Report on North American Energy Infrastructure and Sustainable Development

A Comparative Analysis of the United States and Canada

The energy infrastructure sectors in the United States and Canada present a study in contrasts, with divergent paths impacting progress toward key Sustainable Development Goals (SDGs). The U.S. has established a significant lead in attracting investment and developing infrastructure, driven by strategic policy. In contrast, Canada’s advancement is constrained by regulatory and market-related challenges, affecting its capacity to fully leverage its resources for sustainable development.

United States: Policy-Driven Momentum Towards Sustainable Energy Goals

The U.S. has implemented a robust policy framework that actively promotes investment in energy infrastructure, aligning with several SDGs, particularly SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 13 (Climate Action).

Key Legislative and Regulatory Drivers

• Infrastructure Investment and Jobs Act (IIJA): This legislation allocates $73 billion toward grid modernization, a critical step for building resilient infrastructure (SDG 9) capable of supporting an expanded network of renewable energy sources.
• Inflation Reduction Act (IRA): With $386 billion in climate and energy spending, the IRA directly incentivizes the transition to cleaner energy, supporting the targets of SDG 7 and SDG 13.
• Pipeline and Hazardous Materials Safety Administration (PHMSA) Gas Mega Rule: This regulation enhances the safety and resilience of energy infrastructure (SDG 9) by mandating advanced data management for pipeline integrity, fostering investor confidence.

Impact on Sustainable Development Targets

1. Advancing SDG 7 (Affordable and Clean Energy): Investment in grid modernization prepares the U.S. for increased demand from electric vehicles and data centers, ensuring reliable energy access. The expansion of LNG export capacity also contributes to global energy security, a key component of SDG 7.
2. Fostering SDG 9 (Industry, Innovation, and Infrastructure): In 2023, U.S. companies invested $27.7 billion in transmission and $50.9 billion in distribution. This massive capital injection builds the resilient infrastructure necessary for a modern, sustainable economy.
3. Promoting SDG 8 (Decent Work and Economic Growth): The surge in infrastructure projects creates jobs and stimulates economic growth, while the U.S. positioning in the $75 billion global LNG market enhances its economic standing.

Canada: Regulatory Hurdles Impeding Sustainable Infrastructure Growth

Canada’s progress in energy infrastructure development is hampered by regulatory delays and market vulnerabilities, which limit its ability to attract the capital needed to meet its sustainable development potential.

Primary Challenges

• Regulatory Inertia: The slow pace of adapting standards, such as the Canadian Standards Association’s Z662, and the cancellation of major projects have deterred private investment, slowing progress toward SDG 9.
• Market Dependency: In 2023, 97% of Canadian crude oil and 100% of natural gas exports were sent to the U.S. This overreliance creates economic vulnerability and limits Canada’s role in global energy markets, impacting its independent pursuit of SDG 8 and SDG 17 (Partnerships for the Goals).
• Limited LNG Infrastructure: With only two operational LNG terminals compared to the U.S.’s eight, Canada is not capitalizing on the global shift toward cleaner transition fuels, missing an opportunity to contribute to global SDG 7 targets.

Government Initiatives and Investment Climate

Despite federal incentives like the Canada Growth Fund, the investment climate lags behind the U.S. While M&A activity shows some promise, the scale of investment is insufficient to accelerate the large-scale infrastructure projects required for a comprehensive energy transition in line with SDG 7 and SDG 13.

Strategic Investment Outlook for Advancing the SDGs

For capital allocation in 2025, the U.S. energy sector presents a more direct pathway for investments aligned with sustainable development outcomes.

U.S. Investment Opportunities

1. Grid Modernization: With a planned $121 billion in transmission spending from 2023-2026, this area is fundamental for integrating renewables and supporting sustainable communities (SDG 11).
2. Natural Gas Infrastructure: As a critical bridge fuel, natural gas supports the reliability required for the energy transition, contributing pragmatically to SDG 7 by providing baseload power.
3. LNG Export Expansion: Investment in U.S. LNG facilities supports global energy security (SDG 7) and drives domestic economic growth (SDG 8).
4. Renewable Transmission: Projects like the Southline Transmission Project are essential for connecting solar and wind generation to the grid, directly advancing SDG 7 and SDG 13.

Canadian Investment Outlook

Opportunities in Canada, such as provincial investments in hydro and nuclear power, offer long-term potential for achieving SDG 7. However, these investments require significant patience due to regulatory and developmental timelines.

Conclusion: Aligning Policy with Sustainable Development

The divergence in North American energy infrastructure is a direct result of differing policy commitments to creating an environment conducive to sustainable investment. The United States’ proactive legislative framework has successfully aligned its energy sector’s growth with the objectives of SDGs 7, 8, 9, and 13. To compete for the capital necessary to build a sustainable energy future, Canada must address its regulatory bottlenecks and diversify its market access. For now, investment capital seeking to support and benefit from the energy transition will find a more robust and policy-supported environment in the U.S.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on North American energy infrastructure addresses several Sustainable Development Goals (SDGs) by focusing on energy systems, economic growth, infrastructure development, and policy frameworks. The following SDGs are relevant:

