Naheed Nenshi, the NDP leader of Alberta’s Opposition, is accusing Premier Danielle Smith of a scheme that could increase power bills for Albertans “so she can build AI data centres for her foreign billionaire friends.” 

The comments come from a news conference organized by the NDP in response to reporting by The Narwhal on a leaked document — labelled a “cabinet report” and bearing the Alberta government logo — that appears to show the provincial government is planning to take control of Alberta’s natural gas pipeline system to increase both supply and demand. 

The document outlines plans to wrest regulatory control over the province’s main natural gas transmission line, called the Nova Gas Transmission pipeline, owned and operated by TC Energy, away from the federal Canada Energy Regulator, and to create two new government-owned corporations. One of those Crown corporations could force companies to build natural gas pipeline expansions based on government priorities, while the other could build and operate the pipelines itself. 

Those moves, according to the document, would raise prices on ordinary Albertans and businesses, but would bring in more royalties for the government. 

“Let me reiterate this: Danielle Smith is rolling out the red carpet for data centres, and that will cause higher electricity prices, and she doesn’t care if it spikes your electricity and your heating bills,” Nenshi said.

Detailed questions were sent to several Alberta ministries prior to publication of the original story, but the government did not respond by publication time. 

Late Friday afternoon, the office of Minister of Energy and Minerals Brian Jean sent a statement to The Narwhal in response to a follow-up email asking for comment on the original story.

“Governments routinely examine a wide range of policy, regulatory and legislative options when considering complex issues, and internal materials do not represent government decisions,” it said.

“An increasing number of project proponents across a variety of industries have raised concerns about accessing industrial quantities of natural gas in several regions of Alberta. We are working with industry, including the natural gas infrastructure owners, to better understand these issues and identify practical solutions that support future growth and investment.”

The document on which the reporting was based was leaked to The Narwhal by a source within the Alberta government, whose identity is being kept confidential due to personal and professional risks stemming from the leak. 

A note on trust, integrity and unnamed sources+

This story uses information from sources The Narwhal has agreed not to name. The Narwhal only agrees to keep names confidential when we believe two things. First, that the person we’re speaking with is putting themselves at genuine risk, either personal or professional, by sharing this information with us. Second, that the information they’re sharing is in the public interest. Our decision to do so is never made lightly. 

There are two types of unnamed sources. A confidential source is someone whose name we know, but aren’t sharing. We make multiple attempts to verify their identity and information with other sources. If we aren’t able to get a second source, we say so. 

An anonymous source is someone whose name we don’t know. It is incredibly rare for The Narwhal to publish a story with a completely anonymous source. In these instances, we don’t publish until we have verified the information shared with us with at least one other source. 

And again, these stories must be in the public interest. 

As Canadian governments become increasingly secretive, the courage of whistleblowers is to be admired. We value them greatly. At the same time, our promise to readers is The Narwhal will always make sure the facts are airtight. 

Have something to share? Send us a story tip.

The moves could cost billions of public dollars if the government builds its own pipelines, according to the document. The document estimates it will cost more than $160 million just to institute the changes and fight anticipated legal battles with companies such as TC Energy, or potentially First Nations. “There may also be litigation risk from Indigenous communities and organizations where they believe that they have not been meaningfully engaged from early on in any proposed projects,” the document reads.

Sturgeon Lake Cree Nation Chief Sheldon Sunshine said his community, which is fighting a massive data centre proposal in northern Alberta led by celebrity investor Kevin O’Leary, is “outraged” by the details outlined in the document, which he says he has independently reviewed.

“For years, our Nation has been fighting for meaningful consultation and effective regulation of hyper-scale data centres — including the massive O’Leary Project,” he said in a statement sent to The Narwhal. Sturgeon Lake Cree Nation is not specifically named in the leaked document.

“Now we find out that the United Conservative Party government is trying to artificially drive up the demand for natural gas to lure even more of these data centres to Alberta — all while knowing that this would trample our Treaty Rights and send electricity prices soaring for all Albertans.”

The document estimates building a pipeline to meet government expectations could cost as much as $6 billion. The capacity from that new pipeline could provide enough gas for six gigawatts of power generation for data centres, according to the document. A recently rejected AI data centre near Olds, Alta., would have required a 1.4-gigawatt power plant and used as much power each day as the City of Edmonton.

According to information on TC Energy’s website, the company has invested approximately $15 billion into the Nova Gas Transmission system since 2015, with double the capacity increases outlined in the document.

The document points to the need to feed natural gas to AI data centres as a primary motivation for the moves, but also highlights desired growth in the oil and gas sector, saying “the Government of Alberta is actively courting hyper-scale data centre capital and other investors.”

Nenshi, who said he has now seen the leaked document himself, was blunt. 

“This report makes it clear that their strategy all along was to do whatever they could to increase natural gas prices, to promote the government’s own bottom line due to their own fiscal mismanagement,” he said. The document suggests the moves could increase royalties to the government while consumers could end up paying higher prices for their natural gas and electricity bills under the proposed plan.

Document leaked by whistleblower for whom Canada affords little protection: expert

According to David Hutton, a senior fellow with the Centre for Free Expression at Toronto Metropolitan University, whistleblowers who leak sensitive information to the media run a considerable risk, from losing their jobs, friendships or families through divorce.

He said Canada is “back of the bus” when it comes to protections.  

“International experts have done surveys of various countries and rated them, and we come out at the bottom,” he said in an interview. The federal government has a whistleblower program, but Hutton said there’s never been compensation awarded through it. 

Provincial laws are similar to the federal protections, including Alberta’s, and “are really not of any value,” he said. 

He stresses how crucial it is for public-interest information to see the light of day. As The Narwhal has reported, this is becoming increasingly difficult in Canada as multiple levels of government tighten freedom of information legislation. 

“Research done over decades now has consistently shown that tips from whistleblowers account for usually more than 40 per cent of all of the frauds that are uncovered [globally],” he said, highlighting one aspect of information that is shared.

There is no indication of fraud in the leaked document in Alberta. 

The plans outlined in the document single out TC Energy, which owns and operates the largest gas pipeline system in the province, as a likely source for legal action pushing back against the plans, due to the impacts on its business. 

The company did not respond to questions for the original article or for this follow up. 

Nenshi said he has not yet spoken with representatives from the company after the revelations were made public, but intends to. 

“To actually say government wants to step in in order to hurt people, and that government is strong-arming a company to make billions of dollars in investments that they don’t want to make, with the threat of competing with them if they don’t?” he said. “That’s textbook bullying behaviour. It’s also bad economics and it’s bad business.”

Document points to constraints imposed by feds, says Alberta seeks to ‘achieve greater control’

The document points the finger not just at TC Energy, but also at constraints imposed by the federal regulation of the natural gas transmission network.

“Federal regulatory oversight … is now compounding Alberta’s gas access challenges,” the document reads, adding this oversight “has caused growing concern about the pace of infrastructure development for the [natural gas transmission network].”

The document suggests moving TC Energy’s Alberta pipelines back under provincial regulatory control and under the authority of one of the new government corporations.

Some pipeline networks within the province are already under provincial jurisdiction, including the ATCO distribution network that interconnects with TC Energy’s system. ATCO operates approximately 8,500 kilometres of pipelines in Alberta, whereas the Nova Gas Transmission pipeline, the province’s main natural gas transmission line operated by TC Energy, is about 25,000 kilometres.

“Without provincial regulatory oversight, the Government of Alberta is limited in its ability to compel federally regulated pipelines to invest in capacity expansions,” reads the document.

“Due to the federally regulated [natural gas transmission line] system being fully subscribed, the province cannot guarantee the timely expansion of gas transmission capacity required to support new demand.”

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Alberta is so determined to usher in a wave of AI data centres and increase oil and gas production that it is considering rewriting legislation and creating government-owned corporations that would force private companies to invest in natural gas pipeline expansions — or allow the government to build and operate those pipelines itself — according to a document leaked to The Narwhal. It’s also willing to pay for any legal challenges that follow. 

The document — labelled a “cabinet report” and bearing the Alberta government logo — contains a broad swath of recommendations it indicates were prepared for the Energy and Minerals Ministry led by Minister Brian Jean, and says it was scheduled to be presented to a high-level cabinet policy committee on Sept. 10.

The document says private ownership of natural gas transmission pipelines is throttling growth and that “escalatory and direct measures are now required,” especially as “the Government of Alberta is actively courting hyper-scale data centre capital and other investors.”

The document notes Alberta risks losing investment from AI data centre companies if it can’t come up with “speed-to-market” solutions.

According to the document, the government has been in talks with TC Energy, which owns and operates Alberta’s main natural gas pipeline system, since 2024 in an attempt to force the company to invest in new pipeline capacity, but the company refuses to build based on “speculative demand.” TC Energy did not respond to detailed questions.

Talks with the company stalled, according to the document, after the company pitched a plan that would involve the province assuming more financial liability for the pipeline system and forcing higher rates on those who use it. 

“Discussions continued until 2026 and escalated with the premier’s involvement,” reads the document. “Extensive discussions with TC Energy [have] produced no viable solutions to date.”

The document is critical of TC Energy’s track record, saying the company’s “underinvestment in [natural gas] pipeline capacity has caused a market failure in the natural gas sector leaving key growth regions unable to access gas,” calling the result a “dysfunctional natural gas pipeline network.”

The document was leaked to The Narwhal by a government official whose identity is being kept confidential. The Narwhal has verified they are in a position that would likely have access to such a document. The Narwhal has not been able to independently verify the authenticity of the document, but Alberta’s lobbyist registry confirms TC Energy has been in talks with government officials regarding “increased support for gas market access,” as well as discussions on “strategic natural gas initiatives.”

A note on trust, integrity and unnamed sources+

This story uses information from sources The Narwhal has agreed not to name. The Narwhal only agrees to keep names confidential when we believe two things. First, that the person we’re speaking with is putting themselves at genuine risk, either personal or professional, by sharing this information with us. Second, that the information they’re sharing is in the public interest. Our decision to do so is never made lightly. 

There are two types of unnamed sources. A confidential source is someone whose name we know, but aren’t sharing. We make multiple attempts to verify their identity and information with other sources. If we aren’t able to get a second source, we say so. 

An anonymous source is someone whose name we don’t know. It is incredibly rare for The Narwhal to publish a story with a completely anonymous source. In these instances, we don’t publish until we have verified the information shared with us with at least one other source. 

And again, these stories must be in the public interest. 

As Canadian governments become increasingly secretive, the courage of whistleblowers is to be admired. We value them greatly. At the same time, our promise to readers is The Narwhal will always make sure the facts are airtight. 

Have something to share? Send us a story tip.

Detailed questions sent to the premier’s office, including for confirmation of details in the document, were sent to the press secretaries for the premier and the ministers of affordability and utilities, energy and minerals, jobs, economy, trade and immigration, and treasury board and finance. There was no response by publication time. 

There was also no response to an email and phone call to Vitor Marciano, the chief of staff to the energy minister.

According to the document, the full slate of proposals for cabinet consideration include taking regulatory control for the pipeline transmission network operated by TC Energy away from the federal Canada Energy Regulator, creating a Crown corporation that would guide pipeline construction based on government forecasting, and another Crown corporation that would oversee, or build and operate, its own pipelines. 

