Another day, another data centre announcement. What do they mean for Canada and its digital sovereignty?

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What do they mean for Canada and its digital sovereignty?When it comes to national security, infrastructure ownership and digital sovereignty, 'the devil is in the data centre details'Just because a data centre operates on Canadian soil, it doesn’t mean the data processed or stored there is controlled by Canadians. Photo by OVHcloud/AFP via Getty ImagesBell Canada’s newly-announced expansion of its AI data centre in Sherwood, Sask. (just outside of Regina), is being called not only the largest digital infrastructure play in the country but possibly the largest domestic infrastructure build, period. The project’s scope has been quadrupled — to 1.2 gigiwatts from 300 megawatts, at a cost of $52 billion versus $1.7 billion — and makes Regina the national headquarters for Bell’s AI initiatives.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe announcement is just the latest in a steady stream of data centre proposals proliferating across Canada, driven by the rise of AI and the insatiable demand for the compute needed to run it. But each one brings more questions from the public about energy and water use, economic benefits and the overall impact on local communities. SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againHere’s a look at the current data centre ecosystem in Canada — where some of the biggest projects are in the works and why policy experts say data sovereignty should be a top priority.How many data centres have been built in Canada so far, and how many more are in the works?While there isn’t an official list or database (and private sector projects can be harder to track), a few independent analyses peg the number around 200 to 300 active projects across Canada.“There is a real challenge in understanding not only how many data centres there are, but what types as well,” said Graham Dobbs, senior research associate in innovation and technology at Signal49 Research.At York University’s Schulich School of Business, assistant professor Lyndsey Rolheiser and postdoctoral researcher Alexander Carlo mapped out Canada’s data centre landscape and identified 194 active facilities, 14 under construction and 199 announced projects as of June.The lion’s share of active data centres are located in Canada’s three largest provinces: Ontario (41 per cent), Quebec (30 per cent) and British Columbia (15 per cent). Alberta is home to just 10 per cent, but the province accounts for more than 92 per cent of planned capacity, according to Rolheiser and Carlo’s report.Certain high-profile projects have made headlines. In July, Meta Platforms Inc. announced plans to build its first data centre in Canada, a $13-billion complex in Sturgeon County, Alta. Telus Corp. is expanding an existing facility in Kamloops, B.C., and is developing two new ones in Vancouver.How many data centres are Canadian vs. American?It depends on how you define a “Canadian.” Some facilities may be wholly domestically owned, but others may have multiple owners, financial backers, and companies that lease out the space to run their equipment. For example, Dobbs said a data centre could be run by a Canadian company that rents the space from a foreign multinational. Data centres can also be acquired and repurposed.The York University study found that the providers who develop, own and operate smaller facilities are predominantly headquartered outside Canada.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.The report notes that information about ownership and participation in data centre projects is sometimes incomplete. Where providers could be identified, the report found that U.S.-headquartered firms account for 50 per cent of small active facilities. Canadian-headquartered providers account for 30 per cent and European firms represent nearly 15 per cent.For announced projects coming down the pipeline, the report found that identified U.S.-headquartered firms account for nearly 32 per cent of smaller facilities and 85 per cent for larger facilities.While Rolheiser and Carlo’s study doesn’t directly measure who controls the data stored or processed within Canadian data centres, they said the location of providers suggests “a substantial share of the infrastructure supporting Canada’s digital economy, particularly among large future projects, is operated by firms headquartered outside the country.”“Ownership of facilities is predominantly foreign and grows more so with facility size, with direct implications for data sovereignty,” the report said.What does that mean for data sovereignty?Experts say the bigger issue beyond infrastructure ownership is data sovereignty. Just because a data centre operates on Canadian soil, it doesn’t mean the data processed or stored there is controlled by Canadians.For example, the U.S. Clarifying Lawful Overseas Use of Data Act (CLOUD) allows American authorities to request electronic data from U.S.