Climate Action Archives

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I was in Houston this week for CERAWeek, the so-called Super Bowl of Energy, for a series of intense, and informative, discussions about the current global energy crisis. Last year, the forum was all ears as the new Trump administration laid out its plans for “energy dominance.” This year, the forum was all about the dominant energy crisis unleashed by the Iran war.

1. Watch for the aftershocks

The prevailing view was the conflict — and dangers in the Persian Gulf — will continue for some time, and energy markets will struggle to find a new normal. Former Defence Secretary James Mattis, who has fought three wars in and around the Gulf, said the U.S. cannot declare unilateral victory. Even though Iran’s navy is destroyed, it can deploy anti-ship cruise missiles from its 1,000-kilometre coastline. That means a longer conflict than was first anticipated, and more economic reverberations as supply chains stay gummed up. Traffic through the Strait of Hormuz is down 70%, with 850+ tankers stuck in the crosshairs. It will take weeks just to move that traffic — one reason the IEA called this the “greatest global energy and food security challenge in history.”

2. Oil gets the attention; gas causes the pain

The LNG market disruption is not a temporary shock. QatarEnergy’s CEO confirmed that about 17% of Qatar’s LNG export capacity will be offline for years, with billions of dollars in repairs required. LNG margins are already 200% higher on average for 2026 through 2028. New supply from Australia, Canada, and the U.S. will now just replace the losses, rather than add to supply growth. That means a return to pre-war LNG supply levels is unlikely before late 2027 at the earliest. Analysts at S&P Global Energy expect losses of up to 35 million tonnes of LNG in 2026 — enough to cover half of Japan’s annual imports.

3. Next, food

The World Food Programme warned as many as 45 million more people could fall into acute food insecurity if the conflict doesn’t end soon — a crisis that rivals Russia’s invasion of Ukraine. One big reason: 30% of global urea trade comes out of Iran and Hormuz-constrained countries, and fertilizer exports from the Persian Gulf have dropped precipitously, driving up prices globally and threatening spring planting seasons. Bunker and cargo costs are up 4x in Europe, adding to the transport nightmare. Agriculture input prices have nearly doubled in Egypt. Fertilizer plants in India, Bangladesh, and Pakistan have had to stop production entirely as natural gas and oil prices spiked — and unlike in 2022, there are few alternatives. India cut output from three of its urea plants. Bangladesh shut four out of its five fertilizer factories.

4. Alarms across Asia

The Strait is the only sea route for 93% of Japan’s oil imports, prompting Tokyo to begin releasing 80 million barrels of oil from its strategic reserves. Japan’s LNG buffer is considerably thinner — Japanese companies hold only about three weeks of LNG inventory, equivalent to the total volume of their Hormuz-dependent LNG imports. Taiwan and South Korea are as severely threatened. In South Asia, fuel rationing is well underway. Pakistan and Bangladesh rely on Qatar for roughly half of their LNG imports. Asian LNG spot prices have surged 143% since February 28.

5. Emerging market risks

Rising debt costs and higher import prices have always been a curse for developing countries, especially those that leveraged foreign credit and energy to stimulate growth. In several African economies, energy and transport account for 15-25% of inflation. The Asian Development Bank has identified the Philippines, Pakistan, and Sri Lanka as the most vulnerable in that region. Ripples will be felt in low-cost manufacturing belts, too, as input costs — petroleum-based plastics, for instance — rise. All that will put pressure on indebted countries to borrow more to subsidize consumers and industry, just as interest costs are rising again. In Uzbekistan, Egypt and Mongolia, fuel subsidies account for 28.3%, 28.0% and 11.9% of government spending, respectively. Those dependent on tourism, such as Kenya and Sri Lanka, may be further challenged.

6. A new moment for data centres

It’s widely viewed that power demand from AI-driven data centres will continue to surge, and there won’t be enough gas to run them. Big Tech companies like Google and Microsoft are developing plans to use nuclear, even reviving mothballed plants in the U.S. But that will take years. Data centres now account for 4% of U.S. electricity, and projections are it’s heading to 12%. It’s not just a U.S. and Chinese phenomenon. Asian countries like the Philippines have ambitious data centre strategies, predicated on more imported gas to run them, but will now need that gas — at a much higher cost — to keep factories and the AC running. The supply-demand imbalance doesn’t compute.

7. A new moment for #EVs

The energy shock has put a new light on China’s ambitions to sell EVs to the world, especially the developing world — if those energy-dependent countries can find new ways to electrify their fleets. Currently about 60% of the world’s pure EVs are sold in China. Will the energy shock shift growth? That will take time, especially for countries facing a host of other challenges to build out electric infrastructure. Expect most countries to have both gas- and electric-powered cars for a long time — even the U.S. Fordmotor Co used the Houston forum to promote its strategy for a new electric pick-up truck, being developed at a skunk works plant in California. The truck’s appeal is its simplicity more than its energy needs. The new vehicles use a fraction of the components (it’s all battery) and a fraction of the internal wiring, making it far easier and cheaper to make. U.S. automakers are also learning from China on how to build vehicles as tech platforms. The biggest question in Ford CEO Jim Farley’s mind: How will Americans react? As Ford knows, cars are culture.

8. New frontiers for drilling

It’s early days — and lots of contingencies are emerging — but as much as 10 million barrels a day of production may be lost this year due to the conflict. That’s roughly 10% of global needs. There are plenty of oil fields that can replace that — just not quickly or efficiently. Take Venezuela. Its recent increase of 250,000 barrels per day over 2026 represents less than 0.3% of global consumption. Neighbouring Guyana offers more hope, as does Brazil, Nigeria and even Libya. But all those together don’t get anywhere near the missing barrels. There was chatter at CERAWeek about a return to Alaska drilling, North Sea exploration and even Norway’s Far North. Canadian production is expected to increase, too, including offshore opportunities in Newfoundland and Labrador. But most eyes are on Russia. It may have 80 million barrels of oil currently on the open seas, and a multiple of that ready to go.

9. Canada’s pitch

Energy Minister Timothy Hodgson didn’t mince words. Canada will produce and export a lot more oil and gas, He even put numbers on it: 2.5 million more barrels a day of oil (a 50% increase) and 100 billion cubic feet of gas (double projections) by 2035. He told various audiences that Indigenous support has rarely been stronger for resource development, in part because most big resource projects now have indigenous ownership. Premier Danielle Smith told one audience an agreement between Ottawa and Alberta on carbon pricing is coming and will be critical to long-term contracts. It can also underpin plans for a massive investment in carbon capture and storage, something the Carney government remains insistent on. Behind closed doors, sovereign wealth funds, multinationals and state corporations lined up to advance negotiations for long-term contracts and equity stakes. A universal question among them: Can #Canada execute this time at speed and scale?

John Stackhouse is Senior Vice-President, Office of the CEO, RBC Thought Leadership

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What you need to know about the West’s struggle to break China’s dominant role in rare-earth elements refining—and the technologies that could break Beijing’s hold

The West has ceded critical minerals processing to China–and rebuilding that capacity in a way that is environmentally permittable, economically viable, and scalable within Western regulatory frameworks is a defining industrial challenge of the decade.

Why processing went to China

China controls 70% of the global refining market share for 19 of the world’s 20 most critical minerals; across minerals such as rare-earth elements that figure is north of 90%. This dominance is the compounding effect of three structural forces, each reinforcing the other over time.

Economics. China’s historically low labour costs, energy subsidies, and state-backed industrial policy built a cost structure that undercut Western processors at prevailing commodity prices.

Environment. Conventional rare earth processing relies on sulphuric acid baking, multi-stage leaching, and solvent extraction, generating toxic waste streams and radioactive tailings. According to a Harvard analysis, for every tonne of rare earth output, conventional processing produces roughly 2,000 tonnes of toxic waste. Western jurisdictions internalize those costs through permitting, environmental liability, and community opposition.

Industrial ecosystem. As China’s processing capacity scaled, it drew in engineering talent, downstream manufacturers, and end-use demand—each reinforcing the next. As Western processing retreated over the last 40 years, financial markets stopped funding, institutions stopped training, and downstream manufacturers defaulted to Chinese supply. China accumulated the opposite—four decades of process knowledge, engineering expertise, and refining IP that enforces a barrier to Western re-entry.

The environmental opportunity and technology response

Rebuilding Western processing capacity by replicating China’s model runs into the same barriers that caused offshoring. Arguably it’s now compounded by China’s October 2025 export controls on processing equipment and technology. A more tractable path confronts the environmental liabilities of conventional methods directly—and in doing so, also improves the economics.

Grant and procurement decisions offer a reasonable proxy for which processing approaches have cleared basic viability thresholds. The U.S. Department of War, Department of Energy, and the Government of Canada have directed meaningful capital toward next-generation critical minerals processing since 2022.

Waste and tailings. New processing approaches—including flash heating and modular ion-exchange systems—substantially reduce or eliminate waste streams, making projects permittable where conventional processing would not be.

Canadian firm Ucore Rare Metals is a case in point. Its RapidSX platform is a column-based solvent extraction system for rare earth separation that runs approximately three times faster than conventional mixer-settler systems, with a smaller physical footprint and no Chinese equipment or technology. The U.S. Department of Defense (DoD) awarded US$4 million for Ucore’s Kingston, Ontario, demonstration facility, followed by US$18 million toward its Louisiana Strategic Metals Complex. The Government of Canada committed $36 million at the G7 resource ministers meeting in October 2025 to support refining of samarium and gadolinium.

Emissions. Decarbonizing processing is mainly a question of energy source: replacing fossil-fuel-fired kilns and furnaces with electrically powered alternatives—particularly hydro or other clean sources—solves the emissions problem and improves economics given falling clean electricity costs. Most global critical mineral refining runs on coal-heavy Chinese grids. Processing on hydroelectric power, as Quebec offers, materially changes the emissions profile of the same output.

Australia-based Metallium Resources Inc. is working on a solution to transform metal recovery and recycling waste through flash joule heating—millisecond electrical pulses to heat material above 3,000 degrees Celsius, extracting metals selectively without acid or water. The U.S. DoW provided an initial gallium-focused grant and selected the technology as a processing step in a DoW-funded red mud recovery project in Louisiana. Metallium’s Texas demonstration plant has been commissioned, with feedstock supply secured through a binding agreement with commodity firm Glencore plc.

Recycling. The IEA finds recycled energy transition minerals such as nickel, cobalt, and lithium produce on average 80% fewer greenhouse gas emissions than primary mined material. Recycling rates for rare-earth elements and lithium remain below 5% globally, yet feedstock is accumulating fast: spent EV batteries, end-of-life wind turbine magnets, and electronic waste from AI infrastructure all carry recoverable critical metal content.

The EU has institutionalized recycling demand through binding regulation. Under EU Battery Regulation 2023/1542, manufacturers face minimum recycled content requirements. These are enforceable compliance thresholds—not targets. They create a structural demand signal for recovered materials that current processing infrastructure cannot meet.