That would give the government the power to control some private investment decisions, including directing companies to build pipelines, and it could also make the government a direct competitor of companies such as TC Energy. 

The document argues the moves are necessary to rapidly build natural gas pipeline capacity to help increase oil and gas production and spur data centre growth. The government’s data centre strategy explicitly encourages the use of natural gas for power generation. 

Since the release of that strategy, the government has restricted AI data centre access to the provincial grid until 2028 because there is not enough power to fuel demand and keep the lights on. Developers are required to build their own power supply, which is currently restricted to natural gas power plants.

Albertans could be on the hook for hundreds of millions — or billions — to help support power for AI data centres: document

The moves could cost Albertans. 

The document is clear one of the main drivers of the plan, in addition to increasing the province’s oil and gas production, is attracting AI data centres to the province. “Alberta’s ability to attract and retain data centre investment depends on reliable access to natural gas service,” the document says. 

The recommended changes would result in “significant legal and cost impacts for the Government of Alberta,” according to the document, as well as likely result in “increases for utility ratepayers.”

The document notes Albertans may be “sensitive” to what it calls “any change in perceived affordability.”

The preliminary estimated cost of the proposed changes, including the planning and creation of Crown corporations and potential ensuing legal battles, could exceed $162 million, according to estimates in the document, but that does not include possible infrastructure costs.

The document estimates building a pipeline to meet government expectations could cost as much as $6 billion. The capacity from that new pipeline could provide enough gas for six gigawatts of power generation for data centres, according to the document. A recently rejected AI data centre near Olds, Alta., would have required a 1.4-gigawatt power plant and used as much power each day as the City of Edmonton.

The total cost includes anticipated litigation from TC Energy and other companies, including concerns over “significant claims for compensation” for “alleged expropriation of valuable contractual rights.” 

The document warns First Nations could also initiate lawsuits. 

The moves could also make things more expensive for residents and businesses by driving up the price of natural gas, according to the document.

“While low prices benefit customers (Albertans and industrial users), they limit provincial royalty revenues and can discourage natural gas investment by reducing producer revenues,” the document reads. 

“Increased natural gas demand could contribute to higher costs for households, businesses and gas-intensive industries, which could deflect stakeholder support.”

The document also notes “potential disproportionate impacts on seniors and rural residents can be mitigated by monitoring affordability and exploring mitigation measures specific to households and small businesses.”

The government’s aim is to almost double natural gas prices to support and expand production, which would increase the cost of electricity generation by up to 25 per cent, based on calculations in the document. 

It’s unclear exactly what that could mean for Albertans’ power bills, but those costs could be passed down to Albertans, who the document warns could be upset about government spending and increased costs. 

A recent analysis from the Pembina Institute, estimates the recently announced Meta data center near Edmonton could add $270 to $460 to electricity bills each year.

The document suggests government messaging could sell the plan to Albertans to “help strengthen social licence.”

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FortisBC is a familiar name to many British Columbians. The company’s yellow and blue logo appears on utility bills across the province, but people might not know the company operates one of B.C.’s longest-running liquefied natural gas (LNG) facilities. And now it’s hoping to be able to produce 10 times more LNG at its plant in Delta, B.C., under a proposal dubbed Tilbury LNG Phase 2.

FortisBC’s Tilbury LNG plant has been operating for 55 years. It currently produces about 250,000 tonnes of LNG per year, which is used as fuel by some marine vessels and to heat homes and businesses. The Phase 2 expansion could allow the facility to produce up to 3.4 million tonnes each year, with roughly 2.5 million set aside for export. That’s slightly more than the 2.1 million tonnes Woodfibre LNG in Squamish expects to export once it begins operations.

FortisBC has been working on beefing up its operations at the Tilbury site for about a decade. In July, Minister of Energy and Climate Solutions Adrian Dix announced the government’s support of an earlier expansion proposal, known as Phase 1B, which will add a marine jetty to the site and increase production capacity to 650,000 tonnes of LNG per year. Once Phase 1B is completed, Tilbury LNG will be able to fuel more marine vessels with LNG, which is a lower-emission fuel than the diesel many ships use for power. 

A July cabinet order signed by Dix exempted Phase 1B from review by the B.C. Utilities Commission. That means the expansion will not undergo an independent assessment to examine whether it is necessary and serves the public interest. Last year, the B.C. government also exempted the North Coast transmission line from such a review.

The order also created the option for First Nations co-ownership of the project, which the Musqueam Indian Band has expressed interest in. 

Meanwhile, Tilbury LNG Phase 2, a separate proposal for the same site in Delta, is currently being evaluated by the Environmental Assessment Office. If approved, it would see the construction of a new LNG storage tank with a capacity of up to 142,400 cubic metres, about 57 Olympic swimming pools. There would also be new gas liquefaction facilities capable of producing up to 7,700 tonnes of LNG per day, along with other infrastructure needed to support the expanded operations.

B.C. is betting on major projects as Canada looks to open new markets and reduce its reliance on the U.S. Tilbury Phase 2 is among the 35 energy and mining projects the province has identified as a priority. 

Here’s what you need to know.

Table of Contents

• Why this project?
• What’s different about Tilbury LNG?
• How does this fit into a bigger conversation about shipping traffic?
• What exactly will the expansion look like?
• What are the possible health impacts for people living near the project?
• What are the next steps for the proposed expansion?

Why this project?

Tilbury’s Phase 2 expansion will boost the gas system in the Lower Mainland and help meet peak demand for heat during cold weather, according to the provincial government. Building the project will support 1,210 jobs, the province’s major projects site states — though how many people will be employed after the expansion is built is not yet known.

The project description does not mention the LNG export aspect of the expansion.

FortisBC’s website describes the Phase 2 expansion as a way to “continue reliably serving our customers in a lower-carbon energy future while providing economic growth and benefits to local and Indigenous communities.”

Increasing Tilbury’s LNG production capacity will allow the company to “respond to the growing demand for LNG as a lower-carbon fuel,” according to the site.

In an emailed statement, a FortisBC spokesperson highlighted that the Tilbury facility runs on electricity and therefore has “a lower carbon footprint compared to fossil fuel-based power sources commonly used in LNG production elsewhere.”

“The proposed Phase 2 expansion will be required to meet all applicable regulatory, environmental and permitting requirements, including those established by Metro Vancouver.”

What’s different about Tilbury LNG?

While the other LNG facilities operating or under construction in B.C. are located at some distance from nearby communities, Tilbury LNG is an urban facility.

It sits on the banks of the Fraser River, just across the water from Richmond and downstream from New Westminster, making it the only urban LNG facility in the province. Highway 17, one of the Lower Mainland’s major transportation corridors, runs right alongside it.

“It is a 10-minute walk … to the nearest brewery,” Anna Barford, oceans campaigner for Stand.earth, says in an interview. 

Loaded LNG tankers leaving the Tilbury facility will have to transit the south arm of the Fraser River mouth to make their way out into the Salish Sea, a busy shipping corridor that could become much more crowded over the next few years if and when a number of other projects come to fruition.

How does this fit into a bigger conversation about shipping traffic?

At Roberts Bank, just south of where LNG tankers from Tilbury would enter the Salish Sea, the Port of Vancouver is planning to expand its existing container port by 50 per cent. If that $3.5-billion proposed expansion goes ahead, the port location could handle an additional 2.4 million 20-foot (six-metre) shipping containers each year, adding hundreds of container ship transits to the Salish Sea’s waters.

Meanwhile, the completed Trans Mountain pipeline expansion is expected to increase tanker traffic in the area by nearly 350 tankers per year.

And then there’s Alberta’s proposed pipeline to the Pacific coast, which would also terminate at Roberts Bank. The tanker terminal would be built to accommodate very large crude oil carriers, massive ships capable of carrying 2.2 million barrels of oil that are longer than three World Cup soccer pitches laid end to end.

“These are enormous vessels that the Tilbury tankers are going to navigate around — they will each need to sort of make way for each other,” Barford said. “This is also critical habitat for southern resident killer whales, who we know vessel traffic is a problem for.”

The Environmental Assessment Office will consider potential impacts on southern resident killer whales and other local species and their habitats as part of its evaluation of the Tilbury LNG Phase 2 proposal. Measures by FortisBC to mitigate those impacts will also be assessed.

What exactly will the expansion look like?

To enable the facility to process more gas, the Phase 2 expansion includes a ground flare — basically, an outlet to burn off excess gas when needed. Instead of a flare stack like the one high above the LNG Canada facility in Kitimat, B.C., Tilbury LNG will burn off excess gas at ground level. 

The ground flare option was chosen because it “limits the opportunity for wildlife interactions with flames and greatly reduces noise and flame-related visual effects,” a FortisBC spokesperson said in an email.

The expansion would increase Tilbury LNG’s emissions to one million tonnes per year, according to a report from the Pembina Institute. Most of those emissions — 0.7 million tonnes — would come from so-called upstream emissions, related to the fracked gas and its transportation to Tilbury LNG via pipelines. The other 0.3 million tonnes of emissions would come from the facility’s operations. 

However, the assessment excludes emissions during the start-up phase, a time when LNG facilities often flare more gas than they would once they are established. Flaring involves burning off gas as waste rather than shipping it or using it. LNG Canada, which has been operational for two years now, has been flaring up to 15 times more gas than it was expected to, due at least in part to an issue with the facility’s flare tip. LNG Canada reported flaring 350 million cubic metres of gas in 2025, according to figures reported to the BC Energy Regulator — 10 per cent of all the gas transported to the plant that year. 

What are the possible health impacts for people living near the project?

Experts say significantly expanding an LNG facility in an urban area raises a range of concerns, including possible impacts on human health.

Emissions from an expanded Tilbury LNG will be entering an airshed already permeated with pollution, Tim Takaro, a physician-scientist in environmental medicine, says. Exhaust from vehicles, including heavy trucks travelling to and from port facilities, mingle with emissions from industrial operations along the Fraser River. 

“There’s just no reason to build a new fossil energy facility in a populated area,” he says.

New Westminster and Richmond had some of the highest levels of nitrogen dioxide of any community in B.C. in 2024, according to a report from the BC Lung Foundation. Nitrogen dioxide is a product of high-temperature fossil fuel combustion and is pushed into the air from vehicle tailpipes and industrial smokestacks. Long-term exposure is linked to impaired lung growth in children and more frequent asthma attacks.

For Takaro, who is a member of the Canadian Association of Physicians for the Environment, Tilbury LNG’s impact needs to be considered in the context of existing air quality conditions. 

“What does this facility add to the existing air quality?” he says. “Because that’s what people breathe — they don’t just breathe the new part.”

The Tilbury expansion’s ground flare is also a point of concern for Takaro.

“Their flare is going to be at ground level, which is, of course, where people live,” he says.

Ground flares are often about the height of a single-story building, says Tim Doty, a former employee of Texas’s environmental agency who spent years inspecting oil and gas facilities across the state.

“In theory, that’s going to bring the emissions closer to the community,” he says. 

“I would expect this facility, as it expands, to further impact the community and air quality around Delta and the Vancouver [area].”

Tilbury Phase 2’s environmental assessment takes into account current air quality and modelling of the expansion’s effects, according to an emailed statement from the assessment office. 

What are the next steps for the proposed expansion?

