➔ Winter Olympics: running out of slope?

➔ Chinese EVs: low emissions, high drama

➔ Notes from Davos: The looming fight for grid power

Hot takes

➔ Only four locations would be able to host Winter Olympics by 2050 if current climate trajectory persists. The 2026 Winter Olympicorganizers are powering venues in Milan and Cortina d’Ampezzo with certified renewable electricity and sustainable sourcing, even as the February event is expected to emit around 930,000 tons of CO2. More crucially, snow management remain an issue as the Alpine region has seen a 25% drop in snowfall since 1980. It’s a problem that’s unlikely to go away: a new University of Waterloo study shows that of the 92 potential Winter Olympic host locations, only 52 would remain-climate reliable for the winter edition and 22 for the Paralympics in the future, if current climate policies persist. Without snowmaking technology—only four will reliably be able to host the event by 2050.

➔ China-made EVs could lower Canadian transport emissions—but at a political cost. The decision to allow Chinese EVs in return for Canadian agri-food access comes as Canadian federal and provincial governments have rolled back subsidies. EVs have done the heavy work of lowering Canda’s emissions over the past six years, with transport emissions down 6% compared to 2019, according to Climate Action 2026 report. Cheaper EVs could help maintain the momentum. But rumblings from Washington suggest the deal could complicate CUSMA negotiations.

➔ Canada’s agri-food processors are not waiting for policy perfection. In Atlantic Canada, processors are investing to extract more output from less energy and water, while farmers see emission cuts as a way to boost productivity, observed our Interim Head Lisa Ashton, during her trip to Prince Edward Island to share Climate Action 2026 report’s findings. PEI farmers are leading the way with their 2040 Pathways plan to reduce GHG emissions, accelerate on-farm climate adaptation actions, and boost economic outputs and trade by 2040. It’s an example of how farmers can organize and design a pragmatic plan to drive environmental and economic outcomes for their businesses.

Warming up to the north

Nowhere has climate change, resources and geopolitics collided more quickly. U.S. interest in the Arctic island of Greenland and Russian ships patrolling the region should compel Canada to cover—and bolster—its northern bases.

Climate change is the trigger for interest in the Arctic: Washington’s sudden interest in the “piece of ice” is sparked by a climate-change induced thaw that’s opening up the region to activity— benign or otherwise. The Arctic has just ended a year of record heat and shrunken sea ice as northern latitudes become rainier and less ice-bound due to the climate crisis, scientists say. That’s also accelerated a race for control by the U.S., Russia and “near-Arctic state” China. Canada needs to catch up.

While the Arctic’s location is strategic—so are its resources. The northern region contains significant fossil fuel reserves—an estimated 13% (90 billion barrels) of the world’s undiscovered conventional oil resources and 30% of its undiscovered conventional natural gas resources. In addition it also contains rare earths, nickel, cobalt, graphite and other elements that are vital for energy transition. While it’s unclear whether the region can meaningfully meet rising global energy demand at cost and at scale any time soon, the faster the region warms, the more attractive and accessible its resources would become.

Sovereignty and strategic competition: Canada’s Arctic sovereignty is shaped by competing interpretations under the United Nations Convention on the Law of the Sea, with Canada ratifying the treaty and defining extended continental shelf claims, while the United States has signed but not ratified it.

The North American Aerospace Defense Command (NORAD) detected and tracked Russian military aircraft operating in international airspace near Alaska in 2025, while China and Russia launched a joint patrol in 2024.

Canada’s calculus: Canada makes up 28% of the Arctic land area, second only to Russia’s 67% Arctic landmass. However, the Canadian Arctic accounts for just under 2% of the Arctic region’s economy, and negligible population.

The Major Project Office’s focus on developing Churchill Port at the mouth of Hudson Bay, the Red Chris Mine Expansion and the North Coast Transmissions Line and Ksi Lisim LNG, along with a separate $1-billion investment to strengthen the North’s trade and transportation infrastructure, suggests Canada is joining the Arctic race. Getting these proposals to completion would be the ultimate test. The projects—and more defence spending—will be vital to allay U.S. concerns about the vulnerability of the Canadian Arctic.  But they also need to be respectful of climate and Indigenous issues.

Notes from Davos: The looming fight for grid power

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

John was at Davos last week to make sense of the new world order and a global economy that’s resembling more a bartering and babbling souk than a tightly wired marketplace. Among his observations, two directly impact energy and climate: the competing priorities for grid power, and the continued rise of renewable energy—against all odds. Read the excerpts:

A/C or AI: It’s gridlock
The next energy crisis won’t be fuelled by oil or gas; it will be strained by the world’s faltering electricity grids. Electricity demand globally is rising three times faster than total energy demand, driven by air conditioning and electric vehicles, as well as data centres.

While 90% of Americans have access to air conditioning, the number is 20% in India, 18% in Indonesia and 5% in Nigeria—each with some of the world’s fastest-growing cities. Add to that the growing demand for EVs, which now account for a quarter of global car sales, up from 5% in just five years.

Fatih Birol, head of the International Energy Agency, said the world will need 10,000 terra-watts of new electricity in the next decade, which is the equivalent of adding another U.S., Canada, Europe and Japan. Without any innovation breakthroughs, that would require 70% more copper, and a vast expansion of steel and critical minerals processing.

A renewable lease on energy: There were two vastly telling moments in Davos’s main Congress Hall, one speaking to scarcity, the other to abundance. Donald Trump went off script to lambaste renewable energy, especially wind which he said was for “losers.”

A day later, Elon Musk used the same stage to profess a glorious future for renewables, especially solar which he said could power all of America if he had his way. Just give him a parcel of land, 160×160 kilometres, and tariff-free solar panels! Away from North America, renewables are still the driver of energy growth and have shifted from a “transition” source to a default for new supply in many markets. Europe reached roughly 50% renewable generation in 2024.

In other fast-growing markets, renewables are increasingly seen as energy additions, not just replacements for fossil fuels. Falling battery costs (solar is down roughly 80% in India) and longer lifetimes (30–35 years) have helped shift economics from a simple cost per unit to a cost per lifecycle.

Read John’s full Davos commentary here.

The Institute in Action

• Interim Head Lisa Ashton recently hosted a roundtable in Edmonton with industry leaders and investors on growth capital in Canada’s agri-food sector to dive into the investment challenges that were highlighted in The Next Generation of Growth.

• Energy Lead Shaz Merwat moderated a panel at the BC Natural Resources Forum at Prince George, focused on Canada’s future gas and LNG competitiveness with senior executives from industry, Indigenous organizations.

➔ How’s Canada doing on fighting climate change? It’s complicated

➔ Is the world falling out of love with Teslas?

➔ Canada’s methane rules get pragmatic

Hot takes

➔ Can the IPCC survive its breakup with Washington? The UN-backed Intergovernmental Panel for Climate Change is in a “keep calm-and carry-on” mode after the U.S. decided to pull out, noting that it continues to work on its next cycle of reports, starting in 2027. The IPCC reports are extremely influential, and many countries benchmark themselves to its authoritative data. It’s critical for IPCC to persist, but one of the criticisms of the body is its focus on the science and the tech, that underplays the economics and politics of energy transition. While the White House labelled the IPCC (and the 65 other UN organizations the U.S. exited) as a “waste” of American taxpayer money, others argue that the IPCC has been instrumental in focusing global policymakers on one of the world’s most critical challenges. Science, they hope, will prevail.

➔ New methane rules mark a pragmatic evolution in Canadian climate policy. The new rules—covering onshore oil and gas operations and large landfills with requirements beginning in 2028—pair high ambition with greater regulatory flexibility. The most consequential change is optionality, says Vivan Sorab, our Clean Tech Lead. Government estimates suggest that the new rules could deliver cumulative reductions of 304 Mt CO2e from 2028 to 2040. Operators can follow a regulator-prescribed inspection pathway, subject to regulatory verification and enforcement, or demonstrate compliance through their own processes, backed by monitoring and verification. The removal of the five-year expiry on federal-provincial equivalency agreements further strengthens the framework by improving long-term certainty for provinces and the industry. The rules are reinforced by a $16-million federal investment in methane monitoring and verification tech. Given ongoing uncertainty on methane emission volumes, the focus on measurement could prove to be crucial.

➔ Is the world moving past Elon Musk’s Tesla? It’s hard to say whether the billionaire’s politics put off many, but it could certainly be a factor. Globally, EV cars sales hit a record 21.7 million last year, Bloomberg New Energy Finance estimates, even as Tesla sales contracted 9% to 1.64 million. BNEF forecast 24.3 million EV car sales in 2026—a slower pace of growth than previous years—as falling government incentives are offset by falling battery prices, a bump in commercial vehicle sales and the slow ramp up of robotaxis.

What it takes to write a climate action report

Behind the scenes, the Climate Action Institute team spent the past six months on what’s emerging as a benchmark of Canadian climate action: our Climate Action report, now in its third year.

While there’s been some retreat on climate policies, there’s plenty of action too, on climate. Our report title, Retreat, reset or renew?, suggests it’s all of the above.

