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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.

For all the noise surrounding climate policy, this is the rare file where ideology doesn’t change the physics, and the economics are as plain as daylight: methane is the cheapest, fastest, most practical emissions reduction lever available to Canada’s oil and gas sector. And yet, we still move too slowly — not because the solutions are unclear, but because some governments refuse to raise their sights.

Nowhere is this resistance more visible than in Alberta. While the federal government and most major producing jurisdictions around the world have embraced the need for deeper methane cuts, Premier Danielle Smith’s government has consistently resisted calls to strengthen Alberta’s targets. Even as provinces like British Columbia meet their methane goals early — and even as U.S. states such as Colorado and New Mexico push ahead — Alberta continues to argue that higher targets would harm competitiveness. The evidence suggests the opposite.

Pembina Institute’s Meeting the Moment

The report is unambiguous: methane abatement is the low-hanging fruit of climate and energy policy. Solutions are proven. Costs are low. Many fixes pay for themselves. And on the global stage, methane performance is becoming the new measure of energy credibility.

Contrast that with other oil and gas emissions. Deep decarbonization of heavy oil, upgrading, bitumen extraction and processing remains expensive. Carbon capture, utilization and storage is slow to scale and costly to deploy. Electrification in remote regions is challenging. None of these pathways move quickly or cheaply. That is why, as Pembina notes, other oil and gas emissions remain stubbornly high, locked behind technological, economic and regulatory barriers that will take years to resolve. Methane stands alone: fast, cheap, and immediately achievable.

This is not theory. It is field-tested reality. British Columbia proved it. Colorado proved it. New Mexico proved it. Even the European Union — with a massive reliance on imported gas — has set methane standards so ambitious they will force exporting nations to clean up or lose market access.

Canada cannot afford to pretend this shift isn’t happening. And yet, Alberta’s approach does exactly that. The province still does not require the full phase-out of emitting pneumatics, a major methane source, even though zero-bleed alternatives are widely available and already required in peer jurisdictions. Alberta also recently weakened its flaring rules, eliminating a long-standing ceiling after the industry exceeded the limit two years in a row.

This is the opposite of leadership.

Federal amendments offer a blueprint for credible action

Quarterly inspections at high-risk sites, monthly instrumented screenings, annual third-party audits, and strong restrictions on venting and flaring together form one of the most rigorous methane regimes in the world. Canada is not “acting too fast,” as some claim. If anything, it is struggling to keep pace with the jurisdictions shaping the new global rules.

The stakes are not abstract. They are profoundly economic. As the report notes, methane cuts in Canada cost roughly $11 per tonne of CO₂e, far lower than almost every other emissions pathway in the sector. Imagine if any other emissions source offered reductions at that price. It would be the centrepiece of national policy. Instead, methane is treated as just another line item in the climate debate,  when in fact, it is the strategic hinge between maintaining competitiveness and falling behind.

The reason is simple: you cannot sell energy to the world in the 2030s without proving its emissions profile. The EU knows this. The United States (outside of Washington’s current political turbulence) knows this. International buyers know this. Methane intensity is becoming the passport for participation in global markets, and Canada’s current performance — roughly ten times the emerging best-practice benchmark — is not good enough.

In this environment, refusing to strengthen methane targets is not a defence of Alberta’s industry. It is a disservice to it. The companies that invest early in low-methane operations will command premiums and secure market access. The ones that wait will find themselves negotiating from a position of weakness.

This is why the report argues so strongly for finalizing Canada’s methane regulations without further delay and why provinces, including Alberta, must modernize their frameworks to align with the world’s leading jurisdictions. The economic logic is straightforward: strong methane policy is not a cost. It is a competitive advantage.

There is a broader lesson here. Climate policy is often framed as a series of hard trade-offs. And in many areas, that is true. But methane is the exception — a policy space where the climate benefits, economic savings, public health improvements and competitiveness gains all point in the same direction.

The only real question is whether Canada chooses to lead or whether it allows political resistance to delay the inevitable.

Because on methane, the facts are clear. The solutions are ready. The advantages are obvious. And the world is already moving. Canada can either meet the moment or watch the moment pass by.

The post “Cost and Carbon Competitiveness” was an Alberta rallying cry for years. What happened? appeared first on Thoughtful Journalism About Energy's Future.

Today in the Legislature, Danielle Smith launched yet another salvo of victim-language. accusing unspecified “foreign money” of funding recall campaigns targeting United Conservative Party (UCP) MLAs. She told the legislature that, among other things, “a GoFundMe is being used to raise money.” The claim deserves scrutiny for three interlocking reasons.

First: the claim of victimhood is integral to the populist ideology, authoritarian-libertarianism, that she promotes.  Smith’s rhetoric locates the threat to “our freedoms” in some shadowy conspiratorial force. Her political style emphasizes “you vs them,” “us losing to outside forces,” and “elite actors pulling strings.” When she blames foreign money for recall petitions, she is recycling exactly this tired script.

Claims of victimhood are part and parcel of authoritarian-libertarianism. She portrays her opponents (and democratic challenge) as illegitimate, not merely part of the normal political process. In that worldview, recall efforts transform from an accountability mechanism into an external attack.

Second: she has provided not one shred of publicly produced, verifiable evidence for her claim.

We have no published financial trail. We have no named foreign donor. We have no independently verified audit or investigation showing foreign funds flowing into these petitions. But we do have her suggestion — that “there’s a GoFundMe being used” — with no further substantiation.

