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Canada creates a brand new fossil fuel subsidy – Awkward: Etam

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From the Frontier Centre for Public Policy

By Terry Etam

Upon hearing about the federal government’s decision to roll back the carbon tax on heating oil, I rolled up my sleeves. The point of writing about energy at all is to try to illuminate some aspect of an energy topic from a viewpoint inside the energy sector; to explain some energy nuance that the general population, which cares little for the nuances of energy, may find valuable. Energy is not simple, and there are a lot of loud storytellers out there, selling magical beans and wishful thinking.

To me, the carbon tax rollback was an annoyingly flagrant bit of vote-buying, yet another irritant from the federal government but one that, on centre-stage, seemed to have far less potential for cross-country histrionics than, for example, the time the prime minister threw his talented and principled First Nations minister under the bus. Now that was a shockwave.

This carbon tax vote grab? Ha. SNC Lavalin, Jody Wilson-Raybould, the WE Charity scandal, foreign interference… a heating oil subsidy doesn’t even crack an annual top-ten list of federal governance dirty diapers.

Or so I thought. Hoo boy. The Hail Mary scheme has blown up, blown up real good. Critics are everywhere, from across the political and environmental spectrum. Liberal heavyweights are attacking Trudeau; economists that love the carbon tax for its ‘efficiency’ are declaring the carbon tax dead. Incredulously, premiers have voiced a unanimous opinion that the entire country needs to be treated consistently.

Upon further thought, it shouldn’t be a big surprise that even the hard core climate crowd is displeased. The federal government has been lavish with announcements and proclamations about eliminating fossil fuel subsidies, that they would do so faster than imaginable, that, well, read their words for yourself: “Canada is the only G20 country to phase out inefficient fossil fuel subsidies ahead of the 2025 deadline. We are the first country to release a rigorous analytical guide that both fulfills our commitment and transparently supports action.”

“What the hell is this?” appears to be the consensus among a disparate group of voices that reaches consensus on nothing.

Be very clear why there is outrage: this is a shallow, obvious vote grab that crumbles the pillars of this government, and it most definitely is a creation of a brand new fossil fuel subsidy – so much for international credibility after all the hectoring this government has done globally. (If you have any doubts that this is anything but a political maneuver, consider that almost exactly a year before, in October 2022, the Conservatives tried to pass a motion to exempt home heating oil from the carbon tax, and all Liberal MPs save one brave Newfoundlander voted against it.)

Since the whole topic of the carbon tax has now come up though, here is a critical point that warrants some thought.

Canada and the US have chosen two different strategies to reduce emissions. Canada has, of course, the carbon tax – if you use or burn hydrocarbons, you’re going to pay (certain rural maritimers temporarily notwithstanding). Governmental, and government friendly, economists contort themselves into pretzels to demonstrate that the rebates handed back by the federal government “more than compensate” for the carbon tax, but every citizen that goes to a grocery store and realizes that every item in the industrial chain that handled any of those products in this country paid their own carbon tax, and that all that is rolled into the end product, has a very strong real-world suspicion that the government’s equation is laughable.

Beyond that, there is a big problem with Canada’s ‘stick’ approach to carbon reduction. Canadians can choose to limit the impact of the carbon tax by switching to something less carbon intensive, or spending to otherwise limit emissions. You don’t want to pay the carbon tax, you or your business? “No problem!” Says the federal government; just spend some exorbitant amount of capital, based on frameworks and guidelines that are not yet even ready.

In the US, the government long ago (2008) introduced something called 45Q, a carbon credit which was recently beefed up significantly under the Biden Inflation Reduction Act energy policy. 45Q is a carrot. If you are a carbon emitter, well, no one likes the emissions, but go ahead and carry on with your business.

If you choose to reduce your carbon emissions however, the government will hand you a cheque (sorry, check) for doing so – $85 per tonne CO2e, to be precise. You can start a new business that generates emissions credits, and if you can do it for less than $85/tonne, you have a new profit centre. There is a companion credit called 45X; credit revenue can be generated from it by manufacturing components that go into various energy technologies including structural fasteners, steel tubing, critical minerals, pretty much any battery component, etc.

In short, an existing business can carry on as before, or embark on a new venture with a guaranteed revenue stream from carbon credits generated.

In Canada, the stick is, like, really big, and for real. If you exist and consume conventional energy, you will pay, and pay dearly, and the amount will go up every year until either 2030 or until you cry uncle, whichever comes first.

Want to avoid paying the tax? Again, you will pay dearly, but differently; you will pay for capital expenditures on whatever means are available to you, using whatever policies are worked out by governments at all levels (Not a secret: a great many of the regulatory bugs are not yet worked as to potential solutions to limit emissions, capture/store carbon, etc.).

In Canada, either way, you pay through the nose. In the US, you have options to go into another line of business, or to find potentially unrelated ways to reduce emissions, with a ‘guaranteed revenue stream’ in the form of credits.