The report is based on calculations, aggregations and estimates using a variety of measures from across the economy and society. We selected those metrics to help paint a picture of where we’re at, how far we’ve come and some of the distance ahead. The report, and its measurement tools, are not designed to be a precise diagnostic of any one sector, policy or technology—it’s more like a mirror in which we can see Canada’s successes and shortcomings.

The report was also informed by our team attending over 100 events, and visiting farms, facilities and offices, cross-country, where we listened, spoke and compared notes with peers, experts and skeptics. Over 2,000 Canadian consumers and 150 business executives participated in our two annual surveys. Peer groups dove into the methodologies and several external experts stress-tested our analysis. For our case studies, several companies agreed to heart-to-hearts on the challenges of putting their boardroom promises into action on their factory or office floor. The result is a snapshot of Canada’s climate journey: some milestones achieved, a few dead-ends, and strapping up for the next curve round the bend.

Read the full report here, but here’s a peek at a handful of findings:

• Emissions progress is mixed: National emissions are down 7% since 2019, with reductions in electricity (-27%), buildings (-19%), and oil/gas (-19%) sectors. However, new projects like the TMX pipeline expansion and LNG Canada Phase 1 are projected to increase oil/gas emissions.

• There’s a strong pipeline of climate funding. Climate capital flows of around $20 billion annually continue to support the low-carbon sector.

• …And there’s more on the way. Nearly $100 billion worth of incentives for clean-tech and climate programs and initiatives budgeted for deployment between now and 2035—although funding remains uncertain given policy shifts.

• Climate Action Barometer declined: the Institute’s flagship index fell for the first time in six years amid policy uncertainty.

• Canadians still care about climate: Cost of living issues, healthcare access and strengthening the economy were front and centre, but 33% still consider climate change as a top-three priority for policymakers.

Five insights from the frontlines of climate policy

Don’t fixate on 2030 Canada’s emissions targets. That’s the message from Environment and Climate Change Canada (ECCC) in its latest progress report on the country’s 2030 emissions reduction plan, released days before the Christmas break. Focusing on 2030 targets “at all costs” risks undermining the long-haul climate fight, the report notes. “Focusing narrowly on short‑term reductions could also divert attention from the deeper, systemic transformations needed to reach net‑zero by 2050.”

Pushing heavy industry and oil and gas—two sectors that are deeply tied to competitiveness, investment flows, and trade— could “trigger capital flight, carbon leakage, and a loss of international competitiveness, especially if compliance costs outpace those faced by peer economies.”

Economist Farhad Panahov pored through the data trove to glean 5 valuable insights:

• Emission declines are impressive, given population growth. By 2023, Canada’s emissions declined 8.5% from 2005 levels. More impressively, emissions intensity was down 35% based on the economic size and 29% based on population (which has been growing at a fast clip over the past two decades).

• We need four times the pandemic era emissions declines. Canada’s emissions would need to drop fourfold compared to the 2020-COVID-era magnitude to reach its 2030 targets.

• Most sectors are pulling their weight. Electricity, transportation, heavy industry and buildings sectors are projected to deliver a combined 68 MtCO2e emissions reductions by 2030, through several measures including electric vehicle and heat pump adoption, fuel switching and electrification in heavy industry, and renewable technology deployment.

• Fossil fuels are the outliers. Oil and gas sector, however, has a diverging projection, ranging from either flat to 33 MtCO2e emissions with enhanced methane regulations, hydrogen substitution, and deployment of solvent-based extraction technologies.

• What’s going to move the needle? The controversial, and now shelved, Oil and Gas Emissions Cap (excluded from the projections) would have only added 3MtCO2e in emissions reduction. Meanwhile, agriculture practices along with nitrogen management could contribute up to 12 MtCO2e in emissions reduction.

The Institute in Action

• John Stackhouse will be on the ground in Davos next week. Watch out for his analysis on what he saw, shared and heard at the world’s most influential forum for discussion and debate on the global economy.

• Lisa Ashton, the Institute’s Interim Head, was the keynote speaker on how agri-food can lead a new era of economic development at the Saskatchewan Crops Forum this week.

• Lisa also hosted a roundtable in Saskatoon with industry leaders and investors on growth capital in Canada’s agri-food sector to dive into the investment challenges that were highlighted in the Next Generation of Growth.

• Shaz Merwat, Director of Energy Policy, is moderating a panel on Canada and B.C.’s Competitive Edge as a Global Gas and LNG Producer on Jan. 21 at the B.C. Natural Resources Forum.

On our binge list

• The Elements of Power: A Story of War, Technology and the Dirtiest Supply Chain on Earth by Nicolas Niarchos, on what it takes to usher in the battery era.

• TV series Landman, starring Billy Bob Thornton, that shows wildcat drilling is alive and well in Texas—often powered by wind turbines.

• Disruptors podcast: Alberta’s Next Energy Mix. John Stackhouse speaks with Premier Danielle Smith about the future of power in Alberta.

• Things Are Never So Bad That They Can’t Get Worse (2022), by William Neuman, on the steady collapse of Venezuela over the years.

➔ Mark Carney’s Climate Competitiveness Strategy spotlights critical minerals and tax credits

➔ What to expect at COP30

➔  Gates’ reboots his climate view

➔ Further reading: Unearthing Value: How nature can play a critical role in pro-growth agendas – RBC

Hot takes

➔ The fight for critical minerals is only heating up. Beijing and Washington may be on talking terms these days (unlike Ottawa and Washington), but the fight for rare earth supremacy will be this decade’s big battle. Canada has entered the fray with 26 new partnerships with 9 allied countries and has earmarked capital in the new budget (see below). Vivan Sorab, Senior Manager of Clean Tech, says Canada has the resources, the capital, and the intellectual property to start building a supply chain, but needs to mobilize at speed. That will involve (a) fast-tracking funding for rare earths, (b) guaranteeing demand for the minerals, and (c) building domestic processing capability. Read Vivan’s full briefing here.

➔ Across the pond, several EU members refused to agree to legally binding 2040 goals. Member states agreed to cut emissions by between 66.3%-72.5% by 2035 as part of a submission to the UN ahead of the COP30 Summit in Brazil. But several member states refused to agree to the legally binding 2040 goal unless significant concessions were made that would allow countries to claim 5% of their emissions reductions by selling international carbon credits. The EU also agreed to weaken other politically sensitive climate policies, including delaying the launch of an upcoming EU carbon market by one year, to 2028.

A climate competitive Canada

The federal budget promised to show how the Mark Carney government intertwines climate policy with its growth agenda. It’s early days, but as the federal climate policy takes shape it presents a fascinating trade—stronger industrial carbon pricing and clean electricity regulations for a likely end to the emissions cap and an extension of tax incentives for carbon capture. Let’s see what Alberta and Saskatchewan have to say. (read John Stackhouse’s view on the federal budget here.)

Here’s what caught our eye:

Industrial Carbon pricing: Canada needs robust carbon markets to support clean growth investments. The government plans to work with provinces to set a multi-decade industrial carbon price trajectory that targets net-zero by 2050. It will give businesses confidence. The plan is to fix the benchmark and harmonize across the country in providing a common, strong price signal. We wrote about the importance of harmonizing industrial carbon pricing last year. Expect Canada Growth Fund to continue to issue carbon contract for differences (CCfD) for projects.

Methane: The government aims to finalize enhanced methane regulations for the oil and gas sector and landfills, and work with provinces to negotiate equivalency agreements.

Oil and Gas Emissions Cap: The government plans to leverage technologies such as carbon capture and storage to lower oil and gas sector emissions, which means the Oil and Gas Emissions Cap “will no longer be required.”

Clean Fuels: The government plans to maintain the clean fuel regulations meant to help transition Canada toward less carbon-intensive gasoline and diesel, a rule that the Conservatives have criticized.

Tax credits: The government expanded pre-investment tax credits for green manufacturing, as well as carbon capture and storage (CCUS). Under the budget, the CCUS tax credit, which covers up to 60% of relevant investments, would extend the current rate until 2035.

Critical minerals: A $2-billion Critical Minerals Sovereign Fund will include equity investment, loan guarantees and offtake agreements. The $371.8 million First and Last Mile Fund aims to bring late-stage projects to production stage. Additional critical minerals, like antimony, indium and gallium, are now eligible under the clean tech manufacturing tax credit.

What’s at stake at COP30

It may be more low-key than previous years, but COP events always serve as a pulse check on the state of global climate action—or inaction.

Here’s what to expect from the event:

Belém, the host with the most (to lose): The north Brazilian city is the gateway to the Amazon region—known as the “lungs of the world” – as it produces 20% of the world’s oxygen. But the region is facing disturbances through land use, wildfires and climate-change fuelled extreme weather, plus the relentless march of industrial and commercial expansion. So Belém seems like a fitting, if far-off, location showcasing the ground realities of climate change, unlike the more convenient and glitzy financial hubs of New York and Dubai.

A decade after Paris. The world’s changed since 2015 – when virtually the entire world was united in its pledge to lower emissions. Now, not so much. Current mood: uncompromising. Commodity exporters are feeling emboldened, while climate litigation is at an all-time high.

