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The 2015 Paris agreement outdated by AI advancement

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5 minute read

From Resource Works

Evolving economy is running circles around green ambitions

In 2015 world leaders met in Paris to set the course for climate action and agreed to limit global warming to well below 2°C above pre-industrial levels. Those targets relied heavily on getting to 100% renewable energy, electrifying transport and reducing fossil fuels. But one big factor was left out of those plans: the rapid growth of artificial intelligence (AI) and the massive energy it’s consuming. Now as AI is becoming a pillar of the global economy, climate goals remain stagnant, and we need to ask the big questions about how we reconcile progress with responsibility.

AI’s rapid growth, especially since the introduction of generative AI tools like ChatGPT and MidJourney, has upended industries and created unprecedented demand for computer power. Training and running advanced AI models requires vast amounts of energy, mostly to power the data centers where the computations are done. These facilities use as much electricity as a medium sized city and are straining local grids and making it harder to decarbonize the power system.

The scale of this demand was not factored in when nations were setting their climate strategies in 2015. While many plans accounted for electrification of transport and heating, AI was still an emerging idea. Today the data center industry, driven by AI, cloud computing and internet usage, accounts for about 3% of global electricity consumption and that’s expected to rise sharply as AI adoption grows.

The energy challenges of AI are particularly acute in British Columbia, Canada where a clean electricity grid was once the foundation of the province’s climate strategy. BC Hydro, the publicly owned utility, generates most of its electricity from hydro. But recent data shows BC Hydro can’t meet domestic demand without importing electricity from neighboring regions including Alberta and the US where fossil fuels dominate the energy mix.

In the last fiscal year BC imported over 13,600 gigawatt-hours of electricity – more than double the annual output of the controversial Site C dam, a $16 billion hydro project currently under construction. Importing electricity undermines the province’s green credentials and raises questions about how it will meet future demand as data centers grow to support AI.

Climate goals initially focused on reducing emissions from transport and industrial processes are now being challenged by the energy demands of AI. For example, policies promoting electric vehicles (EVs) assumed electricity demand would grow incrementally but AI is upending those calculations. Data centers designed to power AI workloads require massive energy densities and continuous operation and are adding stress to grids already dealing with EVs and renewable energy integration.

Globally nations are facing similar dilemmas. In the US data centers are driving demand for new natural gas plants even as the federal government is committing to decarbonize the grid by 2035. Meanwhile countries like Ireland and the Netherlands have temporarily halted approvals for new data center connections to protect grid stability and meet emissions reduction targets. These tensions are highlighting the growing challenge of balancing climate goals with the demands of a digital economy which now has the added pressure of AI.

AI and its energy demands have added a new layer of complexity for climate policymakers. Some say the solution is to accelerate the transition to renewable energy and invest in advanced technologies like small modular reactors (SMRs) and energy storage. Others say it’s about improving data center efficiency through liquid cooling and more efficient chips.

But these solutions take time and capital and may not be enough to keep up with the rapid growth of AI driven energy demand. Policymakers will have to make tough choices: should resources be directed towards building more renewable capacity to support AI or should data center growth be limited? And how can we make sure AI’s benefits outweigh its costs?

The AI revolution has blown apart assumptions about energy demand and emissions reduction pathways and we need to face the reality of our existing climate strategies. As British Columbia is trying to balance the promise of AI with a sustainable future the time to act has never been more pressing. A net zero world will require not only innovation but also a willingness to confront the trade-offs that come with plugging in these transformative technologies to our planet.

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Energy

LATE TO THE PARTY: Liberal Resource Minister Minister Suddenly Discovers Canada Needs East-West Pipeline

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From Energy Now

By Jim Warren

On Thursday, February 6 federal energy and natural resources Minister Jonathan Wilkinson told reporters about a brilliant idea he’d come up with. He said Canada should think about building an east-west oil pipeline. He claimed doing so could provide Ontario, Quebec and parts further east greater security of supply.

Furthermore, such a pipeline would eliminate the need to buy tanker loads of oil from places like Saudi Arabia and Nigeria. And what’s more it could provide us with the opportunity to export Canadian oil to countries other than the US.

Talk about being late to the party. It’s as though the Energy East project never made it onto the national agenda.

Wilkinson told reporters how a pipeline like Enbridge’s Line 5 is vulnerable to shut down by US authorities. Line 5 carries oil from the prairies through the northern US Midwest before delivering it to the refinery and petrochemicals facilities at Sarnia, Ontario.

This is not breaking news. The Liberals have been well aware of the threat for years. Michigan governor, Gretchen Whitmer waged a well-publicized multi-year campaign to have Line 5 shut down.

According to a CBC report, Wilkinson said, “successive Canadian governments never really gave it much thought that a lot of the energy the country needs to power its economy flows through the U.S.”

That’s a stretch. He apparently doesn’t consider the governments of Alberta and Saskatchewan to be Canadian governments. The real problem is Ottawa wasn’t listening when premiers Notley, Kenney, Smith, Wall and Moe explained the value of an all-Canadian Energy East pipeline. They also had plenty to say about the cancellation of Energy East in 2017 and the role Ottawa played by creating the regulatory approval quagmire that helped kill it.

No less puzzling is that Wilkinson imagines such a pipeline could ever be built under the BANANAs (build absolutely nothing, anywhere, near anything) regulatory barriers implemented by the Liberals which make it next to impossible for anyone to build a new pipeline. When Jason Kenney referred to Bill C-69 as The No More Pipelines Bill he wasn’t just whistling Dixie.

