For Canada, whose oil and gas industry faces the threat of tariffs on exports to the United States, industry officials from both countries urged calm, saying the continent’s need for shared energy security should sway the administration from turning energy into a battle front. Piping connected to the Coastal GasLink natural gas pipeline terminus at the LNG Canada export terminal in Kitimat, B.C., on Sept. 28, 2022.DARRYL DYCK/The Canadian Press
As legions of oil, gas, electricity and pipeline executives circulated through corridors and meeting halls at the world’s biggest energy conference this week, there was a palpable vibe shift from the past few years. It was fuelled by the policies of a disruptive, pro-fossil-fuel U.S. President.
Donald Trump trumpeted his energy-dominance agenda when he was inaugurated in January, and in less than two months changed the conversation from prioritizing climate goals and the green economy to boosting oil and gas production with few limitations, and focusing on affordability.
That message was on full display this week at energy conference CERAWeek by S&P Global in Houston, which served as a coming-out party for the Trump administration’s “drill, baby, drill” policies – pushing natural gas to power a coming boom in data centres and artificial intelligence computing and ramping up oil production from already-record levels.
Industry players also celebrated the end of restrictions on liquefied natural gas exports and offshore drilling that were imposed by former president Joe Biden.
For Canada, whose oil and gas industry faces the threat of tariffs on exports to the United States, industry officials from both countries urged calm, saying the continent’s need for shared energy security should sway the administration from turning energy into a battle front in what could be a long-running trade war.
Mr. Trump’s secretaries of energy and the interior as well as executives of major companies who spoke at the event decried past efforts to quickly move away from fossil fuels to green energy, arguing that they hobbled economic growth for little return. The pendulum had swung too far to the environmental side of the spectrum, they said.
“I’m honoured to play a role in reversing what I believe has been very poor direction in energy policy,” U.S. Energy Secretary Chris Wright proclaimed in setting the tone for the event. “The previous administration’s policy was focused myopically on climate change, with people as simply collateral damage.”
Mr. Wright, a former fracking executive, asserted that there was no way wind, solar and battery power could replace the many uses of natural gas, which fuels 43 per cent of U.S. electricity. The goal, instead, should be making energy in all its forms abundant for everyone to improve quality of life, he said.
Canada’s Energy Minister says all U.S. tariffs should be scrapped, not just those on oil and gas
Leaving aside statistics showing that 2024 was the hottest year on record, marked by numerous climate-related disasters, the major focus of the week was “hyperscalers” – companies such as Microsoft MSFT-T, Google GOOGL-Q and Amazon AMZN-T planning to build massive, power-thirsty server farms.
“We’ve been talking to a lot of the hyperscalers,” said Larry Fink, chief executive officer of BlackRock Inc., the world’s largest asset manager. “Four years ago, they would say, ‘If we’re building a data centre it must be renewables.’ Two years ago, they said, ‘We’d prefer it to be renewables.’ Today, they care about power.”
Mr. Fink was influential in emphasizing the need for decarbonization in business and finance five years ago, and he said he still believes it. But there is a new sense of “energy pragmatism” driven by the predictions of rising demand, he said. Data centres currently account for 2 per cent of U.S. power demand, but that is expected to hit 8 per cent to 12 per cent by 2030, highlighting the requirements for easily dispatched supplies.
Natural gas has emerged as the immediate critical fuel for data centres, which need almost 100-per-cent up-time, according to a report by Rystad Energy. The inventory of planned U.S. gas-generation projects has ballooned from six gigawatts in 2023 to 17.5 GW today, with the gain linked to both population growth and data-centre demand, it said.
Longer term, that could represent opportunities for the nuclear industry as well, conference delegates heard. Last year, Constellation Energy signed a 20-year deal with Microsoft to power data centres by restarting a unit at the Three Mile Island nuclear plant in Pennsylvania. It is a separate reactor from the unit that in 1979 suffered a partial meltdown in the worst nuclear accident in U.S. history. Development of small modular reactors could also play a role, but none are in operation in the U.S. today.
As administration officials touted an energy renaissance in Houston, the head of the U.S. Environmental Protection Agency took another swipe at sustainability, announcing rollbacks to dozens of environmental regulations. Rules on the chopping block include those aimed at limiting pollution from coal-fired power plants, fighting climate change and encouraging electric-vehicle manufacturing.
Renewed focus on fossil-fuel production, however, does not mean the end of the energy transition, said Jeff Currie, chief strategy officer of energy pathways at global investment company Carlyle and former commodities chief at Goldman Sachs. He is best known for predicting the commodity supercycle that was driven in large part by the massive expansion of the Chinese economy in the early 2000s.
He argued that energy has been in transition for decades, and that is still the case. In the 1970s, it was driven by a need for oil security, and climate became the driver a decade ago, he said.
“The security-driven energy transition moves faster than the climate one,” Mr. Currie told The Globe and Mail. “I want to emphasize: security over affordability over the environment. When those three get out of line you get into problems, like what happened in Germany last year.”
The European country, which has made a major shift to renewable power, hitting 59 per cent of generation last year, has been grappling with high energy costs borne by consumers and industries.
In terms of trade, premiers Danielle Smith from Alberta and Scott Moe from Saskatchewan, as well as federal Natural Resources Minister Jonathan Wilkinson, were among Canadian politicians who travelled to Houston to meet with U.S. and international officials. Their goal was to negotiate an end to Mr. Trump’s tariff threats that have fractured Canada-U.S. relations and shaken investor confidence.
However, Greg Ebel, CEO of Canadian pipeline company Enbridge Inc., urged a conference audience to not overreact. His company ships most of Canada’s oil exports to the U.S. – roughly three million barrels a day – and transports about a fifth of the natural gas consumed in the United States. The business underscores just how integrated the countries’ energy systems are, he said.
“For all the talk of tariffs in the last few weeks and for all the talk of unpleasantries between the countries, I can tell you our systems are as full as they’ve ever been and continue to be full,” Mr. Ebel said. “And so I think we just need to take a little bit of a breath and realize nothing’s going to change overnight.”
With its enthusiastic fossil-fuel promotion, the Trump administration is looking to correct what it sees as the excesses of its Democratic predecessors, said Mark Brownstein, senior vice-president, energy transition, for Environmental Defense Fund.
However, the geopolitical volatility it is causing is making everything more expensive and putting U.S. economic growth at risk. The country faces higher costs for developing both oil and gas or wind and solar as a result, he said in an interview. It also discourages investors from risking capital on major projects, he added.
“The concern of many is that they’re running the risk of overcorrecting in a way that actually works to limit America’s access to energy, and that’s problematic.”