A logistical challenge for a region with 18,000 rooms. Host Brazil expects 50,000 policy types to attend the negotiations, and has even suggested some delegates share rooms. Organizers are also arranging cruise ships, private properties and converting schools into hostels to accommodate climate-biz tourists. Last month, 81 countries were in negotiations with organizers over hotel rooms while 87 countries had already reserved accommodation, according to Brazil’s COP30 Presidency.

There may be a U.S.-sized hole at COP. The U.S., which is in the process of pulling out of the Paris accord, does not plan to send “high level“ representatives to Belém. Still, Washington’s shadow is expected to loom large over negotiations.Organizers have high hopes. COP30 delegates are pushing forward five key agenda items: (1) stronger national climate plans with clearer investment pathways, (2) mobilizing US$1.3 trillion for climate action, including US$300 billion for developing countries, (3) incentivizing sustainable and climate-aligned investment, (4) finalizing rules for an UN-backed global carbon market, and (5) a “fair and inclusive transition” away from fossil fuels, ensuring support for workers and vulnerable communities impacted by climate change. Let the negotiations begin.

Gates reboots his climate view

Bill Gates, the Microsoft co-founder who launched a successful second career as a climate tech financier, recently shared “some tough truths” about climate. His latest note has upset some but have been welcomed by others, including the U.S. President.

Beyond the headlines, his comments may be more nuanced.

Reframe the risk: Gates argues that while climate change will profoundly reshape global systems, it is unlikely to render the planet uninhabitable. His emphasis is on proportionality—recognizing climate change as a chronic, worsening challenge rather than an existential endgame. A new UN report on climate action now expects temperatures to rise 2.3-2.5°C, compared to 2.6-2.8°C in last year’s report, leaving the “world heading for a serious escalation of climate risks and damages.”

From temperature to welfare: Gates has urged that climate action should be evaluated not only by emissions avoided or degrees of warming averted, but also by how effectively it improves human welfare, particularly in vulnerable regions. It aligns with a growing call in development circles to integrate adaptation and poverty reduction within the climate agenda.

Innovate, innovate, innovate: Gates continues to position technological innovation—in clean power, industrial processes, and agriculture—as the decisive tool for decarbonization, suggesting that will drive lasting emissions reductions.

Avoid doomsday narratives: Alarmism may erode public trust and misallocate resources, Gates notes. Some might argue though that the continued focus on climate issues drove action and channelled trillions of dollars into energy transition.

The Institute in action

➔ John Stackhouse , Senior Vice-President, Office of the CEO, spoke to a G7 delegation, and advisers, ahead of a G7 Energy and Environment Minister meeting in Toronto last week, sharing insights on how RBC sees the world evolving. Read his keynote here.

➔ At the Toronto Global Forum on Oct 17, John held a main-stage conversation with Heather Chalmers, President and CEO of GE Vernova Canada, and was also part of a working session on skills and supply chain issues with Ontario’s energy minister Stephen Lecce.

➔ At the GLOBE Food Leadership Summit in Calgary the Canadian Alliance for Net Zero Agri-Food (CANZA) unveiled the Million Acre Challenge, a new initiative to scale climate- smart farming practices across Canada.

➔ At the Arrell Food Summit on Oct 21, Lisa Ashton, Director of Agriculture Policy, sat down with Rene Van Acker, President and Vice-Chancellor of the University of Guelph, to discuss Canadian agriculture’s sustainable growth while addressing one of its most pressing challenges—the country’s growing innovation gaps in agri-food.

➔ Lisa also took part in a panel on climate-smart agriculture food systems at Simon Fraser University, Vancouver.

Hot takes

➔ The IEA has tempered Canada’s renewable energy growth forecast. The International Energy Agency’s latest report still expects Canada to add 21 gigawatts of renewable energy capacity by 2030, almost double the growth of the previous six years, mainly in onshore wind and utility-scale solar PV. However, that’s an 11% decline from the IEA forecast from last year. Ongoing grid challenges and policy and regulatory changes in Alberta were among the key reasons for the IEA pulling back its forecast. It’s a major reversal elsewhere too, with the U.S. and China—the world’s two largest renewable energy markets—facing slower growth amid policy shifts, supply chain vulnerabilities and financing pressures.

➔ Can Canada attract H1-B visa types that are no longer welcome in the U.S. For all the talk of Canada capitalizing on U.S.’s visa snarls to attract the world’s brightest and smartest comes a sobering stat: it takes 53 months for Canada to issue a Start-Up Visa (SUV). A new Betakit study shows that the decade-old program has been facing several challenges, while the government has also slowed the process as part of a wider immigration slowdown. Getting some of the world’s smartest climate, cleantech and innovative minds would require some quick thinking—and processing—from policymakers.

➔ David Greybeard made Jane Goodall. The chimpanzee, with the silver facial hair, was the first animal conservationist Goodall saw using tools and eating meat—sparking a lifelong quest by the conservationist in her pursuit of a greener and richly-biodiverse Earth. She anthropomorphized animals (pointedly rejecting the established practice of using numbers to identify animals by naming Greybeard and his family). By making it personal, Goodall—who died last week, aged 91—lifted them up and, through the Goodall Institute saved countless (though not nameless) species. Goodall was ahead of the curve, but her focus on nature is finally gaining traction.

➔ Further reading: Unearthing Value: How nature can play a critical role in pro-growth agendas – RBC

Cultivating the next generation of Ag innovators

Canada’s agriculture sector has all the ingredients to be the best in the world—productive soils, temperate climate, advanced on-farm mechanization, and a growing agri-food manufacturing sector. But capitalizing on the moment, won’t be easy, according to a new RBC Thought Leadership report . The sector has struggled to attract the right mix of talent and maintain the level of investment in R&D that is required to remain a global leader.

Research by Lisa Ashton, Director of Agriculture Policy, highlights the scale of the challenge:

• Canadian agriculture has immense potential, but the innovation curve may be slowing down. Canada is home to some of the world’s most productive soils and innovative farmers. But agriculture’s annual growth in productivity has declined to about 1% over the past decade from 2% the previous decade, suggesting that few breakthrough innovations are making it to farms.

• The sector is not attracting enough talent. Job vacancy rates are 1.5% above the national average. Less than 1% of STEM and business graduates, who play increasingly important roles on the modern farm, are choosing occupations in agriculture.

• The research and development system is becoming less diverse. Public investment in agriculture knowledge generation, which includes R&D, has declined by 15% since 2010. Private sector outsourced R&D to universities is down 77% over the past five years. And the number of enterprises conducting R&D in the past decade has shrunk by 29%.

• Other countries are pulling ahead. Canada has fallen behind Australia, the U.S., Japan, and Brazil in public investment in agriculture knowledge generation. Home-grown agriculture commercialization is in a slump as the country’s trade balances grow in innovation areas including agriculture chemicals, fertilizers, and services.

• Commercialization of agriculture solutions are headed south. Investment in American agri-food technology startups has been 22 times larger than Canada’s over the past 5 years. The outsized market for investment in the U.S. is pulling Canadian innovation south for capital, mentorship, and market application.

To address the agriculture skills gap, RBC launched an investment initiative in Winnipeg today to help cultivate the next generation of Canadian farming. Introduced alongside Manitoba Premier Wab Kinew, RBC Generate was launched with a $5 million, five-year investment in agriculture in the Prairies with plans to expand through programming delivered as part of a national movement with farmers, The Canadian Alliance for Net-Zero Agri-food (CANZA) Nature United, Sustainable Food Systems for Canada (SF4C) and Indigenous sustainable farming initiatives.

NUCLEAR

SMRs: Small but mighty

RBC Thought Leadership’s Vivan Sorab moderated a panel on Tripling Nuclear Power by 2050: The Role of SMRs in Achieving Global Energy Goals at the SMR Forum in Edmonton last week.

Joined by Atkins Realis Carl Marcotte, Terrestrial Energy’s William (Bill) Smith, GE Vernova Hitachi Nuclear Energy’s Lisa McBride, and George Christidis from the Canadian Nuclear Association, the panel explored the role of SMRs and Canada’s advantages. Here are some of the key takeaways:

• Collaboration is Canada’s competitive advantage: Ontario has taken the lead, commencing construction of the G7’s first grid scale SMR, and has brought together government, utilities, the Canadian nuclear supply chain, and academics to build Canada’s first new nuclear plant in 3 decades. As provinces outside of Canada’s existing nuclear provinces consider nuclear for the first time, building on this collaboration will be key to success.

• Canada must seize the opportunity: With initiatives like Canada’s SMR Roadmap and first-mover advantage on SMR construction, Canada has positioned itself as a leader in next-generation nuclear. But with competition from the U.S. and other countries heating up, Canada must act fast to maintain its lead and ensure that its SMR expertise enables energy security and decarbonization globally. More synergy between the federal and provincial governments will be critical.

• Investment must grow: Canada’s future nuclear fleet will need new investment to sustain a growing supply chain, a next-generation workforce, and the skilled tradespeople needed to build new reactors.