-based technology and cloud services firms including Google, Amazon.com Inc., Microsoft Corp. and Apple Inc., regardless of where the data is stored.“Having the physical foundation in your backyard does nothing for us in terms of being able to govern the digital economy in a way that is responsible or reliable,” said Vass Bednar, managing director at the Canadian Shield Institute.In May, the think tank published a policy paper on digital sovereignty that calls for “meaningful governance” of Canada’s digital systems and said efforts should focus on upstream factors such as data, intellectual property and governance frameworks.The timing of conversations around data sovereignty is crucial as trade negotiations continue between Canada and the U.S., said Jake Hirsch-Allen, director of partnerships at the Dais, a public policy think tank at Toronto Metropolitan University.Last June, Canada stopped collecting the Digital Services Tax — a three per cent levy on certain revenue earned in Canada by foreign tech giants — in an effort to advance trade talks with the U.S.“If we go further down this path in ceding more data and tech sovereignty and AI sovereignty in these trade negotiations, I think we’re going to leave ourselves extremely vulnerable to the United States,” Hirsch-Allen said.A couple of jurisdictions have said no to data centres. Is the backlash growing in Canada?Proposed data centre developments have sparked protests in some communities, where residents have raised concerns about energy costs, water consumption, noise, air pollution and whether promised economic benefits and permanent jobs will materialize.In Ontario, Oakville’s city council voted unanimously in August to to impose a one-year moratorium on data centre development, while Mississauga will vote Sept. 16 on a bylaw that could pause new builds for up to two years. Meanwhile, Manitoba recently rejected a proposal to build a massive data centre in a rural community south of Winnipeg. “There’s a big threat to the environment and not much benefit to the economy,” Premier Wab Kinew told reporters.Even in Alberta, which aims to draw $100 billion in data centre investment to the province by 2030, an application to build a natural gas power plant to supply a $10-billion data centre complex in the small town of Olds was rejected by the province’s utilities commission.Bednar said many people have questions and concerns about how data centre infrastructure is built in Canada that the government hasn’t answered.“When I look at the resistance to data centres and the anger associated with it, I do think it comes from the fact that we’re still not satisfying Canadians in terms of answering, who are these for? What are they for? Why are they necessary? How are they going to make us stronger?”Data centre development decisions primarily rest in the hands of provinces and municipalities, with each taking its own approach to regulations and zoning.“We have a really diverse federation in Canada,” said Hirsch-Allen. “As such, I don’t think it’s going to be possible for the feds to slow down the very significant data centre growth in places like Alberta.”If backlash grows, would that put Canada behind the curve in terms of compute and data storage?Not necessarily. While experts agree that Canada needs to build up its compute infrastructure to power industries, researchers and entrepreneurs, data centres don’t need to be in every community to make that happen.On Sept. 3, the federal government released Canada’s Responsible Data Centre Development Principles, a set of five guidelines that emphasize transparency, creating lasting local benefits and strategic value to Canada, minimizing environmental impacts and not shifting electricity costs to Canadians.However, a news release notes that data centre development decisions are “fundamentally local,” and the national principles are meant to complement existing provincial, territorial, municipal and Indigenous regulatory processes.“Maybe that’s why we’re only seeing principles from them and not something that’s complemented with regulatory teeth or consequences for people that don’t follow these principles,” Bednar said.Bednar said the principles are a start to address data centre concerns and critiques head-on.“If the government is going to be partially a builder and partially a facilitator, I would prefer that we’re supporting a Canadian buildout, private capital-C company with Canadian firms, and then hoping we can support those firms to grow and scale here instead of just get gobbled up by Google, Amazon or Microsoft,” she said.When looking foreign investment in the data centre buildout, Dobbs said lawmakers need to consider the economic spillover effects to make sure electricity prices remain stable for Canadians, people and enterprises can use AI in a way that’s cost effective, and new jobs and industries are being created that drive Canada’s economy forward.“We have to be very clear, and the devil is really in the data centre details,” he said.We apologize, but this video has failed to load.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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