Carney’s Push to Build Canadian Data Centers is Running Into Backlash

The data center backlash that has gripped US politics is spreading north, complicating Prime Minister Mark Carney’s efforts to attract investment in the rapidly expanding artificial intelligence infrastructure.

In many respects, Canada is an alluring alternative for Silicon Valley firms: it has a cooler climate, abundant energy resources and plenty of open land. But a growing number of Canadian communities are looking to slam the brakes on server farm projects.

Two municipalities — Oakville, Ontario and Rocky View County, Alberta — have implemented one-year moratoriums on data center developments. In the sparsely-populated province of Manitoba, Premier Wab Kinew vetoed a project that would have been built outside of Winnipeg, saying the drawbacks outweighed the benefits.

A huge 7.5 gigawatt proposal by Canadian entrepreneur and Shark Tank personality Kevin O’Leary has also sparked pushback, while protestors have marched against data centers proposed in Vancouver which have been championed by all levels of government.

The Canadian hesitancy mirrors the skepticism toward data centers that has led to hundreds of local bans in the US, as well as a statewide moratorium in New York. Supersized data centers are loud and energy-hungry, and many people are still not convinced about the benefits of AI the facilities are meant to support.

Carney and other government officials have also presented data centers as an opportunity to bolster the country’s digital sovereignty. But tech policy critics warn that efforts to store Canadians’ data domestically aren’t always a protection against US influence, while the economic benefits of these projects may be more modest than some claim.

Although the number of local bans in Canada is limited for now, public polling suggests the hesitancy is more widespread. An Angus Reid Institute poll found 68% of respondents would oppose a large AI data center near their home, while a survey by Leger found 4 in 5 respondents said they’re concerned about potential increases to electricity bills and environmental impacts.

Two of the three petitions with the most signatures gathered to submit to Canada’s House of Commons are calling for a stop to data centers. The left-wing New Democratic Party is calling for a nationwide pause.

“I don’t think their concerns are groundless, but I don’t think we can put the brakes on progress,” said Jim Balsillie, the former head of BlackBerry Ltd. who has become an outspoken advocate for Canadian technological sovereignty.

Canadian Advantage

Canada’s AI data center expansion is still in its early stages, but it’s poised to ramp up fast. Recent research from Toronto’s York University shows there are only five operational hyperscale data centers, defined as 50 megawatts or above, but 159 more are announced or under construction. That push is also showing up in trade data: Canadian imports of US goods hit a record high in June driven by a surge in the computer parts used for data centers.

The federal government argued in its AI strategy that Canada is “uniquely positioned to lead in building this infrastructure responsibly and sustainably.”

“As demand for AI compute grows, Canada’s approach will be to link new data center development with clean energy expansion, robust environmental standards, and tangible benefits for local communities,” the document said.

Balsillie said the challenge with data centers is that, unlike other forms of capital investment, they don’t necessarily spur the same kind of economic benefits to people, while the negative spillovers can be material for communities.

“It’s a fine line between being strip-mined for low value-add, metaphorically, and capturing high value-added sovereign participation in this era of AI,” Balsillie said.

Carney’s government unveiled a framework on Thursday to help guide communities’ decisions on data center development. It said such projects must create lasting local benefits, limit environmental impacts and ensure electricity costs are not pushed onto residents. Tech giants including Amazon.com Inc., Meta Platforms Inc. and Anthropic PBC signed on to the principles.

BCE Inc. CEO Mirko Bibic applauded the framework, which he said acknowledged the critical nature of AI infrastructure and the need for more domestic compute capacity.

“On the other hand, there’s an acknowledgement that while we do that, we need to engender trust amongst all stakeholders in the country — citizens, communities, investors,” Bibic said in an interview Friday on BNN Bloomberg.

Provincial governments are also trying to address concerns surrounding energy costs. British Columbia is restricting electric grid use for data centers and forcing operators to compete for access.

Energy-rich Alberta’s government has been particularly bullish about data centers and attracted the bulk of Canada’s proposals. Nonetheless, it’s stipulated operators must supply their own power. The province will be home to a C$13-billion ($9.4 billion) Meta data center, set to be the largest in the country.

Even so, an analysis by the Pembina Institute suggested Albertans could see their electricity bills rise by as much as C$460 per year, because the centers would be allowed to connect to the grid before their own generation comes online. The Brookings Institute found data centers create a modest amount of jobs and workers see no wage gain, while home prices tend to rise by 2-5% in communities that harbor the infrastructure.

Read More: Data Center Backlash Is Seen as Slowing, Reshaping New Projects

“Canada has always been seduced by this promise of jobs, and we’ve given away a lot historically in the past in order to get jobs here. And data centers don’t really have that promise,” said Vass Bednar, managing director of the Canadian Shield Institute, a public policy think tank.

The Trump Factor

Federal and provincial officials have also pitched data centers as a necessity to bolster Canada’s sovereignty at a time when tensions are high with the US.

“Ontario has a choice: we can build the economy of the future and ensure Canadians’ data stays in Canada and out of President Trump’s hands, or we can get left behind and risk Canadians’ data being sent down to the US,” Premier Doug Ford said in August.

But Balsillie said holding Canadians’ data domestically doesn’t necessarily protect it from the Trump administration. Under the Cloud Act, US law enforcement can compel American tech companies to hand over electronic data, regardless of where it is stored.

“It’s not sovereign if you haven’t got sovereign governance,” he said.

The US Mexico Canada Agreement, signed in 2020, also blocks some restrictions on cross-border information transfers.

That complication applies to the supply chain, too. Balsillie argued that CoreWeave Inc., a New Jersey-based company, is in line to receive a portion of federal funding for “sovereign” computing infrastructure, awarded to Cohere Inc., a Canadian AI company. The government and the two companies didn’t immediately respond to requests for comment.

Patrick Searle, the head of the Council of Canadian Innovators, which represents tech CEOs in the country, said in a statement that there are “active conversations ongoing between government and industry exploring how to build digital infrastructure in a way that responds to public concerns.”

“At the same time, this is increasingly an issue of economic sovereignty,” he added. “As compute becomes increasingly important to our economy, national security and competitiveness, Canada needs sufficient infrastructure and technological capacity here at home.”