Environmental Impact of AI Infrastructure in Canada
AI is driving unprecedented data centre expansion in Canada. Hydro-Québec imposed a moratorium on new large connections after requests far exceeded capacity. Google and Microsoft reported 20-34% water consumption increases from AI. No Canadian jurisdiction has an integrated policy for AI infrastructure's environmental impact, creating tension with Canada's 40-45% emissions reduction target for 2030.
The scale of demand is enormous. RBC estimates that if all data centre projects currently under regulatory review proceed, they could account for up to 14% of Canada's total power needs by 2030. The IEA projects global data centre electricity consumption could reach approximately 945 TWh by 2030, nearly doubling from current levels, with AI workloads as the primary driver.
Québec is at the epicentre. Hydro-Québec anticipates data centres will boost demand for hydroelectricity by 14% from 2023 to 2032, with data centre electricity use expected to increase sevenfold by 2035 to over 1,000 MW. In February 2026, Hydro-Québec proposed to the Régie de l'énergie a new rate for large data centres (>5 MW) of approximately 13 cents/kWh — roughly double what current large-power customers pay.
Ontario faces equally intense pressure. Canada's National Observer mapped at least 15 proposed hyperscale data centre projects in Ontario with a combined capacity of 2,202 MW — equivalent to the annual electricity draw of approximately two million homes. Ontario says there is interest in developing as much as 6,500 MW of new data centres — about 30% of Ontario's current peak electricity load. The province introduced regulations in 2025 requiring Ministerial approval before large data centres connect to the grid.
Alberta has seen a surge of data centre applications totalling more than 6 GW from just 12 projects, far exceeding available capacity. In March 2026, the Alberta Utilities Commission rejected Synapse Real Estate Corp.'s application for a 1.4 GW natural gas-fired power plant to serve what would have been Canada's largest data centre complex in Olds, Alberta, citing "significant deficiencies" including 600 undisclosed backup diesel generators. This is the largest regulatory rejection of an AI infrastructure project in Canada to date.
Water consumption is a growing concern. Microsoft's Etobicoke (Toronto) data centre was approved to use up to 39.75 litres of water per second for cooling — equivalent to approximately 1.2 billion litres per year, or 500 Olympic-sized swimming pools. Google reported a 20% increase in water consumption in 2023 attributed to AI workloads; Microsoft reported a 34% increase. The UN special rapporteur on human rights and drinking water called for a global moratorium on new data centre construction, saying "we have collectively embarked on a suicide mission."
Canada's climate targets — 40-45% below 2005 levels by 2030, net-zero by 2050 — depend on electrification of transportation, heating, and industry. Every megawatt consumed by data centres is a megawatt unavailable for these transitions. The tension is already materializing: the November 2025 Canada-Alberta MOU suspended clean energy regulations, allowing gas-powered AI data centres in Alberta. Capital Power, an Alberta gas company, lobbied the Carney government 37 times in the lead-up. Twelve days after the MOU was signed, Capital Power's CEO told Bloomberg it was now possible to build new gas-fired power plants to support AI data centres.
Harms
RBC estimates that all data centre projects currently under regulatory review could account for up to 14% of Canada's total power needs by 2030. Clean electricity consumed by AI data centres is diverted from electrification of transport, heating, and industry needed to meet Canada's climate targets.
Data centres consume large volumes of water for cooling, competing with agricultural and residential use. Google reported a 17% increase in water consumption in 2024. In water-stressed Canadian regions, this creates direct competition with local water needs.
Evidence
9 reports
- Energy and AI: Energy Demand from AI Primary source
Data centre electricity consumption projected to reach ~945 TWh by 2030; AI accelerated servers growing 30%/year
- AI data centres use vast amounts of water Primary source
Microsoft Etobicoke data centre approved for 39.75 L/s water use (~1.2B litres/year)
- Hydro-Québec proposing new rate for large data centres Primary source
New rate of ~13¢/kWh for data centres >5 MW — roughly double current rate; sevenfold increase in DC demand expected by 2035
- Carney allowed gas-powered AI data centres after lobbying from Alberta energy company Primary source
Capital Power lobbied 37 times; Canada-Alberta MOU suspended clean energy regs for gas-powered data centres
-
AUC rejected Synapse Real Estate Corp.'s 1.4 GW gas plant application for Olds data centre, citing significant deficiencies
- One data centre or one million homes? Ontario mapped Primary source
15 proposed hyperscale data centres in Ontario totalling 2,202 MW; interest in 6,500 MW (30% of peak load)
-
Canada's climate targets: 40-45% below 2005 by 2030, net-zero by 2050
-
UN rapporteur called for global moratorium on new data centres; average 100 MW centre uses 2M litres/day
-
Alberta AESO received 6 GW+ in data centre applications from 12 projects
Record details
Policy Recommendationsassessed
Require AI companies to disclose energy and water consumption of training runs and data centre operations in Canada
IEA / Environmental reporting standardsDevelop integrated environmental assessment framework for data centre developments that considers systemic energy and climate effects
Provincial energy regulatorsCoordinate data centre growth with provincial energy planning and federal climate targets
Canada's 2030 Emissions Reduction PlanEditorial Assessment assessed
AI infrastructure is the only hazard category in CAIM's schema (environmental_harm) with zero coverage. Data centre expansion is already creating real governance conflicts in Canada: Hydro-Québec has imposed a moratorium, communities are resisting, and Ontario is approving new gas generation partly to serve data centre demand — in direct tension with federal climate targets. The environmental footprint of AI is a growing public concern and an active policy question at municipal, provincial, and federal levels.
Entities Involved
Taxonomyassessed
Changelog
| Version | Date | Change |
|---|---|---|
| v1 | Mar 10, 2026 | Initial publication |