Guess in which direction businesses will thunder?

Economists love Canada’s carbon tax because it is ‘efficient’. Well, yes, that is true in an oddball sort of way, just as I can guarantee you that I can ‘efficiently’ reduce local vehicular traffic by blowing up every bridge and overpass. How’s that for efficient? I could cut traffic levels by greater than 50 percent within hours of delivery of the ACME Dynamite.

At the end of the day, the federal government’s backpedaling on the carbon tax is symptomatic of a cornerstone of the entire movement failing, because it was made of styrofoam and the building upon which it was constructed will only work with carefully engineered cement.

Europe is no different, celebrating emissions reduction successes while not wanting to talk much about how the industrial sector has been hollowed out. “Stick” taxes force companies to shut down and/or leave, and just plain punish citizens for things like heating their homes.

The carbon tax is a solution to the extent that there is readily-trimmable fat in the system. But it has to be designed to go after that fat, not after everything that moves. Autos are a perfect example. The federal government could have mandated a switch to hybrids, and banned sales of 500-hp SUVs and whatever (don’t yell at me free marketers; I’m pointing out real-world pathways that are possible). They could have mandated a rise in corporate average fuel economy in one way or another.

That is trimmable fat. Attacking home heating fuels is not.

This isn’t to say the US’ program is sheer genius. However, it is worth noting that 45Q has been around for fifteen years; what has happened recently is that it has been beefed up in a way that makes sense. (The US is also doing nonsensical things like forcing companies into carbon capture and sequestration, at the same time that, as US Senator Joe Manchin points out, “CCUS and DAC developers have submitted more than 120 applications to EPA [Environmental Protection Agency] for Class VI well permits to sequester carbon since the IRA passed, and there are 169 total pending applications, and not one approval has been made by the Biden Administration.”)

The energy transition as envisioned by the ‘climate emergency’ crowd was doomed to fail because it was based on a ‘too fast, too soon’ transition game plan – which was actually not a plan at all, more of a command – and, equally as relevant, was based on the tenuous fear instilled in citizens by bad weather (an entire generation is now being raised to 1) be terrified of the weather, and 2) be convinced that their actions can influence it. Stop it.).

Our entire world is built on oil, natural gas, coal (in some parts of the world) and hydrocarbon energy systems in general. Sue ‘Big Oil’ all you want; that won’t change anytime soon.

Energy illiteracy is the slow-moving black plague of our time.

Canada’s efficient carbon tax pits citizens against their heating needs, against their business interests, and against inescapable realities.

Here’s the sad part: All the federal government is doing here is facing reality, or starting to. Europe did the same last year, spending hundreds of billions in brand new fossil fuel subsidies to shield consumers from rocketing energy prices. When push comes to shove, governments will wilt under pressured voter pocketbooks.

Boneheads will at this point insert the oft-heard refrain “So you’re saying we should just do nothing.” I’ve heard that so often it sounds like mosquitoes in summer. It’s the only attack some people have.

It is actually an amazing time to see new energy technologies take shape, with the best minds in the entire energy industry pushing in that way. We are seeing the creation of hydrogen hubs, development of new technology like fuel cells, greater use of methane capture from landfills, etc. A great many great minds are making significant progress.

But even those geniuses can’t change the laws of reality. Eight billion people are now alive at the same time due to a certain system, and it will take a very long time to change that system if all of those people stay alive and try to live like the west does.

Energy wise, we need better, much better. Canada’s government is paying the price for heedlessly listening to ideological cheerleaders. Just like Canada’s citizens have been.

Terry Etam is a columnist with the BOE Report, a leading energy industry newsletter based in Calgary.  He is the author of The End of Fossil Fuel Insanity.  You can watch his Policy on the Frontier session from May 5, 2022 here.

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Alberta

Temporary Alberta grid limit unlikely to dampen data centre investment, analyst says

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From the Canadian Energy Centre

By Cody Ciona

‘Alberta has never seen this level and volume of load connection requests’

Billions of investment in new data centres is still expected in Alberta despite the province’s electric system operator placing a temporary limit on new large-load grid connections, said Carson Kearl, lead data centre analyst for Enverus Intelligence Research.

Kearl cited NVIDIA CEO Jensen Huang’s estimate from earlier this year that building a one-gigawatt data centre costs between US$60 billion and US$80 billion.

That implies the Alberta Electric System Operator (AESO)’s 1.2 gigawatt temporary limit would still allow for up to C$130 billion of investment.

“It’s got the potential to be extremely impactful to the Alberta power sector and economy,” Kearl said.

Importantly, data centre operators can potentially get around the temporary limit by ‘bringing their own power’ rather than drawing electricity from the existing grid.

In Alberta’s deregulated electricity market – the only one in Canada – large energy consumers like data centres can build the power supply they need by entering project agreements directly with electricity producers.