ReElement Technologies is aiming to turn scrap into mining stock. A subsidiary of American Resources Corp, ReElement runs a modular ion-exchange and solvent-based refining platform processing rare earth magnet scrap and lithium-ion battery black mass into high-purity separated products. The platform accepts multiple feedstock types without Chinese primary concentrates. ReElement has received DoD and Department of Energy funding as part of the U.S.’s effort to establish domestic rare earth and battery metal refining capacity.

Challenging China’s rare-earth refining dominance will take time, but the funding of experimental technologies, backed by policy focus and support, suggests that the transition is finally underway.

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Shaz Merwat is Energy Policy Lead at RBC Thought Leadership

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➔ Canada charts new scenarios for a new energy era

➔ The small switcheroo that revolutionized energy efficiency

➔ A handbook for climate hopefuls

Signals

What happens to coffee farms when pest-controlling bats disappear? The world is waking up to the fact that biodiversity impacts everything from your morning cup of Joe to corporate bottom lines. Recently, 152 member governments, including Canada, backed the IPBES Business & Biodiversity Assessment report. It’s groundbreaking research as more than half of the world’s economy, roughly US$78 trillion, depends on nature, from food to tourism to construction, according to RBC research. One of the IPBES report’s key takeaways: align fiscal policies and financial flows with biodiversity and sustainability goals. However, muted mainstream media coverage suggests the message of nature as an asset—and shield—has yet to resonate with a mass business audience. For more, read Unearthing Value: How nature can play a critical role in pro-growth agendas

It’s a light-bulb moment for energy efficiency. While the global built floor area grew 20% over the past decade, lighting electricity use remained stable—in no small part to the humble LEDs, which are nearly 12 times more efficient than halogen lamps. Without them, the world would have gobbled up 800 TWh more electricity—exceeding Africa’s annual electricity consumption, the International Energy Agency estimates. Significant potential remains: 30% of lamps in South America and parts of Asia-Pacific (excluding China and India) still need upgrades, while replacing aging first-generation LEDs would further conserve power watts.

Nuclear’s making a climate comeback. The low-carbon electricity technology underlies some of the world’s cleanest grids and could help decarbonize several industries, says Vivan Sorab, our Clean Tech Policy Lead. France’s electricity grid emits just 22 gCO2/kWh, one of the lowest in the world, as nuclear supplies 65% of the country’s power. Ontario’s grid saw emissions intensity rise to 74 gCO2/kWh in 2024 over the previous year as nuclear refurbishments and demand growth necessitated more natural gas in the system. Small modular reactors (SMRs) could extend nuclear’s climate logic beyond the grid. Carbon-intensive industries like heavy oil extraction and petrochemicals require high-temperature steam that renewables are struggling to deliver on their own. SMRs could eventually provide both electricity and industrial process heat, making them one of the few technologies that can help hard-to-decarbonize sectors. For more on nuclear, read Atomic Advantage: Canada’s generational opportunity in a new Nuclear Age.

Canada’s message from CERAWeek

By John Stackhouse, Senior Vice-President, Office of the CEO

The climate contingent at this week’s big CERAWeek energy conference in Houston could be forgiven for a bit of dizziness. It’s not just the bayou city’s humidity (early) or the marathon TSA lineups at Bush International (late); the tenor on climate action felt a bit 180.

Two years ago, Joe Biden’s energy secretary Jennifer Granholm was here to explain the administration’s LNG pause. On Monday, Donald Trump’s energy secretary Chris Wright stood on the same stage to explain plans to double LNG production this decade.

It’s not just the White House that has changed climate colours. Delegations from dozens of countries came to Houston to plead for more of everything—especially natural gas. The Japanese—home to Kyoto and a lot of climate innovation—were at the front of the queue, explaining they can no longer rely on Qatar and a few others for the gas that powers their island economy. (Remember the nuclear shut down, post-Fukushima.)

The U.S. is now working to supply Japan and other allies with as much gas and oil as it can muster. And it looks like a lot of that will come from Canada.

When it comes to oil, Canada covers two-thirds of the gap between U.S. production (12 million barrels a day) and consumption (20 million). We supply an even bigger share of Americans’ gas in a range of states.

Energy Minister Tim Hodgson came to Houston to tell the world that the federal government is committed to seeing oil production increase by 2.5 million barrels a day — a 50% jump — and doubling LNG exports from what’s now planned. Can that massive increase be done in line with climate commitments?

I posed the question to Hodgson and Alberta Premier Danielle Smith in a conversation I moderated at Canada House, as part of the conference. They expressed strong alignment (so much so that Smith called herself the environmental spokesperson for Carney’s energy policy). They then honed in on three words: methane, carbon pricing and Pathways.

Their governments later that day unveiled an agreement on methane emissions that will help keep Canada, and Alberta, on a path to net zero (“carbon neutrality” is Smith’s preferred measure). Industrial carbon pricing is thornier, although it may get solved by extending some timelines.

The big nut is Pathways, which Hodgson called “the biggest carbon capture project in the world” and would make all those new barrels much more carbon efficient. Cost is another matter. Ottawa thinks Pathways could cost as little as 50 cents a barrel, which it sees as a deal for the industry if it secures a 50% increase in production. Industry people here see the cost to be higher, although there’s some hope that possible investments from Canadian pension funds would reduce long-term capital costs.

We can expect more on all this next week, when the Ottawa-Alberta MOU on energy hits its key milestone date of April 1. The global crisis may cause some delays, and lead to further adjustments. But the message in Houston from Ottawa and Alberta was clear: more production and lower emissions is the new Canadian plan.

New scenarios for a new energy era

By Shaz Merwat, Energy Policy Lead

Electrification is going to be Canada’s key climate enabler. Electricity generation is expected to be up 50% by 2050, with renewables making up 91% of the grid (compared to 79% today), according to Canada Energy Regulator’s latest traditional scenario, which it labels as Current Measures.

While net-zero by 2050 remains a challenging aspiration, the economy is also forecast to advance towards lower-carbon sources. With carbon-intensive coal almost out of the equation, and crude oil production growth easing, fossil- fuel growth will be driven by the relatively lower emissions natural gas: By 2050, natural gas will account for 43% of total oil and gas production—compared to 36% today.

Published two weeks into the war on Iran—what could prove to be one of the most cataclysmic energy events of this century—the report offers multiple paths for Canadian energy and electricity growth and emissions contraction.

Canada is moving beyond net zero: This year’s edition retains the Current Measures and Canada Net-Zero Scenarios from Canada’s Energy Future 2023 (EF2023), but adds Higher and Lower Cases that bracket the baseline by varying economic growth, liquefied natural exports, data centre demand, and global energy prices—offering a more plausible ±20% range of outcomes rather than anchoring the analysis around net zero by 2050 as the only destination.
Emissions will decline around 14% by 2050. GHG emissions under Current Measures are lower in EF2026 at every point—but a net-zero Canadian economy is nowhere on the horizon. By 2050, EF2026 projects 546 megatonnes (Mt) versus 566 Mt in EF2023, reflecting better near-term decarbonization from policies already in place, particularly in the electricity sector.
Sun and wind power will power the grid. Electricity generation under Current Measures is broadly similar across both reports. By 2050, total generation reaches approximately 975 Terawatt-hour (TWh) in the Energy Futures 2026 report compared to 972 TWh (EF2023). The more notable divergence is in the renewables share: EF2026 projects a faster ramp-up, reaching 91% non-emitting generation by 2050 versus 86% in EF2023, with stronger growth from 2035 onward.
Canada’s kicking the peak oil can down the road. Oil production is consistent near-term but EF2026 is notably more conservative in the medium term. By 2035, EF2026 projects ~6.0 million barrels per day (bpd) versus 6.5 million bpd in EF2023—converging closer by 2050 at 5.9 versus 6.3 million bpd by 2050. Peak oil production has been pushed out seven years, to 2042 from 2035 prior. The High Scenario projects oil production soaring to 6.4 million bpd.
…and firing up natural gas. EF2026 projects substantially higher output in every time horizon, reaching 26.8 billion cubic feet per day (bcfd) by 2050 versus 21.5 bcfd in EF2023—a 25% increase—driven largely by new LNG export assumptions baked into the 2026 modelling.
Carbon capture, utilization and storage (CCUS) volumes will likely be marginal. While not specifically broken out in the forecast, about 4% of Canada’s total power generation will be from carbon-captured natural gas in the Current Measures scenario.Total oil and gas emissions are expected to be 176 MT in 2050, down 12% vs 199 MT as modelled in 2025, on the back of a 5% increase in oil and gas production (5.9 million bpd by 2050, compared to 5.6 million bpd in 2025).
Canada is trailing peers: Within a global context, under Current Measures, Canada’s emissions decline from 694 Mt in 2023 (latest available data) to 562 Mt by 2035 is a 23% reduction from its 2005 baseline of approximately 730 Mt. That puts Canada marginally behind the U.S., where Rhodium Group projects a 26–35% reduction below 2005 levels by 2035. Both trail the EU considerably—the EU is on track for roughly a 45–47% reduction by 2035 under current and planned measures. All three are falling short of net-zero without additional policy action.

A handbook for climate hopefuls

Fred Pearce, a UK-based science writer and public speaker, who has authored a few ominously titled books over the years: When the Rivers Run Dry, The Land Grabbers and With Speed and Violence, has a change of tone with Despite it All: A Handbook for Climate Hopefuls. In it, heaims to tell stories about “hope amid the gloom.”

Here’s an excerpt from a short email exchange:

What makes you hopeful?
We remain in deep peril. Every tonne of greenhouse gases added to the atmosphere sticks around for centuries. But my hope lies in the extraordinary progress we have made technically. China, and increasingly India and other fast-developing countries, are adopting solar power as their default source of energy, because it is so cheap. That was unimaginable even 20 years ago. The Chinese are now transforming the cost of batteries so we can store the sun’s energy, rather than just tapping it real-time. We are entering the solar age. It is economics now, not politics, that is making the difference. Whether it is happening fast enough remains as issue. But it is happening.

One of the reasons you give for your optimism are smaller families and an ageing population—but isn’t that going to impact economic growth and government’s ability to support citizens?
It’s a new kind of population bomb. The fear is of a growing number of aged economic “dependents”, and fewer people of working age to support them. Ageing could also slow economic activity by undermining innovation from young go-getters. We have to rethink the old: see them as a source of wisdom and knowledge, as carers as well as the cared for. I am 74 now and still working, so I would say that! But let’s also remember we have fewer children to care for, and today most women are economically active, not at home to bring up the kids.

What worries you the most?
Cliff-edges, points of no return. Melting ice sheets on Greenland and Antarctic and the resulting rising sea levels may soon be unstoppable—even if temperatures come back down. Deforestation in the Amazon may be near the point where lack of trees dries out the air so the remaining trees die off. And the ocean circulation system could be close to collapse, switching off the Gulf Stream. Then there is melting permafrost unleashing methane, a potent greenhouse gas that would supercharge warming. Again, unstoppable. Science cannot tell us yet where or when we may trigger such tipping points. So even as we make remarkable ground in ending our addiction to carbon-based fuels, my fear is it could be too late to avoid these great regime shifts. We may be lucky; we may not.