B.C.’s Environmental Assessment Office is in the final stages of evaluating the Phase 2 expansion. The last public comment period ended in July and the office received 631 completed surveys about the project.One of the survey’s 18 questions asked respondents to select any issues they believed had not been appropriately assessed or that lacked information. A majority of respondents flagged greenhouse gas emissions as an area of concern. Impacts on wildlife, fish and habitat were also selected on a majority of surveys.

The assessment office received more than 4,400 written comments, many of which detail concerns about how the project could impact salmon and orca populations, as well as the need to reduce greenhouse gas emissions in the face of global warming. Of the hundreds of comments reviewed by The Narwhal, the handful in support of the expansion focused on the global market for LNG and the importance of reducing market reliance on the United States.

Once the assessment office completes its evaluation, the ministers of energy and environment will receive a recommendation on whether to issue an environmental assessment certificate to the project. The ministers expect to make a decision by the end of the year, according to a July press release.

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This story is part of a series called Shockwave: Rising energy demand and the future of the Great Lakes. The Great Lakes region is in the midst of a seismic energy shakeup, from skyrocketing data centre demand and a nuclear energy boom, to expanding renewables and electrification. In 2026, the Great Lakes News Collaborative will explore how shifting supply and demand affect the region and its waters.

It’s the summer of data centre controversies in Ontario.

In a season where city council chambers are usually quiet, residents of Hamilton, Oakville, Mississauga, Burlington and Toronto have shown up to public meetings in droves. Many are there to resist proposals for massive new data centres in their backyards, worried about noise, water use and energy bills.

By mid-August, Oakville and Mississauga moved to freeze new data centre construction for a year. Hamilton came within an inch of doing the same.

On Aug. 13, Ontario Premier Doug Ford weighed in. 

Standing in front of a wall of servers at a government-owned data centre in Guelph, Ford unveiled the province’s new “data centre playbook” — and made clear he had little patience for local revolt against the boom he wants to usher in. 

“This is the way of the future,” he said. “Either we do it or Donald Trump’s going to do it, and I’m not giving Donald Trump nothing, absolutely nothing.”

Pushback is also happening in Fergus, Sault Ste. Marie and Armour Township, where a project was cancelled in June in the face of public opposition. Ford calls data centre skeptics “hypocritical,” suggesting residents fighting these projects were “misinformed.”“It just doesn’t add up,” he said, arguing that people can’t rely on artificial intelligence (AI) and cloud storage while also refusing the infrastructure that enables them. 

It was a blunt, campaign-style pitch for a $122-billion industry that has been lobbying hard to take root in Ontario, attracted by its clean electricity grid, temperate weather and proximity to the Great Lakes (four of the five count shorelines in the province). But the data centre push has sparked real concerns about the very few rules governing these massive facilities, and the resources needed to run them.

It’s a story with chapters being written across Canada — including Alberta, where more than 40 are proposed, and New Brunswick, stirring worries about the impacts on old-growth forests and wetlands. Around the world, communities are making it clear they view the centres and the technologies they enable with increasing caution.

And now Ontario is making moves. The province’s playbook has been posted online for public consultation until Sept. 12. It’s currently just a draft, not yet in force — and the legislature won’t be back to debate it until Oct. 27, after an extended summer break.

Here’s everything you need to know.

What are data centres — and why do they matter so much right now?

Strip away the technical jargon and a data centre is just a warehouse full of computers — racks and racks of servers that store and crunch the data behind everything from your email to chatbots to this very story. 

Whether you like them or not, data centres have become the backbone of the modern economy: cloud storage, artificial intelligence, banking systems, health care and government services all run on them. 

They’re not new — Ontario already has dozens — but artificial intelligence has supercharged their scale and size. Today’s data centres are requesting hundreds of megawatts of power, dwarfing older facilities that ran on less power and used less water to cool their servers. While artificial intelligence has its own tension points (which we won’t get into here, but feel free to check out our AI policy), resource use is the root cause of local concerns around the physical space occupied by data centres.

How does a data centre get built in Ontario?

Energy Minister Stephen Lecce has said the province “welcome[s] data centre entrants” — but that welcome comes with strings attached and an approval process that can take up to three years, maybe more. 

The groundwork for this process was laid out first in Bill 40, formally the Protect Ontario by Securing Affordable Energy for Generations Act — the first law governing data centres among provinces — and further in the new playbook.Between the two, it’s clear that data centres need to prove two things to be able to connect to Ontario’s grid.The first is to prove they will be able to cover the full cost of their own electricity connections and use — something other businesses aren’t required to do — so regular households aren’t stuck covering the cost. To enforce that, Ontario wants to create a new, higher electricity rate for any data centre over one megawatt. Quebec’s version of this rate kicks in at five megawatts, so Ontario’s lower bar would catch a lot more projects.

The second is to show the centre will be good for Ontario’s economy. The playbook lays out a three-part criteria to determine this: what jobs, investments and tax revenue it could bring to Ontario; whether it would keep local data in the province; and whether benefits to the host community outweigh the financial and environmental costs. If a data centre can’t satisfy these criteria, Bill 40 gives the energy minister the power to reject its grid connection request. 

“The bottom line is, if a data centre wants to come to Ontario, it is not your right,” Lecce said in a July press conference as the criteria were unveiled. “We now have the right to say no.”

Data centres also have to get approval from municipalities, which determine zoning and building permits. However, most Ontario municipalities don’t yet have zoning rules that specifically address data centres. This means projects can often move ahead on land already zoned for general industrial use, leaving councils with limited power to say no. 

Notably, data centres in Ontario do not have to go through a full environmental assessment, according to analysis from law firm McCarthy Tétrault. It’s also unclear if the province will enforce the constitutional duty to consult Indigenous communities on proposed data centre projects. 

But the province is ensuring other things. The playbook says the government will favour centres that use quieter equipment. It’s also encouraging companies to build their own power supply instead of relying entirely on the public grid, since that can get them running faster than waiting in line for a grid connection. Doing so would exempt a data centre from the process outlined in the playbook. It may also see data centre projects proposed with on-site natural gas plants, as we’re seeing in Alberta. 

One thing neither the playbook nor Bill 40 makes clear is what size of data centre the new process applies to.

How will data centres impact Ontario’s electricity demand?

Significantly — and the numbers keep increasing with every new forecast. 

In 2024, the system operator forecast Ontario’s overall electricity demand will grow 75 per cent by 2050 — a sharper jump than previously projected, driven largely by factories and data centres. The centres are expected to account for about 13 per cent of that new demand by 2035.

A more recent forecast suggested data centres could eventually make up close to nine per cent of all electricity used in Ontario by 2050.

What are data centres using all that electricity for? To stay running all the time; servers never sleep, constantly processing web traffic and requests. 

The province says it’s already fielding interest in data centre builds that would add up to roughly 30 per cent of Ontario’s current peak electricity demand. 

That’s a lot of energy demand — and brings us to the supply challenge ahead.

Will this increase in data centre energy demand result in Ontario using more natural gas?

Possibly, at least in the short-term future.Most of Ontario’s electricity comes from low-emissions sources like nuclear and hydro power. But when demand spikes, like during a heat wave when those who have air conditioners turn them on, natural gas plants are usually what fills the gap, since they can be switched on and off quickly.

That matters for data centres, which run around the clock. If a facility is drawing heavily during one of those peak moments, it could be leaning on gas power to do it. And that fossil fuel is primarily made up of methane, a potent greenhouse gas driving climate change and the worsened wildfire seasons, floods and other severe weather we’ve experienced as a result.

How will data centres impact Ontario’s water usage?

We don’t know yet. 

Existing large data centres use water-based cooling systems to keep servers from overheating. That means that all the water pulled into a centre absorbs the heat from the servers and evaporates into the air. Any water that doesn’t evaporate is reused and then sent to a local plant as wastewater. In closed-loop systems, water just circulates in pipes that cool the servers, so there is little lost to the air. 

According to one estimate, a single one-megawatt data centre can use up to 25.5 million litres of water a year just for cooling — about what all of the homes in the city of Mississauga use in a day. Many of the data centres being proposed in Ontario are larger than that, which means, depending on their cooling system, they could also be using a lot more water. 

Microsoft is building three data centres in Ontario, which share an estimated total demand of approximately 200 megawatts. One planned in Toronto’s Etobicoke area was approved to use up to about 40 litres of water every second for cooling — that’s about five bathtubs full every five seconds, and 1.2 billion litres a year. A separate Microsoft complex in Vaughan is expected to use about 730 million litres of municipal water a year.

The province’s playbook says Ontario will favour data centres that use water-free or closed-loop cooling and reuse waste heat — for instance, to help warm nearby buildings.

What are Ontario municipalities doing about data centres?

On Aug. 11, Oakville became the first Ontario municipality to pass a one-year pause on building new data centres. Mississauga is set to follow suit. Both were facing major AI data centre proposals, or at least land acquisitions that suggested them.

Other municipalities are taking different approaches. Hamilton voted down a proposed pause. Burlington and Waterloo Region have asked staff to review existing rules and impacts. Both, along with Toronto, have asked the province for clearer regulations. Centre Wellington and Sault Ste. Marie are sussing whether they can pass temporary bans.

Ford has resisted calls for a province-wide ban, saying local councils will still have a say and that he’d “rather go to a willing host.” While Ontario law requires municipalities to indicate their support before a wind or solar farm can be developed (usually through a council motion or resolution), no such formal rule was proposed in the data centre playbook.

What does Doug Ford mean when he says Ontario needs data centres to address ‘data sovereignty’?

Both Ford and various companies aspiring to build data centres in Ontario have framed this push as a matter of national security: keep the servers here or risk losing control of Canadians’ data to countries like the United States. 

But it’s harder said than done. Yes, building data centres would mean Ontarians’ data is kept in Ontario physically. But what actually determines control over data isn’t the building’s location — it’s who owns the company running it, and which country’s courts and laws they’re accountable to.

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Summary

• Internal documents show LNG Canada’s original plans for the project included a commitment that operations would not include routine flaring. 
• While LNG Canada and the B.C. government have promoted the site as an environmental leader, the facility burned about 350 million cubic metres of gas in its first year of operation.
• LNG Canada did not directly respond to questions about the removal of the commitments and said it is currently working to “reduce flaring and progress toward steady, long-term operations.”

This story is a collaboration between The Narwhal and Point Source, a U.K.-based investigative journalism organization.

LNG Canada, the country’s first major liquefied natural gas export facility on B.C.’s West Coast, has made international headlines over the past year — for burning off the gas it should have been exporting. 

An issue with one of the facility’s flare stacks has caused the plant to burn off extra gas since starting up in late 2024. It wasn’t supposed to be this way.

Early versions of LNG Canada’s operational plans included detailed environmental commitments — and a promise the Kitimat, B.C., plant would operate “without routine flaring.”

In 2019, the consortium of five foreign-owned companies behind the multi-billion-dollar project told the BC Energy Regulator its massive gas liquefaction and export facility would have minimum disturbance to the local community, assuring the provincial government the plant would be built to specifications that would ensure flaring — the burning of unused gas — would only need to be done in extraordinary circumstances. 

These promises appeared in multiple versions of regulatory reports submitted to the B.C. government. Six versions of the reports — drafts of LNG Canada’s flaring management plans marked as “restricted” — were included in hundreds of pages of government documents obtained by The Narwhal and UK-based investigative journalism outlet Point Source. 