Raising an allegation without delivering evidence is classic populist behaviour. It allows the speaker to court outrage, distraction and grievance, rather than engage in the messy business of transparency and truth. Smith has absolutely no shame in asserting what amounts to an unsubstantiated conspiracy claim, thereby shifting attention from the substantive issues of recall law, democratic accountability and the concerns raised by voters.

Third: the UCP — her party — have used precisely this playbook before. Back in 2019, then-premier Jason Kenney’s government commissioned the Public Inquiry into Anti‑Alberta Energy Campaigns, explicitly to examine “foreign-funded activism” against Alberta’s oil and gas industry. The inquiry itself was triggered by the “research” of Vivian Krause — whose claims of foreign money influencing Canadian environmental non-profits have since been debunked.

The money-under-the-bed narrative worked then for the UCP: framing challengers not as citizens but as foreign agents. And because the earlier version failed to produce meaningful findings (the inquiry’s conclusion was that the groups in question had done nothing illegal) the lack of rigour here is predictable. Smith is essentially deploying her party’s old toolkit.

Putting these three objections together — ideological lens of victimhood, absence of evidence, prior institutional behaviour — one arrives at a clear conclusion: this is not serious governance. This is theatre. It is distraction. It is a defensive reflex. It is the posture of a party and leader who feel the ground shifting beneath them.

When a premier claims foreign actors are funding democratic petitions against her, she is not engaging in good-faith democratic dialogue. She is signalling a retreat into grievance and blaming.  That is not the language of pluralism or of democratic humility. It is the language of incompetence.

The UCP’s playbook is long-established: create the outsider threat, mobilise the base, shift blame away from her government’s many recent failures. Here are just two of them.

Invoking the Notwithstanding Clause to End the Teachers’ Strike

Smith became the first premier in Alberta history to use the notwithstanding clause to suspend Charter of Rights and Freedoms protections. She didn’t have to. As Energi Media expert interviews clearly showed, there were other regulatory tools at her disposal.

Instead, she chose political convenience.

The Auditor General’s Scathing Report on Healthcare Failures

Alberta’s Auditor General delivered a devastating assessment of healthcare governance under Smith’s restructuring agenda. The report cited poor oversight, lack of accountability,  fragmented decision-making, failure to provide clear performance measures, and significant risk to patient care because of chaotic reorganization.

It confirmed what health-care workers have been saying for months: Smith’s “reform” has produced confusion, instability, and declining system performance.

Smith’s invocation of foreign funds is simply the latest chapter in a long story of the most inept government in Canada.

What’s at stake is not just this recall fight. What’s at stake is public trust in democratic institutions. The recall process is meant to be a tool of citizen accountability. It is meant to allow constituents to hold elected representatives to account. Smith is effectively defaming the very notion that voters might legitimately disagree with her government, might legitimately exercise a democratic tool, might legitimately say: you are not representing us.

She is framing dissent not as local political agency, but as external sabotage. Again, this is standard authoritarian behaviour.

There is also a sharp irony in Smith’s outrage: she is furious about a recall mechanism that her own party put into law. The UCP framed recall legislation as a populist accountability tool when it served their interests — a way to posture as champions of “the people” against unresponsive politicians. But now that citizens are using that very law against her own MLAs, Smith treats it as an abuse, even a foreign-funded plot.

It’s the classic boomerang of bad-faith populism: a tool designed for political theatre suddenly functions as real democratic accountability, and the government that created it recoils in indignation. This is not sabotage. It’s consequences.

The post Where’s the Beef, Danielle? appeared first on Thoughtful Journalism About Energy's Future.

Check out Energi Media’s YouTube channel for more news and analysis, and our Thoughtful Energy Journalism Substack for long form energy essays.

Alberta’s grid reliability and investment climate were thrust back into the political spotlight today as Alberta’s New Democratic Party introduced Bill 203, the Energy Storage Planning for Investment Act. The proposed legislation aims to chart a coordinated provincial strategy for battery deployment, reduce long-term electricity costs, and restore investor confidence after two years of market uncertainty.

Nagwan Al-Guneid, Shadow Minister for Energy and Minerals, tabled the private member’s bill.  She said the bill reflects the lessons learned during the January 2024 cold snap, when Alberta narrowly avoided a province-wide blackout. As record-low temperatures pushed electricity demand to extreme levels, the province’s 190 megawatts of installed battery storage provided critical support to grid operators by discharging during the emergency.

According to the NDP, that contribution helped “keep the lights on” at a moment when the system was under severe stress. The party argues that the incident underscored both the vulnerability of Alberta’s grid and the value of energy storage in managing reliability risks.

“Energy storage means low-cost energy and more jobs,” Al-Guneid said. “Our economy is evolving, and electricity demand is through the roof. This bill is about improving grid reliability, securing more affordable energy, and bringing new jobs while making sure Alberta doesn’t fall further behind while other jurisdictions surge ahead.”

A Framework for Storage Deployment

Bill 203 would require the provincial government to establish a coordinated plan focused on four priority areas: lowering long-term power costs, supporting job creation and industry diversification, enabling greater participation in the electricity market, and modernizing the regulatory environment.

The cost component centres on using storage to capture off-peak power—when wholesale prices are lowest—and discharge during periods of high demand. The NDP says this would improve grid stability and help expand the supply of low-cost energy.

Job creation efforts would be tied to long-duration energy storage (LDES) research and the development of a made-in-Alberta battery materials industry. According to the NDP, Alberta’s critical minerals—including those recoverable from oilfield wastewater and brine—could support a domestic supply chain for advanced storage technologies.