Conversations

Failure to value and account for natural assets are among the four barriersholding back climate adaptation initiatives in Canada,write C.D. Howe senior fellow James Stewart and Anabela Bonada, managing director at the Intact Centre on Climate Adaptation, University of Waterloo.
Gavin Mooney at the Energy Transition Advisor explores how rapid solar power deployment helped Pakistan cushion its crushing dependence on Middle East natural gas.
Canada is entering one of the largest electricity buildouts in its history. If it’s going to succeed, Indigenous Nations must be at the centre—not on the sidelines, write Kwatuuma Cole Sayers and Blake Shaffer in an op-ed.
As energy systems are struggling to transform in the face of climate change, Justice in Canada’s Energy Transition report asserts that justice and equity are central to making a low-carbon economy sustainable, writes Julie MacArthur, a co-editor of the report.
“Excessive heat warnings, red flag warnings for wildfire conditions, and monthly temperature records being shattered yet again… this is easily one of the most anomalous out-of-season heatwaves that I’ve observed,” says climate scientist Zachary Labe about the current season.

Curated by Yadullah Hussain, Managing Editor, RBC Climate Action Institute.

Climate Crunch would not be possible without John Stackhouse, Jordan Brennan, John Intini, Farhad Panahov, Lisa Ashton, Shaz Merwat, Vivan Sorab, Caprice Biasoni, Lavanya Kaleeswaran and Joelle Schonberg .

Have a comment, commendation, or umm, criticism? Write to me here (yadullahhussain@rbc.com)

Climate Crunch Newsletter

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Key Findings

Canada is one of only six countries with a domestically designed and exportable nuclear technology portfolio. That strategic leverage positions Canada to shape global energy security and forge long-term alliances.
Canada can take advantage of rising global interest in nuclear power. The United States has ambitions to quadruple its nuclear capacity, and more than 30 other nations have pledged to triple nuclear capacity by 2050.Canada can offer proven value across the nuclear supply chain to help scale the growing global market.
Uranium is the U.S.’s structural vulnerability—and Canada’s advantage. U.S. nuclear reactors require 25,355 tonnes of uranium annually, but sources only 8% of that requirement domestically. Canada, which has the world’s third-largest uranium resources and is ramping up production, is establishing its anchoring role in North America’s nuclear fuel supply chains with its high-quality deposits, reliable production, and geopolitical stability.
Canada’s nuclear supply chain is primed for expansion but sits at a strategic inflection point. Ontario’s successful nuclear refurbishment projects have preserved high-value nuclear manufacturing and engineering capabilities and have demonstrated that large-scale nuclear projects can be delivered ahead of schedule and under budget. But future competitiveness depends on sufficient policy clarity, project pipelines, and new nuclear build success to justify sustained investment and expansion.
Canada faces three credible, and not mutually exclusive, nuclear futures. Canada can anchor its strategy around: (1) uranium and fuel security; (2) lead in technology through pressurized heavy water reactors (PHWRs) and light water small modular reactors (SMRs); or (3) integrate more deeply into a North American nuclear build-out.
Canada needs to move fast to execute its nuclear ambition. Civil nuclear competitors are pairing technology with financing, diplomacy, and long-term partnerships as global interest in nuclear power surges. The window is narrowing for Canada to translate intentions into lasting influence. It could prove to be a multi-billion-dollar exporting opportunity as nuclear investments need to nearly double to US$120 billion annually by 2030 to double nuclear capacity, according to one International Energy Agency scenario.

Following a period of stagnation in the Western world, nuclear power is making a comeback—a global resurgence driven by the rising power demand of artificial intelligence, the energy security concerns, and shifting industrial policy.

The technology sector, facing imminent increases in power demand thanks to AI data centres, is a key driver of nuclear’s resurgence, with companies like Google, Microsoft, Meta, and Amazon signing agreements with conventional nuclear power producers and advanced nuclear technology companies. Google signed a 25-year power purchase agreement with NextEra Energy to restart the Duane Arnold Energy Centre in Iowa, a 610MW plant offline since 2020,¹ provided early-stage capital to Elementl Power to develop three advanced nuclear sites in the U.S.² and partnered with Small Modular Reactor (SMR) company Kairos Power and the Tennessee Valley Authority on a reactor demonstration project.³ Amazon has invested over US$1 billion in nuclear projects and technologies,⁴ including a stake in the advanced SMR company X-Energy.⁵ And Meta, looking to secure reliable, long-term electricity supplies to power its AI ambitions, inked 20-year agreements to buy energy from three U.S. nuclear plants (Meta also committed to developing small modular reactors with two companies). These deals will provide the company with 6.6 gigawatts of power by 2035, according to Meta.⁶

Beyond the growing power needs of artificial intelligence, energy security concerns, particularly in Europe, are driving the reversal of nuclear phaseout plans and the development of new nuclear strategies. Italy has recently begun exploring the reintroduction of nuclear power into the country’s energy mix, almost four decades after its last plant was shut down.⁷ Denmark is actively considering nuclear power,⁸ and Norway has begun impact assessment studies for a potential SMR.⁹ The European Commission is also developing a strategy targeting SMR deployment by the 2030s.¹⁰

Yet nuclear’s resurgence in the West faces significant challenges. Most notably, reactor construction projects across several Western nations have been marked by cost and schedule overruns that have raised execution risk and hampered financing. The Vogtle 3 and 4 projects in Georgia, the first new reactor projects in the U.S. in decades, were built at an estimated cost of US$36.8 billion as of 2014, relative to an original estimated cost of US$14 billion.¹¹ The Flamanville 3 project in France connected to the grid in December 2024, twelve years behind schedule, at a cost of €13.2 billion, quadruple the initial cost estimate.¹² The U.K.’s Hinckley Point C project remains under construction, and is now projected to cost £49 billion, nearly triple the £18 billion estimate when it commenced construction in 2017, with Unit 1 not expected online before 2030.¹³ And in the U.S., the V.C. Summer nuclear project in South Carolina was abandoned in 2017 following project delays and cost overruns.¹⁴

But with interest in nuclear resurgent, worldwide capacity could grow 75% to roughly 730GW by 2050 under current policies, according to the International Energy Agency.¹⁵

For its part, the U.S. is aiming to quadruple what is already the world’s largest nuclear reactor fleet by 2050 (up from its previous goal to triple capacity), strengthen its supply chain, and modernize nuclear fuel supplies. The U.S. is advancing rapidly on next-generation nuclear technology, committing about US$5 billion in federal funding to small modular and advanced reactor research, demonstration, and early deployment through U.S. Department of Energy programs.

China, meanwhile, is building an additional 38.5GW of capacity¹⁶, while Russia is leveraging nuclear energy for its Arctic, industrial and foreign policy goals, extending its state-backed reactor export model.

With significant uranium reserves and deep nuclear technology expertise, Canada is one of only six countries with domestic and exportable nuclear technology portfolios. And it is embarking on a new nuclear construction program that could become one of the largest in the West if the full suite of projects proceeds as planned. Construction of the G7’s first Small Modular Reactor (SMR) has started at the Darlington nuclear site in Clarington, Ontario, and several of Canada’s nuclear reactors have been successfully refurbished ahead of schedule and under budget, bucking the cost overrun trend of nuclear projects in other Western countries.

Simply put, Canada has an opportunity to play a key role in nuclear’s resurgence—from anchoring global uranium and fuel supply to leading in nuclear technology and service exports to its allies, scaling North American nuclear supply chains, and enhancing global nuclear exports.

Here are some of the goals and requirements for each pathway.

1. Uranium Powerhouse

The Goal

As global reactors restart, stable uranium mining and nuclear fuel services (conversion, enrichment, fabrication) become increasingly critical to energy and security. Canada’s world-class uranium deposits and uranium conversion expertise anchor allied nuclear fuel security in North America and abroad, guarding against energy insecurity and resource nationalization risks.

Leveraging Canada’s Advantage

Planned and under-construction reactors will increase global uranium requirements as they come online, necessitating new mines as existing resource quality drops and supplies of secondary uranium become more constrained.

Canada is home to the world’s third largest uranium resources after Australia and Kazakhstan,¹⁷ and already plays a key role in anchoring nuclear fuel supply chains thanks to its high-quality deposits, reliable production, geopolitical stability, and fuel manufacturing expertise.

Ongoing expansion of existing projects and new mines in Saskatchewan will enhance Canada’s position as a key energy security pillar for allies in North America and globally. By building on its strengths in uranium conversion (Canada holds 18% of global uranium conversion capacity),¹⁸ Canada can strengthen fuel services stability for an expanding nuclear fleet in North America and abroad.

Pathways to Success

The U.S.’s nuclear reactor fleet already has key energy security vulnerabilities, with 20% of its enriched uranium sourced from Russia in 2024.¹⁹ U.S. policy efforts have sought to reduce the dependence with proposed investments in spent fuel reprocessing, and the previous administration’s ban on Russian enriched uranium imports (Russia controls 40% of global enrichment capacity)²⁰. However, even with potential expansion of enrichment infrastructure, the U.S. will remain dependent on uranium imports, with domestic production currently a fraction of annual reactor requirements. U.S. nuclear reactor operators purchased 25,355 tonnes of uranium in 2024, with only 8% sourced domestically, with Canada providing the greatest source of U.S. purchases at 36% of the total.²¹ Continued U.S.–Canada partnership on uranium will be critical for the security of the U.S.’s nuclear fuel supply. While Canada is currently self-sufficient in uranium and fuel manufacturing thanks to reactors that run on natural uranium, future nuclear reactors, such as SMRs and potentially large light water reactors, will necessitate enriched uranium for fuel, potentially strengthening the case for Canada to seek domestic enrichment capabilities.

2. Nuclear Tech Pioneer

The Goal

Leveraging its existing technology expertise and expanding its domestic large-scale nuclear program alongside growing expertise in SMR deployment would strengthen Canada’s energy and economic security domestically. It would also provide a differentiated portfolio of reactor technologies, engineering and operational services, and regulatory support for new and existing nuclear jurisdictions.

Leveraging Canada’s Advantage

Canada’s experience in the Candu pressurized heavy water reactor (PHWR) design, construction, and operation, underpins a 17-reactor strong fleet across Ontario and New Brunswick and 12 units exported internationally since the 1970s.²² Fuelled by natural uranium, Canadian reactors do not rely on enriched uranium fuels, enabling independence from a concentrated set of enrichment suppliers, an increasingly valuable attribute as energy independence gains traction globally. Modern, gigawatt-scale designs and upgraded versions of existing reactors could expand Canada’s reactor portfolio if they are licensed and proven commercially at home. Simultaneously, successful construction and operation of grid-scale light water SMRs in Ontario would cement Canada’s position as a first mover and operator in this technology, allowing Canadian nuclear suppliers and operators to market their construction, operational and regulatory expertise to new markets.

Combined, these capabilities could position Canada among a handful of countries with credible expertise and export capability across a portfolio of technologies ranging from large nuclear reactors to small modular reactors.

Such a nuclear energy strategy could also provide a boost for the more than 200 domestic nuclear component manufacturers supporting Canada’s program. PHWR and SMR deployments abroad could enable value capture for Canada across the full reactor lifecycle, from uranium and fuel services supply, regulatory support, reactor construction and operation, through refurbishments, and decommissioning—even with some supply chain localization in partner countries.