In November 2023, the commitments vanished from the latest drafts — and remained absent from all subsequent drafts and the final version. The removal of commitments close to completion raises fresh questions about whether potential problems during construction may have led the company to downgrade its environmental targets.

A few months later, the mega-project started its commissioning process. Then came the flaring.

As The Narwhal and Point Source previously reported, LNG Canada burned approximately 350 million cubic metres of gas in 2025, making it one of the most polluting LNG facilities in the world. Some unplanned flaring events included multiple occurrences of flames reaching heights of 90 metres, roughly as tall as London’s Big Ben, along with plumes of black smoke settling over the community. 

“The fact that LNG Canada showed the regulator multiple draft documents which all said that the facility would not flare on a routine basis was beyond misleading,” Tim Doty, a former state oil and gas inspector from Texas, said in an interview. “This was totally false information.”

During his tenure with the Texas government, Doty managed thousands of air quality monitoring projects as part of environmental assessments of industrial facilities. He’s now a consultant who works on behalf of companies and organizations to assess and monitor emissions at oil and gas facilities around the globe. 

Unnecessary flaring of gas essentially wastes the resource — and creates carbon pollution.

Even after LNG Canada quietly dropped its planned commitment to operate without routine flaring, stakeholders continued to tout its environmental credentials. In June 2025, Shell CEO Wael Sawan said LNG Canada would be “one of the lowest-carbon [LNG] projects anywhere in the world,” speaking at the Energy Asia conference in Malaysia. 

B.C. Premier David Eby echoed the claim in July that year, saying gas processed at the Kitimat terminal is the “lowest-carbon LNG in the world.”

Many experts now say these claims were fundamentally untrue.

Christopher Doleman, an LNG and gas specialist at the U.S.-based Institute for Energy Economics and Financial Analysis, said the volume of flaring at the facility “undermines claims being made” about low-carbon LNG.

“Statements that have been made by officials saying that the LNG is the cleanest in the world now seem to be completely untrue,” he previously told The Narwhal.

The premier’s office did not reply to a request for an interview, referring questions to the Energy Ministry, which acknowledged it received the questions but ultimately did not respond.

LNG Canada did not directly respond to questions about the removal of the commitments and said it is currently working to “reduce flaring and progress toward steady, long-term operations.”

‘An extremely big polluter’: former oil and gas inspector

LNG Canada flared a minimum of 127,900 cubic metres of gas every day in 2025, with the daily average being much higher: almost one million cubic metres. Government data show 3,648 million cubic metres of gas were sent to the facility last year via the Coastal GasLink pipeline, meaning almost 10 per cent of all gas transported to the terminal was burned off without being used for power or exported.

The average household in Canada consumed around 2,216 cubic metres of natural gas in 2024, according to the Canadian Gas Association. That means LNG Canada burned off the equivalent amount of gas that could have provided energy to 157,942 homes.

Yet, LNG Canada’s documents submitted to the provincial government claim environmental excellence. 

“LNG Canada’s ‘commitment and policy on health, safety, security, environment and social performance’ focuses on ways to avoid and minimize negative environmental and social impacts resulting from our operations and enhance the positive impacts in a systematic manner,” the early documents noted.

Doty said regulatory plans for LNG facilities are often subject to multiple revisions by the government regulator. 

“It is normal for there to be a bit of back and forth between the operator and the regulator when documents are being prepared that are associated with operating permits which allow the company to release pollution,” he explained. “However, it does seem strange that these documents contained these environmental pledges that were later scrapped entirely.”

The BC Energy Regulator told The Narwhal and Point Source the early versions of the reports “included commitments and commentary that were outside of the intended scope of the report and not consistent with the design of their facility.”

“Routine flaring is authorized for specific purposes, including pilot systems, continuous purge systems, passing valves, manual sampling systems and online process analyzers,” a regulator spokesperson explained in a detailed response to questions.

Doty questioned whether the designs were ever intended for a facility that would operate without routine flaring or if something happened while building the plant. 

“You can see from the way that this facility was designed that there was always supposed to be some kind of combustion going on — and with that comes emissions,” he said, adding additional problems may have occurred early in the commissioning process.

The regulator spokesperson disagreed with the theory that the plant was designed for high rates of flaring. 

“The [BC Energy Regulator’s] reviews of the facility and LNG Canada’s submissions during design and construction … did not identify factors that would have contributed to increased flaring rates during operation,” the spokesperson noted.

James Smith, a Kitimat community member whose name has been changed to protect his family from potential repercussions, worked on the project during construction. He said he witnessed numerous problems on the job site, ultimately leading him to quit.

“They cut corners: it was about timelines and money,” he said. “They knew even before the flare arrived, before they started building it, that it wasn’t going to work. That was the word on the ground.”

The Narwhal could not independently verify Smith’s claims, and LNG Canada did not respond to questions about alleged problems during construction. 

In January, The Narwhal revealed an “integrity issue” with the facility’s flaring equipment resulted in LNG Canada burning significantly more gas than expected — and discovered it could take three to five years to fix.

The issue was identified shortly after the LNG plant started testing its equipment in late 2024, if not before, but the government regulator did not learn about the problem until April 2025.

“I’ve been assessing and monitoring facilities in the oil and gas sector for more than 30 years, and I can tell you that LNG Canada is an extremely big polluter,” Doty said. “In my opinion, it should not be allowed to operate with such excessive emission levels.”

The facility is currently operating with a cracked flare tip as well as several leaking valves, according to previous reporting from The Narwhal and technical reports since the issue was identified. A flare tip, which sits at the top of the flare stack, helps ensure the safe combustion of the gas.

The technical problems have increased the risk of flames from flares retreating back into the system’s pipes and causing an explosion. To stop this from happening, LNG Canada has substantially increased the gas flows to all of the facility’s flares.

“A replacement flare tip is currently being installed,” a spokesperson for the consortium wrote in an emailed statement. “While the replacement is expected to improve flare tip integrity, a longer-term redesigned tip is being developed.”

LNG Canada wants the B.C. government to let it increase flaring tenfold

Earlier this year, LNG Canada revealed it was planning to ask the B.C. regulator to increase its flaring limit tenfold for the next three years. The company’s deputy chief operating officer, Teresa Waddington, disclosed the plans during a Kitimat council meeting in March and at a recent presentation to Kitimat residents.

If approved, the new limit would allow the company to continually flare up to 300 tonnes of gas per day, an increase from its current limit of 28 tonnes per day. The company said the new, more permissive flaring limit would help accommodate operational problems which have led to higher-than-anticipated flaring volumes.

LNG Canada told The Narwhal and Point Source the proposed amendment is “not expected to materially increase emissions in the local air shed.”

“The original … authorization was based on long-term, stable operating conditions and did not reflect the higher flaring volumes typically seen during start-up and early operations at an LNG facility,” the spokesperson wrote. “LNG Canada is requesting a temporary, three-year provision that reflects overall flaring during the early operations period.”

However, flare tips are large and complex pieces of equipment and can take more than a year to procure, according to Waddington. As a result, she said LNG Canada wants to keep purging extra gas to prevent the flames from spreading downward into the pipes, likely until 2028.

“LNG Canada has said that it’s going to take three years to replace the flare [tip], but I can tell you that it doesn’t take three years to replace a flare [tip] like this,” Doty said. “The plant should be shut down. It should be properly repaired and engineered and then started back up again.”

Tracey Saxby, a marine scientist and executive director of non-profit environmental organization My Sea to Sky, worries LNG Canada is setting a precedent that other liquefaction and export facilities will follow.

“Woodfibre LNG in Squamish has estimated that flaring during startup will last for one month, with intermittent flare events of three to four days,” she said in an interview. “After that, during regular operations, they are saying they will only flare three per cent of the time, which is 11 days a year. But after what we have seen at LNG Canada and other facilities worldwide, this seems unrealistic.”

She said the excessive flaring at LNG Canada held against its previously stated commitments demonstrates there is “nothing anyone can do if the operator of one of these facilities breaks its promises about pollution.”

The regulator said it is “actively overseeing LNG Canada’s progress on short-term and long-term corrective actions and measures to reduce flaring from all facility flare systems.” 

“[BC Energy Regulator] technical experts review flaring and air contaminant discharge information submitted by LNG Canada, conduct inspections and take compliance actions where required,” the spokesperson noted, adding an “investigation into potential non-compliances is ongoing.”Updated on July 31, 2026, at 5:39 a.m. PT: This story has been updated to correct a statement that the BC Energy Regulator has promoted the LNG Canada facility as an environmental leader. It is the B.C. government that has made that claim.

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Summary

• The Alberta government is hoping to attract $100 billion worth of data centres to the province over the next four years. If built, the data centres would require enormous amounts of electricity to operate.
• With a cap on how much electricity data centres can purchase from the provincial grid, most will have to generate their own power by burning natural gas, a fossil fuel.
• A global surge in demand for natural gas plant infrastructure is driving up costs and extending wait-lists, calling into question how realistic Alberta’s data centre ambitions are.

The Alberta government has big ambitions for AI data centres, but those dreams will have to contend with the harsh reality of a heated global competition for electricity. 

Around the world, there is a shortage of turbines used in natural gas power plants, as more and more electricity generation is built to feed hungry data centres. Estimates for wait times to obtain the critical components are now upwards of five years. Prices have also increased dramatically. 

That has serious implications for Alberta’s plan to attract $100 billion worth of data centres over the next four years, not only in terms of how quickly the facilities can be built, but also at what cost. 

As if to drive the point home, the province joined private industry on July 2 for the announcement of the $4.6 billion Greenlight natural gas power plant, which is 2.6 times more expensive than a similar sized power plant completed by the same company two years ago. That plant will feed electricity to a $15 billion Meta data centre.

“We’re definitely seeing the impact of that turbine supply crunch,” Will Noel, senior electricity analyst with the Pembina Institute, says. 

These power plants burn natural gas, a source of the potent greenhouse gas methane, to spin turbines that generate electricity. Natural gas power generation accounts for approximately 77 per cent of Alberta’s electricity grid.

The turbine shortage comes on the heels of the province’s overhaul of its electricity market, a move that has stalled power plant investment as companies wait for more certainty before committing. It also follows the government’s crackdown on renewable power generation, which decimated the market for wind and solar in Alberta.

Data centre developers face lengthy waits and a highly competitive process if they want to connect to Alberta’s grid, but can move quickly if they build their own power supply — which the grid operator requires to be natural gas, at least for now. 

The operator, in response to questions from The Narwhal, said that’s because developers must be able to meet their power demand at all times.

“Renewables and stand-alone storage are currently excluded because of weather dependency and duration limitations,” a spokesperson said by email. “As of now, they are not qualified to reliably offset a data centre’s around-the-clock draw the way dispatchable gas generation can.”

New technologies could change that, according to the operator. 

If the proposed data centres don’t already have their turbines ordered, it’s going to be a long wait. 

Noel says we don’t actually know how many of the 41 data centre centre proposals in Alberta as of July 7 have finalized designs and parts on order. It’s also not known if any will eventually connect to the grid. 

“This is obviously speculation,” he says, “but I imagine most of these data centres don’t have turbines ordered.”