• SMRs have a big price tag. The Ontario Power Generation’s four SMRs at Darlington with a capacity of 300-magawatt are expected to cost $20.9 billion. That compares to the 377-megawatt natural gas-fired power station in Saskatchewan carrying a price tag of $825 million. While SMRs can have geostrategic value, they will still need to compete with gas, hydro and bigger nuclear plants to attract capital.

• Indigenous communities are front and centre: New nuclear projects will not succeed without placing indigenous communities at the forefront. Engagement must be early and projects must enable indigenous participation and equity.

➔ New York Climate Week shrugs off U.S. climate retreat

➔ Nova Scotia is going big on wind power

➔ Our Unearthing Value report explores natural capital’s role in pro-growth agendas

Hot takes

➔ New York Climate Week powers on despite clouds over clean energy. The annual event, underway this week, is featuring more than 1,000 sessions across the city, from Arctic to sustainable fashion, adaptation to critical minerals. The event comes amid a major reversal by Washington on several clean energy policies. But the record number of programs and more than 100,000 attendees suggest the push for a greener and cleaner energy transition may not have waned just yet.

➔ Nova Scotia’s Wind West proposal is gaining momentum. The province’s proposed $60-billion, 5,000-megawatt development could position Atlantic Canada as a clean energy hub. Ottawa also believes the proposal is a major projects contender, and is gauging investor interest that could spur renewable power expansion on the East Coast. But, as the strategic plan itself states, “it won’t be easy,” with regulatory challenges and cost competitiveness issues to overcome. Nova Scotia is seeking federal support through investment tax credits and low-interest loans from the Canada Infrastructure Bank and support for the Mi’kmaq Nation to purchase equity in the project. The slew of support measures could lower the project costs to $170 per megawatt hour, compared to the average energy rate of $51.86 per megawatt hour Nova Scotians paid last year.

➔ Australia is pitching itself as a carbon storage hub. Take note, Canada. The nation Down Under is leveraging its geological advantages to become a carbon storage hub for Asia-Pacific. It’s part of Australia’s new Net Zero plan, out last week, that pledges to cut carbon emissions by at least 62% compared to 2005 levels over the next decade. The focus on carbon removal and investment in the technology aims to offset the country’s gas and mining emissions.

A climate policy reset

Mark Carney’s forthcoming “Carbon Competitiveness Strategy” is an interesting combination of words. Unlike Trudeau-era climate policy labels that centred on carbon reduction—such as “Emissions Reduction Plan” and “Oil & Gas Emissions Cap”—the current Prime Minister’s word choice signals a marked shift on how carbon (its reduction, storage and low-emissions production) can advance Canada’s economy.

As Canada recalibrates its climate policies, here are five questions we are thinking about:

• What’s the future of the industrial carbon pricing system? Alberta’s freeze on its industrial carbon tax price for 2026 and Saskatchewan’s earlier repeal challenges federal rules. Carney will need to clarify how federal design can sustain investment on clean technologies while managing provincial divergence.

• How should a Border Carbon Adjustment be managed? Ottawa is weighing carbon tariffs to protect domestic industry from lower-cost, high-emitting imports. But with U.S. trade tensions simmering, its implementation may rankle Washington. As our economist Farhad Panahov wrote in a recent report: “Major discrepancies in carbon pricing with its trading partners can impact Canada’s competitiveness at a time of a structural global upheaval.” Is it even feasible? Could the BCA be a carveout focused on China and other non-NATO trading partners?

• What’s the future of the oil and gas emissions cap? Scrap, maintain or reimagine? A decision here could be critical for Canada’s energy sector.

• What will it take to revive clean-tech funding? Several investment tax credits are already in place. What else can Ottawa do to revive flagging funding in Canadian cleantech.

• Can we meet Paris targets? The Carney government says it remains committed to its 2030 climate goals. But the Canadian Climate Institute recently estimated that the country is off-track. What can Carney, a former UN Special Envoy on Climate Action and Finance, do to turn the trajectory around?

Clean tech and trends

➔ A new electric smart heat pump was rolled out in Canada. Vancouver-based startup Jetson’s Air can be plugged into existing ducts and operate in temperatures as low as -30C. An AI-powered energy manager analyzes weather, energy use, and indoor air quality to save energy—and money. CEO Stephen Lake, who led the smart glasses startup North that was acquired by Google in 2022, says it’s the software that will unlock efficiency gains. It could also be pivotal in making a dent in emissions: Heating emissions account for 13% of energy-related GHG emissions in Canada.

➔ A  McGill University lab spinoff secured $3.5 million from investors for a pilot project to build an iron-based energy storage. If successful, it could dramatically cut diesel and other fossil fuel consumption in heavy industry.

➔ European Union members failed to agree on a binding climate plan ahead of a UN general assembly meeting this week. They instead signed a “statement of intent” to cut emissions by as much as 72.5% by 2035.

➔ Robert Redford, who died last week, was not only a Hollywood icon, but also an activist with a knack of telling stories about a changing climate. His brainchild the Sundance Film Festival showcased several movies on the environment, while his non-profit Redford Centre backed 60 movies on climate action (or inaction), of which 11 were picked up by streaming services.

Nature

Unearthing value

More than $78 trillion  of the global economy—roughly half of total GDP—is highly to moderately dependent on nature. Yet, national GDPs count nature only after it is extracted—fish, grain, timber–while mostly ignoring ecosystem services from nature. In our new report, Director of Agriculture Policy Lisa Ashton, writes about how leveraging natural capital can boost pro-growth strategies.

LSome key takeaways from the report:

• Natural capital remains an underused economic engine. The GDP of Canada’s nature-based sectors, including forestry, agriculture, mining and fisheries, grew 0.3% slower, year-over-year, compared to the rest of the economy over the past quarter century. A similar trend is observed in the United States and the United Kingdom.

• Ignoring nature threatens prosperity. More than half of the world’s economy, roughly $78 trillion, depends on nature, from food to tourism to construction. Canada, the U.S. and the U.K. are looking to build back their economies, yet their nature base in which their economies rely on for long-term growth is depleting.

• There is a generational opportunity to leverage natural capital wealth through nation-building agendas. Countries that track and grow natural capital alongside GDP can unlock growth and attract global investors hunting for investable natural capital projects. With finance mobilizing to close the nature finance gap, demand is rising—and an estimated $580 billion is required annually by 2030 and it will be nearly $940 billion by 2050.

• Private capital is critical to scaling. And yet, governments currently account for 82% ($222 billion) of nature finance. That’s because the private sector needs stronger policy signals and assurance that their investments will generate returns to help close the gap.

• Nature’s place in finance and environmental markets is growing but remains underrepresented. Nature is a small segment of sustainability finance. In 2025, nature-based carbon offsets represent 13% of voluntary carbon credits to-date, but hold more than half of the annual potential of carbon credit creation.

• Policy integration, AI, and…yes, accounting can get nature on the balance sheet and growth agenda. For Canada, a timely test for all three is the implementation of the Critical Minerals Strategy and emerging major mining projects.Starting with integrating Indigenous values and knowledge systems in natural capital accounting frameworks.

The Institute in action

• Today, Lisa Ashton is presenting her report  Unearthing Value on the nature economy and moderating a panel with Nature United at the New York Climate Week.

• This week, the team hosted a delegation of U.S. congressional and embassy officials on the possibilities for enhanced cooperation between the U.S. and Canada on critical minerals.

➔ Nurturing nature at New York Climate Week

➔ The EV mandate is kicked down the road

➔ General Fusion’s new lease of life comes as global race heats up

Hot takes

➔ The Canada EV mandate is on hold. Another Trudeau-era climate policy suffered a blow when the Mark Carney government paused a rule that mandated automakers to ensure EVs accounted for 20% of sales from 2026. Trade headwinds from the U.S. are partly the reason as is the end of U.S. EV tax credits later this month. Automakers are already reeling from an estimated US$12-billion in tariff costs so far. Several are caught in limbo as they have sunk billions in EV supply chains on a market that’s suddenly lost momentum. It’s a microcosm of the bigger climate-versus-economy debate that’s raging around the world.

➔ The Business Development Bank of Canada is going big on critical minerals. The funding agency’s $200-million Industrial Innovation Venture Fund II, is supporting early-stage startups focused on several areas including key raw materials for clean-energy infrastructure and electric vehicles. Canada needs it: latest data from the Canadian Venture Capital Private Equity Association (CVCA) shows Canadian clean-tech firms raised a paltry $191 million in the first half of 2025, compared to $657 million during the same period last year.

➔ A new global oil rush. Norway likes to imagine itself as the land of the world’s richest—and most ESG-savvy—wealth fund and electric vehicles, but it’s all driven by fossil fuels. But Sylvi Listhaug, whose Progress Party surged to second place in the recently concluded elections, wants Norway to be the “last country in the world to stop (oil) production.” It’s a recurring theme, with Canada among scores of other countries catching the new oil fever. What would it mean for global emissions? Investments in upstream oil was set to fall this year for the first time since 2020, the IEA projects. It could just be a blip.