According to the AESO, there are 30 proposed data centre projects across the province.

The total requested power load for these projects is more than 16 gigawatts, roughly four gigawatts more than Alberta’s demand record in January 2024 during a severe cold snap.

For comparison, Edmonton’s load is around 1.4 gigawatts, the AESO said.

“Alberta has never seen this level and volume of load connection requests,” CEO Aaron Engen said in a statement.

“Because connecting all large loads seeking access would impair grid reliability, we established a limit that preserves system integrity while enabling timely data centre development in Alberta.”

As data centre projects come to the province, so do jobs and other economic benefits.

“You have all of the construction staff associated; electricians, engineers, plumbers, and HVAC people for all the cooling tech that are continuously working on a multi-year time horizon. In the construction phase there’s a lot of spend, and that is just generally good for the ecosystem,” said Kearl.

Investment in local power infrastructure also has long-term job implications for maintenance and upgrades, he said.

“Alberta is a really exciting place when it comes to building data centers,” said Beacon AI CEO Josh Schertzer on a recent ARC Energy Ideas podcast.

“It has really great access to natural gas, it does have some excess grid capacity that can be used in the short term, it’s got a great workforce, and it’s very business-friendly.”

The unaltered reproduction of this content is free of charge with attribution to the Canadian Energy Centre.

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Energy

CNN’s Shock Climate Polling Data Reinforces Trump’s Energy Agenda

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From the Daily Caller News Foundation

By David Blackmon

As the Trump administration and Republican-controlled Congress move aggressively to roll back the climate alarm-driven energy policies of the Biden presidency, proponents of climate change theory have ramped up their scare tactics in hopes of shifting public opinion in their favor.

But CNN’s energetic polling analyst, the irrepressible Harry Enten, says those tactics aren’t working. Indeed, Enten points out the climate alarm messaging which has permeated every nook and cranny of American society for at least 25 years now has failed to move the public opinion needle even a smidgen since 2000.

Appearing on the cable channel’s “CNN News Central” program with host John Berman Thursday, Enten cited polling data showing that just 40% of U.S. citizens are “afraid” of climate change. That is the same percentage who gave a similar answer in 2000.

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How much has been spent on climate alarm messaging since that year? When Climate science critic Steve Milloy, who runs the Junkscience.org website, asked X’s AI tool, Grok 3, to provide an estimate of “the value of pro-global warming propaganda from the media since 2000,” Grok 3 returned an answer of $722 billion. Given that Grok’s estimate includes both direct spending on such propaganda as well as earned media, that actually seems like a low number when one considers that virtually every legacy media outlet parrots and amplifies the prevailing climate change narrative with near-religious zeal.

Enten’s own report is an example of this fealty. Saying the findings “kind of boggles the mind,” Enten emphasized the fact that, despite all the media hysteria that takes place in the wake of any weather disaster or wildfire, an even lower percentage of Americans are concerned such events might impact them personally.

“In 2006, it was 38%,” Enten says of the percentage who are even “sometimes worried” about being hit by a natural disaster, and adds, “Look at where we are now in 2025. It’s 32%, 38% to 32%. The number’s actually gone down.”

In terms of all adults who worry that a major disaster might hit their own hometown, Enten notes that just 17% admit to such a concern. Even among Democrats, whose party has been the major proponent of climate alarm theory in the U.S., the percentage is a paltry 27%.

While Enten and Berman both appear to be shocked by these findings, they really aren’t surprising. Enten himself notes that climate concerns have never been a driving issue in electoral politics in his conclusion, when Berman points out, “People might think it’s an issue, but clearly not a driving issue when people go to the polls.”

“That’s exactly right,” Enten says, adding, “They may worry about in the abstract, but when it comes to their own lives, they don’t worry.”

This reality of public opinion is a major reason why President Donald Trump and his key cabinet officials have felt free to mount their aggressive push to end any remaining notion that a government-subsidized ‘energy transition’ from oil, gas, and coal to renewables and electric vehicles is happening in the U.S. It is also a big reason why congressional Republicans included language in the One Big Beautiful Bill Act to phase out subsidies for those alternative energy technologies.

It is key to understand that the administration’s reprioritization of energy and climate policies goes well beyond just rolling back the Biden policies. EPA Administrator Lee Zeldin is working on plans to revoke the 2010 endangerment finding related to greenhouse gases which served as the foundation for most of the Obama climate agenda as well.

If that plan can survive the inevitable court challenges, then Trump’s ambitions will only accelerate. Last year’s elimination of the Chevron Deference by the Supreme Court increases the chances of that happening. Ultimately, by the end of 2028, it will be almost as if the Obama and Biden presidencies never happened.

The reality here is that, with such a low percentage of voters expressing concerns about any of this, Trump and congressional Republicans will pay little or no political price for moving in this direction. Thus, unless the polls change radically, the policy direction will remain the same.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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