The global turbine shortage

Across the world, but particularly in the U.S., data centres are being built at a furious pace. That, along with a broader turn to electrification and production challenges, is creating a bottleneck for turbines and additional power plant components. 

A report from Bloomberg says the cost of building a natural gas plant in the U.S. increased 66 per cent between 2023 and 2025, while the time it takes to complete construction has increased 23 per cent in the same time period. 

The pressure to build and the lack of components is creating bidding wars on turbines and swelling the bottom lines for turbine manufacturers.

GE Vernova, one of the few large-scale turbine suppliers, saw significant growth last year and into 2026, and has a backlog of orders that account for 100 gigawatts of potential power supply. (For reference, that’s nearly one-third of the electricity the entire city of Calgary uses in a year.) 

All three of the major turbine suppliers are reporting delays.

That supply crunch has led some data centre developers in the U.S. to go to extreme lengths to get power, including repurposing old jet engines. 

Noel calls those fixes “inefficient and very costly,” but notes “the revenue they’re getting from the data centres is outstripping the extra cost, so they’re just kind of doing what they can to get any power on site as fast as possible.”

In Alberta, a power surplus could quickly evaporate

There is nothing to that extent happening in Alberta, which quickly instituted a hard cap on how much power was available to data centres from the existing power grid.

The Alberta government has embraced the AI boom as a way to increase demand for the province’s vast natural gas reserves. 

“Jurisdictions that can provide reliable and affordable power will have a serious advantage in attracting investment, and with our vast natural gas resources and mature industrial infrastructure, that is exactly what Alberta can offer,” Premier Danielle Smith said while announcing the recent Greenlight project.

The Alberta Electric System Operator, which manages the province’s private grid, allocated 1.2 gigawatts of power for data centres in a competitive process that ended with two developers allowed to tie into the grid. 

Another round will dole out additional power and the system operator recently announced data centre developers planning to build their own power plants could temporarily tie into the grid while those plants are being built, up to 1.6 gigawatts. 

The operator said by email that the “bridging provision” is a “general mechanism accommodating a time gap (up to three years) between a load being ready to operate and its generation being fully built and in service for any reason.”It is up to the developer to ensure it has the necessary power after that three-year window and if there is a power shortage during those three years, data centres using the bridging provision would be the first to have electricity curtailed. 

The province also has a healthy cushion of extra power after a buildout of capacity prior to market reforms and a renewable crackdown. But that won’t necessarily last. 

Noel points to the insatiable data centre demand and resulting supply crunch, combined with population growth and increasing electrification as pressures on the system. 

“And then we’ve got the old coal plants that were converted to run on gas — those are coming up soon on their end of life,” he says. “So I think mid-2030, if we don’t kind of deal with this now — whether it’s more gas or more renewables or whatever — I think there’s a real possibility that we will go from flush with power to just scraping by again.”

The office of Alberta’s minister of affordability and utilities, RJ Sigurdson, didn’t reply to specific questions about the turbine shortage and its impacts, but said the government prioritizes the “well-being of Albertans” and “will not compromise the reliability or affordability of the electricity that millions of Albertans, Indigenous communities and our local industries depend on.” 

The minister’s office said the government “does not prescribe a specific generation technology for powering data centre projects.” It said the decision by the grid operator to limit generation to natural gas at this time is an independent decision by the arm’s length body. 

The Alberta Electric System Operator says its role is to ensure the safety and reliability of the grid and it does not track whether private developers have ordered the necessary equipment.

So what does this all mean for Alberta’s AI data centre dream?

The Narwhal reached out to all of the big natural gas generators in the province to see if they were being impacted by turbine delays and cost increases, but received no responses. Emails to two data centre developers, Beacon Data Centers and Synapse, also did not get a response. 

It can be difficult to assess how the various companies could be impacted by the current race for power plant components, but applications to the Alberta Utilities Commission, the regulator for power plants, provide some insight. 

Synapse, which hopes to start construction on a data centre near the town of Olds in October, hasn’t disclosed who will build its turbines, but says once final decisions are in place, it could have them on site within a month. It plans to use modular generators, operating alone, before completing construction of a full system while the project is online.

In the company’s application to Alberta Environment and Parks, Synapse says it will use generators from Alberta-based Eco Power Equipment, which specializes in portable gas generators. Eco Power said it doesn’t manufacture turbines. 

Another data centre moving through the regulatory process is Beacon Data Centers’ Indus project, southwest of Calgary. 

Its application to the regulator shows details on turbine components and has a target of Dec. 31, 2028, for completion of the project, pending approval.

Alberta’s electricity market overhaul stalls investment as companies wait for more certainty

As those projects move through the regulatory process, large electricity generators remain cautious about building new projects to help keep the lights on.

There are also questions about how the data centre boom could impact prices. Premier Smith says the Greenlight project could help bring down transmission costs, which ultimately show up on electricity bills. Noel agrees that’s possible. 

But the flip side is increased demand for natural gas and the trickle down of massive cost increases for building power plants could potentially increase electricity or heating bills. 

“I think everyone’s kind of sitting and waiting to see how the [restructured electricity market] plays out,” Noel says. 

“In 2028 we’ll phase out the old market and bring in the new, and maybe then we’ll start to see investment, but that’s a pretty long time.”

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Summary

• With demand for electricity rising fast, BC Hydro says it needs natural gas power plants to keep operating to ensure the province has enough power.
• Island Generation, a natural gas plant in Campbell River, B.C., was supposed to be decommissioned but BC Hydro is now seeking to renew its contract as the province needs the power. 
• Energy Minister Adrian Dix said Island Generation is facing supply issues due to the Squamish-based Woodfibre LNG project. As the project is not yet operational, Dix’s comments have confused and surprised some politicians and experts.

When a heat wave hits Vancouver Island, residents turn up their air conditioning, flick on fans or adjust their heat pumps. Demand for electricity spikes. That’s also true during cold snaps and long, dark winter nights when more electricity is needed to keep homes lit and warm.

It’s on those days of extreme electricity demand that a Campbell River power plant fuelled by natural gas is most likely to fire up. Island Generation, owned by Capital Power, is one of a handful of facilities in B.C. that use natural gas to produce electricity. It’s what is known as a peaker plant, mostly called on to generate power at times of peak demand.

With a capacity of 275 megawatts, Island Generation can create enough electricity to power about 125,000 homes. It accounts for about one-quarter of all the electricity that can be produced on Vancouver Island. Only about 40 per cent of the electricity used on the island is generated locally. The rest comes from the mainland, transmitted via cables laid across the bed of the Salish Sea.

Over the past five years, Island Generation has operated an average of 15 days per year, according to Adrian Dix, B.C.’s minister of energy and climate solutions.

But, the facility has been having trouble getting the gas it needs to generate electricity at critical times, Dix told members of the B.C. Conservative caucus on April 23. He said the supposed natural gas supply issue is connected to liquefied natural gas (LNG) production. 

“The reason why the supply of gas is affected is that gas is going to a project called Woodfibre LNG in Squamish. That has been the issue between ourselves and Capital Power,” he said. 

Dix’s statement surprised and puzzled the politicians and experts The Narwhal spoke to. Woodfibre LNG is still under construction until at least next year. Until then, there’s no obvious reason the Squamish facility would be using gas that would otherwise go to Island Generation. 

But questions to the Energy Ministry, Island Generation and Woodfibre LNG mostly went unanswered. None provided information needed to clarify the situation with Island Generation’s gas supply.

“Woodfibre LNG will be purchasing gas in the future once the facility is operational,” a spokesperson for the facility said in response to multiple emails and questions, an answer that does not directly address whether the facility is currently buying natural gas, as the minister implied.

The Energy Ministry did not respond to The Narwhal’s request for an interview with Dix or to specific questions about the ministry’s knowledge about Island Generation’s gas supply or its efforts to ensure the facility will be able to get the gas it needs to operate.

Green Party MLA Jeremy Valeriote, who represents the Vancouver-Sea to Sky riding where Woodfibre LNG is located, told The Narwhal he has not been able to clarify Dix’s comments.

“I’m just flagging for the public that it’s been hard for either of us to get any public information on this,” Valeriote said.

‘Where would that extra energy come from?’

BC Hydro’s contract with Capital Power was set to end in October 2026, but it recently applied to the BC Utilities Commission for a new agreement. The application mentions both Island Generation and the McMahon Cogeneration facility in Taylor, B.C., near the heart of the province’s oil and gas industry. The two gas-fired plants could help BC Hydro meet about 80 per cent of a 500-megawatt electricity shortfall it forecasts will materialize by 2030.

Demand for electricity has been rising rapidly in B.C., driven partly by large industrial customers such as LNG terminals and mining operations. BC Hydro has been under pressure to find efficiencies in its system and bring on new generating capacity with an emphasis on renewable sources such as wind and solar.

Meanwhile, the provincial government has been working to usher in an LNG boom, which could put pressure on the electrical grid and increase competition for natural gas.

Valeriote noted BC Hydro is supposed to be phasing out fossil fuel electricity generation, not seeking new contracts with gas-fired plants.

“It’s pretty concerning when we talk about firing up what should have been a decommissioned gas plant on the island that may not even have gas … in those critical, peak times,” he said.

BC Hydro’s submission to the utilities commission argues the Clean Energy Act, which requires it to generate and purchase enough energy to meet demand, trumps the regulations regarding phasing out fossil fuels. 

B.C. Conservative MLA Larry Neufeld wants to know what would happen if Island Generation were unable to operate during a demand peak.

“Where would that extra energy come from?” Neufeld, who serves as his party’s critic for oil, gas and LNG, said. 

“Would that be siphoned off of the Lower Mainland? Would it be imported? Those are excellent questions that the minister would be responsible to answer.”

B.C.’s LNG push and electricity demand

By 2030, there could be three LNG facilities operating in B.C. and a huge increase in demand for natural gas. In May, the Canadian government celebrated an agreement that could see one of them, Ksi Lisims LNG, sell one million tonnes of liquefied natural gas (LNG) per year to Germany, starting sometime in the 2030s.

Another is LNG Canada, located on B.C.’s coast, the first large-scale LNG export facility in the country. 

It is already using up a huge amount of gas to operate: last year, LNG Canada received more than 3.6 billion cubic metres of natural gas. Nearly 10 per cent of what it burned off was because of an issue with one of the flare stacks, as The Narwhal previously reported.

And, it might eventually use much more. Earlier this month, B.C. Premier David Eby, federal Natural Resources Minister Tim Hodgson and LNG Canada CEO Chris Cooper held a press conference about a potential second phase of the project.

The newsiness of this announcement — trumpeting another small step toward a final commitment to proceed — was so thin one reporter asked why a press conference had been called at all. But Phase 2 could make a big difference to the province’s energy supply, as LNG Canada’s demand for natural gas could double as its production capacity rises to 28 million tonnes of LNG per year.

Woodfibre LNG will have a much smaller production capacity. It is expected to produce 2.1 million tonnes of LNG per year and will need about 7.7 million cubic metres of natural gas to do so. That gas will be supplied via a new pipeline branch off the Eagle Mountain pipeline, which currently supplies Vancouver Island, including the Island Generation station.

