Editorials

Editorial

Authors:  and | March 2026 – Volume 14, Issue 1, 2026

ROLLERCOASTER ABROAD

The geopolitical rollercoaster that characterized 2025 has continued unabated since we wrote our last editorial in September for Issue 4 of Volume 13. At this juncture, it is difficult to suggest that the remainder of 2026 will be anything but more of the same. There were, however, three notable developments that are likely to have consequential implications for Canada internationally and at home, particularly as it relates to energy and trade.

2025 U.S. National Security Strategy

Released on December 5, 2025, the 2025 U.S. National Security Strategy (“NSS”) sets out the U.S.’ foreign policy principles, priorities, and a focus on global regions. It is a significant departure from traditional U.S. NSS norms and realigns the position of the U.S. in the world order[1] — declaring that the U.S. “must be preeminent in the Western Hemisphere as a condition of its security and prosperity”[2]. As discussed by the Asia Pacific Foundation of Canada[3], “allies — including Canada — are expected to align with Washington’s economic statecraft”[4] — alignment “of hemispheric security and co-ordinated economic statecraft take precedence over national discretion, particularly as it relates to China”[5]. Defence and security critiques of the NSS suggest that the planned abandonment of core investments by the U.S. in “security, open trade, democracy, and alliances…the underpinnings of global peace will not make America First; it will make America weak”[6].

Venezuela

Escalating action on Venezuela by the U.S. arguably began in January, 2025, with the signing of an executive order that “paved the way for criminal organizations and drug cartels to be named “foreign terrorist organizations”.”[7] Increasingly assertive actions continued throughout 2025. After initiating strikes on small vessels in the Caribbean Sea in September, 2025 (a significant portion of which were associated with Venezuela) in an effort to fight maritime drug trafficking in Latin America[8] and ramping up the pressure on the Maduro regime by seizing oil tankers that operate without U.S. permission and transport oil from Venezuela, Russia or Iran in contravention of the sanctions imposed by the U.S. and other countries[9], the Trump Administration approved a military strike on Venezuela and on January 3, 2026 captured its president Nicolás Maduro and his wife, Chilia Flores. Despite inditing Maduro and Flores for narco-terrorism[10], President Trump confirmed shortly thereafter that “having a Venezuela that’s an oil producer is good for the United States because it keeps the price of oil down”[11] and that “Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America”[12]. A meeting with U.S. and international major oil producers on January 9 confirmed President Trump’s overarching interest in Venezuelan oil — both investments to revitalize oil production[13] and monies realized from the sale of confiscated Venezuelan oil[14].

Greenland

President Trump’s fixation on Greenland resumed shortly after his re-election, in December 2024 when he stated in a Truth Social post that “the ownership and control of Greenland is an absolute necessity”[15]. Actions and escalations continued through 2025 and into these early weeks of 2026[16]. With the release of the 2025 U.S. National Security Strategy and U.S. actions in Venezuela, it is clear that Greenland, Denmark, and the European Union broadly are taking these unwanted overtures seriously[17], particularly in the face of the imposition of new tariffs on eight European countries — Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland — for opposing American control of Greenland, beginning at 10 per cent on February 1 and increasing to 25 per cent in June. The U.S. risks triggering the collapse of North Atlantic Treaty Organization (“NATO”)[18] and the use of the EU’s anti-coercion instrument, the so-called “trade bazooka”, which could impose a broad array of actions, including blocking U.S. access to EU markets[19].

The Trump administration’s Greenland agenda is not without risk in the U.S., as seven in 10 U.S. adults disapprove of Trump using federal funds to try to purchase Greenland[20] and 86 per cent disapprove of using force to obtain the territory[21].

It remains unclear however, whether escalating U.S. interest is purely related to security concerns, or whether it is punishment for President Trump’s failure to win the Nobel Peace Prize.[22] One can only hope that as the political realities of the upcoming mid-term U.S. elections become more pronounced, rhetoric from the Trump Administration relating to Greenland will ebb.

