Analysis – Alberta ditches cheap natural gas for data center growth, at odds with Canada’s clean energy goals
Written by Amanda Stephenson
CALGARY, June 9 (Reuters) – Alberta is raising its supply of cheap fossil fuels to lure tech companies to build data centers for the AI boom, a move that could set back Canada’s plan to link new data center development to clean energy expansion.
Canada is the world’s fifth largest producer of natural gas, about 60% of which comes from Alberta. As well as large reserves of petroleum, the western province has a mild climate that can reduce cooling costs for data center infrastructure and a lot of available land. All of that could make data centers more cost-effective than in the United States, where they face pushback from communities and lawmakers.
Tech companies could also create a new market for long-suffering natural gas producers in Western Canada, where operators have faced a multi-year supply glut and have sometimes had to pay customers to pick up their gas when prices have changed.
But the rapid expansion of data centers in Alberta will disrupt Canada’s plans to power an AI boom using clean hydro, renewables and nuclear. Although natural gas is a cleaner energy source than coal or oil, as a fossil fuel it still contributes to gas emissions.
Prime Minister Mark Carney said Canada’s data centers will run on “some of the cleanest energy in the world.” His government’s June 4 AI strategy — aimed at accelerating Canada’s adoption of artificial intelligence — highlighted that more than 83% of the country’s electricity grid comes from renewables and low-emission energy sources.
Canada currently has only five data centers operating at the so-called hyperscale level, which requires at least 50 megawatts of electrical capacity, equivalent to the energy needs of a small city.
But about 100 more are in the works and 90% of those are planned for Alberta, where the province’s gas pressure is nearly five times the national average, research from the University of York shows.
“We really look at these data centers as digital pipelines and digital filters for us to help get value from our natural gas to global markets, but in a modern, smart way,” Alberta Technology Minister Nate Glubish said in an interview.
The province aims to attract C$100 billion of investment in data centers. Glubish said he has made several trips to Silicon Valley since 2024 to court power-hungry giants from Alberta’s natural gas.
20 existing small to mid-sized data centers in Alberta already run off the provincial power grid, which is 60% powered by natural gas. The provincial government is giving new proponents the option to build their own energy sources to avoid restrictions on energy capacity.