FortisBC is in the process of building that new section of Eagle Mountain as well as upgrading the section of the pipeline that leads into Squamish. A spokesperson for the company said in a statement that Fortis “regularly assesses system capacity and plans for growth and changing regional needs.”

“FortisBC can meet the needs of existing customers on Vancouver Island and we are continuing to deliver natural gas service in line with our contractual agreements,” the spokesperson said.

The Narwhal also asked Capital Power for an interview to discuss the minister’s comments. In response, a company spokesperson sent a two-sentence statement.

“Capital Power and BC Hydro are engaged in discussions around the future of the Island Generation facility in Campbell River,” the statement said. “Our focus is always to ensure we support the reliable, safe delivery of the power needs of British Columbians.”

A follow-up email with the same questions The Narwhal sent to the Energy Ministry went unanswered.

Conservative MLA Neufeld said British Columbians should not have to worry about a shortage of natural gas, even with a large increase in demand.

“Having spent over 30 years in the industry in northeast British Columbia, I will state that it is my opinion that that is a non-issue,” Neufeld told The Narwhal.

“There is far more than enough natural gas in the ground … we don’t have to be concerned about a supply crunch. Whether that is taken advantage of properly by government and by regulation is another question for the minister.”

But as British Columbians brace for a summer of heat waves and rising electricity demands, the province’s ability to keep power flowing becomes an increasingly important question.

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Summary

• B.C. is preparing to overhaul its natural gas royalty system, which determines how much revenue the government earns from the industry, by 2027.
• The government is promising a better return for taxpayers while industry warns higher rates could drive investment to Alberta.
• The debate comes as some advocates argue B.C. should collect more from gas companies who are using public lands for profit.

As B.C. readies to change what it charges fossil fuel companies extracting natural gas from public lands, industry supporters are pushing back.

B.C. has been eyeing changes to its natural gas royalty structure since 2021 when an independent assessment found the existing system needed a complete overhaul. The old system was “contributing to or possibly overcompensating” for the costs of developing oil and gas in B.C., the assessment concluded, which hugely reduced royalties returned to the public.

Details on how the new framework will increase royalties have yet to be released.

According to BC Conservative Labour critic Kiel Giddens, it risks “chasing away investment potential.” He raised the issue in the legislature on the final day of the spring sitting, saying if B.C.’s new royalties are too high, gas producers could move their operations to Alberta.

“There is a real risk that we could actually lose revenue if we’re not competitive,” Giddens told reporters.

Green Party MLA Jeremy Valeriote had a different take. 

“If Alberta wants to sell off their public resources for a song, then we should let them,” he told reporters at the legislature. “We should be standing up for competitiveness in terms of getting the most out of our resources.”

Energy and Climate Solutions Minister Adrian Dix is confident the new royalty system will strike a better balance for both the industry and British Columbians.

“To ensure a fair return … but also a situation where the industry can prosper and invest — those are my two goals in the process,” Dix said.

The new royalty system is emerging alongside B.C.’s burgeoning liquefied natural gas (LNG) industry. LNG Canada, the first production facility to begin operating in B.C., began shipping its product to Asian markets last year — although the facility has experienced equipment issues that have reduced its production capacity. The B.C. and Canadian governments are eagerly anticipating a final investment decision on Phase 2 of the facility, which will double its capacity to 14 million tonnes of LNG per year.

Meanwhile, three other B.C.-based LNG projects are moving toward being operational before 2030. Together, these LNG production facilities will create a significant boom in gas demand, one the industry is keen to capitalize on.

On April 9, Dix sent a letter to industry stakeholders, as originally reported by DOB Energy. The letter, obtained by The Narwhal after Dix’s ministry refused to provide a copy, acknowledged the feedback included several key themes, such as “the need for reliable B.C. gas supply to underpin existing and future LNG projects.”

Dix also emphasized the government’s commitment to “the growth of LNG as a cornerstone of B.C.’s economic strategy.” 

“A strong, investable upstream sector is essential to realizing this opportunity,” he wrote.

How much revenue does B.C. earn from royalties? Probably less than you think

The new royalty system is set to take effect on Jan. 1, 2027, following years of consultations with the industry and First Nations, as well as members of the public.

Royalties are supposed to give British Columbians a share of the profits that private companies earn by pumping oil and gas from public lands. B.C.’s previous royalty regime was criticized on that front because it offered companies a generous suite of credits that could reduce their royalty payments.

In 2022, B.C. announced the end of several of those credits, including the deep well credit, which former Premier John Horgan described as “the largest fossil-fuel subsidy in British Columbia.” 

At that point, the province had given away more than $7 billion in credits to oil and gas producers, with $3.75 billion of those still on the books. Companies are able to use those credits to reduce the royalties they would otherwise pay; money that would have gone into the provincial budget to fund other initiatives. (As of last month, companies had yet to claim about $600 million in credits, according to Dix.)The billions in credits contrast with the revenue B.C. actually collects from natural gas producers. Budget documents show B.C. has collected $5 billion in royalty revenue from gas producers since 2019, nearly half of that in 2022. This year, the province expects to collect $942 million in royalty revenue — less than it projects the BC Lottery Corporation will earn. Next year, royalty revenue is expected to hit $1.6 billion, driven by higher natural gas production.

“I think the dirty little secret of oil and gas is that they don’t contribute a ton in taxes,” Sven Biggs, Stand.earth’s Canadian oil and gas programs director, said. “There is not tons of economic activity actually connected to this [industry].”

The majority of B.C.’s oil and gas operations are concentrated in the northeast, where agricultural fields are criss-crossed by pipelines and studded with well pads. Oil and gas is a way of life for many Peace Region residents but it also comes with downsides. Fracking operations use huge amounts of water to extract gas from the ground, a process that can also leak gas and chemicals into the air and water. The Canadian Association of Physicians for the Environment has called for the B.C. and federal governments to fund a health impact assessment of the LNG sector to assess links between the industry’s activities and “asthma, heart disease, birth defects, childhood leukemia, neurodevelopmental and neurodegenerative diseases like autism and Alzheimer’s.”

Beyond royalties, Biggs argues B.C. should also be seeking to recoup the cost of the industry’s environmental and potential health impacts.

“All of those costs get passed on to us if they are not paying,” he said. “Technically this gas belongs to British Columbia — it’s a Crown resource and we are licensing it to these extraction companies.”

Complaints about competitiveness ‘a smokescreen,’ advocate says

The new system the province is proposing would take into account the money companies invest in their B.C. operations, as well as the money those operations make, called a revenue minus cost system. This approach is “globally recognized for maximizing economic values,” according to a B.C. government website.

Adopting a revenue minus cost system would bring B.C. into alignment with other gas-producing places, including Alberta, notes Werner Antweiler, an economics professor at the University of British Columbia’s Sauder School of Business.

When the province began reviewing the royalty regime, the plan was to capture “50 per cent of profits after production costs are accounted for” — a pretty standard split in other jurisdictions, according to Antweiler.

“When you calculate revenue minus cost, revenue is pretty simple [because] you can see what the market pays,” Antweiler said. “The cost, that’s a different thing. … Anything that’s increasing costs will reduce profits and will lower the royalty. So one of the key questions that I have is to what extent are we calculating costs the same way as other jurisdictions?”

Depending on how costs are calculated, companies may pay only 30 or 40 per cent of their profits to governments in royalties, Antweiler said.

As for BC Conservative Labour critic Giddens’ warning about companies moving to Alberta, Biggs said those warnings are “a smoke screen from the industry.” He noted gas companies have been investing in B.C. for years — a trend partly sparked when Alberta implemented a new royalty regime in 2016.

“I don’t see a way that they can walk away from those at this point,” he said. “It would be a huge write-down. Alberta could produce more gas — hypothetically, but not really enough to meet the kind of demand we’re talking about.”

However, Biggs worries that governments remain susceptible to threats that an entire industry will “pack up and leave town and blame the administration for the lack of investment.”

“It works very well on them every time,” he said.

Years ago, when B.C. was working to lure gas companies to set up shop in the province, offering competitive royalty rates was a key advantage, Antweiler said.

“As the industry has matured, there’s really no reason to continue treating them better than their peers in Alberta.”

‘No decision has been made yet’ on B.C.’s new natural gas royalty regime

Industry priorities have already prompted the government to back down on a couple of proposed royalty scenarios, as Dix’s April letter shows.

“The province will not be advancing the Transition-Plus or Enhanced Return royalty curve scenarios further,” Dix wrote in the letter. “We acknowledge the concerns raised about the magnitude of change associated with those scenarios and the uncertainty they could introduce at this stage. Any further scenarios will consider your feedback as we work to align with the objectives of the new royalty framework.”

The Energy Ministry did not respond to The Narwhal’s questions about the letter, including a request for a description of the Transition-Plus and Enhanced Return scenarios.

Antweiler noted the two scenarios are similar to interim royalty rates outlined in 2022 under which companies pay higher royalties when gas prices are high and lower rates kick in when prices drop. The revenue minus cost system is simpler, he said, and could still give B.C. a good rate of return, depending on how it is designed

“It makes sense to me to move away from just an update of the existing system and to something that’s really robust and economically cohesive,” he said. “That’s exactly what other jurisdictions — like Alberta — are doing.”

Antweiler hasn’t seen the specific rate scenarios the province has been discussing with industry stakeholders. Those are covered by non-disclosure agreements, as Giddens pointed out to reporters.

Dix said non-disclosure agreements, known as NDAs, are a standard part of government consultations with both First Nations and industry stakeholders.

“The energy companies provide information to us about the impact of different possible royalty regimes and differences that are obviously commercially sensitive, so that’s done under NDA,” Dix said. “We put forward different proposals and asked them to comment on different potential proposals, just to see what the impact is on different companies.”

“I think that’s really irresponsible,” the Green Party’s Valeriote said of the government’s apparent concession on the two royalty scenarios. “I think we should be extracting the most value for the B.C. public out of these public resources, and caving into lobbyists and others who want to make it easier to make big profits, it’s just not good public policy.”

“No decision has been made,” Dix said when asked about the letter in the legislature on May 28.

“A lot of work has gone into the process and now we’re in the consultation stage,” he added. “This included extensive consultation with Treaty 8 First Nations and with energy companies.”

The minister told reporters he hopes to have a final decision on the new natural gas royalties later in June.

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Construction on the North Coast transmission line is not expected to start until later this year, but last week BC Hydro took “a key step toward securing a major customer” for its electricity: Ksi Lisims LNG.BC Hydro and Ksi Lisims LNG have signed a memorandum of understanding that “provides clarity on how and when BC Hydro will deliver as much as 600 megawatts of clean electricity to the proposed floating LNG facility,” according to the government’s press release. Energy Minister Adrian Dix hailed the agreement as a key step toward Ksi Lisims’ final investment decision, which is expected later this year.The details of the agreement will not be made public, a BC Hydro spokesperson told The Narwhal in an email, because it contains confidential information about Ksi Lisims.

The Ksi Lisims LNG project is expected to consume as much electricity as 250,000 B.C. homes use in a year. How BC Hydro plans to supply that power — and what it means for the broader grid — has not been disclosed. But a key piece is building the multibillion-dollar transmission line. In December, Dix signed a cabinet order outlining many of the terms BC Hydro and North Coast transmission line customers will operate under, including that the costs for the project be recouped via hydro rates.The most recent cost estimate for the first two phases of the North Coast transmission line is $6 billion, double BC Hydro’s initial $3-billion estimate. The third phase of the project, which will run high-voltage transmission lines north from Terrace, B.C., to Bob Quinn Lake near the Alaska border, has not yet been costed. B.C. is currently negotiating with the Canadian government to secure federal funding for the project.

