{"id":9582,"date":"2024-12-05T14:50:49","date_gmt":"2024-12-05T14:50:49","guid":{"rendered":"https:\/\/www.rbc.com\/en\/thought-leadership\/canadas-5-energy-bargaining-chips-to-counter-trumps-tariffs\/"},"modified":"2024-12-05T14:50:49","modified_gmt":"2024-12-05T14:50:49","slug":"canadas-5-energy-bargaining-chips-to-counter-trumps-tariffs","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/climate-action-institute\/climate-crunch\/canadas-5-energy-bargaining-chips-to-counter-trumps-tariffs\/","title":{"rendered":"Climate Crunch: Canada\u2019s 5 energy bargaining chips to counter Trump\u2019s tariffs"},"content":{"rendered":"

Issue #06<\/span><\/p>\n

\u2794<\/span> How Canada can stave off a tariff-trigger-happy U.S.
\n\u2794<\/span> AI vs Emissions: Canada can have it all<\/p>\n

Hot takes<\/h3>\n

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Give those sanctimonious Christmas climate blogs a rest.<\/strong> There might be better ways to make you feel less guilty about your Christmas carbon footprint. Can you travel less in the run-up to Christmas, get on public transportation more, avoid that optional plane trip, stop buying wrapping paper\u2014even send less cards (Canada Post is on strike, anyway)? And dig in your Christmas roast guilt-free.<\/p>\n

\u2794 Environment vs economy plays out in two Canadian cities:<\/strong><\/span> Crowsnest Pass, Atla., wants to be a coal town again. The 6,000-strong community recently <\/a>voted in favour of building the Grassy Mountain metallurgical coal project\u2014and it wasn\u2019t even close: 72% voted yes in a high turnout, in the hopes of securing new economic revenues. While the town\u2019s vote is non-binding, it underscores how economic development is trumping environmental concerns for some communities. Further west, Vancouver <\/a>clung on to its ban on natural gas heating for new homes\u2014but only just. Those in favour of scrapping the ban, including mayor Ken Sims, said it would improve housing affordability in pricey B.C. But it also sparked widespread opposition. A 5-5 tie at the city council vote ensured the ban remains in place.<\/p>\n

\u2794 The backlash against the plastic backlash.<\/strong><\/span> Global climate leaders\u2019 very bad, no good, awful year seems to have ended with another disaster this week in South Korea: a failure to agree on plastic pollution<\/a> . More than 100 countries were pushing to phase out plastic production, but oil producers warned it could impact economic development. Talks will resume next year. The latest stalemate is part of a broader pattern of stalled progress on climate and environmental issues, especially at COP29.<\/p>\n

\u2794 Barbados swapped a portion of its debt for climate commitments.<\/strong><\/span> The debt-to-climate swap allows Barbados to restructure <\/a>higher-interest debt, and generate $125 million in fiscal savings. In return the Caribbean nation has pledged to use the funds to boost water resource management and improve water and food security. It\u2019s emerging as a popular way for developing countries to ease their financial burden in return for greater environmental stewardship. The World Economic Forum<\/a> estimates debt-for-nature swaps could provide US$100 billion to restore nature and help countries adapt to climate change.<\/p>\n

\u2794 Bi-Weekly Climate Action Award:<\/strong><\/span> Omar Yaghi<\/a>, a chemist at University of California, Berkely, for developing a carbon capture powder. Early tests show just half a pound of the stuff may absorb as much carbon dioxide as a tree.<\/p>\n

\u2794 Bi-Weekly Climate Fail Award:<\/strong><\/span> To Norway<\/a> for offering commercial deep-sea mining\u2014a world first. The government <\/a>has since postponed the decision amid pressure from a coalition partner. Thirty two countries, including Canada, have called for a moratorium on deep-sea mining in international waters.<\/p>\n

5 Energy Aces Up Canada\u2019s Sleeves<\/h3>\n

President-elect Donald Trump hosted Prime Minister Justin Trudeau at Mar-a-Lago for dinner last week after threatening to impose a blanket 25% tariff on Canadian goods. Trump described the dinner meeting as \u201cproductive,\u201d but Canada\u2019s hardly off the hook. Here\u2019s how Ottawa can leverage its energy resources to play a strong hand and steer U.S. away from mutually assured inflation in both countries.<\/p>\n

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\u2794 The crude math doesn\u2019t add up:<\/strong><\/span> Heavy Canadian oil still trades at roughly a $10 discount to the North American benchmark. A 25% tariff on the U.S.\u2019s biggest oil shipper could send gasoline prices spiking well over their current US$3 per gallon<\/a> average, nationwide. That could derail energy czar Doug Burgum\u2019s mandate to lower gas to US$2 per gallon. Incidentally, Burgum was at the Trump-Trudeau dinner table.<\/p>\n

\u2794 There\u2019s no American energy dominance without Canada: <\/strong><\/span>Canada is the dominant supplier of piped natural gas to the U.S. If the new administration wants to establish American \u201cenergy dominance,\u201d it must lean on Canadian gas. A steady supply from the Montney and Duvernay, would give U.S. lawmakers the flexibility to boost American liquefied natural gas exports to Europe and Asia, without raising prices at home.<\/p>\n