Canada and the EU Respond

Perhaps in recognition that “hope” is not a strategy, Canada and its European allies are continuing to pursue global partnerships and trading relationships, demonstrating their continued agency in these matters and negotiating around the edicts promulgated in the 2025 U.S. National Security Strategy. On January 17, 2026 the European Union and Mercosur[23] ended 25-years of negotiation by signing a Partnership Agreement (“EMPA”) and Interim Trade Agreement creating one of the world’s biggest free-trade zones[24] and Prime Minister Carney continues to advance new strategic partnerships with China[25], Qatar[26], and Saudi Arabia[27] to position Canada in the “world as it is, not as we wish it”[28].

At the time of writing this editorial, Prime Minister Carney is in Davos, delivering what is being reported as a “provocative speech”[29]; “amounting to a rallying cry for smaller counties to work together to wrestle economic control of their future”[30]. The Prime Minister’s remarks[31] clearly set out the imperative of the moment and Canada’s path for the future. An adverse reaction by the Trump Administration at some point in the coming days or weeks does, however, remains a real risk.

BUMPER CARS AT HOME

The question is, of course, whether the Canadian federation is institutionally flexible enough and the players therein are sufficiently motivated to make our experiment in co-operative federalism work for the benefit of all Canadians, sooner rather than later.

There have been positive developments that point to a spirit of greater willingness to cooperate. On November 27, the governments of Canada and Alberta signed a Memorandum of Understanding (“MOU”)[32] to work cooperatively, and within their own jurisdictions, striking a new partnership to lower emissions, unlock natural resources, and build a stronger, more sustainable, and more competitive economy[33]. In addition, Ontario and Canada have signed a new cooperation “agreement that will significantly streamline environmental approvals for major infrastructure and resource projects through a ‘one project, one decision’ model”[34]. Ontario has now joined the ranks of British Columbia, Manitoba, Prince Edward Island, and New Brunswick, all of whom have signed similar agreements. Cooperation agreements with Quebec, Newfoundland and Labrador, Nova Scotia, Saskatchewan, Alberta, and Yukon remain in discussion[35].

The effort to build interprovincial energy infrastructure, particularly an oil pipeline to northwestern B.C. continues to face significant challenges, not withstanding the positive narrative surrounding the Canada-Alberta MOU, including:

  • Outcome of the settlement negotiations between Trans Mountain Pipeline ULC and its shippers[36]. At issue is the inclusion of more than $9 billion in cost overruns in final interim tolls.[37]
  • Lack of a private sector proponent and the likely need for a provincial or federal financial commitment to backstop cost overruns.[38]
  • Outcome of a potential Alberta vote on separation in 2026[39] and the outcome of 24 citizen recall petitions faced by UCP Members of the Legislative Assembly, more than half of the 47-member caucus[40].
  • Need to build a political consensus on public support for building a new pipeline to the northern coast of British Columbia[41].
  • Development of a pathway to address the concerns of coastal First Nations in a manner consistent with the principles of truth and reconciliation.

Domestic challenges aside, there is new pressure to speed up major project approvals following the Trump Administration’s actions in Venezuela, as argued by Alberta Premier Danielle Smith in her letter to the Prime Minister posted to social media on January 8, 2026[42]. Premier Smith reiterated the need for a new one million barrel per day oil pipeline to Canada’s pacific coast and the expansion of the Trans Mountain pipeline, and insisted that the approval process be shortened ever further to six months from application. Even with the tepid reaction[43] from the major oil producers to President Trump’s request for at least US$100 billion in spending for Venezuela and aggressive efforts to bolster production[44], oil and gas analysts at BMO Capital Markets suggest that any material increase in production from Venezuela that makes its way to the United States would likely push Canadian oil sands production out of the Gulf Coast market (Petroleum Administration Defense District 3), requiring additional pipeline capacity to access Asian markets[45].

THIS EDITION

It is tradition that the first issue of ERQ of each year include a review of the developments in administrative law relevant to the energy bar and regulators. This year is no exception, and we are pleased to once again present as a Regular Feature the “2025 Developments in Administrative Law Relevant to Energy Law and Regulation” by Paul Daly, University Research Chair in Administrative Law & Governance, University of Ottawa. This year’s edition covers three key areas: (1) extension of the Vavilov framework to cover areas of administrative decision-making that were not yet subject to the “culture of justification”; (2) recent cases on the correctness review; and (3) cases relating to aspects of procedural fairness, including bias and adjudicative independence.

The remainder of the articles from our contributing authors in this issue of ERQ have a decidedly electricity grid focus.