A third element targets investor confidence. By allowing regulated utilities and competitive-market operators to collaborate more effectively, the NDP says Bill 203 would make the market more predictable for companies considering new projects.

Alberta’s deregulated electricity market is the only one of its kind in Canada; in every other province, generation is owned largely by vertically integrated Crown utilities. The NDP argues that this market structure can work, but only if government policy is stable and the investment environment reliable.

Global Acceleration, Local Uncertainty

The NDP also framed Bill 203 as a response to international trends. Energy storage is expanding rapidly in jurisdictions such as Texas, China, Australia, and Ontario, where it is used to stabilize grids, reduce consumer costs, and support the growth of new industries. The party says Alberta risks falling behind without urgent action.

By contrast, the NDP points to what it calls a series of “self-defeating” decisions by the UCP government. Chief among them was the seven-month moratorium on wind and solar development imposed in 2023, which stalled at least $33 billion in investment across 118 projects and an estimated 24,000 job-years. While the pause ended in February 2024, the party argues that investor confidence has not recovered, citing continued uncertainty around the province’s market redesign process.

That redesign has been the subject of criticism from industry groups and analysts, including Morrison Park Advisors, whose government-commissioned report warned that policy unpredictability has increased the cost of capital and led to delayed or cancelled projects.

According to Al-Guneid, “Industry has warned us again and again that the UCP has made Alberta’s electricity market a place investors cannot rely on. Until there’s clarity and certainty, the UCP’s data centre ambitions—and the good-paying jobs they keep promising—will never materialize.”

The NDP says Bill 203 is designed to provide that clarity by creating a consistent framework that guides both government and regulatory agencies.

Building on Bill 22

Bill 203 builds on the foundation laid by Bill 22, the UCP’s 2022 Electricity Statutes (Modernizing Alberta’s Electricity Grid) Amendment Act. Bill 22 established the first legal definitions for “energy storage facility” and “energy storage resource,” and was proclaimed in March 2024 after nearly two years of regulatory development.

Al-Guneid acknowledged that Bill 22 was a necessary step, clarifying how storage interacts with provincial statutes. But she said Alberta still lacks a coordinated policy direction and market design tailored to the unique characteristics of storage technologies.

A key example is transmission tariffs. Under current rules, storage operators pay transmission charges twice—once when batteries draw power from the grid and again when they discharge that power back into the system. This legacy cost structure was developed before storage was part of the grid and has long been cited as a barrier to market participation. While the Alberta Electric System Operator has begun reviewing storage-specific rates, the NDP says more work is needed.

Bill 203 would require collaboration among three ministries—Affordability & Utilities, Technology & Innovation, and Energy & Minerals—to develop a modernized rate framework and coordinate storage planning across government. It also provides direction for the Alberta Electric System Operator and the Alberta Utilities Commission to align regulatory processes with the growth of storage.

A Legislative Debate That Reflects Larger Questions

The introduction of Bill 203 sets up a new round of debate in the Legislature over the direction of Alberta’s electricity system. For the NDP, energy storage is a way to address affordability, support reliability, and rebuild Alberta’s investment reputation. For the UCP, the bill represents another point of contention in an already polarized discussion over grid modernization, renewables policy, and the future of the province’s power market.

What is clear is that Alberta’s electricity system is entering a period where reliability, cost management, and investor confidence will drive decisions across sectors—from data centres to heavy industry to critical minerals. Bill 203 is unlikely to settle those debates on its own, but it ensures that energy storage—long treated as a niche technology—will occupy a central place in the conversation about Alberta’s energy future.

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For years, Canada has promised to build a full critical minerals and battery supply chain. We’ve published strategies, signed MOUs, pitched foreign investors, and talked endlessly about “value-added opportunities.” But these were mostly aspirations, not assets. Now, in St. Thomas, Ontario, the strategy is turning into steel and concrete.

Volkswagen’s PowerCo is erecting one of the largest battery-cell factories in the world, up to 90 gigawatt hours (GWh) at full build-out, on a 350-acre site where main-building construction is now underway. The project is no longer a political announcement. It is the physical anchor of a Canadian supply chain that finally runs from mineral extraction to finished battery packs. And its arrival signals something important: Canada is no longer trying to join the global battery race. It is in the race.

Where St. Thomas fits in the supply chain

A modern lithium-ion battery supply chain has four major steps:

1. Mining – extracting critical minerals (lithium, nickel, graphite, manganese, cobalt).
2. Refining & processing – turning raw ore into battery-grade materials (sulfates, precursors, cathodes, anodes).
3. Cell manufacturing – assembling electrode materials into the electrochemical “cells” that store energy.
4. Pack manufacturing – integrating cells into packs with cooling, electronics, and enclosures for EVs.

Volkswagen’s St. Thomas plant is step #3: battery-cell manufacturing. This is the heart of the value chain and the highest-value manufacturing stage after cathode-active materials.

But what makes this project strategically significant is how it connects backward to Canada’s upstream minerals and forward to pack integration in Ontario’s automotive plants (backward and forward linkages explained). The plant creates a gravitational centre that pulls the rest of the supply chain into alignment:

• Mining and refining in Ontario, Quebec, and Atlantic Canada now have a guaranteed world-class customer.
• Cathode and precursor manufacturers—like Umicore in eastern Ontario—fit directly into VW’s procurement needs.
• Automakers assembling EVs in Ontario (Stellantis, GM, Ford, Honda) will have access to locally manufactured cells.

For the first time, Canada is on the cusp of closing the loop. Mining investment only makes sense if processing exists. Processing only makes sense if cell producers are located nearby. Cell producers only invest where EV platforms are already being built. St. Thomas is the keystone that allows the whole arch to stand.

