remains that unsubsidized renewables and batteries outperform nuclear and gas on cost and deployment time. Sadly, instead of embracing this more affordable and distributed future, the provincial government remains stuck in an inflexible and fiscally reckless past.

Nuclear power can provide energy security, but only if it is supported and fuelled by a domestic supply chain, like the original CANDUs. Its unmatched energy density makes sense where land is scarce, but that is hardly the case in Ontario. It may even be a defensible form of industrial policy if you believe in that kind of state interventionism. But above all else, nuclear power is neither nimble nor affordable (outside China) and it’s about time the Ontario government stopped posturing otherwise.

More Policy Options articles on nuclear power:

• Ontario’s nuclear option is the wrong path to meet green energy targets
• Canada’s newest nuclear industry dream is a potential nightmare

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By Ian Munroe, Anna Berka and Christina E. Hoicka

The number of renewable energy projects that are fully or partly Indigenous-owned is growing quickly in Canada, and our new research suggests that their benefits reach far beyond reducing greenhouse gas emissions.

The number of such projects on traditional Indigenous territories and reserve lands jumped by more than 300 per cent between 2009 and 2020. Nearly one-fifth of the country’s electricity-generating infrastructure involved First Nations, Métis and Inuit partners or beneficiaries as of 2022.

Yet little is known about the impacts of these renewable-energy projects within the participating communities beyond the physical footprint of the construction.

We aimed to fill this information policy gap in response to a request from two organizations that work extensively with First Nations, the Clean Energy Association of British Columbia and the New Relationship Trust, which obtained funding from Natural Resources Canada to conduct research.

Together we conducted a study to paint a more complete picture of these broader impacts, interviewing knowledge-holders in 14 First Nations in British Columbia involved with 36 planned or operational Indigenous-led renewable energy projects.

We found that these projects employ “placed-based” approaches, often with a high degree of community engagement early on, and revenues often allocated to support their own culture, governance, ecology, support services and economy.

Transformational change

We found that when First Nations’ worldviews are centred and community control is enabled, broad social and cultural benefits result, providing greater self-determination.

As part of our research, we interviewed knowledge-holders from the West Moberly First Nations near Peace River, B.C. The nation has used wind-project revenues to support cultural camps and youth programs. As one knowledge-holder there told us:

“We are involved in it, and we are engaged in it. We are co-owners. And I know our Elders feel really good about hearing that. Knowing that we are not just sitting on the sidelines, while other people fill their pockets in our territory. And our community is doing that kind of stuff more and more. There is a connection there, right, because you are involved. More money is flowing to the community.”

In the Fraser Canyon region, the T’eqt’aqtn’mux (Kanaka Bar Indian Band), which has been affected by wildfires in recent years, has used proceeds from solar projects to reduce fire hazards and protect homes.

In the case of the Skidegate Band Council, we heard that revenues from a two-megawatt microgrid solar project would go toward funding Tll Yahda Energy, a partnership with the Old Massett Village Council to develop renewable energy projects in Haida Gwaii.

While these results demonstrate that a broad range of positive outcomes can flow from Indigenous-led renewable energy projects, the social and cultural impacts remain neglected in conventional energy practice.

An alternative to traditional energy planning

The Indigenous-led projects we heard about stand in contrast to typically used top-down decision-making, favoured by governments.

This approach is often characterized by public consultation that occurs after the decision of where to site the project has been made, often leading to local rejection of the project, and sometimes cancellation.

The bottom-up nature of the approaches we heard about hold important lessons that can enable widespread acceptance of energy transitions.

This is particularly relevant in B.C., where the provincial government is encouraging renewable energy projects to create economic opportunity and counter external economic shocks, including tariffs from the United States.

This policy push extends to the province’s more than 200 First Nations, with a 2025 procurement call that requires at least 25 per cent First Nations ownership of a project.

The B.C. government must also meet its obligations under the Declaration on the Rights of Indigenous Peoples Act (DRIPA), which aims to bring provincial legislation into agreement with the United Nations Declaration on the Rights of Indigenous Peoples.

The UN treaty requires that state parties enable self-determination and obtain free, prior and informed consent from Indigenous Peoples for projects that impact their lands or resources. Indigenous-led renewable electricity projects in B.C. could help meet requirements under DRIPA to provide pathways for First Nations to improve their economic and social conditions without discrimination.

The Indigenous-led approaches we studied provide a vehicle to support Indigenous communities and make progress toward the province’s decarbonization goals. They also hold valuable lessons for developing policy in other jurisdictions like Ontario, where the provincial government has pledged to boost support for the growing number of Indigenous energy projects.

The world is entering a new era in which energy independence will be more important. Our findings about Indigenous-led projects illustrate a radically different approach to growing the Canada’s renewables industry in a way that can provide energy and facilitate transformational social and cultural change.

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Chinese electric vehicle giant BYD is open to acquiring a competing manufacturer and setting up shop to produce cars in Canada—but not if it means entering a joint venture with another company.

“The Shenzhen-based automaker is studying the Canadian market for a potential manufacturing facility, although no decision has been made,” Bloomberg News reports, citing an interview with BYD Executive Vice President Stella Li.

“Perhaps more striking than the Canada factory talk is Li’s candid acknowledgment that BYD is evaluating potential acquisitions of established automakers,” Electrek writes. “Several American, European, and Japanese manufacturers are struggling under the financial strain of maintaining both combustion and electric vehicle product lines simultaneously.”

But while “we’re open to every opportunity we have,” Li said, “I don’t think a JV [joint venture] will work.”

In mid-January, Prime Minister Mark Carney agreed to sharply reduce tariffs on electric vehicle imports from China, while China offered up tariff relief for Canadian canola, peas, pork, and seafood. At the time, Canadian observers predicted lower EV prices and possible long-term advantages for the country’s automotive industrial base.

Canada agreed to slash duties on up to 49,000 Chinese EVs per year to a “most-favoured-nation tariff rate” of 6.1 per cent, Carney’s office said in a release. The imports will amount to less than 3 per cent of annual new vehicle sales in Canada, but “will drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing careers for Canadian workers, and ensure a robust buildout of Canada’s EV supply chain,” the PMO said.

Days later, Carney said he saw the deal as an opportunity for Ontario’s automaking heartland. “We’ve had direct conversations directly from the Chinese companies… with explicit interest and intention to partner with Canadian companies,” he told media during a stopover in Doha, Qatar. “We’ll see what comes to pass. This is an opportunity for Ontario. It’s an opportunity for Ontario workers, opportunity for Canada, done in a controlled way with a modest start.”

Now, Bloomberg says BYD is looking at expanding its reach in overseas markets where it can repeat the “Brazil model”, a marketing and sales approach that has worked well for it in South America and Europe. “Buying existing production capacity with trained work forces is faster and cheaper than building greenfield—and BYD appears to be applying the same logic globally,” Electrek explains.

One place the company isn’t considering an expansion is the United States, a “complicated environment” where tariffs on Chinese-made vehicles exceed 100 per cent and connected car technology is banned.

BYD’s sales fell 36 per cent, to 400,241 vehicles, in the first two months of this year, both news outlets say. “But exports gained momentum, and the company is targeting 1.3 million overseas vehicle sales for the full year,” Electrek reports. “Li said BYD’s recently launched next-generation Blade Battery and ultra-fast flash charging architecture, capable of delivering up to 1,500 kW, will help reverse the domestic sales dip.”

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