At the end of the second week of the war in Iran, the International Energy Agency (IEA) and 31 oil-producing nations agreed to release more than 400M barrels of oil from strategic reserves-the largest release ever, nearly twice as large as the 2022 release after Russia invaded Ukraine.
The war has led to the effective closure of the Strait of Hormuz, a critical chokepoint through which approximately 20 per cent of the world’s oil supply passes. Oil prices surged 60 per cent following the outbreak of fighting, with Brent crude briefly breaching $115 US per barrel.
IEA Executive Director Fatih Birol termed the market challenges “unprecedented in scale,” requiring an “unprecedented” response.
That release barely made a dent in high energy prices and has since been largely forgotten as the geopolitical mess in the Middle East plays out.
Canada doesn’t have a strategic oil reserve, and our status as a net exporter exempts us from this IEA requirement. Federal energy minister Tim Hodgson told the Globe and Mail that Canada has “a tremendous ability” to tap the oil sands, which he called “the best strategic reserve in the world” to help get barrels to market.
Oil Sands production hit a record high in 2025, and industry analysts expect that to grow by 500,000 barrels a day by 2030. However, a recent announcement by CNRL to pause expansion of its northern Alberta Jackpine project will take 150,000 of those barrels off the table. None of these new barrels will be extracted and refined in time to meet global needs during the current war.
As long as Minister Hodgson is dreaming in technicolour, I will as well.
Canada’s Low-Carbon Strategic Renewable Energy Reserve
Canada has a strategic energy reserve with everything but the political will needed to expand it. The reserve in question is our bountiful supply of wind, solar and geothermal power, the technology to store it in distributed battery systems, and the ability to transmit it through provincial and cross-border interties.
We don’t have this capacity yet. If Premiers like Danielle Smith and energy czars like Tim Hodgson continue to stand in the way, we may not for a long time. But so long as we’re dreaming about an endless future with Big Oil holding the world hostage during periods of global strife, there is value in articulating an alternative to endless war, climate disaster and energy poverty.
A renewable energy strategic reserve has many advantages:
- It’s produced domestically from continuously regenerating resources
- It’s immune to global commodity price shocks. (Gas prices in Canada averaged $1.71/litre on the day of publication).
- It aligns with Canada’s commitment to reduce GHG emissions by 40-45 per cent below 2005 levels by 2030
- It’s an opportunity to build storage facilities that aid normal grid operations, and serve as emergency reserves, all while creating permanent domestic jobs
Storage isn’t simple, but it is effective
As demand for renewable energy skyrockets, the cost of Battery Energy Storage Systems is plunging, costing 25 per cent less year-over-year in 2025 than in 2024. We need large-scale, interconnected systems that provide a backstop against periods of low generation. Combining renewable energy sources will alleviate the dreaded “windless, cloudy day” concern many opponents cite.
Unlike oil, renewable energy isn’t getting held up in the Strait of Hormuz during war. While extensive storage is needed for cost-effectiveness, we won’t need 90 days of reserve oil as the IEA recommends. We can draw on multiple electricity sources-our existing hydro, wind, solar and geothermal—to abate short-term shortages.
How long, how much, how far?
60 per cent of Canada’s electricity demand is met by hydroelectricity. These are generally low-carbon operations providing reliable on-demand and baseload energy through hydro facilities, but come with a host of other environmental challenges. To replace remaining electricity from natural gas and coal, Canada must accelerate renewable energy development seven or eight times the current planned pace.
Building out renewable energy will take time, require significant private investment and public support, all backed by government initiatives. This is an opportunity for Canada to reduce the impacts of climate change (financial costs included) and create a system that spurs clean economic growth.
The real strategic reserve
To insulate Canada from price fluctuations and commodity market volatility, a shift over the next twenty-five years to renewable energy will mean having a built-in strategic reserve. War, climate disasters, Big Oil’s corporate greed, and the accelerated energy transition won’t rock our economy as they do today. The sun will continue to shine, the wind will blow, the ground will remain hot, and Canada will rest easy knowing our real strategic reserve can’t be undermined.