Why this story matters so much for Canada

This project is not just another automotive investment. It represents a structural shift in Canada’s economic future.

1. We are finally capturing midstream value, not exporting it.

Historically, Canada exported raw materials while other countries captured the high-value manufacturing. Lithium from Quebec and graphite from Ontario would have ended up processed in Asia, turned into cells in Asia, and shipped back to North American automakers.

St. Thomas flips that equation: value now stays in Canada.

2. It creates the conditions for a domestic critical-minerals flywheel.

Mines need demand certainty. St. Thomas provides it.
Refiners need stable offtake. St. Thomas provides it.
EV manufacturers need proximity to cell production to meet trade requirements. St. Thomas provides it.
This is how integrated industrial ecosystems form.

3. It positions Canada as a serious global player in the energy transition.

Volkswagen chose three global hubs for its unified-cell strategy: Salzgitter (Germany), Sagunt (Spain), and St. Thomas (Canada). That is extraordinary company and a sign that Canada is no longer a peripheral actor.

4. It strengthens North American supply-chain resilience.

With the United States desperate to reduce dependence on Chinese cells, Canada becomes central to the continental EV strategy. St. Thomas is much more than a factory; it is an insurance policy for North American automakers.

5. It sticks even through global headwinds.

The EV slowdown of 2024–25 forced VW to delay or scale European plans. But not this one. The St. Thomas timeline still targets 2027. That tells you where VW believes long-term North American EV demand is heading.

Only now do we get to the nuts and bolts

PowerCo confirmed in late October and early November that major building construction is underway, with concrete pouring and steel erection on the 350-acre site . Magil Construction Canada Inc. is executing the foundation package—more than 30,000 cubic metres of concrete. Steelcon Group is erecting nearly 5,000 tonnes of structural steel.

Ontario government releases reinforce the original job estimates: roughly 3,000 direct workers in the plant, plus thousands more across the local supply chain.

The timeline remains unchanged: start of production in 2027, with capacity rising toward 90 GWh per year, enough for more than a million EVs depending on pack size. This plant will use Volkswagen’s unified prismatic cell format, the global architecture meant to drive scale across all PowerCo factories.

Construction is advancing through the classic gigafactory phases:

• site preparation and utilities (2023–2025),
• foundations and steel (2025–2026),
• equipment installation and dry-room integration (2026–2027),
• commissioning and ramp-up into 2028.

In other words: the milestone that matters, the one that transforms political rhetoric into industry reality, is already behind us. The factory is rising.

The bottom line

Volkswagen’s St. Thomas project is not a symbol. It is a signal. A signal that Canada’s critical minerals strategy has crossed the line from policy into practice. A signal that the country finally has a nucleus around which a full battery supply chain can grow. And a signal that the energy transition’s most valuable manufacturing step—battery-cell production—is no longer something Canada watches from the sidelines.

This time, Canada is in the game.

The post Canada’s First Giga-scale Battery Plant is Under Construction. Why That’s Important appeared first on Thoughtful Journalism About Energy's Future.

Canada is sitting on a world-class opportunity to build a world-scale advanced geothermal industry, yet the federal government’s climate competitiveness strategy barely acknowledges it. That silence isn’t just puzzling, it’s risky. Because if we’re serious about electrification, industrial heat decarbonization, energy security, and creating new clean energy industrial opportunities, then advanced geothermal isn’t optional. It’s indispensable.

And the irony is this: Canada already has everything it needs to lead. We just haven’t decided to act like it.

The interviews (here, here, here) underlying this column offer a clear picture. Start with the basics: the new generation of enhanced geothermal systems (EGS) is nothing like the “Iceland model” of tapping naturally occurring hot-water reservoirs. As geoscientist Gord Brasnett, the co-author of the Cascade Institute report The Deep Heat Advantage: A techno-economic analysis of Enhanced Geothermal Systems in western and northwestern Canada, explained, Canada’s geology isn’t blessed with those “geologic unicorn” hotspots where heat and water sit conveniently near the surface.

Instead, our opportunity lies deeper — literally. EGS drills several kilometres down, engineers a fracture network between two wells, and circulates water through hot rock to recover that heat. It’s modern, modular, and powered by technologies developed in Canada’s own oil and gas sector. In other words, we are already experts at the hardest part of geothermal: drilling deep, hot, technically complex wells.

Canada’s engineering capability is so strong that Canadians are already doing this work internationally. “We have folks doing insulated drill pipe in deep volcanoes in Oregon,” Brasnett explained, “and Canadians deploying drilling expertise in Germany.” Our people are helping build the geothermal future — just not here.

Why not? Partly because we lack the policy framework to bring them home. The European Union gave Ever Technologies a €90-million grant to build its first closed-loop commercial project south of Munich, supported by Germany’s €251/MWh feed-in tariff. That’s industrial policy. That’s how new clean-energy sectors are built.

By contrast, Canada’s 2025 federal budget — marketed as a “climate competitiveness strategy” — barely mentioned geothermal at all. As Brasnett said, geothermal remains “overlooked,” both because it is literally underground and because Canada has not yet deployed commercial-scale projects that would put it on Ottawa’s radar. But that invisibility has consequences. Without a strategic signal from government, capital, talent, and supply chains drift elsewhere.

