The state of New York has imposed a one-year moratorium on large hyperscale data centres, the first such ban in the United States, as the federal NDP under new leader Avi Lewis pushes for a similar national freeze in Canada. Proponents frame moratoriums as a check on energy and water demands—but critics warn that prohibition would simply export billions in investment to willing jurisdictions and squander what may be Canada’s biggest economic opportunity in a generation.
The pause south of the border landed in the same week Alberta announced a major data centre development, described as one of the largest private-sector investments in Canadian history. It’s created a split-screen that has sharpened the question of whether Canada will build or block the facilities. With members of the Democratic Party reportedly preparing to target data centres ahead of November’s midterm elections, resistance to construction in the U.S. shows little sign of easing.
In Canada, that resistance is already organizing. Lewis won the federal NDP leadership on a platform calling for a moratorium on approvals for new AI data centres pending democratic consultations with affected communities. Since becoming leader, he has also urged Ottawa to amend the Impact Assessment Act so future projects must meet more rigorous environmental and social standards. In Mississauga, Ont., councillors are campaigning against a proposed 220,000-square-foot facility through a petition, a 300-person town hall and a pending council vote, under the slogan of no new data centres.
Sean Speer, The Hub’s editor-at-large, argued the American backlash is precisely why Canada should move in the opposite direction. Local opposition helped delay or cancelled roughly US$156 billion in U.S. projects in 2025 alone, he noted, and the talking points about energy, water and corporate giants have crossed the border intact, right down to the demand for moratoriums. Canada, he observed, holds the advantages the industry needs: a huge and sparsely populated landmass, abundant affordable energy and cold temperatures.
“Rather than trying to replicate Silicon Valley, Canada should aim to power it. Far from a consolation prize, this may be Canada’s biggest economic opportunity in a generation,” Speer wrote.
Concerns about power and water consumption are not frivolous, Speer acknowledged. Other critics point to the costly generation and transmission infrastructure required to serve these facilities, the risk that some of those costs will be paid by taxpayers, higher emissions where new demand is met by fossil fuels, persistent noise from cooling equipment, air pollution from backup generators, land-use conflicts, and a relatively small number of permanent jobs compared with the scale of the investment and any public subsidies involved. But Speer argued these are questions for siting, environmental review, grid planning, pricing and cost-recovery rules rather than prohibition. A moratorium, he said, does not manage the trade-offs; it exports the investment to jurisdictions willing to build.
First Nations could be significant players as communities obtain new land through court decisions and settlement negotiations, he added, with the Alberta experience showing companies will invest heavily in adjacent infrastructure.
That ambition contrasts with official Ottawa, Speer argued, where the Carney government is spending billions trying to engineer a sovereign AI stack.
“Being the data centre capital of the world is a far better national ambition than subsidizing a homegrown AI ecosystem at any and all cost,” he wrote, adding that sovereignty comes from being needed rather than from owning a national champion.
Skepticism about Ottawa picking winners extends beyond data centres. Charles Lammam, writing in The Hub, has criticized the federal AI strategy, which names five priority sectors and includes a $500 million fund through which the government will take equity stakes in firms it considers champions.
“Ottawa picks which industries will drive growth and is prepared to back that judgment with debt-financed public money,” Lammam wrote, pointing to International Monetary Fund research showing productivity effects from subsidies fade quickly and can reverse within a few years. Security spending may have its own justification, he argued: “But the Defence Industrial Strategy, whatever its security merits, is not a productivity strategy.”
The compute gap is significant. Canada trails every other G7 nation in AI compute infrastructure, with roughly one-tenth the per capita capacity of the U.S., according to data cited by John Stackhouse, senior vice-president, office of the CEO, at Royal Bank of Canada.
New York has enacted a one-year moratorium on new hyperscale data centres, marking a significant regulatory move in the U.S. Meanwhile, the federal NDP in Canada, led by Avi Lewis, is advocating for a similar national freeze. Critics argue that such moratoriums could stifle investment and economic opportunities, especially as Alberta announces a major data centre development. Proponents of the moratorium cite concerns over energy and water usage, while some experts suggest Canada should leverage its advantages to become a hub for data centres rather than impose restrictions.
What are the potential economic impacts of a moratorium on data centres in Canada?
How do energy and water concerns factor into the debate over data centre construction?
What advantages does Canada have in becoming a hub for data centres?
Comments (1)
I suspect what the NDP is proposing here is unconstitutional. Essentially all the criteria needed to judge the validity of a large in-province project like this are under provincial jurisdiction.
Attempts to use federal environmental or criminal law to stifle development would likely find themselves on the losing end of court challenges.
Even though the Federal-Alberta energy MOU returns the single review process to provincial hands, it is actually still under court review, and it is likely that the provinces win control outright anyway. What Alberta got wasn’t a special power; it was a shortcut to the expected decision. This informs us how a federal moratorium is likely to be viewed by the courts.
While the NDP’s idea is on its face unworkable, they’d probably say that’s the point. They don’t actually care if they’re allowed to or not; a 1-year moratorium probably wouldn’t have to make it to the Supreme Court, and the damage will have been done by the legal uncertainty to make further development unlikely.
They don’t actually want a moratorium; they want to use lawfare to make Canada look so unfriendly to development that no one would dream of investing here no matter what the law says at present. It’s the BC NDP’s anti-TMX tactics all over again, which are likely not lost on Lewis and the NDP brain trust.
In addition to the immediate impacts within the AI industry, Albertans in particular should take note of just how fragile a politically based compromise is. Carney has left us vulnerable by squandering country-wide recognition that Canada had been poorly run economically. He did so by stroking his centralizing ego and multiplying agencies and deepening political involvement rather than working for durable institutional reform. He may have every intention of honouring the MOU, but the sizable NDP-Liberal swing demographic that actually brought him to power likely does not and will pressure for non-adherence from this and future governments.
Avi Lewis may be the one proposing this, but the danger to our prosperity is likely much closer than the leader of Canada’s perennial basket case third party.