Canada Plans to Supply Natural Gas for U.S. AI Data Centres
Natural Resources Minister Tim Hodgson told Bloomberg in March that Canada will increase natural gas exports to power American data centres supporting the artificial intelligence arms race. Hodgson said the government discussed with the Trump Administration "how we could help send more gas down to help you export more off the Gulf Coast and to help you with your AI strategy."
The move contradicts the electoral message that brought Prime Minister Mark Carney to power last year. Carney campaigned on distancing Canada from the United States. Now his government is deepening economic ties to Trump's agenda.
Energy Demand Outpacing Infrastructure
Data centre energy consumption is accelerating. The facilities accounted for nearly 5 percent of total U.S. electricity consumption in 2024 and are projected to reach 12 percent by 2028. Over half of this demand is met by fossil fuels.
Projections show data centres could consume 106 gigawatts of power by 2035-more than current installed capacity from either nuclear or hydroelectric sources in the United States.
Water and Local Impacts
A single large data centre consumes 5 million gallons of water daily, equivalent to a community of 50,000 people. By 2028, collective data centre water demand in America alone could reach 3.3 billion gallons per year.
Two-thirds of recent data centre installations have been built in water-stressed regions including Arizona, Texas, and the Colorado River Basin.
Local communities are already feeling the strain. In Archbald, Pennsylvania-population 5,400-residents packed town hall meetings to oppose five proposed data centres totaling 13.4 million square feet. Lackawanna County Commissioner Bill Gaughan called the data centre boom "one of the biggest environment and social threats of our generation."
Canadian Government Removes Regulatory Barriers
Canadian regulators have accommodated tech companies by removing clean energy requirements. The Carney government reversed clean energy regulations after Capital Power, an Alberta gas company, lobbied 37 times to build a gas-powered AI data centre in the province.
Saskatchewan approved a gas-powered server farm south of Regina despite local opposition over noise and environmental impacts. Alberta exempted a 7.5-gigawatt data centre proposal from provincial environmental assessment, even though the gas-fired facility would require seven times the power generated by the Site C dam.
Climate and Policy Consequences
Burning natural gas to power data centres worsens two major threats simultaneously: climate change and uncontrolled artificial intelligence development. The United Nations recently documented how fossil fuels are pushing the planet beyond critical tipping points, particularly around ocean temperatures.
The arrangement also creates pressure on electricity grids, delays coal plant closures, and inflates electricity rates for residents and businesses.
For government decision-makers navigating these competing priorities, understanding AI's infrastructure demands is essential. AI Learning Path for Policy Makers covers how energy, policy, and technology strategy intersect.
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