The B.C. government estimates the projects served by the new transmission line could yield $950 million per year in revenue for the provincial and local governments and boost B.C.’s gross domestic product by “nearly $10 billion per year.” Ksi Lisims is “expected to attract nearly $30 billion in investment,” according to the province.

But in order to lock in those economic benefits, BC Hydro has to provide “cost certainty” to those potential new customers. If that means reducing the amount of money private companies would otherwise be expected to pay, BC Hydro will have to find other ways of recovering those costs.

“Rate payers are going to pay in the end because [these projects] are going to need so much electricity that supply is not going to be able to meet demand and prices are going to have to go up,” explained Andy Hira, a political science professor and director of the Clean Energy Research Group at Simon Fraser University. 

New contracts could let big projects off the hook for connection costs

The North Coast transmission line will primarily serve industrial customers, including mining projects and the Port of Prince Rupert. The B.C. government has not been shy about promoting the project as a boon for private companies it hopes will invest in the province.“This is the reliability companies can count on, every hour of every day,” Premier David Eby told a crowd at the Natural Resources Forum in Prince George, B.C., on Jan. 20. “Certainty that power will be there when companies need it. Certainty that it will be available at a predictable cost. That certainty is what turns proposals into final investment decisions.”

But here’s why that cost certainty could mean higher hydro costs for British Columbians. A cabinet order Dix signed in December could spare large North Coast power users from paying millions to hook into the power grid.

The order includes new contracts specifically for North Coast transmission line customers. One of those contracts deletes a handful of words from a decades-old contract called tariff supplement 6, which requires new industrial customers seeking more than 150 megawatts to pay the costs of generating and transmitting the power beyond that threshold.

“This was an important protection for other customers and was put in place in the 1990s after a negotiation overseen by the BC Utilities Commission,” Richard Mason, a former BC Utilities Commission member, told The Narwhal. “New large loads using the North Coast transmission line will almost certainly require BC Hydro to add new generation, raising the average cost for everyone.”The tweak in the new contracts seems to let large projects, like Ksi Lisims, seeking to connect to the North Coast transmission line off the hook for extra generation and transmission costs they would otherwise be required to pay.“In other words, new customers with large loads won’t have to contribute to any extra transmission or generation cost,” Mason said. “These costs will now be socialized across all BC Hydro’s customers.”

The Energy Ministry did not directly address detailed questions from The Narwhal about the changes. An emailed, unattributed statement from the ministry confirmed “those costs do not apply to new large projects in specific industrial sectors connecting to the BC Hydro system in the North Coast region” under a new contract created by Dix’s order.

The implications of that change are concerning to Hira.

“The fact that they’re doing this behind closed doors, without any public discussion — that they’re passing on potentially huge costs to taxpayers and not providing any justification — is really alarming,” he said. 

The Narwhal asked both the Energy Ministry and BC Hydro how any additional generation or transmission costs would be recouped and whether the government has estimated how much those costs could be for North Coast transmission line customers. 

In its statement, the energy ministry confirmed those costs “will be recovered from all BC Hydro ratepayers, including those industrial customers.”

The statement did not include any mention of a cost estimate but did note that large industrial customers connected to the North Coast transmission line will pay BC Hydro for the electricity they use, as all BC Hydro customers do. North Coast transmission line customers will also have to pay a security deposit to BC Hydro and cover the cost of power lines to their connection point.

The B.C. government has considered making changes to tariff supplement 6 since at least 2024. A briefing note prepared for Eby in March 2024 outlined the potential for an unprecedented increase in industrial electricity demand, driven mainly by large industrial customers. Requiring LNG, mining and other companies to pay the costs required under tariff supplement 6 “could be prohibitive,” the document stated.

But companies that expect to reap huge profits from B.C.’s natural resources are well positioned to pay their own costs, Hira argued.“The government can’t state that companies that are prepared to invest millions in an LNG pipeline and port facilities can’t afford to pay an electricity connection fee — it simply doesn’t make sense,” he said.

Costs for connecting North Coast transmission line customers could be significant

In addition to Ksi Lisims, the North Coast transmission line could serve “half a dozen private mining projects worth $50 billion in investment,” according to Mining and Critical Minerals Minister Jagrup Brar. 

Under the new contracts in Dix’s December order, none will be required to pay the extra generation and transmission costs required under tariff supplement 6. The Energy Ministry did not respond when asked how much the change could save eligible projects.

However, another LNG project on the north coast provides a hint. Cedar LNG, near Kitimat, B.C., was subject to tariff supplement 6, seemingly for the first time in the transmission contract’s 30-year history. 

To get Cedar LNG connected to the power grid, the provincial government opted to contribute $200 million to help build a new 287-kilovolt transmission line and other electrical infrastructure in July 2025. The floating liquefaction and export terminal could produce three million tonnes of LNG per year for export to Asian markets, using 214 megawatts of electricity.Neither the province nor Cedar LNG replied to questions about how much the company may have contributed toward the transmission infrastructure.If all of the anticipated North Coast transmission line projects come with similar transmission costs, the cost to BC Hydro could be substantial, even before considering the cost of any new electricity-generating capacity that might be needed to meet the new power demand.If electricity prices in B.C. do increase significantly, Hira pointed out B.C. could miss out on attracting other industries to invest in the province. Instead, he said, the province seems to be doubling down on natural resource extraction.

“You’re mortgaging the possibility of diversifying the province’s economy.”

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The Government of Ontario began accepting applications for commercial-scale geologic carbon storage projects on Feb. 2, 2026.

Ontario’s associate minister of energy-intensive industries, Sam Oosterhoff, is impressed by Suncor Energy. The oil and gas company is producing about 100,000 barrels of oil products per day at its Sarnia, Ont., refinery, Oosterhoff told his colleagues at the legislature after visiting the plant in what’s known as Chemical Valley.

They aren’t “cowboys” who don’t care about climate change, he said on Nov. 4, adding that while they produce all that oil they still “care deeply about reducing emissions.” And Oosterhoff, along with the Government of Ontario, believes they should do it through a process known as carbon capture and storage — with the storage location being Ontario’s bedrock.

That’s why, Oosterhoff said, Ontario should pass new legislation that would enable this process across the province, for high-emitting industries like cement and steel, non-renewable power generation and for oil and gas refiners, like Suncor. 

The proposed Geologic Carbon Storage Act, folded into Bill 27, the Resource Management and Safety Act, was debated after second reading the day Oosterhoff spoke. It could move to third reading shortly.

Carbon capture and storage involves containing the carbon dioxide released when fossil fuels are burned and injecting it deep underground to prevent it from entering the atmosphere and increasing global warming. Advocates say doing so could limit some of the most severe effects of climate change, like hotter and more widespread wildfires, floods and drought, as the province and country have experienced in the past few years. But critics argue carbon storage allows for the continued burning of fossil fuels, rather than transitioning away from them.  

Oosterhoff said in debate that the need for storage is crucial because the oil and gas industry plays a key role in the life of everyday Canadians, an argument also familiar in the House of Commons — despite oil and gas being non-renewable resources. “A solar panel is not going to provide the case covering that I have on this phone,” Oosterhoff told his colleagues, though non-plastic — as well as recycled plastic — phone cases are on the market. Some people even go without phone cases, a consumer category that is only about two decades old.

While carbon storage can lower emissions from industrial processes, like Suncor’s oil refinery in Sarnia, the greenhouse gases released into the atmosphere when that refined oil is burned by customers down the line, continues to warm the climate. Some academics and activists also point out carbon storage is extremely expensive and edges out investment in solutions that could limit the production of carbon dioxide in the first place.

When it comes to Ontario’s readiness for carbon storage, there are other pressing concerns — like an unknown number of gas wells that some critics argue could heighten the risk of leaks of poisonous hydrogen sulfide and planet-warming methane. But as The Narwhal reported in September, Ontario can’t afford to properly plug these wells, located mostly in southwestern Ontario — the same region where carbon storage is proposed.

“There’s a real concern about what’s going to happen to those abandoned oil and gas wells once this new industry starts up,” Ontario NDP MPP Peggy Sattler said, in response to Oosterhoff.

Dave Sawyer, an environmental economist with the Canadian Climate Institute, a climate policy research organization, said carbon storage has been framed as a “silver bullet” to dealing with the ballooning emissions from the oil and gas sector.

“There’s a broader innovation agenda there that could have been driven,” he said. “And the silver bullet notion takes all the oxygen out of the room.”

So what would Bill 27’s passage, and the start of carbon storage in Ontario actually look like? Read on.

What is carbon capture and storage and how does it work?

Bill 27 introduces a framework for commercial-scale geologic carbon storage, as it’s never been done before in Ontario.

In order to divert and store the carbon dioxide generated by industrial processes such as oil and gas refining, the British Geological Survey explains, it is converted to a liquid-like form and injected into the pores of sedimentary rock. This is called geologic carbon storage. 

Those rocks are contained using naturally occurring storage caps and human-made ones to stop carbon dioxide from escaping. A “caprock” is a thick, impenetrable type of rock, such as shale, that sits above more porous rock, like a lid on Tupperware. Human-engineered barriers are made up of steel and other corrosion-proof materials to keep the carbon dioxide secured underground. 

Materials published by the Government of Ontario in May 2025 explain that carbon dioxide has most commonly been stored in formations like saline aquifers or depleted oil and gas reservoirs. “Previous research has suggested the most suitable storage formations in Ontario may be found beneath the beds of Lake Huron and Lake Erie and surrounding onshore areas,” the government notes.

Ontario’s Ministry of Natural Resources did not respond to questions about its carbon storage plans by publication time. Its published information sheet continues that, after carbon is injected, wells are plugged and the site is then monitored to “mitigate any potential safety risks to the public or the environment.”

The Intergovernmental Panel on Climate Change, which provides scientific assessments on climate change for policymakers, says that if the carbon dioxide is stored properly on well-managed geologic storage sites, the CO2 could be trapped for millions of years.

Geologic storage is currently the most popular form of carbon storage, though other methods are being researched, said Bo Zhang, an assistant professor of civil and environmental engineering at the University of Alberta.

Zhang said he believes carbon capture and storage is really the best way for Canada to reach net-zero goals by 2050 — given how reliant the country currently is on fossil fuels.

Maurice Dusseault, a professor emeritus of engineering geology at the University of Waterloo, said through thinking about these processes, it’s important to remember the goal in the first place: to stop carbon dioxide from entering the Earth’s atmosphere and contributing to extreme weather events, disaster and death.

And Dusseault said that while renewable energy use has increased globally, that hasn’t meant a reduction in fossil fuels. In fact, the Intergovernmental Panel on Climate Change reports that globally the amount of carbon dioxide produced per unit of energy only decreased by 0.3 per cent from 2010 to 2019. 

But moving away from fossil fuels has been challenging — as Canada’s entire infrastructure has been built with fossil fuels in mind, Dusseault said. 