Pathways to Success

Experience from early SMR projects will enable the Canadian nuclear sector, and partners across the supply chain, construction, and engineering services, to anchor global deployment. Poland,²³ Hungary,²⁴ and Bulgaria²⁵ alone could represent a potential pipeline of up to 40 SMRs, providing a critical early market for Canada starting in the 2030s, as domestic deployment of large reactors sets the stage for international exports later into the decade. To succeed, Canada’s local deployments will need to be delivered and operated successfully, backed by the expansion of its supply chain and nuclear manufacturing base beyond its current refurbishment-ready capabilities. Key manufacturing gaps, such as reactor vessels and heavy water production for new reactors, will need to be closed. Canada will also need to expand its nuclear talent pool to prepare for reactor construction, as well as preserve existing expertise, as global deployments create competition for talent.

3. Continental Energy Partner

The Goal

Integrating more deeply into the U.S. supply chain (including reactor component manufacturing, construction, and deployment) would give Canada access to an established export pipeline for large light water nuclear reactors. Favourable commercial negotiations and cross-border intellectual property transfer could enable Canada to partially localize supply chains for U.S.-origin large reactor components, allowing Canada to support domestic construction programs and support foreign reactor construction.

Leveraging Canada’s Advantage

U.S.–Canada civil nuclear cooperation is rooted in decades of technology collaboration and expertise exchange. Although Canada and the U.S. operate different nuclear reactor technologies today and have distinct nuclear regulatory procedures, the two nations have formally collaborated on several advanced nuclear technologies such as next-generation SMR fuels and light water SMRs through joint technical work between each nation’s regulators.²⁶

A traditionally single-technology nuclear nation, Canada could expand its large nuclear reactor fleet to include U.S.-origin designs such as the AP-1000, which benefits from more than a decade of operating experience in the U.S. and China. This could lower construction risk for gigawatt-scale reactors in Canada by leveraging lessons learned from prior construction projects in the U.S. and China, and enable Canada’s nuclear supply chain to expand, and selectively access a global export pipeline. Currently, 20 AP-1000 reactors have been contracted in markets such as Poland, Bulgaria, Ukraine, and India,²⁷ and Canadian manufacturers have signed memorandums of understanding for the potential supply of components such as valves and flow control equipment,²⁸ as well as steam generators, pressure vessels, and heat exchangers.²⁹

Canadian manufacturers have already provided components such as valves³⁰ and fabrication services for reactor modules³¹ to U.S. nuclear projects such as Georgia’s Vogtle 3 and 4 reactors. U.S. nuclear supply chains, which lay largely dormant until the Vogtle projects lack the capacity to scale reactor construction to the levels envisaged under the U.S. government’s ambitions,³² could create opportunities for Canadian manufacturers if projects proceed to construction. The Canadian nuclear supply chain already hosts more than two dozen companies with nuclear certifications from the American Society of Mechanical Engineers, covering core nuclear components, safety systems, and relief systems,³³ evidence of an established, licensable industrial base capable of supporting large-scale reactor deployment.

Pathways to Success

For deeper North American supply chain integration to succeed, Canada will need to secure and increase domestic manufacturing and export opportunities as the U.S. builds out its nuclear industrial base. Washington has increasingly framed nuclear energy as a strategic economic sector, with industrial policy playing a growing role alongside commercial considerations. Recent agreements between the U.S. federal government and nuclear sector partners reflect this orientation, positioning reactor deployment as a vehicle for U.S. industrial renewal. The trajectory of existing U.S.–Canada trade dynamics, such as tariffs on Canadian-manufactured components, alongside commercial negotiations, will determine the extent to which Canada is able to localize manufacturing and scale current exports to the U.S.

Canada: A Civil Nuclear Power

Eighty years ago, Canada became the second country, behind only the United States, to achieve sustained nuclear fission thanks to the work on the experimental Zero Energy Experimental Pile (ZEEP) reactor at the Chalk River Laboratories in Ontario.³⁴
Canada’s domestic, pressurized heavy water nuclear reactor technology, the Candu, supplies 15% of the country’s electricity through 16 reactors in Ontario and one reactor in New Brunswick.³⁵
The Canadian nuclear sector employs roughly 89,000 people,³⁶ and is a major producer of medical isotopes, like Cobalt-60 for cancer treatment and medical sterilization, through its nuclear reactors.
Canada leads in next-generation nuclear technologies, having developed the world’s first SMR roadmap in 2018 and is building the G7’s first SMR near Toronto, a project that will eventually supply 300MW of capacity, enough to power 300,000 homes with reliable, zero-emission power.
Canada is advancing rapidly on its deep geological repository, a culmination of years of stakeholder engagement and Indigenous engagement, entering the impact assessment process, bringing the country closer to a single solution for the long-term responsible management of spent nuclear fuel.

The path forward

As Canada expands its nuclear power industry, it needs to enhance and refine several areas across the supply chain.

Establish a comprehensive nuclear strategy. Centred on energy and economic security and a fleet-based approach for deployment, a pan-Canadian comprehensive strategy—in coordination with Ontario and other provinces, industry and universities—can improve certainty needed for supply chain investment, workforce development, inter-provincial cooperation, and international partnerships. It could integrate deployment targets, construction timelines for major projects, and technology pathway clarity with the goal of ensuring future energy and economic security.
Develop a competitive nuclear export financing and diplomatic infrastructure. A dedicated nuclear export financing facility, supporting a multi-technology reactor portfolio including SMRs, could improve Canada’s competitiveness as an exporter of nuclear reactors, components, and expertise. It could be paired with enhanced diplomatic infrastructure, with dedicated nuclear trade commissioners and the integration of civil nuclear cooperation into Canada’s foreign policy strategy.
Build and maintain a nuclear-skilled workforce. Skills development planning, including expansion of apprenticeship programs, visa fast-tracks for nuclear specialists, university partnerships, and training facilities tied to deployment timelines could smooth the way for large-scale nuclear deployment.
Close critical supply-chain gaps and support expansion. Canada’s nuclear supply chain will need to scale heavy water production and close gaps in calandria manufacturing and zirconium supply for fuel cladding, while supporting local suppliers to remain competitive against manufacturers in other civil nuclear jurisdictions like China. The nuclear supply chain can provide an avenue for manufacturers from other sectors (e.g., the automotive industry) to diversify into, but can benefit from targeted support for high-cost and time-intensive nuclear component manufacturing certifications from professional bodies such as the Canadian Standards Association and the American Society of Mechanical Engineers.
Protect uranium value chain and strengthen fuel security. Growing mining capacity, expanding conversion infrastructure to capture more value-added services along the nuclear fuel cycle, and assessing advanced fuel requirements and potential expansion of Canada’s fuel capabilities into areas such as fuel fabrication for light water nuclear reactors and enrichment will prepare Canada and its allies for an energy secure future regardless of technology.

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Vivan Sorab is RBC Thought Leadership’s Clean Tech Lead

RBC Thought Leadership is grateful to the following individuals and organizations for sharing their expertise.

Atkins Realis

Atomic Energy of Canada Limited

BWXT Canada

Cameco Corporation

Canadian Nuclear Safety Commission

Conexus Nuclear Inc.

David Paterson

Jacquie Hoornweg

Laurentis Energy Partners

Michelle Leslie

Milt Caplan, MZ Consulting

Norm Sawyer, ION Nuclear Consulting

Ontario Power Generation

RBC Capital Markets

SMR Forum

The Breakthrough Institute

The Canadian Association of Small Modular Reactors

The Canadian Nuclear Association

The Organization of Canadian Nuclear Industries

The World Nuclear Association

Westinghouse Canada

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World Nuclear News, Duane Arnold restart underpins NextEra Energy and Google collaboration, 2025

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World Nuclear News, Google to fund development of three nuclear power sites, 2025

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World Nuclear News, Google, Kairos Power, TVA announce collaboration, 2025

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World Nuclear News, Amazon, Google, Meta and Dow back goal to triple nuclear capacity, 2025

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X-Energy, Amazon Invests in X-energy to Support Advanced Small Modular Nuclear Reactors and Expand Carbon-Free Power, 2024

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World Nuclear News, Meta announces ‘landmark’ agreements for new nuclear, 2026

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World Nuclear News, Italian government introduces draft bill on nuclear energy, 2025

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World Nuclear News, Denmark begins study on potential use of nuclear energy, 2026

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World Nuclear News, Assessment of proposed Norwegian SMR plant to begin, 2026

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European Commission: Commission presents measures to increase EU’s energy independence and affordability, 2026

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U.S. Energy Information Administration, Plant Vogtle Unit 4 begins commercial operation

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Power Magazine: Flamanville 3: Europe’s Hard-Won Nuclear Milestone, 2025

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Wall Street Journal: How to Build the World’s Most Expensive Nuclear Power Plant (2026)

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World Nuclear Industry Status Report: Utilities Abandon V. C. Summer AP1000 Reactor Construction Following Westinghouse Bankruptcy, 2017

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International Energy Agency, World Energy Outlook 2025.

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World Nuclear Association, World Nuclear Outlook Report, 2026

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World Nuclear Association, Supply of Uranium, 2025

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Cameco Fuel Services

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U.S. Energy Information Administration Uranium Marketing Report, 2024.

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Thunder Said Energy, Uranium enrichment: by country, by company, by facility?

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U.S. Energy Information Administration Uranium Marketing Report, 2024.

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World Nuclear Association, Nuclear Power in Canada, 2025

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World Nuclear News: Hungary looking at deployment of BWRX-300s, 2025

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World Nuclear News: BWRX-300 to be considered for deployment in Bulgaria, 2026

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U.S. Nuclear Regulatory Commission, Joint Reports of the Canadian Nuclear Safety Commission (CNSC) and the NRC, 2026

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U.S. Department of Energy Systems Analysis & Integration Campaign: Potential Cost Reduction in New Nuclear Deployments Based on Recent AP1000 Experience, 2025

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Westinghouse Electric Company: Westinghouse and BWXT Canada Sign MoU for AP1000® and AP300™ Projects

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U.S. Department of Energy, Nuclear Energy Supply Chain Deep Dive Assessment, 2022

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Aecon, Aecon and Westinghouse sign collaboration agreements for development and deployment of advanced nuclear new-build projects, 2024

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U.S. Department of Energy: Pathways to Commercial Liftoff: Advanced Nuclear, 2023

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RBC Thought Leadership estimates based on data from the American Society of Mechanical Engineers Certificate Holder database

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Canadian Nuclear Association: History of Nuclear in Canada

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➔ Inside Canada’s strategy for the “Davos of Energy”

➔ What Canadian leaders told us about their views on climate action

➔ Canadian oil can deploy industrial carbon pricing at the cost of a Timbit per barrel, according to a study

Signals

Energy transition—not defence—will drive demand for critical minerals. Focus on electric vehicles and other energy transition technologies will be vital to underpin investments in Canada’s critical minerals sector, , according to Energy Lead Shaz Merwat. The good news is that emerging processing technologies—such as flash joule heating and direct lithium extraction—could alter the cost curve for new Canadian refining projects. Canada’s clean electricity advantage could also prove to be a differentiator as processing technology reduce energy intensity sufficiently to compete with China. Read Shaz’s Mine & Refine report and Seven Takeaways from PDAC.