Canada is uniquely suited to scale this industry

Alberta, in particular, has the deepest bench of drilling, reservoir engineering, geoscience, and oilfield manufacturing expertise in the country. “Eighty-five percent of the skills from the oil and gas sector transfer to geothermal,” Basnett noted, citing International Energy Agency estimates. Alberta has more engineers per capita than anywhere else in Canada, and its industrial parks — Calgary’s Foothills, Edmonton’s sprawling fabrication corridors — already manufacture rigs, drilling assemblies, subsurface tools, and sensors perfectly suited to geothermal applications.

This is not a workforce that needs reinvention. It needs redeployment.

The technology fit is equally strong. Much of the innovation that advanced geothermal now relies on — insulated drill pipe, high-temperature electronics, durable casing, cementing techniques — was pioneered in the oil sands decades ago and proven at commercial scale. Canada is already exporting these tools and techniques to the United States, Germany, and elsewhere. “These are made-in-Canada solutions… deployed worldwide,” Gord said. “It’s a great story we don’t tell loudly enough”.

And the economics are compelling. With deeper plays targeting hotter rock, the efficiency gains more than offset the higher drilling costs. Gord’s modelling shows advanced geothermal achieving levelized costs below $50 per megawatt-hour. That’s competitive with gas and with solar-plus-storage. For clean, firm, dispatchable power, that price is extraordinary.

Even more compelling is the global opportunity. Dozens of countries share Canada’s geology: deep, hot, dry rock, but no natural hydrothermal reservoirs.

“There are far more places that look geologically like Canada than like Iceland,” Brasnett emphasized. If we can prove out deep EGS here, it becomes a “turnkey capability” exportable to Australia, central Europe, Africa, and beyond. In a world desperate for clean baseload power, especially with electrification and data centre demand spiking, that capability is priceless.

So why isn’t geothermal a pillar of Canada’s climate competitiveness strategy?

Partly, as Brasnett carefully noted, because Canada has a habit of “spreading too little butter over too much toast,” avoiding bold bets in favour of lukewarm, incremental efforts. Meanwhile, China is filing “unbelievable numbers of patents” in subsurface technology while the United States has spent a decade running the Utah FORGE living lab to de-risk deep geothermal through coordinated research, drilling, and reservoir engineering.

Canada has done none of that.

Yet nothing prevents us from starting now. The regulatory barriers have largely been resolved; Alberta and BC now have geothermal resource development acts in place, eliminating past ambiguity about rights and permitting. The supply chain exists. The workforce exists. The technology exists. The economics are lining up.

What’s missing is the strategic decision to treat advanced geothermal the way Europe treated wind or China treated solar and batteries — as a national growth pole with backward linkages, forward linkages, and technology linkages that drive prosperity across entire supply chains.

Canada has a once-in-a-generation chance to lead in a sector perfectly aligned with its strengths. If we continue to ignore it, others will not.

We don’t need to invent this industry. We just need to build it here.

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The International Energy Agency has always built its authority on policy. Its World Energy Outlook models are maps of intent: what governments say they will do, not necessarily what markets or industries are already doing. That worked when energy transitions moved at a bureaucrat’s pace. But today, the engine of change is industrial, not political. China — through sheer manufacturing scale and global electrification reach — is driving a transformation that the IEA’s scenarios struggle to capture.

The agency dropped APS from the World Energy Outlook 2025, saying that national commitments are too uneven to model reliably. Instead, it focused on the Current Policies and Stated Policies Scenarios. In effect, the IEA narrowed its gaze to a future far more friendly to oil and gas. A world that changes, but only as fast as formal policy permits. Yet the real world is moving faster, driven not by pledges but by production lines and industrial policy.

China: The Electrifier-in-Chief

Over the past decade, China has fused state planning, industrial finance, and scale to build the world’s most powerful clean-energy ecosystem. In 2024 alone, it sold 12.8 million New Energy Vehicles and exported 1.3 million more. It now accounts for roughly 60 percent of all new renewable capacity installed globally each year. Its solar panel manufacturing capacity will soon exceed the United States’ total electricity demand.

This is not just an energy story; it is an industrial one. Chinese automakers — BYD, SAIC, Geely, Changan — are flooding the Global South with affordable sub-$20,000 EVs, the ubiquitous two- and three-wheelers, bundled with charging networks, battery-recycling plants, and joint-venture factories. Beijing’s “industrial diplomacy” is electrifying emerging markets in the way Western aid once sought to wire them for fossil fuels.

The IEA sees policy diffusion as the main driver of energy transitions. China shows us something else: industrial diffusion. What the IEA calls “infrastructure limitation” in Africa, Southeast Asia, and Latin America is being dismantled by Chinese capital, logistics, and engineering. Electrification is becoming an export commodity.

The Physics of Scale

The story that the IEA’s model misses is not ideological; it’s arithmetic. Every doubling of cumulative solar production cuts costs by about twenty percent; every doubling of battery output by roughly eighteen percent. Those learning curves compound faster than politics can keep up. In 2010, a battery pack cost over $1,000 USD per kilowatt-hour; by 2023, $130. By 2030, it may hit $60. Solar module prices have fallen by over ninety percent since 2010.

Once parity arrives, substitution accelerates. Each ten million EVs on the road displaces around half a million barrels of oil demand daily. At projected adoption rates, that’s the equivalent of erasing an entire Saudi Arabia of oil demand within a decade.

This is the industrial feedback loop that OPEC, ExxonMobil, and the U.S. Energy Information Administration have consistently failed to model. Their scenarios assume hydrocarbons’ dominance and treat innovation as exogenous, a polite way of saying “someone else’s problem.” The IEA broke from that orthodoxy with the APS, which embedded learning curves and cost feedback. Yet by retreating from APS in 2025, the agency risks losing sight of the very dynamics that once made it the gold standard.