Dawn of a new Major Projects era

Dawn Farrell, the first head of the brand-new Major Projects Office (MPO), is tasked with fast-tracking several projects that could raise the country’s emissions—or not, depending on how she navigates the country’s twin environmental and economic imperatives. Could Farrell accomplish Canada’s elusive trifecta of building faster, accelerating sustainable growth, and strengthening national unity?

Her nearly decade-long tenure as CEO of Calgary-based utility giant TransAlta Corp., is instructive on how the executive has operated in the past:

• Under her watch, which ended in March 2021, the utility transitioned from coal to natural gas, as part of an industrywide transition to reduce emissions.

• By 2021, TransAlta had completed the full conversion of Keephills Unit 2, Keephills Unit 3 and Sundance Unit 6 from thermal coal to natural gas.

• The energy transition impacted coal workers, with several provincial communities tapping the Coal Community Transition Fund.

• By the end of 2021, TransAlta had cut GHG emissions by 70% from 2005 levels, and exceeded the national 2030 emissions targets in Canada, the U.S. and Australia where it operates.

• TransAlta transformed into one of the largest producers of wind power in Canada and the largest producer of hydro power in Alberta—growing renewable energy capacity from around 900 MW in 2000 to over 2,800 MW in 2021.

The TransAlta journey gives Farrell the cred to help streamline several projects, but now she must elevate it to a national level, where several competing interests—federal, provincial, First Nations and corporations—are jostling for attention.

Oil pipelines, LNG projects, and several renewable energy projects are being proposed, but here are Farrell’s overarching challenges:

• Bringing investor confidence back: The MPO will need to prove Canada can build again—and sustainably. The office will need some early wins to see global capital dip its toes back into Canada.

• Looking past Trump: Yes, there’s a POTUS-sized cloud hanging over Canada, but Europe (hello, Germany), Japan and emerging economies also want our resources. The next wave of projects will need to be pointing east and west, with buy-ins from consuming countries.

• Aligning provincial priorities: Another big rock. If Farrell can get B.C., Alberta and Quebec on the same page, Canada could become a resource superpower.

• Bringing Indigenous groups into the fold: Moving beyond lip service to actual partnerships with Indigenous communities could be the MPO’s most enduring achievements.

Trends, tech and science

➔ An ocean-based carbon removal tech is making waves. Nova Scotia-based Planetary Technologies recently struck a $43.3-million deal with Frontier Climate, which is backed by Shopify, Google, and Meta. The aim? Remove 115,211 metric tonnes of CO₂ between 2026 and 2030 by adding alkaline minerals—like calcium oxide and magnesium oxide—to coastal waters. The process accelerates natural absorption of CO2 and promises storage for over 10,000 years. Frontier believes it can bring the current price tag of roughly US$270 per tonne to US$50–$160 by leveraging existing infrastructure at coastal power plants. It will also preserve marine ecosystems and involve local communities, including the Mi’kmaq Nation.

➔ The dream is alive at General Fusion. The Richmond, B.C.-based, nuclear fusion hopeful recently raised $30 million, after recently enduring layoffs and scaled-back operations. The funds will power its LM26 fusion demonstration program, targeting operational temperatures of 10 million degrees Celsius—an essential step on the path to commercial fusion. Shopify CEO Tobi Lütke’s Thistledown Capital and Saudi JIMCO were among investors that backed the round. The lifeline for Canada’s sole fusion company comes as investors injected US$2.6 billion over the past year across 52 other companies globally, including 29 in the U.S. alone. And the race to crack the fusion tech code is heating up: China National Nuclear Corp. set up a $2-billion China Fusion Energy Co. in July, followed soon by Massachusetts-based Commonwealth Fusion Systems, the world’s largest private fusion company, raising US$863 million in a new round.

➔ Carbon capture is like trapping a genie in a bottle—but it could escape. A new peer-reviewed study published in Nature estimates that the world can trap a mere 1,460 gigatons of carbon dioxide-compared to previous estimates of as much as 40,000 Gt (roughly a year’s worth of CO2). Structural geological faults and poor well construction could dampen the efficacy of carbon-capture tech, the study notes. That still leaves plenty of jurisdictions with viable geology and expertise to capture carbon. Around US$4 billion has already been invested in carbon capture, utilization and storage (CCUS) facilities in 2024 with more than 50 metric tonnes of CO2 capture capacity currently operational—with few leaks reported so far. In addition, the report identifies Canada and the U.S. as “better placed” than Europe to implement geologic storage solutions.

Nurturing nature in New York

Power On: Hard choices, real consequences. Sounds about right as the theme of this year’s New York Climate Week starting September 22. The event, which is fast rivalling the annual COP events, brings financiers, environmentalists and policy wonks together in one of the Big Apple’s worst traffic jam seasons.

Lisa Ashton, our Director of Agriculture Policy, will be in attendance. She will be speaking at the Nature Hub on September 24^th at an event co-hosted by the RBC Climate Action Institute and Nature United.

Nature contributes US$33 trillion to the global economy—equivalent to the value of global trade in goods and services. Yet, nature’s role in the economy beyond its extracted resources—fish, grain, and timber—are not accounted for in national GDPs, leaving a source of economic growth and risk on the sidelines. Here’s a sneak peak of some early themes emerging in Lisa’s upcoming report on the nature economy:

• Natural capital is underutilized as an asset in economic growth. The GDP of Canada’s nature-dependent sectors grew 0.6% slower, year-over-year, compared to the rest of the economy over the past quarter century.

• There are real risks in overlooking nature’s role in building prosperity. Canada, the U.S., and the U.K. are looking to build back their economies. Yet, their nature base is depleting. The U.K., for example, is stressing its water assets, with the government projecting a 5- billion-litre-per-day gap in water availability by 2055.

• Pro-growth agendas present opportunities to value and build natural capital. Nature is now a reportable risk and an investable asset class—ready to be integrated into major investment and infrastructure projects.

“In an era of reindustrialization, all opportunities for durable growth need to be on the table. A timely consideration as countries around the world are struggling to raise capital to manage, protect, and conserve their natural capital,” says Lisa.

RBC Briefings

• Carbon Pricing & Competitiveness: Steering Canada’s climate policies amid trade shocks

• Emissions, energy & economics: Canada’s latest mega project

• Building the Future: What to watch as Build Canada Homes takes shape

➔ Canada’s EV battery plan is supercharged

➔ The electric-jet era takes off at Billy Bishop airport

➔ How to unsettle scientists

Hot takes

➔ Canada’s EV battery vision takes shape. Volkswagen’s Canadian battery arm PowerCo is pushing ahead with its St. Thomas, Ontario, gigafactory, with two construction contracts. The plant is slated to start production in 2027. But it’s more than a construction milestone, it’s a signal that Canada’s high-stakes bet on EV supply chains is materializing despite tariff skirmishes and uncertain demand. For Ottawa and Ontario, the real test will be whether it can give Canada a foothold in North America’s evolving battery supply chain. 

➔ Energy ambitions clash with sustainability. Ontario’sproposal to connect Alberta and Saskatchewan oil and gas to refineries in Southern Ontario and tidewater ports, including a new deep-sea port on the James Bay coast, is facing Indigenous pushback. Their key concern: They feel “invisible.” The Indigenous Resource Network is also concerned they are seen as roadblocks to project development, when in fact “they are in fact part of the solution,” the IRN noted. This will be a recurring challenge as Canadian governments look to fast-track projects. Canada will need to get Indigenous groups on board to avoid project delays.

➔ Scientists are unsettled. The U.S. Department of Energy (DoE) stunned the climate academia world with a new report that suggested “CO2-induced warming might be less damaging economically than commonly believed.” Talk about unsettling the science community. Several websites including Nature and Carbon Brief have published pointed ripostes, but the new DoE report is challenging accepted wisdom on climate. Will the UN’s Intergovernmental Panel on Climate Change (IPCC) move swiftly with a rebuttal? Its next assessment report is not due till mid-2028.

Emissions, energy & economy: Assessing Canada’s latest mega project

Ksi Lisims LNG project is ready for its spotlight. The Indigenous-backed project is waiting for an environmental assessment (EA) order from the B.C. government that could potentially see the natural gas export project proceed. The province’s ministers of environment and parks and energy are set to decide by September 7.

Here’s how the project could impact Canada’s economy, emissions and energy:

Who’s behind it:  The Nisga’a Nation, a self-governing First Nation on the Pacific Coast. Western LNG, backed by an affiliate of investment heavyweight Blackstone Inc., is a partner.

Location: Right next to the U.S. border on Pearse Island.

Timelines: The EA was expected by Q4 2024, so we are already playing catchup. The original application placed construction between Q2 of 2025 to Q4 of 2027, with operations beginning in 2028 (till at least 2058).

Project description: Two floating LNG facilities, each with liquefaction processing units. Once fully complete, the project will handle up to two billion cubic feet per day (bcfd) and export around 12 million tonnes per annum of LNG.