How are Canadian business executives addressing climate policies? The Climate Action team was on a listening tour over the past few weeks to check the pulse on climate action among Canadian leaders. Here’s what we heard: Canadian businesses are focusing on the doable. The result is not retreat, but a sharper focus on what can be built, financed, and scaled this decade. There’s plenty of climate capital to scale ambitions. The challenge is deploying it. Read our full briefing here.

Creating demand is the impetus for the new Advanced Carbon Removal (ARC) Coalition in Canada. The coalition launched this month and is made up of RBC, Shopify, the Government of Canada and other investors to mobilize $100 million in new support for Canadian carbon dioxide removal projects by 2030. These projects cross several sectors including energy, heavy industry and agriculture, and focus on scaling durable carbon removal technologies, including direct air capture, biochar, bioenergy with carbon capture and storage, enhanced weathering, and marine carbon dioxide removal. Canada has a competitive advantage in these carbon removal pathways given its vast resources in minerals and biomass, and access to clean electricity sources for processing.

The coming war for climate

The hope is that the Middle East conflict is short-lived. But it’s already casting a long shadow on global economic growth and energy flows—and climate goals.

With much of the oil-and-gas rich region engulfed in the crisis, major European and Asian importers are scrambling to secure alternative fossil fuel supplies. Solar and wind may be “intermittent” power sources, but oil and gas are now facing challenges of their own. The question for both energy-rich and option-poor policymakers is how to make urgent short-term decisions—without undermining long-term climate implications.

Here is what’s at stake…

For Canada: Big decisions, high stakes

Safe-harbour Superpower. Nervous nations have come calling, says Tim Hodgson, Minister of Energy and Natural Resources, looking for politically neutral Canadian oil and gas. Bonus: Canadian hydrocarbons don’t pass through global flashpoints—but do face domestic logistical hurdles. Can Canada ramp up as a reliable supplier without compromising its climate goals?

Investors are already testing the waters. The temptation is to build new West Coast LNG terminals and oil pipelines, and even East Coast projects to power Europe. Newfoundland Labrador recently reached a deal with Equinor and BP p.l.c. to lay the ground for construction and production at the offshore $14-billion Bay du Nord project. The oil pipeline route formerly known as Keystone XL—and now called the Prairie Connector—is all being revived. These projects could trigger an economic growth spurt—most certainly they would raise emissions.

Provincial considerations. British Columbia and Quebec must now navigate the tension between their strict environmental mandates and the pressure of allowing new energy infrastructure through their territories. Alberta, on the other hand, would need to ensure it does not over-index on oil and gas investments amid uncertain global energy demand.

For Europe: A power reset?

Continental drift. The 40% surge inEuropeanLNG prices following the strike on Iran highlighted the economic bloc’s limited options. With the continent still scarred by the loss of Russian pipeline gas, the current Middle Eastern shock has fractured the EU’s green consensus. Italy’s recent move to suspend carbon pricing—and Germany’s quiet recalibration of the 20-year-old Emissions Trading System (ETS)—signals a pivot toward security first over climate first.

Power with strings attached. As Qatari LNG through the Strait of Hormuz dries up, Europe is facing a short-term gas crisis, with Italy, Belgium and Poland more exposed than others. While U.S. LNG is bridging the gap, this reliance is increasingly transactional, coming with “political strings” that complicate the transatlantic alliance. Faced with a complete Russian gas embargo and a supply chain for renewables that remains dangerously concentrated in China, Europe finds itself in a strategic deadlock: return to legacy coal, pay the American premium, or accelerate a transition fuelled by China.

For Asia: Wake-up call

The Electrostate Paradox: China’s energy security is currently defined by a stark contradiction. As the destination for 38% of all oil transiting the Strait of Hormuz, Beijing has much lose from Middle Eastern volatility—a vulnerability compounded by the loss of Venezuelan crude following the ouster of the Maduro regime earlier this year. While Beijing recently issued a cautious 15th Five-Year Plan—lowering its carbon intensity target to 17% to prioritize industrial stability—this retreat masks a deeper shift. As Jason Bordoff, director of the Centre on Global Energy Policy at Columbia University, argues, by absorbing the short-term costs of fossil fuel disruptions today, China is effectively clearing the path to consolidate its dominance as the world’s first true “Electrostate.”

India’s dilemma. Even before the recent destabilization in the Middle East, New Delhi signalled a significant appetite for Canadian energy, with High Commissioner Dinesh Patnaik affirming India’s readiness to absorb “whatever Canada is offering.” While India maintains deep-rooted ties with Middle East nations, the vulnerability of the Strait of Hormuz—which handles nearly 15% of India’s crude imports—has accelerated a long-standing diversification mandate. For India, the crisis could simultaneously trigger higher coal consumption, more Western LNG exports, but also focus on powering up sola, and other renewable energies.

The Asian pivot. Roughly 37% of the oil transiting the Strait is destined for South Korea, Japan, and other regional hubs—a dependency that is forcing a radical strategic recalibration. Rather than waiting for Middle Eastern tensions to stabilize, South Korea is leveraging the volatility as a catalyst. The country’s president framed the crisis as “a good opportunity to swiftly and extensively transition to renewable energy.”

It’s unclear whether fossil fuels or renewables will emerge as winners from the latest cataclysmic conflict. What’s certain, however, is that the global race to secure energy supplies has intensified.

Inside Canada’s CERA play

Canada is all set for the “Davos of energy.” The IHS CERA conference in Houston, starting March 23, will have a much larger Canadian presence than in recent years, with the Canada House pavilion and participation of Tim Hodgson, the Minister of Energy and Natural Resources, with officials from Invest in Canada (IIC), Innovation, Science, and Economic Development Canada (ISED), and Global Affairs Canada (GAC), among others.

Canada’s balancing act would be to attract American dollars but also diversify away from U.S. capital and attract a wider investor base to safeguard its sovereignty and reduce dependence on the American market.

—Canada’s four strategic themes at the event:

Standing on guard: Position Canada as a secure and stable clean and conventional energy superpower;
Being resourceful: Showcase Canada’s leadership in innovation, research and development, and emissions reduction in energy;
Championing Team Canada: Support energy companies by showcasing Canada’s benefits as a destination for energy investment capital; and,
Leveraging the sovereignty angle: Highlight Canada’s energy sovereignty and ability to meet growing global energy demand through market diversification.

—Several Canadian provinces, energy companies, and thought leaders will be amplifying the message, with Alberta Premier Danielle Smith slated for one of the panels.

—With construction on the roads in minerals-rich Ring of Fire set to commence this year and a new Critical Minerals Strategy, Ontario Minister of Energy and Mines Stephen Lecce will join a panel on the New Geopolitics of Critical Minerals.

—Canada House will feature dedicated programming focused on oil, nuclear energy, LNG, AI and energy, investment in Canada and methane abatement technologies. Some of the planned sessions, include Capital in Motion: Funding an Infrastructure Supercycle, featuring Minister Hodgson. Another with Chief Sharleen Gale, Chair of the First Nations Major Projects Coalition, will be on delivering Canadian energy to global markets.

—Other sessions focus on Canada’s low-carbon LNG, next-generation nuclear reactors, Canada’s methane innovation leadership, AI-enabled clean technology, and breakthroughs and bottlenecks in getting Canadian oil to global markets.

Climate conversations

—The world’s facing a copper shortage. John Stackhouse and Shaz Merwat discuss how Canada can help.

—The agriculture sector is asking, “why Canadian farmers are not participating in compliance carbon markets at scale as a source of offsets?” Interim Head Lisa Ashton presented our Climate Action 2026 findings at the Annual Sustainability of Canadian Agriculture Conference and carbon pricing dominated the Q&A period.

—Canadian Climate Institute’s Dale Beugin and Ross Linden-Fraser explains why the industrial carbon pricing will cost just a Timbit per barrel for Canada’s oil sands sector.

—ESG now means energy, security and geopolitics, writes Liam Denning, Bloomberg opinion columnist.

—Canadian provinces and territories signed a deal to build transmission infrastructure needed to power the country’s next generation of growth. Pembina’s Tim Weis explains its significance.

—It’s not just the latest U.S. tariffs that have gutted Canada’s softwood lumber sector. RBC Economics Salim Zanana explains the thousands cuts.

Curated by Yadullah Hussain, Managing Editor, RBC Climate Action Institute.

Have a comment, commendation, or umm, criticism? Write to me here (yadullahhussain@rbc.com)

Climate Crunch Newsletter

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This year’s Prospectors & Developers Association of Canada (PDAC) event in Toronto was abuzz with talk of Canda’s critical mineral riches and the speed at which they can be brought to global markets—at commercial scale. The industry is enthusiastic, the government supportive, but there is a long way to go to realize Canada’s mining potential. Here are seven themes that we observed at the event.

1. Diverging views of supply chains exposures

The U.S. and Canada approach critical minerals from materially different strategic frameworks, and that divergence has consequences for bilateral cooperation.

The U.S. framing is one of industrial decay and national security emergency—manufacturing surge capacity, weapons systems dependency, and concerns of China outpacing American armament production capacity by a factor of five to six. Within that frame, critical minerals are not a supply chain optimization problem but rather a symptom of a broader hollowing out of American industrial capability that extends to smelters, chemical processing, and advanced manufacturing.

Canada’s framing has been more “narrowly” commercial—a supply chain opportunity, a geological advantage to be monetized, and a seat among allies to be secured.

That gap in threat perception creates friction with an expectation the U.S. is (or at least will be, over time) operating on a more binary logic—alignment or non-alignment—while Canada has positioned itself as a middle power seeking rules-based multilateral cooperation.

Whether Canada narrows that perception gap—or develops an independent strategic rationale grounded in its own economic security interests—will likely impact how “seriously” it is taken at the bilateral table as the Canada-United States-Mexico trade deal review evolves.

2. Resolving refining bottlenecks will be key

Canada’s geological endowment is enviable, but extraction without downstream processing is increasingly seen as less than ideal. Yet, the economics of building processing capacity in Canada are deeply unfavourable.

Anecdotally, conversion costs for lithium spodumene to cathode-grade material run roughly twice what they are in China and at times in Latin America. Global copper smelter margins are often 2–5%, if not simply breakeven. Canada has closed multiple smelters over the past fifteen years. Even in China, the rare earth refining industry has not earned its cost of capital in three decades—arguably the watermark against which any new entrant must be measured.

These margins do not support private sector investment at scale without intervention. We heard overwhelming agreement that state capital needs to function as first dollar in, last dollar out on processing infrastructure. The buyers’ club concept—pooling G7 demand and stabilizing prices when they are depressed—addresses part of this problem, but the governance and trust architecture to deploy that capital at scale remains unresolved.

3. Project Vault is not a partnership of equals

The bilateral/plurilateral distinction that emerged from the sessions as it relates to the U.S. view of a buyers’ club—supply sourced bilaterally, but demand aggregated multilaterally—sounds like burden-sharing but warrants scrutiny. This architecture is in essence the U.S. acquiring mineral supply on its own terms, stored on U.S. soil and then asking allies to aggregate demand around what is effectively American strategic inventory. Put plainly: Buy American.