\u2794 There\u2019s uranium at the U.S.\u2019s doorstep: <\/strong><\/span>The Joe Biden administration\u2019s plan to triple U.S. nuclear capacity is something the new administration<\/a> will likely be on board with. Biden\u2019s nuclear framework<\/a> envisions working closely with Canada, among others, to \u201cestablish a secure and resilient global nuclear fuel supply chain,\u201d including uranium. Canada<\/a> is the world\u2019s second largest producer of uranium with output far exceeding the U.S.<\/p>\n

\u2794 We are critical to building an alternative to China\u2019s supply chains:<\/strong><\/span> Canada has nearly five times more cobalt reserves and six times more nickel reserves than the U.S, two key metals in energy transition. We are also a bigger producer of aluminum, graphite (for lithium-ion batteries), indium (for chip-making), iron ore and lithium than the U.S., according to the U.S. Geological Survey<\/a>. The U.S. needs us to loosen China\u2019s hold on global supply chains.<\/p>\n

\u2794 We power your cities.<\/strong><\/span> Admittedly, a bit of a weak hand these days (see chart). Still, Hydro Quebec has built new transmission lines and sewn up long-term contracts with customers in Massachusetts and New York. Droughts are playing havoc with Canadian electricity exports, but it remains an important bargaining chip.<\/p>\n

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AI vs Emissions<\/h3>\n

Canada can have it all: a foothold in North America\u2019s booming data centre sector powered by artificial intelligence, but also maintain its climate ambitions. What\u2019s needed is a flexible approach, a strategic alignment with the United States\u2014and meaningful levels of abated natural gas.<\/p>\n

Power Struggle: How AI is challenging Canada\u2019s electricity grid<\/em><\/a>, a new report by Energy Policy Lead Shaz Merwat<\/strong>, analyzes how Canada can navigate the stress data centres could potentially place on the country\u2019s grid:<\/p>\n

\u2794 <\/span>What\u2019s the opportunity?: <\/strong><\/p>\n

Canadian regulators are reviewing data centre applications with a combined estimated capacity of 15 gigawatts\u2014enough to power seven out of 10 homes nationwide. AI is the primary driver of this surge, with data centres offering a $100 billion opportunity for the construction and build of data centres and accompanying IT infrastructure (think expensive Nvidia chips).<\/p>\n

\u2794 <\/span>What\u2019s the playbook?: <\/strong><\/p>\n

\u201cBring your own power\u201d seems ideal. That\u2019s the Alberta model, which allows for faster deployment and supports local natural gas prices, driving economic benefits for the province.<\/p>\n

\u2794 <\/span>What are the climate costs?:<\/strong><\/p>\n

If natural gas powers six additional gigawatts of data centres, annual emissions could rise by 16 million tonnes of CO2e\u2014a 3% increase in Canada\u2019s total emissions, Shaz estimates. However, carbon capture and storage (CCS) could throttle the rise of emissions.<\/p>\n

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Read the full report here<\/a>.<\/p>\n

The Institute In Action<\/h3>\n

\u2794<\/span> The RBC Climate Action Institute co-hosted a special session in Ottawa in November with the British High Commission, where Institute head John Stackhouse and Deputy High Commissioner David Prodger<\/strong> offered eight key messages for Canada<\/a>.<\/p>\n

\u2794<\/span> John also spoke at the National Electricity Roundtable<\/a> in Ottawa about Canada\u2019s opportunity to produce more electricity to power AI<\/strong>, EV batteries and other parts of the economy.<\/p>\n

\u2794<\/span> John\u2019s whirlwind Ottawa trip concluded with a discussion at the Sustainable Finance Forum<\/a> on Canada\u2019s opportunity to produce more food and emit less<\/strong>\u2014it could be our best investment for the disruptive decade ahead.<\/p>\n

\u2794<\/span> What\u2019s on the team\u2019s reading wish list: John\u2019s been brushing up on\u00a0his Trumponomics<\/a> with two books return by the president-elect\u2019s former advisors. Here are some other books on the team\u2019s list: The New Cold War: How the Contest Between the U.S. and China Will Shape Our Century,<\/em> obert Niblett, and The War Below: Lithium, Copper, and the Global Battle to Power Our Lives,<\/em> by Ernest Scheyder.<\/p>\n

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Curated by Yadullah Hussain<\/strong>, Managing Editor, RBC Climate Action Institute.<\/p>\n

Climate Crunch would not be possible without John Stackhouse<\/a>, <\/em>Myha Truong-Regan<\/a>, <\/em>Sarah Pendrith<\/a>, <\/em>Farhad Panahov<\/a>, <\/em>Lisa Ashton<\/a>, <\/em>Shaz Merwat<\/a>, <\/em>Vivan Sorab<\/a>, <\/em>Caprice Biasoni<\/a> and <\/em>Frances Dawson<\/a>.<\/em><\/p>\n

Have a comment, commendation, or umm, criticism? Write to me here (yadullahhussain@rbc.com<\/a>)<\/em><\/p>\n

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