Who’s opposing it: The project faces opposition from several environmental groups and Indigenous groups, including the Gitanyow Hereditary Chiefs and Lax Kw’alaams Band.

Related infrastructure: An environmental certificate has been issued for the 780-kilometre Prince Rupert Gas Transmission (PRGT) project, which Nisga’a and Western bought from TC Energy in 2024. If PRGT rings a bell, that’s because it was the key conduit for the now-defunct Malaysian energy giant Petronas’s LNG project proposal back in 2014. It was approved even then, with amendments in July to address new environmental concerns.

What about the project’s emissions: The development expects to be net-zero ready by 2030, subject to an electricity agreement with BC Hydro. Project proponents say it would contribute 0.02% of B.C.’s emissions and 0.002% of total Canadian emissions.

Is that good?: The project claims to have a lower well-to-port emissions intensity compared to U.S. Gulf Coast projects (0.76–1.19 tonne of carbon/tonne of LNG lower). At full production, Ksi Lisims LNG would emit 9–14 million tonnes less CO2e per year than a U.S. Gulf Coast terminal project.

Cool (your) jets

Is this the future of electric aviation?

RBC Thought Leadership’s Energy lead Shaz Merwat was on the Billy Bishop Toronto City Airport runway last week as Beta Technologies Alia CX300 rolled out an all-electric aircraft. The conventional takeoff/landing aircraft can be configured either as a passenger or cargo aircraft. Here are some cool specs:

• Passenger capacity: 5 passengers

• Cargo capacity: 1,250 lbs. of cargo

• Maximum demonstrated range: 336 nautical miles (i.e., Toronto to Sarnia, or Calgary to Okanagan region)

• Max speed: 280 km/hour (Cessna 172 can top 344 km/hour)

• Charge Time: <1 hour

• Energy cost: $18 per hour of flight time (Cessna 208: $347 per hour)

• Emissions: At least 75% less emissions than a conventional small aircraft

• Uses: Short-haul cargo and corporate travel

The CX300 photographed above is the cargo variant, and fourth off the production line with final delivery to Air New Zealand. The carrier will use the aircraft for regional cargo routes.

Billy Bishop is arguably already one of North America’s most sustainable airports, and is on a path to fully electrifying its vehicle fleet, including shuttle buses, ground vehicles, towing, etc.

To learn more about decarbonizing aviation, listen to the episode of RBC’s Disruptors Podcast on the topic with Angela Avery, Executive Vice President, Chief People, Corporate & Sustainability Officer at WestJet Group and Geoff Tauvette, Executive Director at the Canadian Council for Sustainable Aviation Fuels (C-SAF).

Trends, tech and science

Canada’s turning its chill into an advantage. Ottawa recently injected $2.5 million in TerraFixing’s direct air capture (DAC) tech—aimed at extracting CO₂ in remote, wintry zones where low temperatures actually enhance efficiency. It’s an inventive way to turn Canadian winters into an advantage. If TerraFixing can prove cold-weather DAC works at scale, it could give Canada an edge in the global carbon-capture arms race.

A new “cli-fi” take on extreme weather. Sarah Hall’s Helm, is the latest novel in the new climate fiction genre that blends “atmospheric principles” with folktales to paint a picture of humans’ relationship with nature. Meanwhile, eco-warrior Bill McKibben, who once wrote a book with the grim The End of Nature title, returns with a surprisingly upbeat Here Comes the Sun: A Last Chance for the Climate and a Fresh Chance for Civilization.

➔ The worried, the hopeless and the climate-conscious

➔ King Coal’s long rein continues

➔ A global gridlock’s holding back renewables

Hot takes

➔ Climate literacy for the worried and the hopeless. Ottawa plans to invest14.4 million in 17 projects to boost environmental literacy among young people. It ranges from $1.8 million for BC Parks Foundation to inform students about biodiversity loss and several programs that combine climate science with traditional Indigenous knowledge. We are going to need all of it: A recent study shows Canadian youth are wallowing in “worry and hopelessness” in response to climate change.

➔ Carbon Upcycling is a step closer to cracking the cement emissions challenge. The Calgary-based startup recently broke ground on Canada’s first commercial-scale carbon capture and utilization facility at partner Ash Grove’s Mississauga cement plant. Opening in 2026, the $10-millionproject will capture kiln CO₂ and convert it, along with other industrial byproducts, into up to 30,000 tonnes a year of low-carbon cement materials. Funded by federal programs and venture firm CRH Ventures, the initiative aims to embed circular economy solutions into heavy industry. Also read our 2024 case study on Carbon Upcycling.

➔ UN plastics treaty talks are on the brink. There was limited consensus among delegates of 179 nations after a 10-day marathon on global plastic pollution that ends today. The scale of the problem is massive, with straws, cups and stirrers, carrier bags and microbeads among the single-use products clogging up oceans and threatening marine life. The 2,000-plus delegates are poring over 32 clauses in a draft text, but, some say, countries can’t even agree on the definition of “plastic pollution.”

AI deepfakes’ power problems

Saskatchewan Premier Scott Moe was the latest target of an AI deepfake video that falsely showed him promoting cryptocurrencies. It’s not just a public menace—it has implications for the climate.

Some AI models gobble up 20.4 million joules to generate a 30-second video, according to data extrapolated from an MIT study —that’s enough to power an electric vehicle for 18 kilometres. Eight million AI deepfakes could be shared online this year—doubling every six months, according to Open Fox, a law-enforcement consultancy. Add to it millions of meaningless, misleading and near-malicious AI-concocted videos that litter the Internet (countries as mythical monsters , anyone?). It’s not nothing: One 30-second video per day, for a month, would be the equivalent of adding 40% to a typical one-bedroom apartment’s utility bill, according to energy policy lead Shaz Merwat who wrote about AI’s power needs last year.

AI’s demand on power grids is already formidable:

➔ Datacentres will account for 20% of electricity demand growth to 2030 in advanced economies, the International Energy Agency estimates.

➔ Emissions from data centres could rise from 180 million tonnes today to 300 metric tonnes (Mt) by 2035 in IEA’s base case, with 500 Mt as a higher estimate—roughly 2.5x the emissions of Canada’s oil and gas sector.

➔ The United States now has the largest pipeline of gas-fired power plants in development globally, surpassing China—with a fifth to power data centres.

➔ Given the exponential use originating from image and video queries, most likely over time, we could see tiered pricing for heavy data users to match users’ data use for heavier AI tasks, Merwat said.

Felippa Amanta, who published a study on the AI deepfake challenge for Oxford University, goes a step further: “The deepfake’s effect on climate information and emotion will be much more significant than the direct energy to produce the deepfake.”

King Coal’s enduring rein

Spot the resilient fossil fuel in the chart below. Old King Coal set a new demand record last year, with coal-for-power generation also hitting its highest level ever. Trade in the carbon-intensive commodity also broke records in 2024. Coal is the world’s most carbon-intensive fossil fuel, with emissions on average 50% higher than natural gas.

Here are some coal trends that suggests it will endure for some time:

• China accounts for 56% of global demand, but India and the U.S. is expected to see production rise.

• The U.S. is considering several regulations that were poised to limit coal use in power generation. A Trump executive order also lifted “unattainable emissions controls” for coal plants to ensure energy security.

• The IEA expects global coal consumption to plateau in 2026, but rise 5% in the fast-growing ASEAN region.

• Despite coal’s resurgence, the IEA expects renewables-based electricity generation to overtake coal-fired generation in 2025.

Trends, tech and science

Ballard is powering through a global hydrogen reckoning. The Vancouver-based company that’s been plugging away at hydrogen tech since 1979, launched its second major shake-up in less than a year. It underscores the pressure hydrogen fuel cell companies face after years of hype. Under new CEO Marty Neese, Ballard is pivoting to a narrower set of applications where its technology has proven traction, like transit buses and stationary backup power. The 30% operating cost cut target for 2026 suggests that the pace of hydrogen buildout has been slower than the market—or Ballard’s earlier strategies—anticipated.

A global gridlock is stifling renewable energy. Nearly 40% of Scotland’s wind power capacity was curtailed due to grid constraints over the past six months. That’s the latest setback in a long list of renewable and affordable power being held back by a gridlock. For every dollar invested in renewable power, just 60 cents go to grids and storage—the ratio should be one-to-one, the UN estimates, noting that there’s three times more renewable energy waiting to be plugged into grids than was added last year.

Solar and wind are getting eclipsed. The White House’s war on renewables has seen projects valued at US$22-bilion scrapped in the first six months of 2025, according to E2 data . That’s 16,500 in jobs lost during the period. On the heels of the Big Beautiful Bill that would see low-carbon energy credits phased out faster, a new federal order subjects wind and solar projects to greater scrutiny as it “denigrates the beauty of our Nation’s natural landscape.” It echoes Alberta’s no-go zone directive last year.

RBC Briefings

• Trade Zone: Trump’s US$48 billion hit on American buyers

• Will Artificial Intelligence soon become Artificial Influence?

