Canada Sets Sights on New Electricity Projects in Quest for Energy Growth

Canada is likely to see major new electricity transmission projects on the east and west coasts as the government moves to increase energy production, the country’s natural resources minister said.

Tim Hodgson told Bloomberg News that electricity grids are an “incredibly important” part of the drive to strengthen the economy in the face of the Trump administration’s protectionist policies. Prime Minister Mark Carney has stated many times that his objective is to make Canada an “energy superpower.”

A longstanding problem for Canada is that much of its electricity grid runs south to the US, rather than east-west to connect provinces with each other. Changing that requires “a series of multiple projects,” Hodgson said.

On the east coast, there’s a pitch to connect the four provinces of Atlantic Canada with Quebec in a project called the Eastern Energy Partnership. Wind power from Nova Scotia and Newfoundland, and potentially nuclear power from New Brunswick, could be “interconnected with one of the biggest potential batteries in the world, which is the hydroelectric assets of Quebec and Labrador,” the minister said.

On the other end of the country, he highlighted the proposed North Coast Transmission Line in British Columbia, which would supply power to export-related infrastructure around the coastal city of Prince Rupert and would also allow for new grid connections to BC’s neighbors.

BC, Quebec and Newfoundland all get the vast majority of their electricity from hydroelectricity. The reservoirs are a clean source of power that can be held back when intermittent sources such as wind are available, and unleashed when they aren’t.

Canada is a seller of electricity to the US. Last year, the country exported around 35 terawatt hours of electricity to US states, valued at C$3.1 billion ($2.3 billion). That’s enough to power more than 3.3 million homes.

New York is an important customer, importing more than 8 million megawatt-hours in 2023, mostly from Ontario and Quebec — a figure that’s set to rise over time. A new transmission line, the Champlain Hudson Power Express, is scheduled to come online in 2026 and provide New York City with roughly a fifth of its power.

That project was announced at a time when Quebec thought it had power surpluses. Quebec’s power utility, Hydro-Quebec, has had to curtail US exports due to periods of drought that have reduced water levels in dam reservoirs. The company has drawn up plans to invest as much as C$200 billion by 2035 to meet future demand for electricity, improve reliability and fulfill its power export commitments to the US.

Electricity has also been used as a weapon in the trade war, albeit briefly. Ontario imposed a 25% surtax on power exports to Minnesota, New York and Michigan in March in retaliation for US President Donald Trump’s barrage of tariffs. The provincial government quickly backed down after the president threatened to increase those import taxes further.

Goldman Career

Hodgson is new to politics after a long career in finance and the corporate sector, much of it spent at Goldman Sachs Group Inc. Before running for office, he was board chair of Hydro One Ltd., the electrical utility serving Ontario.

Carney named Hodgson as minister of energy and natural resources in May — making him one of the key policymakers responsible for getting new infrastructure built to help Canada diversify its trade partners. The government passed a law allowing it to designate projects as being in the national interest, with the goal of approving them for construction within two years, much faster than the usual timeline.

The North Coast transmission line has “huge potential to unlock critical mineral corridors in northwestern BC, potentially in Yukon if it gets extended up into the Yukon,” Hodgson said.

Hodgson emphasized the importance of clean electricity to power liquefied natural gas facilities in BC. A large LNG export terminal began operations in June in Kitimat and there’s a proposal to expand it, along with building other new LNG facilities along the west coast. “I think we should be really proud of our natural gas exports,” he said.

With the major-projects legislation now in place, Hodgson acknowledged the government’s path may get more difficult as it starts to champion specific projects.

“When you actually put something up, there’s always somebody against it,” he said. But he contends that the election result, in which Carney and Hodgson’s Liberal Party nearly won a majority of House of Commons seats, and current opinion polling show the population is largely in favor of making “hard decisions” around getting projects built.

“I am hopeful as we start to designate things and the very vocal — maybe vocal to an extreme — start to speak up, that the majority speaks up too,” Hodgson said.

Carbon Market

During his private sector career, Hodgson also spent three years on the board of oil producer MEG Energy Corp. Now, he’s looking to clear the obstacles for a carbon-capture system known as the Pathways Alliance project that he believes is crucial for the future of that industry.

The single biggest issue to solve is the industrial carbon market, Hodgson said. Credits trade too cheaply in Alberta for the carbon capture project to make financial sense, he said.

“A functioning industrial price on carbon is going to be an important component” of getting the system built, Hodgson said. “That’s something that Alberta’s thinking hard about, that the federal government’s thinking hard about. It’s a priority for us.”

He said a carbon contract for difference — which would effectively guarantee a minimum price for carbon credits — is possible, but only after the market is functioning better.

He compared it to underwriting a life insurance policy. “When a person with stage-four cancer who refuses to quit smoking and drinking a bottle of vodka a day — maybe not the perfect analogy — says, I want you to write a contract for difference on my life, that’s not really a savvy business decision,” he said. The market needs to work better before such carbon contracts can be written.

Critical Minerals

Hodgson said he’s also working to secure international cooperation on critical minerals supply chains, a topic discussed at the Group of Seven leaders summit in June.

“We would very much like to have our first types of announcements by the end of the G-7 energy ministers’ conference at the end of October,” he said.

The biggest issue is ensuring that China isn’t undercutting prices. “There are tools that we are developing and working on” for that, Hodgson said, without being specific. Canada is pitching itself as “a great reliable partner with some of the best critical mineral assets in the world.”