Nations’ tendencies to operate in self-interest in a scarcity scenario is precisely the reason for Project Vault’s domestic storage requirement. Still, for other nations like Canada, the risk is being a favoured supplier with no guarantee of preferred access when it matters most. Such asymmetry, hopefully, can be negotiated.

4. Copper is the clearest demand signal

If there is one commodity where the investment thesis is most favourable, it is copper. The convergence of AI infrastructure buildouts, electrification, defence procurement, and grid expansion has created a demand profile that generalist investors can underwrite without relying on policy-dependent assumptions.

Yet even with this enviable demand profile, there is strong consensus of a growing shortage of copper supply, still. As it relates to Canada, copper may be the most realistic near-term entry point through which broader mining investment, including in associated polymetallic deposits, gets unlocked, solving many of the “more traditional” less niche, mining development challenges.

5. Don’t ignore civilian demand

At its simplest, sustainable long-term demand secures supply chains. China built its critical minerals dominance through civilian demand—electric vehicles, wind turbines, batteries—at a scale that justified refining investment and created learning curve advantages that now make its processing margins tough to compete against.

The strategic paradox facing North America is attempting to construct supply chains for critical minerals while simultaneously pulling back on the civilian demand drivers to justify that investment. Without a credible domestic demand signal, processing facilities face uncertain offtake, and without offtake, project finance is unavailable. At present, alternative anchors such as defence and AI/data centres is expected to be the near-term catalyst, but the sheer size of the total addressable clean energy demand is one that better captures the attention of longer-term, more generalist investors.

6. Prioritize across the minerals list

Treating 30-plus minerals as a single policy strategy ignores the complexities of each metal’s supply chain. The genuine policy problem is in niche commodities where Canada punches above its weight—rare earths, scandium, tungsten, graphite, nickel and possibly lithium—where markets are either small, opaque, and/or structurally dominated by a single producer (often China).

A strategy focused on five to eight minerals with a clear demand anchor is viewed as more executable and more credible from an effective strategy than a broad-based approach. If oriented successfully, this will have positive spillover effects on the procurement of the types of skills and human capital associated with the greater strategy, such as rare earth separation, hydrometallurgy, and advanced processing requiring specialization unreplicated through equipment procurement alone. The expertise that exists across the G7 countries is an untapped potential.

7. Regulatory coordination as competitive advantage

The Major Projects Office represents a meaningful shift toward facilitation of these projects. Brownfield expansion is the near-term opportunity while Indigenous partnerships, structured early with genuine economic participation, is consistently the most effective accelerant to mitigate permitting and financing risks.

Shaz Merwat, is the Energy Policy Lead for RBC Thought Leadership

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Climate Action 2026: Reset, Retreat, or Renew highlighted the drop in climate action in 2025 for the first time since the report’s 2019 baseline. It wasn’t a total shock that climate wasn’t a major priority considering the challenges Canadians are facing on trade, affordability, national unity and security. Still, we wanted to delve deeper—is this drop going to persist in 2026? What can Canada do to push through the headwinds and drive climate action back up in 2026?

The Climate Action Institute set out on an engagement tour with industry leaders and climate policy experts over the past few weeks to understand what’s next for climate action in Canada and what path governments, businesses, and consumers will take in the year ahead—reset, retreat or renew?

Here’s some of what we heard:

1. Climate ambitions are being reset with a focus on what’s doable

Many of the climate targets set in the early 2020s for 2030 and beyond are becoming harder to achieve – not because ambition has faded, but because short term pressures are colliding with long-term decarbonization plans. Across advanced economies, governments and businesses are recalibrating, prioritizing delivery and near-term feasibility over headline ambition. The result is not retreat, but a reset: a sharper focus on what can realistically be built, financed, and scaled this decade.

While climate change is still on the mind of Canadians, concern truly intensifies when climate impacts intersect with immediate issues of health and safety—in particular, when it comes to wildfires. The intersection of climate risk and daily life is reshaping policy debates and what climate actions need to be prioritizing in the short-term. Governments are increasingly exploring how to align climate policy with how Canadians are experiencing environmental effects, as well as macro issues including affordability, energy security, and industrial competitiveness, rather than treating climate action as a separate agenda.

2. There’s plenty of climate capital. The challenge is deploying it.

There are $100 billion of government incentives budgeted between now and 2035 for clean-tech and climate programs, according to our estimates.¹

The problem is that industry leaders find many Canadian climate funds “untouchable” or with transaction costs that are too high. For example, stakeholders in the mining and clean technology sectors struggle to access programs like the Low Carbon Economy Fund, citing bureaucratic hurdles such as complex granting processes. Stakeholders said this challenge is systemic across climate programs and incentives. Notably, the Auditor General found that the federal government’s recently retired Net Zero Accelerator, an $8-billion fund, attracted only 15 out of the 55 largest-emitting companies in Canada and resulted in just two signed agreements by late 2024. The biggest barrier cited was the lengthy and complex application process, averaging 407 hours.²

Leveraging AI applications was suggested by industry as one option to help streamline project review processes and synthesize project data, reducing the administration burden for governments and applicants. AI powered government administration is a trend that has a growing list of working examples, like DAISY, the Development Application Information System, in New South Wales in Australia that helps local councils and project developers accelerate approval processes.

3. Policy friction and geo-political uncertainty threatens Canadian climate competitiveness

In an era marked by protectionism, shifting alliances, and supply-chain risk, the idea that Canada can compete globally on climate ambition alone can feel aspirational. Yet, for emissions-intensive, trade-exposed sectors, climate competitiveness is less about idealism and more about whether decarbonization can tangibly support growth, resilience, and market access.

Canada’s steel sector illustrates that tension. Over the past year, steel sector exports fell 24%, as the industry saw reduced revenues and demand, and more than 1,000 direct jobs lost, moving long-term 2050 net-zero targets lower on the priority list for companies.³ Yet, decarbonization opportunities that are clearly aligned with growth and market prospects help make the case for climate competitiveness. The U.S.’s 50% tariffs on Canadian steel accelerated plans for Algoma Steel to transition production from traditional blast furnaces to electric arc furnaces, which use electric power instead of coal, allowing for a more flexible, lower-cost operation that is more competitive under trade pressure. Yet, this switch did not come without tradeoffs, including large upfront investments and scaling down employment.

British Columbia’s timber industry exemplifies a sector hit hard by tariffs, but with the potential to bolster Canada’s climate competitiveness ambitions. After a long downturn fuelled by mill closures, pest outbreaks and wildfires, the timber industry is seeking bounce back opportunities through new markets that can boost demand. Mass timber could be an option.

As a low-carbon material, mass timber can reignite domestic production, feed the modular housing boom, and decarbonize the building sector. To succeed, federal, provincial, and municipal governments must prioritize low-carbon procurement, adopt “tall wood” building codes, and streamline project permitting.

Canada climate competitiveness in other sectors hinges on getting major projects off the ground. Despite holding the world’s sixth-largest lithium reserves, and substantial deposits of nickel, cobalt, and rare earth elements, Canada is not a major player in producing the materials that are essential to batteries, wind turbines, and electric vehicles.⁴ While Natural Resources Canada has identified critical minerals as central to economic growth and climate strategy, mining projects remain hindered by capital gaps and long permitting timelines. Geopolitical fragmentation complicates market access and financing for Canadian projects. For investors, climate alignment alone is insufficient. They require regulatory clarity, infrastructure readiness, Indigenous partnership certainty, and long-term offtake agreements. Without streamlined approvals and coordinated federal–provincial policy, Canada risks failing to leverage its mineral wealth for the global energy and industrial transformation.

Climate competitiveness could be a fantasy if Canada can’t pass the test of reducing policy friction and mitigating geopolitical uncertainty fast enough to make climate alignment the simplest path to growth in resource-based sectors.

4. A national electricity strategy requires a major shift in priorities

An imminent pan-Canadian electricity strategy is set to map a plan for expanded power generation and remove barriers between provincial markets.

According to our estimates, expanding electricity generation by 2050 by low-emission sources including nuclear, hydroelectric and abated natural gas in addition to solar and wind, would cost over $1 trillion.⁵ Canada’s surging electricity demand is a hot topic as industry leaders and consumers grapple with the current bill to meet demands, like Toronto Hydro’s $5.9 billion investment plan for 2025-2029. The pressing upgrade highlights the strain on existing infrastructure to support electrification (e.g., heat pump adoption).

The availability of reliable renewable power to meet rising demand is a central concern, particularly as the economics of developing low-carbon generation are not consistently viable across Canadian jurisdictions, challenging the national goal of fully decarbonizing electricity systems by 2050. Existing infrastructure and cost barriers mean natural gas continues to play a significant role and is expected to remain the dominant heating source in many provinces including Alberta, Saskatchewan and some Atlantic provinces. On the demand side, affordability is often the primary driver for households considering a switch to low-emitting technologies such as heat pumps. However, in provinces like Saskatchewan, where subsidies for fuel switching are limited or unavailable, homeowners often cannot justify the upfront investment required to adopt low-emission solutions. Without supportive policy measures or improved economic incentives, the financial case for transitioning to cleaner technologies remains challenging for many households.

Scaling energy supply to meet demand and deliver on a pan-Canadian vision requires a shift in priorities to “build big things,” focusing on infrastructure like the East-West energy grid and major climate projects. However, projects have yet to get off the ground raising questions if big and bold is possible, or if the small and fragmented tradition of Canada’s federation will persist.

Other countries are finding ways to meet their economies’ rising power needs. In 2024, China added approximately 543 gigawatts of new electricity capacity, according to their National Energy Administration. The power generation added since the end of 2021 in China now exceeds the size of the entire U.S. power system. While Canada’s needs are proportionally smaller, the comparison highlights the speed required to compete in clean energy manufacturing, supply chains, and technology deployment.

5. Too many shovel-ready carbon removal solutions are waiting to scale

Canada’s forests, wetlands, and agricultural lands can reduce Canada’s emissions by up to 78 megatonnes of CO2e in 2030 if sustainable management and conservation are enabled.⁶ Unlocking these nature-based solutions requires scale. Projects must achieve economies of scale to go through the costly process of being verified on functioning markets to deliver real value to land stewards, such as farmers. Projects must also provide the value of scale to investors looking for large single purchases of credits or claimed impacts. It’s ironic that despite Canada’s vast natural landscape, a lack of operational scale remains the primary barrier to delivering market-based incentives.

Aside from the Conservation Cropping Protocol in Alberta that has since been retired and the Great Bear Rain Forest, there are few Canadian examples of scaled market-based approaches to incentivize nature-based solutions. Fragmented carbon pricing systems and rigid protocol design are key hinderances that have slowed progress in Canada. However, the current review of Canada’s industrial carbon pricing benchmarks, and bilateral agreements such as Alberta’s memorandum of understanding with the federal government, present an opportunity to test policy designs that can unleash investment for nature-based solutions.

6. Capitalizing on climate-conscious consumers critical to decarbonization

Despite rising national security threats, affordability concerns, and an economic downtown, roughly 33% of Canadians still list climate change as one of their top three concerns, according to our consumer survey.