The Global South’s Leapfrog

Look beyond Beijing. Across the Global South, Chinese-financed solar farms, grid-stabilization projects, and electric-mobility programs are rewriting development logic. In Kenya, rooftop solar is offsetting diesel generation. In Brazil and Indonesia, low-cost Chinese EVs are scaling faster than policy incentives can track. In the Middle East, Chinese firms are co-building battery-storage complexes once thought decades away.

This diffusion matters because it shifts the geometry of the transition. For decades, energy modernization flowed North to South. Today, it runs in reverse. China’s overcapacity — derided in Western policy circles — is accelerating global deployment by forcing prices down. The IEA’s models, calibrated to declared policies rather than industrial momentum, under-represent this structural feedback.

Capital Flows Tell the Truth

Follow the money. Global clean-energy investment surpassed $2 trillion USD in 2024 and continues rising about 6–7 percent annually. Fossil-fuel investment, meanwhile, has plateaued or declined. Capital allocation now looks more like APS than like the new CPS (Current Policies Scenario), or even the still conservative Stated Policies Scenarios (STEPS). Markets are already betting that electrification, not hydrocarbons, defines the mid-century energy mix.

If the IEA’s CPS and STEPS project fossil demand growth into the 2040s, they describe a world that capital markets have already abandoned. APS aligns more closely with where investors are placing real money — grids, storage, batteries, renewables, and electrified transport.

The Model and the Machine

What’s unfolding is a divergence between two kinds of forecasting: the model built on policy, and the machine built on production. The model counts regulations; the machine multiplies learning. The IEA’s WEO 2025 treats electrification as an outcome of government intent. But China’s industrial ecosystem shows it is increasingly a self-propelling system — feedback, not fiat.

This is not to diminish policy. Without it, China’s ecosystem would not exist. But policy there functions as scaffolding for industry, not a ceiling. The IEA’s omission of APS makes sense within its institutional DNA; it reflects what can be officially promised. Yet it leaves unmodelled the real-world force now shaping the transition: manufacturing momentum.

The Consequences for Analysts and Policymakers

For analysts, the lesson is simple: the energy transition is being built, not legislated. The baseline for understanding it is no longer the pace of policy but the speed of industrial learning. For policymakers, particularly in countries like Canada still investing billions in hydrocarbon expansion, the implication is brutal. The world is electrifying faster than you can permit a pipeline.

The APS still fits the facts because it embeds the physics of feedback. The IEA may have stopped publishing it, but China is still proving it — one gigafactory, one grid, one EV fleet at a time.

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Will Donald Trump derail the global energy transition? Probably not, because China is now driving the transition, not the US. But, as leader of the world’s largest economy, he can certainly do some damage, especially to American efforts to build clean energy manufacturing of solar panels, batteries, electric vehicles, and their supply chains.

“Trump appears to be on the cusp of barricading the US economy behind a tariff wall and cementing its role as the world’s biggest fossil fuel producer,” writes Bloomberg’s David Fickling. “The risk for the US is that China can see how doubling down on its green push will enhance its wealth and global status, and diminish that of its rival.”

Trump gets that China is America’s chief geopolitical rival. One of the few accomplishments from his first Administration is alerting the United States to the economic threat it poses. He blustered throughout the recent election campaign about tariffs, as high as 60 per cent, he intends to levy on China. 

But Trump thinks the prize is the American market. It’s not. 

That would be the Global South, which consists of the world’s low-income and emerging economies, including Latin America and the Caribbean, Africa, India, and large swaths of Asia. These correspond roughly to the non-OECD (Organization for Economic Co-operation and Development) countries OPEC expects to drive oil and gas demand growth to 2050 and beyond.

Extending the latest World Oil Outlook report’s time horizon to 2050 “amplifies the role of India, Other Asia, Africa and the Middle East as the key sources of incremental demand in the coming years,” OPEC says.

Twenty-two million barrels per day of incremental demand, compared to an 11 million barrels per day decline in the OECD.

Minimizing China’s presence in the Global South would seem like a logical strategy.

China has enormous under-utilized manufacturing capacity in the key clean energy technologies (wind, solar, batteries, EVs, heat pumps). At the Third Plenum a few months ago, the national government committed to “three new things” – solar, batteries, EVs – as the primary focus of its industrial strategy going forward. While it sounds crazy to Westerners, even with all that idle plant, over the next decade China is committed to investing as much or more as its Western rivals in building even more facilities. 

Where will all that production go?

The US and Canada will be closed for business. Europe is slowing imports of China’s clean energy tech with its own tariffs. Japan and South Korea aren’t keen about China flooding their markets, which aren’t that big anyway. China’s domestic market is big, but not that big.

The only outlet for all that pent up manufacturing is the Global South. 

Not surprisingly, Chinese companies are already building EV plants in key markets like Brazil and Thailand while doubling EV exports from 1.3 million units in 2023 to 2.7 million this year. China’s Belt and Road initiative is supporting infrastructure designed to export resources (e.g. Brazil soybeans) and import manufactured goods. For example, China invested $1.3 billion in Peru’s $3.5 billion recently opened Chancay port.

“Chancay is the latest development in a worrying pattern of Chinese state-owned companies, which are beholden to the political interests of their government, building and operating ports in strategic waterways across the world, from the Aegean Sea to the Panama Canal,” the Atlantic Council reported.