• John Stackhouse on the Ministry for the Future’s clarion call for climate action

➔ AI gets all the attention, but the AC is also a major power drag, too

➔ Canada’s ghost emissions

➔ David Suzuki and Chris Wright’s starkly different world views

Hot takes

➔ Ghost emissions are climate change’s untold story. Globally, emissions from Land Use, Land-Use Change and Forestry (LULUCF) are tracked but not included in a country’s emissions inventory. While emissions from managed lands are included, emissions from unmanaged lands are excluded as they are triggered by events beyond human control-such as wildfires. But they are formidable: Wildfire on just managed lands had emissions in 2023 that surpassed Canada’s total accounted emissions-by a lot. This year’s LULUCF emissions could rack up, too. By June 2nd, total estimated wildfire emissions for Canada were second only to 2023, with approximately 56 megatonnes of carbon (or 8% of Canada’s GHG emissions in 2023), according to the EU CAMS Global Fire Assimilation System. That’s years of painstaking climate action wiped out in weeks. This highlights a fundamental tension in Canada’s climate policy: most of the attention has been on emissions mitigation; less attention has been paid to climate adaptation. And we are all paying the price.

➔ Is it time for a $100-billion Pathway + pipeline package? Alberta and Ottawa are making progress on a big energy package that could include a West Coast oil pipeline, the long-contemplated Pathways project to capture carbon emissions, and room for expanded oil production, writes John Stackhouse from Calgary. But Mark Carney’s team may need to finesse its way out of the previous Liberal government’s oil and gas emissions cap. That could involve a new target, or delayed timeline, or a refined approach to measuring abated emissions. The package’s headline costs could also be sobering—up to $100 billion.

➔ The Texas tragedy underscores the frequency, and intensity, of floods. More than 80% of Canadians live in urban areas, and around 8 out of 10 major Canadian cities are located in proximity to flood zones, according to the federal government. Floods are already Canada’s costliest natural hazard in terms of property damage, causing $2 billion in destruction annually, as climate change supercharges weather conditions. As part of a greater National Adaptation Strategy, Ottawa is spending  $164.2 million to update Canada’s flood mapping program by 2028. Will it be enough?

➔ David Suzuki and Chris Wright’s recent comments highlight the tension between environmentalists and some energy proponents. Canada’s veteran environmentalist told iPolitics recently that its “too late” to reverse climate change as policymakers are focused on economic growth, not nature. Meanwhile, U.S. Energy Secretary Christ Wright sees the climate crisis as a byproduct of progress, not an existential threat. “I am willing to take the modest negative trade-off for this legacy of human advancement,” he wrote in The Economist. Policy is often driven by political cycles, with energy proponents winning this round. However, the next political cycle is around the corner.

The Big Cool

Power-hungry data centres get all the attention, but the humble air conditioner is also a major strain on grids. As summers get more oppressive in Canada and around the world, the International Energy Agency expects air conditioners to be a top driver of global electricity demand, with air-conditioner ownership worldwide rising from 37% to 45% by 2030.

Here’s why cooling is emerging as a critical climate issue:

➔ Cooling generated just over 1 gigatonne of carbon emissions globally in 2022 (1.9% of total). Space cooling could also lead to leakage of refrigerants, which have a global warming potential of around 1,000 times higher than CO2.

➔ 2Energy demand for space cooling globally is growing at 4% annually, twice as fast as water heating. This is putting pressure on power capacity, especially as countries like Canada strain to keep their grids clean.

➔ In Canada, the percentage of households with an air conditioner hit 64% in 2021, compared to 55% in 2013. That’s even more impressive given the surge in households over the past decade.

➔ Buildings account for 18% of Canada’s total emissions. Of these, space heating and cooling represent more than 67% of building energy use.

➔ One in 10 Canadian households had a heat pump (which, of course, double up as air-conditioners) in 2021, from virtually zero a few years prior. Heat pumps are 4.5 times more efficient than conventional air conditioners, making them a key pillar of climate action.

➔ Residential heat pump imports jumped 71% in Canada in Q1, compared to the same period last year, the Heating, Refrigeration and Air Conditioning Institute of Canada (HRAI) data shows.

➔ Federal and provincial Canadian policymakers are considering building codes that would stipulate at least one room with an air conditioner in a home.

➔ Access to cooling is emerging as a human rights issues, especially after nearly 600 people died in a Vancouver heat dome event in 2021.

➔ “An important driver of activity is climate-change mitigation, driven mostly by policy, rebate programs, incentive,” says Martin Luymes, Vice President, Government & Stakeholder Relations at HRAI. For instance, federal rebates led to record heat pump sales, which then dropped off when the programs ended. Several provinces including Ontario, B.C., and Nova Scotia continue to offer rebates, helping sustain interest.

➔ The Canadian HVAC industry sees the possible termination of the Energy Star program in the U.S. as a “major mistake,” says Luymes, noting that the program, which promotes energy-efficient products including air conditioners, as valuable, low-cost consumer guidance tools. Experts say scrapping or weakening Energy Star could harm climate progress.

The good and the ugly in the One Big, Beautiful Bill Act

Donald Trump’s signature 2025-26 budget bill is now law. The legislation changes several clean energy tax incentives that were managed under the Inflation Reduction Act (IRA), tightens domestic content requirements, imposes new qualification deadlines and sunsets other tax credits that could impact Canadian cleantech firms eyeing opportunities across the border.

Here’s the good, the bad and the ugly of the OBBBA:

Carbon capture: The bill maintains credits for carbon capture, but also provides incentives for captured CO2 for oil production, underscoring the administration’s commitment to the fossil fuels industry.

Nuclear: The bill maintains credits for both existing nuclear facilities and new advanced energy technologies. However, new foreign entity provisions could inject uncertainty in the sector’s growth. The legislation is supported by an earlier executive order that targets a quadrupling of U.S. nuclear capacity from 100GW to 400 GW by 2050.

EVs: Electric vehicle manufacturing and competitiveness will be “hard hit,” according to the Center on Global Energy Policy, noting that the law could reduce domestic demand for EVs, jeopardize battery investment and allow China and other foreign competitors to gain greater market share.

Clean grid: Solar and wind power was particularly hard hit as historic investment and production tax credits sunset earlier than before. The law would reduce the build-out of new clean power generating capacity by 53-59% through to 2035, according to the Rhodium Group. An executive order following the OBBBA directs the U.S. Treasury Secretary to eliminate subsidies for “unreliable green sources like wind and solar,” that it believes is threatening national security. A separate executive order directs the Treasury Secretary to end “market-distorting subsidies for unreliable, foreign controlled energy sources.”

Critical minerals: Metallurgical coal is nowdeemed a “critical mineral,” allowing it to qualify for a production tax credit. The law also broadly reduced 45X Production Tax Credits for critical minerals to 2033 (compared to no limits before), which would pose a challenge as most critical minerals projects require long timelines. The Center for Strategic & International says the “amended tax credit disincentivizes investment in newly discovered greenfield projects with longer timelines to production in favour of brownfield legacy mines that may be closer to production but have lower grade reserves.”

Trends, tech and science

China is the world’s energy transition workhorse. Around 74%, or 1.3 terawatt, of the world’s new wind and solar capacity is being built in the country, with the U.S. a distant second with 5.9% of all new projects, and India third at 5.1%, according to Global Energy Monitor. The 590GW of new Chinese wind capacity proposed or underway could power nearly all U.S. households. China’s inevitable cleantech dominance poses a conundrum for the West, as suggested by EU President Ursula von der Leyen earlier this month: “Beijing is at once a staunch competitor in the clean tech race, and a vital partner for global decarbonization.” A fractured G7 can’t keep Chinese tech out for too long.

Straddling cleantech and AI. Founded by veteran tech investor Nicholas Parker, CleanAI recently launched a networking and financing ecosystem for entrepreneurs and businesses intersecting AI and clean-tech. CleanAI research shows that the artificial intelligence-enabled cleantech solution space would require US$138 billion over the next five years and could mitigate up to 10% of global greenhouse gas emissions.

RBC Briefings

• Trade Zone: The Great Canadian Stampede to find new trading partners

• Supply Management Explained

• Climate Crunch: Canada’s other green superpower

• U.S. and Canada outlooks intact amid reorienting trade flows

• Five-minute charging: How grids can manage power spikes

The Institute In Action

• Last week, John Stackhouse visited Limberlost Place, Ontario’s first mass timber, net-zero carbon emissions building, to participate in a documentary about the project. The George Brown College building is set to open this fall in Toronto.

• On July 15th, Nathan Janzen and Lisa Ashton gave a keynote presentation at the Dairy Farmers of Canada Annual General Meeting in Toronto.

Books on the team’s reading list:

• Genesis, Henry Kissinger, Craig Mundie and Eric Schmidt, on AI’s transformative powers, in politics, security, prosperity and science. Read John’s review here.

• The Explorer’s Gene: Why We Seek Big Challenges, New Flavors, and the Blank Spots on the Map, by Alex Hutchinson.