The only major export pipeline to be built in the wake of C-69, was the Trans Mountain expansion (TMX). And it was only completed because the owner, the Government of Canada, was prepared to incur the staggering costs of navigating its own pipeline approval regulations. A pipeline originally budgeted to cost $6.8 billion wound up costing an additional $54 billion. Sane investors simply aren’t prepared to accept that level of unreasonable cost and uncertainty.

A first step in getting new pipelines built would be eliminating Bill C-69 along with Bill C-48, the West coast tanker ban. Wilkinson didn’t touch on those points when telling reporters about his bold new idea.

One has to wonder, after11 years of anti-oil and anti-pipeline policy making, if Wilkinson really means what he’s saying. Has he truly experienced a road to Damascus level conversion due to the threat of US tariffs?

Another plausible explanation for Wilkinson’s call for the resurrection of Energy East is that he’s seen the polling numbers. An Angus Reid poll conducted earlier this month shows 79% of Canadians from across the country support new oil and gas pipelines to tidewater on the east and west coasts. The poll also shows 74% of Quebec respondents now support the idea of building new pipelines to tidewater.

If those numbers hold, Canada’s next government could possibly revisit Energy East. If they succeeded in getting the line built it would represent the most visionary nation building project since the building of the trans-continental railway.

No less surprising is, despite the rise in public support for pipelines, Quebec Premier Francois Legault says he won’t accept a new oil pipeline in his province. Legault is out of step with Quebec opinion on more issues than pipelines. The separatist Parti Quebecois is currently leading Legault’s Coalition Avenir Quebec by 10 points in party preference polls. This is not to say the PQ is any more pipeline friendly.

After11 years of Liberal anti-oil and anti-pipeline policy making, Wilkinson is finally on the right side of the Energy East idea. Some might say better late than never—better to change one’s mind than to continue being wrong. Others will say it is a flip flop of epic proportions and questionable sincerity. Skeptical pundits will question whether Wilkinson’s new found fondness for pipelines is any more credible than Mark Carney’s pledge to get rid of the carbon tax.

Wilkinson is a bright man, so it is possible he has believed Energy East was a good idea for some time. Too bad he didn’t tell us sooner. He waited too long to come clean to expect electoral redemption.

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Banks

The Great Exodus from the Net Zero Banking Alliance has arrived

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From the Canadian Energy Centre

By Gina Pappano

Next, we need a Great Exodus from net zero ideology

In 2021, all of Canada’s Big Five Banks – TD, CIBC, BMO, Scotiabank and RBC – signed onto the Glasgow Financial Alliance for Net Zero (GFANZ) and the Net Zero Banking Alliance (NZBA).

U.N.-sponsored and Mark Carney-led, GFANZ is a sector-wide umbrella coalition whose goal is to accelerate global decarbonization and the emergence of a worldwide net zero global economy.

But now, in the first month of 2025, four of Canada’s Big Five Banks – TD, CIBC, BMO and Scotiabank – have announced their decision to exit the NZBA.

This came on the heels of similar announcements by six of the biggest U.S. banks – Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley and Wells Fargo as well as the investment firm BlackRock leaving the Asset Management subgroup of the GFANZ.

That group, the Net Zero Asset Managers Initiative, has now suspended operations altogether, and the GFANZ and all of its subgroups are falling like a house of cards.

At InvestNow, the not-for-profit that I lead, we’re considering these developments a victory and a vindication of our work.

In November of 2024, we submitted shareholder proposals to Canada’s Big Five banks asking them to leave both the NZBA and the GFANZ. As of this writing, all but one of them have done just that.

But this is only a partial victory.

When they signed on to the NZBA, the banks pledged to align their lending, investment and banking activities with decarbonization goals, including achieving net zero emissions by 2050. They pledged to focus on higher emitting sectors first and foremost. In practice, this means they would be setting their sights on Canada’s natural resource sector.

That’s because the net zero ideology motivating these groups requires the drastic reduction of oil and gas production and use over a comparatively short period of time.

That is a serious threat to Canada since we’ve been blessed with an abundance of natural resources. Hydrocarbon energy has become the backbone of our economy, and the war being waged against it has already made our lives harder and more expensive. Left unchecked, these difficulties will compound, with ruinous results.

In joining the NZBA, the Big Five Banks agreed to divest from oil and gas, eliminating projects and companies from the investment pool simply because of the sector they work in, as part of a long-term goal of totally decarbonizing the economy.

Presumably, having left the Alliance, those banks could now change course, increasing investment in and lending to oil and gas firms with an eye toward increasing the return on investment for their shareholders.

Except the banks have stressed that they have no intention of doing so. In the press releases and articles about leaving the NZBA, each bank emphasized that this move should not be interpreted as them abandoning net zero itself. All of these banks remain committed to aligning their activities with decarbonization, no matter the cost to Canada, the Canadian economy or the good of its citizens.

This means we still have work to do. While we applaud the banks for exiting the NZBA, we will continue to work to get them to leave behind the net zero ideology as well. Then, and only then, will we claim a full victory.

Gina Pappano is the former head of market intelligence at the Toronto Stock Exchange and TSX Venture Exchange and executive director of InvestNow , a non-profit dedicated to demonstrating that investing in Canada’s resource sectors helps Canada and the world. Join the movement and pass the InvestNow resolution at investnow.org.

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