Wood Mackenzie sees new Carney government driving energy diversification in Canada

Newly elected Canadian Prime Minister Mark Carney has made energy a key initiative of the new government, according to global commodities research firm Wood Mackenzie.

Wood Mackenzie expects both conventional and renewable power to remain a priority for the new administration and that it will address interconnection challenges.

The firm’s analysis suggests there could be increased energy trading flows with the US during this government’s tenure.

Zero carbon power

“Canada’s energy sector is already world-class and increasingly global, with new infrastructure access for oil via TMX [the Trans Mountain Expansion pipeline project], NGLs [natural gas liquids] and gas via the imminent start-up of LNG Canada Phase 1,” Wood Mackenzie vice president of research Mark Oberstoetter said.

“This market diversification is well timed with supply growth occurring in Canada’s legacy trading partner – the US – and US President Donald Trump’s tariff escalations, but decoupling energy flows from the US is difficult.”

Wood Mackenzie also expects the government to enhance its energy independence by expand Canada’s nuclear energy sector, with more than $1,100 million in funding for nuclear small modular reactors (SMRs) announced so far this year.

While Canada’s LNG era is dawning with first shipments from LNG Canada Phase 1 not far off, further growth needs to be stimulated.

Heavy oil flow

Canadian heavy oil pipeline flows will increase to the US as Enbridge and the Alberta government progress expansions to the Mainline pipeline, while more north-east US gas will flow economically into eastern Canada once TC Energy’s long-term fixed price pipeline tolling contract expires in 2027.

However, Wood Mackenzie claims pipe infrastructure challenges persist.

Significant attention was given in the lead-up to the election to promoting a west–east energy corridor but the details and inclusion of oil in that corridor are unclear and unlikely under coalition rule.

Wood Mackenzie said it does not currently expect any “zombie” projects like Energy East or Northern Gateway to be revived, especially with no midstream proponent.