➔ A Silicon Valley of direct air capture set to debut in Alberta

➔ Global abundance: Exploring the New Energy Age

➔ Brazil is cooking up sustainable soybeans for China

Hot takes

➔ The Silicon Valley of direct air capture is taking shape in central Alberta. Quebec-based Deep Sky, backed by a US$40-million grant from Bill Gates’ Breakthrough Energy, is opening its direct air capture innovation and commercialization centre in Innisfail in central Alberta this summer. The facility—seen as a hub for direct air capture activities—will serve as a sandbox for firms to test direct-air carbon-sucking technologies before they scale their operations commercially. Eight companies—from Canada, the U.S. and Germany and others—have already signed up. In a vote of confidence, the Alberta government also recently invested $5 million in DeepSky from the province’s Technology Innovation and Emissions Reduction Regulation (TIER) fund.

➔ Ontario is crafting a new wood construction strategy. The recently announced Advanced Wood Construction Plan aims to promote wood use in larger and taller structures to accelerate projects, lower costs by as much as 20%. Swapping cement and steel with wood would also help lower emissions in a sector that accounts for 18% of Canada’s total emissions. Widespread adoption of wood, specifically mass timber, as a substitute or complement to concrete and steel could cut embodied emissions in buildings by as much as 25%, according to our report Mass Timber. The five-year plan comes as the province’s $20-billion industry is facing punitive U.S. tariffs.

➔ Forecasters are scrambling to assess demand from data centres in the U.S. Electricity demand is now set to grow 25% by 2030 and 78% by 2050, compared to 2023 levels, according to a new report by ICF, a consulting firm. That’s an annual growth rate of 3.2% through 2030 (1.4% previously) and 2.2% (1.1% previously) through 2050 and contrasts with the past two decades when U.S. electricity demand was essentially flat. The strain on capacity could lead to a doubling of electricity prices by 2050, ICF warns. Texas, along with California and PJM region (covering 13 mid-Atlantic and Midwest states)—markets already importing Canadian electricity—will see the highest demand growth.

➔ Brazil is developing bespoke, sustainable soybeans for China. Inspired by its successful Boi China beef model, the Latin American country aims to develop “Soy China,” through a supply chain that aligns with China’s environmental standards and runs on renewable energy. It’s also seen as a way for China to counter the EU Deforestation Regulations (EUDR), which have much stricter rules. Many countries (inside and outside the EU) have raised concerns about the EUDR because of its stringent traceability requirements that do not align with conventional soybean supply chains. And Brazil and China’s move is alternate route for soybeans to flow. The U.S. Department of Agriculture recently warned that sustainable soybeans would directly challenge American and Canadian exporters’ market share in China.

Nature capital: Canada’s other green power

By Lisa Ashton

As climate change disrupts the U.K.’s landscapes—from the Scottish Highlands to the Somerset Wetlands—the country is facing a £97-billion ($181-billion) nature asset deficit. The Green Finance Institute (GFI) estimates that planned public spending on conservation and restoration by the government is well short of delivering on its binding commitments, including the 25-year Environment Plan and the U.K.’s 30×30 targets under the UN Biodiversity targets. It also presents real risks and losses of between £150-£300 billion of U.K.’s GDP by 2030. The U.K. government is now seeking ideas from businesses, investors, and innovators to protect the “natural foundations of its economy,” and spur growth in its “burgeoning” nature services sector.

Canada can draw lessons from the U.K. experience. It’s home to landmark investments in several initiatives including the Great Bear Sea project finance for permanence (PFP), and watershed policy commitments to protect and conserve 30% of Canada’s land and water by 2030.

Canada’s is truly a nature powerhouse with riches that are second to none:

➔ It’s one of just five countries that collectively contain more than 70% of the world’s remaining intact ecosystems;

➔ 20% of the world’s total freshwater;

➔ 25% of the world’s wetlands;

➔ 24% of the world’s boreal forests;

➔ the world’s longest coastline;

➔ the world’s longest coastline;

➔ ecosystems in Canada provide essential habitat for approximately 80,000 species.

But, Canada, like many others, has not been able to unlock nature finance at scale to address declining natural capital as a share of GDP—roughly 70% in 1995 to about 40% today—and mitigate the risks associated with a natural environment that’s experiencing more deterioration than the U.S. and the U.K. Wildfires year-to-date alone could risk 0.4% of Saskatchewan’s GDP and 0.2% for Alberta, according to Statistics Canada estimates.

Nature finance is in its infancy, but a pathway to build natural capital in Canada and investments is slowly being charted. In 2022, the Government of Canada issued its first green bond, valued at $5 billion, with a portion of funds going to nature-based projects including financing that supports the adoption of climate-smart agriculture practices.

Exploring nature finance is an opportunity to build greater resilience in Canada’s natural resource dependent economy driven by fuel, food, fertilizer and forestry production.

Trends, tech & science

Gas flaring in Alberta is raising alarms among health professionals. The Canadian Association of Physicians for the Environment (CAPE ) Alberta chapter cited research that shows a 1% increase in flaring exposure led to a 0.73% rise in respiratory-related hospital visits. The warning comes after Reuters reported that gas flaring blew past the province’s self-imposed limit on annual natural gas flaring in 2024, for a second year in a row. In June, the Alberta Energy Regulator said it was ending limits on flaring.

Overcapacity is reinforcing steel’s hard-to-abate reputation. Around 30% of steel capacity remains unused globally, an excess that’s sent prices plunging to a four-year low. With margins under pressure, steelmakers are hardly in the mood to decarbonize. The problem is set to worsen: more than 40% of new steelmaking capacity—mostly from “non-market” forces such as China—that’s set to enter the market by 2027 will be emission-intensive, according to an OECD report . Strengthening international co-operation to address excess capacity and market distortions will be vital to improve the outlook for steelmakers in market economies, the OECD recommends. That would give steelmakers the space to advance decarbonization efforts. New anti-dumping tariffs in Canada and the U.S., primarily aimed at China, is also an opportunity to establish a green steel market.

Plastic bag bans and fees are making a difference. Several U.S. jurisdictions that enforced these policies have seen a 25-47% dip in plastic bags as a share of total items collected in shoreline cleanups, according to an extensive University of Delaware and Columbia University study. The ban also reduced the number of animals entangled along the shoreline. Still, plastic pollution overall remains a growing challenge. The final round of a Global Plastics Treaty is set for August in Geneva.

The New Energy Age

By John Stackhouse

More, more, more energy.

That was the big message in the IEA’s 10th annual investment report.

The International Energy Agency (IEA) tracks investment flows for all forms of energy, and this year is more relevant than ever, given the volatility we’ve seen in energy prices this decade. While a slower global economy may temper some investment patterns, what gets built today will shape energy patterns in years to come.

Some highlights:

• Capital flows to the energy sector are on course to reach US$3.3 trillion this year.

• China is leading the energy investment surge, accounting for nearly a third of global investment, split almost evenly between grid and storage, renewable power and fossil fuels.

• North America saw a record US$700 billion in investments in 2024, but will see pullback to US$690 billion this year. Clean energy investment is at an all-time high.

• Would the U.S. new “big, beautiful bill” that guts several clean energy incentives, and Canada’s Bill C-5, that promotes clean and conventional energy projects, move the needle on energy investments?

• The biggest use of investment globally is electrification, which will consume almost half ($1.5 trillion) of all energy capital.

• Only a third of investment will go to oil, natural gas and coal:

• lower oil prices are likely to keep investment down;

• LNG investment is on “a strong upward trajectory,” led by the U.S., Qatar and Canada;

• nuclear’s renaissance continues, rising by 50% over the past five years;

• coal-fired power in advanced economies has ground to a halt, while it’s showing a comeback in China and India.

The bottom line is the world will continue to need to invest trillions a year in energy, across a wide array of sources. As that continues, some long-term trends are clear—more energy investment will go to Asia, especially China; more will go to electrification; and as our new report, “A G7+ Strategy for Natural Gas,” lays out, more will go to gas infrastructure.

Countries that develop the right policies will generate and attract the bulk of that capital, in what’s shaping up to be a New Energy Age.

Must reads

➔ This massive new data centre is powered by used EV batteries (Fast Company)

➔ Would you recycle more if every bottle gave you a chance to win $1,000? (CBC)

➔ Net-zero push is still on at many companies: SBTi (WSJ)

➔ Why Canada’s orphan wells are a bigger methane menace than active wells (ACS Publication)

The Institute In Action

• John Stackhouse and Lisa Ashton visited the Kelburn Farm in Manitoba in late June. The demonstration farm operates out of the Red River Valley, a growing hotspot for agri-food innovation. The Kelburn Farm is a place for farmers, students, researchers, and companies along the agri-food supply chains to test and trial new ideas that are advancing Canadian agriculture.

• Shaz Merwat was at the RBC Energy Transition Conference in London last week. He also attended a virtual International Energy Agency Conference on certified natural gas this week.

On the team’s reading list:

• Crisis: A Global Case Primer, by Jason Miklian and John Katsos, on leading when things are falling apart.

• Shaz Merwat was at the RBC Energy Transition Conference in London last week. He also attended a virtual International Energy Agency Conference on certified natural gas this week.