Consumer demand represents a critical lever. Adoption of technologies, such as heat pumps and electric vehicles, would accelerates once the economics make sense, in the form of rebates, clear price signals, and stable policy frameworks. Businesses and policymakers can harness this demand by aligning climate policy with affordability and competitiveness for consumers.

Major infrastructure projects—such as new transmission corridors, clean-tech manufacturing hubs, or carbon management systems—require public trust to move from proposal to implementation. Without social licence, even technically sound projects stall. Building that trust means demonstrating tangible benefits: job creation, lower long-term energy costs, improved reliability, and enhanced resilience to climate impacts.

Canada’s climate challenge is increasingly a question of scale and delivery. Ambition remains important—but execution, coordination, and trust will determine whether the country can translate targets into tangible outcomes.

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We track climate related funding and expenditures announced in the budgets of the federal government and the four largest provincial governments (British Columbia, Alberta, Ontario and Quebec). This includes announced plans towards climate- and environment-related initiatives focused on decarbonization, innovation, energy efficiency, fuel switching, clean and low-carbon technology manufacturing and deployment, skills, re-search and planning. It also includes transfer payments, program spending, tax expenditures, and select public financing. Total expenditure amounts are equally spread over timeframe announced in the budgets. For select items, expenditure amounts are distributed over the years as prescribed in the budgets.

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Office of the Auditor General of Canada. 2024 Reports 1 to 5 of the Commissioner of the Environment and Sustainable Development to the Parliament of Canada, 2024.

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Office of Prime Minister. Prime Minister announces new measures to protect and transform Canada’s steel and lumber industries, 2025.

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Natural Resource Canada. Lithium facts.

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Our estimate of $1 trillion takes into account multiple public assessments of long-term electricity system needs. The 2023 Public Policy Forum report—Project of the Century: A Blueprint for Growing Canada’s Clean Electricity Supply – and Fas t—includes estimates such as the Conference Board of Canada’s The Cost of a Cleaner Future: Examining the Economic Impacts of Reducing GHG Emissions (~$1.7 trillion), the University of Montreal’s 2021 Canada Energy Outlook (~$1.1 trillion), and provincial estimates from Ontario ($375-425 billion), Quebec ($185 billion to 2035, with higher cumulative needs through 2045), and Alberta (~$44-52 billion in 2041). Together, these provincial figures approach ~$847 billion before accounting for British Columbia and other provinces, supporting the use of a $1-trillion directional estimate.

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Nature United. Natural Climate Solutions in Canada, 2021.

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➔ Stick to net zero by 2050 or abandon it?

➔ Some land sectors have a new emissions standard

➔ Canada makes a big nuclear push in Europe

The signals

Could April 1 reset Canada’s off-course climate trajectory? The Canadian Climate Institute’s latest report (which notes that Canada’s climate targets are “off course”), suggests that strengthening measures such as industrial carbon pricing and oil and gas methane rules is critical to coming close to the targets. Both measures are part of the MoU that Ottawa and Alberta agreed to hammer out by April 1. Together, these two policies could deliver an emissions-busting punch (see chart).

Canada's climate tarets depend on a few high-impact policies

Should the world give up on net zero by 2050? U.S. Energy Secretary Chris Wright thinks so. He recently chastised the International Energy Agency (IEA) for its “destructive illusion” of the 2050 goal. Amid this friction, energy ministers at an IEA summit in Paris last week failed to agree on climate objectives. It’s true that the world’s struggling to hit its net-zero targets, the UN projects, as nations from Canada to Germany retreat from some of their more ambitious climate policies. But few are looking to cast aside net zero just yet. France and other European nations pushed back during the summit, noting that electrification remains a cornerstone of the bloc’s economic policy. Meanwhile, Canada is expected to unveil its Climate Competitiveness Strategy, and China has already emerged as the world’s first “electro-state.”

China has galloped ahead of competitors with a new electric work horse of the ocean. Fittingly, in the new Year of the Horse, China debuted ocean-going Ning Yuan Dian Kun, featuring a battery capacity equivalent to 380 Tesla Model 3s. The test launch comes as the international Maritime Organization dithers on solving ocean pollution—technology, as it so often does, is leading policy here. Crucially, the batteriescan be shore-charged and swapped like cargo container to ensure its 740 twenty-foot equivalent (TEU) load can sail further. It’s a critical breakthrough: half the world’s container fleet is under 3,000 TEUs (twenty-foot equivalents) and these vessels are considered the ocean’s true work horses. An emissions dent in that space could make a real splash.

From lab to land: Can the new emissions standard deliver?

– By Lisa Ashton, Interim Head, Climate Action Action Institute

The first international standard for accounting for land-based sectors’ greenhouse gas (GHG) emissions is a true test of taking science from the lab to the field—and of patience.Land-based sectors, including agriculture and forestry, finally have an international standard for accounting, reporting and tracking GHG emissions.

The GHG Protocol’s Land Sector and Removals Guidance (LSRG) is intended to standardize GHG inventory accounting across companies with land-based GHG emissions allowing for consistent disclosures, which is necessary to boost their credibility with investors and regulators around claims like farmers increasing soil carbon sequestration and tree planting that are at risk of miscalculating their real impacts given the complexity of tracking GHG sources and sinks in natural systems.

It was a long time coming, taking more than five years of debates, revisions—and even a period of derailment—to land the GHG Protocol.

Why did it take so long? Simply put, it was due to tensions between climate accounting purists and industry trying to agree on a practical standard.

The sticking points:

Not knowing who your farmer is: Agri-food supply chains are geographically dispersed and cover large swaths of land to feed a growing population, challenging companies pursuing perfection in tracking changes in GHG emissions and soil carbon removals happening on the farms from which the companies are sourcing from.
Counting GHG emissions when land use changed: Repurposing land from, say grassland to cropland, has GHG emissions and soil carbon change implications that could alter a company’s GHG emissions inventory. Determining which measurement technologies, like remote sensing, are acceptable for tracking these changes and how to report net impacts has been a source of confusion.
Accounting, measuring and tracking soil carbon: GHG changes in natural ecosystems like agricultural soils is deeply complex and datasets take years to establish. The right approach that allows companies to track soil carbon changes without becoming an exhaustive, expensive academic exercise is still up for debate as measurement approaches are still being refined and many factors influence soil carbon changes.

Should Canadian businesses align with the GHG Protocol’s Land Sector and Removals Guidance?

Companies that source agriculture and forestry products are now faced with this challenging question as the decision influences their business far beyond their climate goals–from supply chain logistics and relationships to their sourcing regions and ingredient choices. The decision is even more complicated because the standard took longer than expected to be developed and missed a window when influential companies were creating their GHG accounting frameworks and developing incentive programs for farmers and foresters to deliver on-the-ground climate action in the early 2020s.

A thousand cuts

– By Stephanie Shewchuk, Housing Policy Lead

Canada’s stumbling forestry sector could hurt the country’s ability to develop homegrown sustainable solutions for packaging, building and retail sectors. The Forest Products Association of Canada called 2025 “one of the most challenging years in recent memory.” In addition, wildfires—paradoxically exacerbated by climate change—laid to waste 886,300 hectares in 2025 alone, which is well above the province’s 10-year average.

Ottawa and the B.C. governments have both acknowledged the depth of the province’s forestry crisis through targeted budget measures, but there may be room for more: new investment tax credits to encourage biomass use, improved procurement guidelines to support greater uptake of Canadian wood in government projects, and for the newly launched Build Canada Homes agency to prioritize Canadian lumber in federal construction products. It could prove to be a significant climate move as buildings currently make up 18% of Canada’s greenhouse gas emissions.

These approaches will support an industry in crisis today but its future will hinge on three key factors: market recovery, positioning sustainable wood products as a strategic asset in the transition to a low-carbon economy, and how effectively it can adapt to climate-driven wildfire risk.

Climate conversations

Canada’s Energy Minister Tim Hodgson was in Warsaw recently pushing the CANDU nuclear technology for Poland’s next suite of nuclear reactors. “We have what Poland wants,” Hodgson said as he drums up more interest for the baseload power source. Canada is also reportedly eyeing a uranium deal with India during Prime Minister Mark Carney’s visit to New Delhi this week.
Canada’s new auto strategy promises a new path for the sector, but Climate Action Institute Economist Farhad Panahov says the road ahead will be driven by three key themes.
Geothermal—the heat beneath our feet—could be a transformative baseload power source. CAI’s Clean Energy Lead Vivan Sorab digs into the opportunity.
Who came up with the 1.5 Celsius global target anyway? Climate scientist Katharine Hayhoe explains how science and politics converged on a number that defines global ambition.
Any credible scenario for Canada’s electricity future must consider wind and solar supplying majority of new demand growth. “The question is not whether these sources will expand, but whether Canada will begin to treat solar power as a core strategic asset or continue to regard it as marginal,” writes Peter Nicholson, Chair, Canadian Climate Institute, in an essay.
“Energy is not an end in itself; what people want is hot showers and cold beers.” Micheal Liebreich and others believe policymakers will have better success if they count energy from the consumer’s perspective.
Pollution poses a bigger threat to India’s economy than trade tariffs, IMF chief economist Gita Gopinath warned recently. Here’s why one of the world’s largest economies is being choked.

Curated by Yadullah Hussain, Managing Editor, RBC Climate Action Institute.

Have a comment, commendation, or umm, criticism? Write to me here (yadullahhussain@rbc.com)

Climate Crunch Newsletter

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Canada’s new automotive strategy is a signal that Ottawa is keen to persist with a central pillar of the country’s manufacturing sector, despite tariff pressures and suggestions from the U.S. President that “we don’t need cars made in Canada.” The new strategy aims to carve out a new path for the industry, led by electric vehicles that have blossomed into a US$750-billion market worldwide in 2025.¹

Key 2026 themes we are watching:

Incentives are back, but unlikely to trigger a major uptick in sales. Provincial subsides are phasing out, and the eligible cars pool is limited

Offering up to $5,000 to consumers buying an EV under $50,000, the $2.3 billion subsidy will add 840,000 EVs to Canadian roads by 2030, the government projects.

Total impact on adoption, however, might be subdued. At least 7 in 10 of all purchases under the previous federal program received a subsidy, largely stacked on top of provincial rebates. But provincial support is also dwindling. The once $7,000 stackable support in Quebec now stands at $2,000, while the $4,000 EV subsidy in British Columbia has ended. Most of the other provinces have also pulled back incentives—Prince Edward Island lowered its rebate amount, New Brunswick and Nova Scotia are ending theirs, while rebates in Manitoba and Newfoundland expiring in March.

Transaction value threshold of $50,000 targeted for the mass-market segment is also likely to limit adoption. There are only 18 models included in the list of potentially eligible vehicles for a subsidy, ² which made up only 30% of EV sales in both 2024 and 2025.³

EV prices are still high, and Chinese cars might not deliver the expected relief

The average price of a new EV in Canada was about $70,000 last year,⁴ so the 49,000 cars under the new China deal could prove to be an attractive bargain. However, final costs for a Chinee EV are likely to creep up as Chinese imports still carry a 6.1% tariff, plus the costs of shipping vehicles to Canada. Chinese carmakers are also likely to seek higher profit margins compared to their competitive domestic market, which is awash with more than 50 brands.