The first is an article by David Morton, former Chair and CEO of the British Columbia Utilities Commission and Advisory Board Member of the Canadian Energy Reliability Council, entitled: “Interprovincial Cooperation and Energy Reliability”. Morton explores the governance and institutional structures needed in Canada to enable the movement of electric power east – west by looking at the Alberta experience, analyzing the Canadian federal jurisdiction over international and interprovincial power lines, and reflecting on the evolution of the U.S. Federal Energy Regulatory Commission’s jurisdiction over interstate transmission, wholesale energy markets, and reliability. Morton concludes that the challenge of interprovincial cooperation is less about electrons than about institutions and trust and that Canada’s energy future depends on the development of a rules-based partnership between provinces.

David Brown, Professor of Economics at the University of Alberta and Canada Research Chair in Energy Economics and Policy, outlines several key elements of ongoing electricity market reforms in Alberta, in his article: “Simplified Versus Integrated Market Designs: A Review of Alberta’s Evolving Electricity Market”. Brown begins by describing Alberta’s existing market design, how it developed growing pains over time, and explores approaches used in other jurisdictions to mitigate these challenges. Brown uses the experience and empirical evidence from jurisdictions worldwide to highlight the trade-offs being made in Alberta’s final proposed Restructured Energy Market (REM), particularly as it relates to the short-run operation of the electricity market. How the proposed REM interacts with long-run resource adequacy objectives is also discussed, before Brown concludes with the parting thought that time will tell whether the design choices in the proposed REM will lead to additional required market reforms in the future.

Brady Yauch, Director, Markets and Regulatory, and Brendan Callery, Senior Manager Eastern Canada, both of Power Advisory LLC, discuss the arrival of the electricity Market Renewal Program in Ontario on May 1, 2025 in their article: “Breaking Up is Hard to Do: Ontario’s Transition to a New Market Design”. Yauch and Callery first discuss five of the well-understood and well-known deficiencies of the legacy market in Ontario that dated back to market opening in 2002, before discussing four key overarching design components that are central to the overhaul of the renewed market. Yauch and Callery highlight the expected financial benefits associated with improving the economic efficiency of the IESO-administered market and note that the market design of the Market Renewal Program broadly aligns with the design of markets across North America, particularly in New York, New England and the mid-western to eastern United States. The authors provide a detailed assessment of energy market performance for the more than six months the renewed market has been in operation, before closing with the thought that the impact of Ontario’s changing electricity supply/demand balance may lead to amplified price impacts that are independent of the renewed market design.

The article: “Regulatory Questions for Grid Modernization” by Kenneth Costello, former regulator with the Illinois Commerce Commission and researcher at the U.S. National Regulatory Institute, continues the focus on electricity grids, albeit at the distribution level. Costello postulates that robust support for grid modernization from diverse interests should not presume its social desirability and net benefits to utility customers. Utility regulators should perform their due diligence to determine whether grid modernization investments are good for customers and society in general. Costello sets out nine critical questions that regulators should ask when considering grid modernization investments. The article then concludes with a brief overview of three key challenges regulators must overcome when considering grid modernization: information asymmetry, risk allocation, and the consequences for cost allocation and rate design.

The final article in the electricity grid theme, “Beyond Queue Seniority: Customer-Centric Solutions for Interconnection Scarcity” by Travis Kavulla, Head of Policy, Base Power Company, and Kevin Thompson, Regulatory Affairs Manager at NRG Energy, addresses the issue of congestion on the grid given that transmission capacity is become scarce. Whether it is the growth in renewables or the arrival of data centres, the era of abundant transmission capacity is over. The old system of “first-in-time, first-in-right” doesn’t seem to be working anymore. The article examines how American and Canadian jurisdictions have been approaching the question and then proposes a market-based approach to solving the allocation of transmission capacity.

We conclude this issue with a book review of Bruce McIvor’s latest book “Indigenous Rights in One Minute: What you need to know to talk reconciliation”. University of Alberta Faculty of Law Professor Tamara (Baldhead) Pearl reviews the book and provides an excellent context for the reader to situate McIvor’s book in modern day aboriginal law. The book review not only provides a useful overview of the book, it also provides Professor Pearl’s professional and personal insights on the state of law affecting Indigenous rights in Canada.

 

 

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