• SDG 7: Affordable and Clean Energy: This is the most central SDG, as the article’s core subject is energy infrastructure, including pipelines, electricity grids, LNG terminals, and the integration of various energy sources like natural gas, renewables, hydro, and nuclear. It discusses the reliability, modernization, and investment in energy systems.
• SDG 8: Decent Work and Economic Growth: The article directly links energy infrastructure investment to economic outcomes. It discusses how strategic capital allocation, policy initiatives, and returns on investment in the U.S. are driving economic momentum, contrasting with Canada’s slower growth due to regulatory hurdles.
• SDG 9: Industry, Innovation, and Infrastructure: This SDG is addressed through the extensive discussion on building and upgrading infrastructure. The article highlights the development of “resilient” and “investor-friendly” energy infrastructure, grid modernization to support new industries (AI, data centers), and the use of advanced technology for pipeline management.
• SDG 11: Sustainable Cities and Communities: The modernization of the energy grid to ensure reliable power for electric vehicles (EVs) and growing urban data centers directly relates to developing sustainable and resilient community infrastructure.
• SDG 13: Climate Action: The article connects to this goal by mentioning major policy initiatives like the U.S. Inflation Reduction Act (IRA), which allocates significant funds for “climate and energy spending,” and Canada’s “clean energy programs” and “environmental scrutiny” of projects.
• SDG 17: Partnerships for the Goals: The article illustrates the importance of public-private partnerships. It shows how U.S. government policies (IIJA, IRA) have successfully mobilized massive private investment in the energy sector. It also discusses international trade dynamics, such as LNG exports and Canada’s trade dependency on the U.S.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, several specific SDG targets can be identified:

1. Target 7.1: Ensure universal access to affordable, reliable and modern energy services.
   • The article discusses the U.S. grid modernization efforts to create a “reliable, scalable power” system capable of supporting high-demand sectors like AI, data centers, and EVs. This directly relates to ensuring modern and reliable energy services.
2. Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • The article mentions the need for renewable transmission projects like the “Southline Transmission Project” to integrate solar and wind power into the grid. It also notes that Canadian provinces are investing in hydro and nuclear projects.
3. Target 7.a: Enhance international cooperation to… promote investment in energy infrastructure and clean energy technology.
   • The article is centered on investment in energy infrastructure, detailing how U.S. policies like the IIJA and IRA have spurred massive capital flow into grid modernization, pipelines, and LNG facilities.
4. Target 8.2: Achieve higher levels of economic productivity through… technological upgrading and innovation.
   • The article points to the use of “advanced data management systems to track pipeline integrity” in the U.S. as a form of technological upgrading. Furthermore, building infrastructure to support innovative sectors like AI is a key theme.
5. Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development.
   • This is a core theme. The article explicitly states that U.S. policy has made its energy infrastructure “more resilient and investor-friendly.” The entire comparison between U.S. momentum and Canadian lags is framed around the quality and reliability of infrastructure development.
6. Target 9.4: Upgrade infrastructure… to make them sustainable, with increased resource-use efficiency and greater adoption of clean… technologies.
   • The article describes the U.S. spending on “grid modernization” and Canada’s “clean energy programs” as direct efforts to upgrade infrastructure. The mention of natural gas as a “critical bridge fuel” also relates to the transition towards more sustainable energy systems.
7. Target 13.2: Integrate climate change measures into national policies, strategies and planning.
   • The article cites the U.S. Inflation Reduction Act (IRA) as a national policy that injects “$386 billion into climate and energy spending,” demonstrating the integration of climate measures into national strategy.
8. Target 17.17: Encourage and promote effective public, public-private… partnerships.
   • The article provides a clear example of this target in action, explaining how U.S. public policies (IIJA and IRA) have created a “tailwind” for private utilities and energy firms, leading to billions in private investment. The M&A activity mentioned also represents private-sector partnerships.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article provides several quantitative and qualitative indicators that can be used to measure progress:

• Financial Investment in Energy Infrastructure (Indicator for Targets 7.a, 9.1):
  • $73 billion allocated by the U.S. Infrastructure Investment and Jobs Act (IIJA) for grid modernization.
  • $386 billion allocated by the U.S. Inflation Reduction Act (IRA) for climate and energy spending.
  • $27.7 billion invested by U.S. companies in transmission in 2023.
  • $50.9 billion invested by U.S. companies in distribution in 2023.
  • $121 billion in planned transmission spending by U.S. utilities from 2023 to 2026.
• Development of Physical Infrastructure (Indicator for Targets 7.b, 9.1):
  • Number of operational LNG terminals: 8 in the U.S. vs. 2 in Canada.
  • Number of proposed LNG terminals: 18 in the U.S.
• Economic Activity and Private Sector Engagement (Indicator for Targets 8.2, 17.17):
  • Number of M&A deals in Canada: 39 deals in 2024, with a projection of 54 for 2025.
  • Value of specific M&A deals, such as the Brookfield/Temasek acquisition of Neoen for $14 billion.
• International Trade and Market Share (Indicator for Targets 7.a, 8.1):
  • Percentage of Canadian exports to the U.S.: 97% of crude oil and 100% of natural gas in 2023.
  • Size of the global LNG market: $75 billion.
• Infrastructure Resilience and Modernization (Qualitative Indicator for Targets 7.1, 9.1):
  • The description of the U.S. grid as being “poised to support the surging demand from AI, data centers, and EVs” serves as a qualitative indicator of its enhanced reliability and capacity.

4. Table of SDGs, Targets, and Indicators

Source: ainvest.com