Overall, EV price improvements have lost momentum, especially as battery prices—that make up about a third of EV costs—are also flattening out. The 25-40% difference in costs between Chinese and U.S. carmakers stems from efficiency in battery production.⁵ The recent scale back of EV roll-out plans by the Detroit Three—Ford, GM and Stellantis—could further slow price improvements in North American EVs.

Check out RBC’s Electric Car Cost Calculator to compare electric vehicle costs to gas models

Emissions would likely to come down, mostly driven by hybrid electric vehicles adoption

Canada’s new emissions standards, however, don’t target EV sales specifically, they only aim to achieve equivalent emission reduction of up to 75% EV sales in 2035, compared to 100% EV sales required under the previous legislation.

Over the past decade, emissions performance improved by 30-50%, however, total emissions continued to rise as more cars entered Canadian roads, from ~20.1 million passenger vehicles in 2011 to 24.5 million in 2024.⁶ ⁷ BloombergNEF projects that Canada’s car fleet will largely stay flat going into 2035 and decline further in future, in which case improved emissions performance will deliver absolute emissions reduction, though clean fleet eventually hinges on parting with all tailpipe emissions.⁸

American carmakers now have the flexibility to adjust their technology to ensure compliance, which could delay full electrification in favour of hybrid cars, which are nearly half as less emitting and are more attractively priced. Hybrids are already ascendant, with car sales in the category on the rise in 2025 even as battery-electric vehicles (BEV) sales plummeted.

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BloomergNEF, Energy Transition Investment Trends 2026

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Transport Canada, EVAP Vehicle List

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BloombergNEF, EV Sales Interactive Dataset

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Statistics Canada, New motor vehicles sales, Table 20-10-0085-01. Average price derived by ratio of total purchase value to total vehicle sales.

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McKinsey Center for Future Mobility, The future of affordable EVs: Breakthroughs in battery pack costs

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Environment and Climate Change Canada, Greenhouse Gas Emissions Performance for the 2023 Model Year Light-Duty Vehicle Fleet

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Statistics Canada, Vehicle registrations by type of vehicle, Table 23-10-0308-01 and 23-10-0067-01

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BloombergNEF, Electric Vehicle Outlook 2025

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Investment in next-generation geothermal technologies is surging globally, driven by recent breakthroughs in drilling technology that are rapidly transforming the economics and viability of geothermal electricity generation. According to the International Energy Agency (IEA) and data from Underground Ventures, a geothermal-focused venture investor, financing for next-generation geothermal reached roughly CAD$3 billion in 2025.¹ The U.S. and Indonesia lead the world in investment in geothermal power and heating projects.²

While Canada possesses world-class subsurface expertise, hot geothermal gradients spanning western and northwestern regions, and companies like Eavor, DEEP Earth Energy, and Tu Deh-Kah Geothermal, domestic deployment lags dramatically. Canada currently generates less than six megawatts (MW) of geothermal power, representing 0.004% of the country’s installed capacity.³

According to the IEA, global investment in geothermal energy could reach CAD$3 trillion by 2050⁴ as nations seek reliable, zero-emission baseload power to complement intermittent renewables. Advanced technologies are key to scaling geothermal, which has traditionally been confined to specific areas with the right geology. Two technologies stand out: (1) Enhanced geothermal systems (EGS), which borrow shale drilling technology, create new fractures in hot underground rocks, inject fluids and use the steam to generate geothermal power;⁵ (2) Closed Loop Geothermal (CLG) systems also deploys advanced drilling and injects liquid through underground pipes to generate electricity.⁶ ⁷

Recent innovations are dramatically reducing costs. Improved drilling techniques borrowed from oil and gas, including polycrystalline diamond compact drill bits and real-time fibre optic monitoring, are cutting well costs by up to 12-26% compared to earlier estimates.⁸ Companies like Houston-based Fervo Energy have demonstrated sustained 8-10 MW output from single production wells at their Cape Station project in Utah, validating the commercial viability of EGS.⁹ New techno-economic analysis shows that in high-gradient regions like British Columbia’s Mount Meager or the Northwest Territories’ Liard Basin, levelized costs of energy for EGS could fall to CAD$45-53/MWh with continued innovation, competitive with combined-cycle gas and cheaper than new nuclear.¹⁰

Considerations for Canada as it looks to compete in the global geothermal race:

The opportunity could be significant.

Recent research on Baker Lake, Nunavut, reveals that previously dismissed regions of the Canadian Shield may hold viable deep geothermal resources. At a measured gradient of 28°C/km, significantly higher than earlier national estimates, modelling indicates a 90% likelihood that a four-kilometre deep system could meet the community’s heating demand, with potential for electricity generation at 7-8 kilometre depth.¹¹

Saskatchewan is already leveraging its oil and gas expertise.

Saskatoon-based DEEP Earth Energy has partnered with oilfield services company SLB to develop Canada’s first commercial-scale geothermal power facility near Estevan, near the Saskatchewan-North-Dakota border. Phase 1 involves drilling two wells, with Phase 2 potentially scaling to 18 wells producing 30 MW.¹² This project leverages the Western Canadian Sedimentary Basin’s hot sedimentary aquifers and demonstrates that Canada’s oil and gas infrastructure, rigs, drilling expertise, and supply chains, can be applied to geothermal development.

Yet regulatory fragmentation threatens to stall momentum.

Only Alberta, British Columbia, and Nova Scotia have geothermal-specific legislation. There is no national strategy, no coordinated R&D agenda, and insufficient financial de-risking tools to accelerate early-stage projects. A national regulatory template that provinces could rapidly adapt to their own specific needs alongside government-backed initiatives like the Alberta Drilling Accelerator (ADA) could help to catalyse geothermal in Canada by reducing drilling costs, developing high-temperature tools, and optimizing reservoir stimulation.

The window for Canadian leadership is closing.

The U.S. Department of Energy’s Enhanced Geothermal Shot targets electricity costs below CAD$61/MWh by 2035.¹³ with billions in funding. Tech giants including Google, Meta, and Microsoft are investing heavily in geothermal partnerships. China, Indonesia, and the Philippines are rapidly expanding deployment. If Canada does not act with coordinated policy, regulatory harmonization, and strategic R&D investment, it risks squandering subsurface expertise and geological endowment that offer natural advantages.

Vivan Sorab is Clean Technology Lead at RBC Thought Leadership

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Schulz, R., Lyons, M., Ugur, D., Bennett, S., Turich, C. (2026): Investment in next-generation geothermal is surging. Policies are key to further growth, International Energy Agency: https://www.iea.org/commentaries/investment-in-next-generation-geothermal-is-surging-policies-are-key-to-further-growth

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McCarthy, D. (2025): Chart: Geothermal energy is attracting more and more investment. Canary Media. https://www.canarymedia.com/articles/geothermal/chart-global-investment-clean-energy

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Brasnett, G., Eyre, M., & Massie, P. (2025). The Deep Heat Advantage: A techno-economic analysis of enhanced geothermal systems in western and northwestern Canada. Cascade Institute. https://cascadeinstitute.org/wp-content/uploads/2025/10/The-Deep-Heat-Advantage-FINAL.pdf

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International Energy Agency: The Future of Geothermal Energy: https://iea.blob.core.windows.net/assets/cbe6ad3a-eb3e-463f-8b2a-5d1fa4ce39bf/TheFutureofGeothermal.pdf

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https://www.energy.gov/hgeo/geothermal/enhanced-geothermal-systems

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New tool models viability of closed-loop geothermal systems – Energy

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Akindipe, D., Witter, E. (2025). 2025 Geothermal Drilling Cost Curves Update, Stanford Geothermal Workshop: https://pangea.stanford.edu/ERE/db/IGAstandard/record_detail.php?id=37947#:~:text=drilling%2C%20rate%20of%20penetration%2C%20polycrystalline%20diamond%20compact%2C%20drilling%20cost%2C%20geothermal%20well&text=wells%2C%20the%20estimated%20cost%20reduction%20is%20between%2018%25%20and%2026%25.

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Jeffreys, F. (2025). Fervo Energy’s Cape Station: A landmark next generation geothermal development: https://www.seequent.com/fervo-energys-cape-station-a-landmark-next-generation-geothermal-development/

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Bacon, Y. (2026). Geothermal Potential in Baker Lake, Nunavut: Research to support enhanced geothermal systems in Northern remote communities. Cascade Institute https://cascadeinstitute.org/technical-paper/baker-lake/

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Breer, M. (2025): DEEP Earth Energy Unveils Next-Gen Geothermal Plant Near Estevan. The Energy Mix. https://www.theenergymix.com/deep-earth-energy-unveils-next-gen-geothermal-plant-near-estevan/

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Enhanced Geothermal Shot: Unlocking the Power of Geothermal Energy: https://www.energy.gov/sites/default/files/2022-09/EERE-ES-Enhancing-Geothermal-508-v2.pdf

Texas-sized challenges: 9 takeaways from CERAWeek

1. Watch for the aftershocks

2. Oil gets the attention; gas causes the pain

3. Next, food

4. Alarms across Asia

5. Emerging market risks

6. A new moment for data centres

7. A new moment for #EVs

8. New frontiers for drilling

9. Canada’s pitch

Why processing went to China

The environmental opportunity and technology response

Download the report

Signals

Canada’s message from CERAWeek

New scenarios for a new energy era

A handbook for climate hopefuls

Conversations

Key Findings

1. Uranium Powerhouse

The Goal

Leveraging Canada’s Advantage

Pathways to Success

2. Nuclear Tech Pioneer

The Goal

Leveraging Canada’s Advantage

Pathways to Success

3. Continental Energy Partner

The Goal

Leveraging Canada’s Advantage

Pathways to Success

Canada: A Civil Nuclear Power

The path forward

Download the Report

Signals

The coming war for climate

For Canada: Big decisions, high stakes

For Europe: A power reset?

For Asia: Wake-up call

Inside Canada’s CERA play

Climate conversations

1. Diverging views of supply chains exposures

2. Resolving refining bottlenecks will be key

3. Project Vault is not a partnership of equals

4. Copper is the clearest demand signal

5. Don’t ignore civilian demand

6. Prioritize across the minerals list

7. Regulatory coordination as competitive advantage

Here’s some of what we heard:

1. Climate ambitions are being reset with a focus on what’s doable

2. There’s plenty of climate capital. The challenge is deploying it.

3. Policy friction and geo-political uncertainty threatens Canadian climate competitiveness

4. A national electricity strategy requires a major shift in priorities

5. Too many shovel-ready carbon removal solutions are waiting to scale

6. Capitalizing on climate-conscious consumers critical to decarbonization

Download the report

The signals

From lab to land: Can the new emissions standard deliver?

A thousand cuts

Climate conversations

Key 2026 themes we are watching:

Considerations for Canada as it looks to compete in the global geothermal race:

The opportunity could be significant.

Saskatchewan is already leveraging its oil and gas expertise.

Yet regulatory fragmentation threatens to stall momentum.

The window for Canadian leadership is closing.