The Biden Administration’s response is the Americas Partnership for Economic Prosperity, designed to lever private capital along with US public funds to build infrastructure. The project hasn’t come close to matching China’s hustle. The Atlantic Council says that President Xi Jinping intends to sign more economic agreements this year with Latin American countries.

This is in a region the US has considered its “backyard” for over a century. 

China is on the move.

Let’s assume Trump slaps higher tariffs on Chinese goods when he assumes office in January. That will sting, but China’s leaders are ready with a pushback strategy of their own. You can bet it includes more attention to the Global South.

Given Trump’s antipathy to clean energy and his frequently stated desire to roll back Biden climate initiatives, there is a very good chance he will exit office in 2029 with US suppliers of clean energy products still not competitive with China. Perhaps costs will be low enough to speed up the American energy transition, but it’s unlikely firms will be active much beyond their domestic market. Meanwhile, their Chinese competitors will be firmly entrenched in the regions where growth is most expected.

Trump’s second term is very likely to end with the US a distant second place in the clean energy arms race, perhaps even third behind Europe. 

“[W]hile Trump is caught up with short-term and transactional wins, Xi has been laser-focused on coming out on top in the long run,” says Fickling.

How ironic that his “America First” strategy may end with an “America, Distant Runner-up” Reality.

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Alberta already has a Plan A. It’s called the Emissions Reduction and Energy Development Plan. To understand how risky it is, you need to understand OPEC’s “Oil and Gas Forever” worldview, which is the basis for how the Alberta government thinks about the energy future.

OPEC’s recently released World Oil Outlook 2050 forecasts mid-century oil demand at 120 million barrels per day, up from 103 million barrels currently. You read that correctly. Just as the global energy transition grabs another gear, perhaps two, the cartel is doubling down on the status quo. 

OPEC forecast comes with OPEC narrative

“OPEC does not believe that energy sources are locked in a zero-sum game,” Secretary General Haitham Al Ghais wrote in July, “nor can the history of energy be reduced to a succession of energy replacement events.”

In other words, the energy future will look much like the past. 

After 1945, the rapidly industrializing world couldn’t get enough energy and primary energy demand skyrocketed, led by fossil fuels. Hydro and nuclear also grew rapidly, but were added to fossil fuels. Diversification, not displacement.

OPEC thinks history will repeat itself. This time, the rapid growth of energy consumption will be led by emerging middle income economies in the Global South. An expanding middle class in India and Brazil and Indonesia want the same lifestyle as the North. The new voracious appetite for consumer goods will ensure that wind and solar are absorbed into the energy mix and do not displace hydrocarbons in the 21st century.

Premier Danielle Smith and the oil and gas industry share OPEC’s view. 

That’s all Smith talked about during the World Petroleum Congress in Calgary a year ago. She pilloried the International Energy Agency for predicting peak oil demand by 2030, calling it a “political activist organization.” Recently, she has mused about doubling Alberta’s oil output to eight million barrels per day. Every second day it seems she is in the media excoriating Prime Minister Justin Trudeau for supposedly holding up West Coast LNG expansion.

For Smith and OPEC, oil and gas are entering a golden age of expansion, not staring down the barrel of demand destruction.

During her World Petroleum Congress press conference, I asked her if Alberta had a Plan B, just in case the IEA turned out to be right. Smith’s long-winded politician’s non-answer made it clear there is no Plan B. 

Alberta all in on “Oil and Gas Forever”

Smith’s gamble is unacceptable. At least, it should be. Peak oil and gas demand by 2030, followed by decline, low prices, and oil company failure, is a huge gamble for Albertans. If she’s wrong, a lot of workers won’t be able to pay their mortgages in the not too distant future.

An Alberta Plan B isn’t a nice-to-have, it’s a need-to-have. The existential threat to the Alberta oil and gas industry, one of the largest in the world, is too great to be fantasized away. 

Or, as is more likely, simply misunderstood.

This energy transition is different. It is technology-led, not commodity-led. Solar, wind, and batteries on the supply side, electric vehicles, batteries, heat pumps, and electric industrial processes on the demand side. And all of that technology is manufactured in a factory, most of them in China.

Manufacturing technology that creates energy is fundamentally different from extracting oil and gas. More like electronics manufacturing. For example, the calculator that cost my parents $75 for my Grade 8 math class is now an app on my phone and costs me nothing. In a pinch I can ask Google to do the calculation. 

A similar process is at work for clean energy. Wind and solar often bid into wholesale electricity markets at zero cost. China automakers churn out EVs as low as $5,000. Battery prices have fallen off a cliff, enabling even more renewable power generation and lowering the cost of EVs. Perhaps most importantly, clean energy costs are forecast to continue falling for years. 

Which is why Haitham Al Ghais is wrong. Make no mistake, electricity is an existential threat to oil. Oil’s customers, the automotive industry, have chosen its competitor, electricity, to fuel their vehicles. 

In fact, electric transportation is the “disruptive innovation” for the oil and gas business model. And that’s bad news for Alberta.

“…the list of leading companies that failed when confronted with disruptive changes in technology and market structure is a long one,” wrote Harvard Business School professor Clayton H. Christensen wrote in his 1997 classic, The Innovator’s Dilemma.

Hard to imagine Suncor or Imperial Oil declaring bankruptcy, but once a business model has been disrupted, failure often follows in short order (e.g. BlockBuster). Failure on that scale would be catastrophic for Alberta.

Hence the need for a Plan B.