In Ontario, the increased use of natural gas for power generation in recent years has seen the province’s grid go from 94 per cent emissions-free, down to 87 per cent.

Is carbon capture safe in Ontario?

Bruce Hart, an adjunct professor in earth sciences at Western University, said he’s optimistic about Ontario’s carbon storage plans, given the types of rock available in the southwestern part of the province.

Hart said rocks from the Cambrian Age are nestled about a kilometre underground along the north shore of Lake Erie. This is likely the best place for carbon storage, he said, due to the depth and the 500-metre layer of “very impermeable rock” overlying the Cambrian rock zone, offering containment.

This is critical because carbon dioxide is an asphyxiant and, the British Geological Survey explains, leaks at such a concentration “could cause suffocation,” as well as negating climate change mitigation. 

Going back to the issue of old oil and gas wells in Ontario, the instability of those reservoirs has already been displayed. On Aug. 26, 2021, hydrogen sulfide gas leaking from a crudely buried gas well ignited, causing an explosion in the town of Wheatley, Ont. 

Twenty people were injured and about 60 households and 30 businesses were evacuated.

Across the province, research has suggested the number of old wells is likely in the tens of thousands, with many dug prior to regulations around properly plugging them and many in unknown locations.

Ontario has mentioned in its public documents that saline aquifers and depleted oil and gas reservoirs have been used to store carbon dioxide in other jurisdictions. 

But Hart said the only aged wells that would be used are ones dug deep enough into the Cambrian layer. Many of the more shallow derelict wells that were abandoned are only hundreds of metres deep at most, far above that. Ontario describes its plans for carbon storage as taking place 800 metres or more below the surface — one and a half times the height of the CN Tower.

In terms of these wells increasing the risk of leaks, he said modern drilling methods are highly sophisticated, and the integrity of any kind of borehole is “monitored nearly continuously.” 

“There is a vanishingly small possibility there could somehow be leakage from the borehole, but even if that were to occur, the [measuring, monitoring verification] program would instantaneously detect that leak and the operation would be shut down,” he said. 

Carson Fong, a program manager specializing in carbon dioxide removal at the Pembina Institute, a Calgary-based climate think tank, said if the new regulations ensure that sufficient engineering studies are completed to guarantee the carbon dioxide is secure, storage in Ontario can be done safely.

But he adds there isn’t enough information in Bill 27 to determine if project-specific studies will be sufficient. 

“The legislation notes it’ll be up to the minister to determine that … so we might need to wait for more detailed regulations to really evaluate this,” he said. 

Another concern brought forward to the Ministry of Natural Resources and Forestry regards consent and consultation with landowners and communities, specifically First Nations. “Indigenous communities are seeking meaningful engagement and consultation throughout the development of the framework and individual projects,” reads the province’s summary of comments from summer 2024 on the discussion paper for regulating geologic carbon storage.

The Chippewas of Kettle and Stony Point First Nation noted in comments that Traditional Knowledge must be incorporated into any environmental risk assessments on carbon storage. 

The Ontario Federation of Agriculture also outlined concerns in comments it submitted to the province on Oct. 2, requesting impact assessments on agricultural lands to ensure carbon capture would not have negative effects. It recommended the government look at whether reducing carbon-intensive industries is a better option — considering the cost of establishing, operating and policing geologic carbon storage. 

Is carbon capture and storage already happening in Canada?

According to the federal government, as of 2023 there were five carbon dioxide capture, transport, storage and utilization projects operating in Canada. As of 2025, those projects capture about four megatonnes of carbon dioxide a year and are limited to Alberta and Saskatchewan.

In Alberta they are the Alberta Carbon Trunk Line, the Glacier Gas Plant and Quest Carbon Capture and Storage. In Saskatchewan, the operational projects are the Weyburn Midale CO2 storage facility and the Boundary Dam. 

According to the International Energy Agency, a Paris-based intergovernmental organization, another 63 projects are being planned, and seven are under construction. By 2030, the International Energy Agency projects Canada’s capacity to be about 31.3 megatonnes per year of carbon storage — a significant increase, but still only around five per cent of the nearly 600 megatonnes of carbon dioxide equivalent Canada is projected to emit annually by then.

Carbon capture and storage has played a starring role in Prime Minister Mark Carney’s vision for Canada’s climate change policies. 

Carney has touted the practice as a critical investment need for Canada in order to reduce emissions in the oil and gas sector — while maintaining continued resource extraction. He has described an opportunity for the country to establish itself internationally as a leader in carbon storage. 

That fervor became more apparent in the federal government’s climate plan, unveiled as part of the Carney government’s first budget on Nov. 4, the same day Oosterhoff spoke to his colleagues in provincial parliament. The plan indicates that Canada’s proposed cap on emissions from the oil and gas sector, which isn’t yet in place, could be thrown out by the Carney government in favour of further investments in carbon capture and storage technology. 

The federal government is also considering fast-tracking a $16-billion carbon capture and storage project proposed by the Pathways Alliance, an organization of major oilsands producers. 

So, should we be going all-in on carbon storage?

Some environmental economists, like Sawyer, warn that carbon storage and capture “seizes the mind” because when applied to modelling, it seems like an ideal solution. But he warns that the dream of carbon capture and storage could actually be a mirage, distracting from innovative thinking around climate change that reduces dependency on fossil fuels. 

Aly Hyder Ali, a program manager at climate advocacy group Environmental Defence, is vehement in the organization’s rejection of carbon capture and storage. He characterizes it as a tactic that allows emitters to expand fossil fuel production, not a meaningful solution to climate change.

“This technology is an extremely costly disruption that ultimately only lets oil companies continue to increase their production,” he said. All it “captures” are subsidies for the oil and gas industry, he said. 

Zhang disagrees: “I wouldn’t say it’s a band-aid solution,” he said. “Because there is no complete replacement for fossil fuels right now.”

In Ontario, the provincial government sees carbon storage as a means to “support the transition to a low-carbon economy.”

Ultimately, in the battle against climate change, Sawyer sees the increased push around carbon capture and storage as playing only the goalie on a hockey team — the last resort — instead of all the other possible players.

Updated on Feb. 2, 2026, at 11:14 a.m. ET: This story was updated to note when the province started accepting applications for geologic carbon storage.

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In a world grappling with a building climate crisis, electrification has become a buzzword. Securing a reliable supply of clean — or at least relatively low-emission — and plentiful power to displace fossil fuels is regularly proffered by policymakers as the way forward.

But electrifying large swaths of society — from heavy industry to transportation — isn’t as simple as putting a plug in a socket. New power generation projects, such as wind and solar farms, need to be connected to the grid, which must have the capacity to carry and ferry that power. Transmission lines, substations and all kinds of electrical infrastructure must be built or upgraded to allow that to happen. None of it is cheap, especially when some of your biggest customers — such as mining operations or oil and gas facilities — could be located hundreds of kilometres away from the nearest power line.

So what happens when energy-hungry industries want to connect to the grid, but worry the cost of that access will hurt their bottom lines? B.C. may be about to find out.

Last week, the B.C. government approved the environmental assessment certificate for the Ksi Lisims liquefied natural gas (LNG) project. It will be built on an island near the mouth of the Nass River in northern B.C., close to the Alaska border. Once operational in 2028, Ksi Lisims could produce up to 12 million tonnes of LNG per year.

Natural gas — which is extracted in B.C. primarily through hydraulic fracturing, or fracking — is mostly methane, a powerful greenhouse gas responsible for around 30 per cent of the current rise in global temperatures, according to the International Energy Agency.Electrifying Ksi Lisims would allow the facility to “produce some of the cleanest, low-carbon LNG anywhere in the world,” according to B.C. Premier David Eby.

To go electric, Ksi Lisims estimates needing to draw about 600 megawatts from B.C.’s power grid, according to internal government documents obtained by The Narwhal in February. The project’s remote location means building the required electrification infrastructure won’t be quick, cheap or easy and the project’s environmental certificate notes Ksi Lisims will likely be powered by natural gas when it begins operations. 

Ksi Lisims is one of eight major industrial projects — including LNG facilities, mines and oil and gas operations — that have expressed interest in connecting to B.C.’s grid. Together, they could require more than 3,000 megawatts of electricity. For context, the Site C dam is capable of producing up to 1,230 megawatts of power.

Every one of the projects listed in the internal documents was seeking more than 150 megawatts, and this number is important. It’s the threshold that should trigger a BC Hydro rule created in the early 1990s known as tariff supplement 6. It requires new industrial customers seeking more than 150 megawatts to pay the costs of generating and transmitting the power beyond that threshold.

The 150-megawatt threshold is meant to protect other BC Hydro customers, including residential users and small businesses, from being hit with higher electricity prices as a result of investments in new infrastructure to serve large industrial customers. However, requiring LNG, mining and other companies to pay those costs “could be prohibitive,” the documents note.

Despite being on the books for more than 30 years, tariff supplement 6 had never been applied because “no projects above 150 megawatts have been built in B.C.,” according to a briefing note prepared for Eby in March 2024. 

But, with multiple large industrial projects exploring their options for connecting to BC Hydro’s grid, that will not be the case for long. 

B.C. government opted to pay for part of Cedar LNG’s connection costs

At 214 megawatts required, Cedar LNG was one of the first projects to trigger tariff supplement 6’s threshold. The facility, a floating liquefaction and export terminal in Kitimat, could produce three million tonnes of LNG per year for export to Asian markets. The company was spared additional generating costs for clean power because BC Hydro was forecasting a power surplus when Cedar LNG’s connection to the provincial grid was being assessed.

As for the transmission infrastructure needed to electrify Cedar LNG, the provincial government opted to contribute $200 million to help build a new 287-kilovolt transmission line, a new substation, new distribution lines and nearshore electrification for the project.

Access to BC Hydro’s electrical grid will allow Cedar LNG to produce “the lowest emission LNG in the world,” according to B.C. Energy Minister Adrian Dix.

“This is the best LNG in the world,” Dix said during the July announcement. “Our market position, our proximity to the Asian market, makes it the best LNG in the world and it’s the lowest emission LNG in the world.”

So how much did Cedar LNG pay for the infrastructure that will allow it to market its product as the cleanest in the world? The Energy Ministry referred The Narwhal’s questions about Cedar LNG’s contribution to the transmission infrastructure to the company, which did not respond by publication time.

The Narwhal also asked the Energy Ministry whether other major projects — such as Ksi Lisims — can also expect the province to pay for a portion of any transmission infrastructure required to go electric, but did not receive a response.

The government has been eyeing changes to tariff supplement 6 for more than a year in a bid to find ways “to balance industrial competitiveness with electrification in other sectors of the economy, all while keeping rates affordable,” according to the 2024 briefing note to the premier.

Earlier this year, the BC Utilities Commission, an independent regulator that oversees energy utilities, ordered BC Hydro to review the rule, noting its age and lack of nuance in assigning costs. The commission set a Sept. 30 deadline for the review to begin but has since granted BC Hydro an extension until April 30.

In pleading its case, BC Hydro told the commission it needed more time to develop alternatives to tariff supplement 6 — something the Energy Ministry was already mulling over in March 2024. BC Hydro also noted that some economic development policies the provincial government is considering “could impact the scope and objectives of any review.”

The details of what those policies are and how they could impact the review of tariff supplement 6 are considered confidential and have not been made public.

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