During her press conference, Smith said that if demand for Alberta oil and gas dries up, “we’ll make stuff out of it.” I’m paraphrasing, but it was a throwaway comment. Not meant to be taken seriously. Nor should we take it seriously. It takes 10 to 20 years to build new industries, scale up new companies. The time to begin is now, not when the golden goose begins its death rattle.

Alberta desperately needs a new energy plan. But who will step forward to draft it? That’s the awkward question for which there appears to be no answer.

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Yesterday I published a Note criticizing the University of Alberta energy transition course. The crux of my argument is that Alberta’s oil and gas leadership thinks the current energy transition is commodity-led like all past transitions when, in fact, this one is technology-led. The UofA course ignored that difference, hence my criticism. My Note was the target of some nasty ad hominem. Meh, to be expected. What annoyed me, though, was the baseless accusation that I am anti-oil. Not true.  

What I am against is combusting hydrocarbons when we should be using them, instead, as feedstock for Alberta advanced materials manufacturing industries. Imagine a future where Alberta-based factories turn oil sands bitumen into carbon fibre rather than shipping it to American refineries in Illinois or Texas to be made into gasoline or diesel.

This hypothetical isn’t an idle exercise. Change is coming and much sooner than most Albertans , especially my critics, are prepared to admit.

In addition to a rapidly accelerating energy transition, there is a global materials transition underway. At least that’s what Saudi Aramco VP Dr. Ibrahim Abba and chemist Dr. Paolo Bomben of Alberta Innovates told me. 

Starting with the assumption that Alberta hydrocarbons can be used for non-combustion purposes, at significant scale, follow my argument.

Here’s what I wrote in yesterday’s Note about the nature of this energy transition: “this energy transition is technology-led, unlike every other historical energy transition, which has been commodity-led. When your energy is made in a factory instead of extracted from the ground and combusted, different rules apply, the transition moves at a much faster pace, and the outcomes are different.”

In a nutshell, wind and solar energy, batteries, electric vehicles, heat pumps, and plenty of other clean energy technologies have passed the inflection point on their S-curves and are now competitive with oil and gas-based technologies like the internal combustion engine. In the words of Dr. Doyne Farmer, the triumph of clean energy is now inevitable.

But when are they likely to triumph? Plenty of forecasters have modelled the energy future. The International Energy Agency, which is well respected outside Alberta if not within, thinks peak demand for all fossil fuels will arrive by 2030, followed by decline within a few years.

Assume the IEA is correct

Is disaster ahead for the Alberta oil and gas sector? The Canadian Energy Regulator’s modelling shows oil sands production declining next decade if the industry has to pay even some of the compliance costs of lowering its extremely high greenhouse gas emissions. The efficient projects with an excellent resource will last longer than less efficient ones, but none of the producers will enjoy anything like the current boom.

Industry players have a more optimistic view of a demand destruction scenario, but it doesn’t hurt to worry about the worst case during a period of intense structural change. Fortunately, the oil sands, which comprise about 75 per cent of Alberta’s oil production, have a pivot: the aforementioned advanced materials manufacturing. 

I argue that the threat of a worst case is significant enough that Alberta should begin planning now to build a domestic non-combustion market for bitumen. This has a number of major benefits.

One, extends the life of the oil sands for decades. Instead of facing potential consumption decline combined with a marginal existence, or perhaps even widespread corporate failures, producers could profitably supply local non-combustion demand for decades. Perhaps even into the next century or two, given the huge size of Alberta bitumen reserves.

Two, a new market would provide new sources of revenue to pay for the clean up of Alberta’s unfunded oil and gas environmental liabilities, which likely top $300 billion and counting. Then there’s another $75 billion just to decarbonize the oil sands. Who knows what the bill for the rest of the industry will be? Keeping the industry financially healthy ensures that taxpayers won’t be on the hook for corporate liabilities.

Three, building an advanced materials industry and the necessary supply chains in Alberta will create tens of thousands of new jobs while generating more government revenue to support public services. 

How in the world can that argument be construed as anti-oil? 

The real energy conversation Alberta should be having

Let me be clear: I am not anti-oil, I am anti-Alberta oil and gas status quo. 

My journalism over the past decade has convinced me that the “Future is Electric” worldview is far more likely than the “Oil and Gas Forever” worldview that dominates in the University of Alberta course. If I’m right, then the Alberta industry is staring down the barrel of an existential threat unlike any other it has encountered, including the reviled National Energy Program. 

If I’m right, then Alberta should begin a pivot today away from the combustion of its hydrocarbons and toward non-combustion uses, like materials manufacturing. This is a perfectly legitimate argument, which makes my criticism of the University of Alberta’s course entirely legitimate, regardless of whose noses may be out of joint.

However, as energy economist David Gray is fond of saying about Alberta’s oil and gas hacks, “if it’s not combustion, it’s communism.” That’s about the quality of criticism levelled at my Note. Unfortunately, it’s also the quality of the Alberta conversation about the global energy transition.

Ask yourself this question: is it anti-oil to defend the Alberta oil and gas status quo, whose existence is threatened by the energy transition, or to argue for a pivot to a different market that has the potential to prolong the Alberta industry’s life while providing the revenue to clean up its liabilities?

Another question: whose interests are my critics serving? The giant oil companies or the people of Alberta, who actually own the hydrocarbon resource according to the Constitution of Canada?

It’s time for a new conversation about the future of oil and gas in Alberta. Thank you to the critics of yesterday’s Note for opening the door. If they have the courage of their convictions, they’ll agree to public debates where their Oil and Gas Forever narrative can be properly tested.

If I was a betting man, my money would be on them to avoid that spotlight, mostly because their analysis can’t stand up to close scrutiny.

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