A Note From the Author
As a systems thinker, I weave together solutions from across disciplines to tackle the biggest challenge of our time.
Deep beneath our feet lies a source of energy so vast it defies imagination. The Earth’s core burns hotter than the surface of the sun—over 6,000 degrees Celsius. This immense heat, radiating outward through dense layers of rock, represents a virtually limitless supply of power—enough to fuel humanity’s energy needs for millennia. And yet, we’ve barely scratched the surface of its extraordinary potential.
Despite its promise as a clean, 24/7 energy source, geothermal has struggled to gain traction. While countries like the U.S., Iceland, and Germany have embraced it, global capacity stands at just 16 gigawatts—a mere 0.2 percent of global electricity. Yet, unlike its southern neighbor, Canada has been passive, failing to tap even a fraction of its vast underground heat.
For decades, Canada has been a world leader in energy innovation—except when it comes to geothermal. While Canadian oil and gas companies pioneered advanced drilling techniques and built one of the most sophisticated energy industries on the planet, geothermal power has remained little more than an afterthought. It’s not for lack of resources. Canada sits on some of the best geothermal potential in the world, yet it remains the only country along the Pacific Ring of Fire that hasn’t tapped into it.
The potential for geothermal energy in Canada is immense—over 5,000 MW in traditional shallow geothermal resources with currently available technology.
Meanwhile, Canadian expertise has fueled geothermal booms as far away as Germany. In 2010, Canadian firms were responsible for 27 percent of U.S. geothermal projects, helping America develop one of the world’s largest geothermal industries while Canada ignored its own prospects. As of 2024, Canada generates precisely zero megawatts of geothermal power.
How did this happen? How did a country with an abundance of underground heat, world-class drilling expertise, and a booming energy sector fail to capitalize on one of the most reliable clean energy sources available?
The answer isn’t simple. Geothermal didn’t fail on its own merits—it was pushed aside. A combination of high upfront costs, entrenched fossil fuel dominance, and a lack of government support has created barriers that geothermal has never been able to overcome. While Canada poured billions into oil and gas subsidies, geothermal was left to fend for itself, unable to break into an industry designed to favor established players.
But this isn’t just a story of missed opportunities—it’s one of unrealized potential. Geothermal has been overlooked, not because of its limitations, but because of ours. That can change. Canada still has the talent, the technology, and the opportunity to reshape its energy landscape—but only if we recognize what’s been holding it back and take the necessary steps to change course.
So, why has Canada overlooked geothermal for so long? And more importantly, what would it take to finally unlock this resource?
Why Geothermal Never Took Off in Canada
In the early 20th century, as nations around the world began experimenting with geothermal power, Canada stood at an energy crossroads. The country had everything needed to become a global leader in clean energy: vast untapped geothermal resources, world-class drilling expertise, and a rapidly growing population that needed power. But while some countries capitalized on this new innovation, Canada took a different path—one that locked it into fossil fuels for decades to come.
Geothermal power had its first breakthrough in 1904, when Italy built the world’s first geothermal plant. By the mid-20th century, geothermal projects were emerging in countries like the U.S., Iceland, and Japan, all recognizing its capacity to provide constant, fuel-free electricity. Yet in Canada, almost no attention was given to the technology. Instead, the government prioritized two things: hydropower and fossil fuels.
The Rise of Hydropower and Fossil Fuels
While geothermal energy continued to be ignored, hydropower surged ahead as Canada’s renewable energy backbone. The country’s vast rivers and waterfalls provided a low-risk, government-supported alternative to fossil fuels. Massive public investments in hydroelectric dams transformed Canada’s grid, cementing hydropower as the backbone of the nation’s electricity supply ever since.
At the same time, the oil and gas industry was expanding rapidly. By the 1960s, vast oil sands deposits were being developed in Alberta, setting the stage for fossil fuel dominance. Billions in government incentives—from tax breaks to infrastructure projects—ensured that oil and gas became the country’s primary energy strategy.
Geothermal, by contrast, received none of that support. It wasn’t that the technology was unproven—countries like Italy and the U.S. were already generating electricity from geothermal sources. The problem was that Canada’s energy policies favored what was already easiest to exploit.
How Energy Policy Shaped Canada’s Future
Every energy system is shaped by the policies and investments behind it. In Canada, early energy planning prioritized what was cheap, accessible, and politically viable. Hydropower fit the bill—it was reliable, easy to finance, and backed by public funds. Fossil fuels fit because they were profitable and heavily subsidized.
Geothermal, on the other hand, required upfront investment, exploratory drilling, and long-term vision. Without government support to de-risk these early costs, it never had a chance to compete. The result? Canada built its energy grid without it.
This early divergence created systemic roadblocks that still exist today. While other countries integrated geothermal into their energy mix, Canada’s infrastructure—and its policies—remained built around oil, gas, and hydro. And once an energy system is designed around specific industries, changing course becomes exponentially more difficult.
The geothermal resource potential in Canada could exceed one million times Canada’s current electricity consumption.
Unlike solar and wind, which fluctuate with the weather, geothermal runs 24/7, 365 days a year. It provides the same baseload reliability as nuclear or hydro—without fuel costs, emissions, or waste.
Even tapping a fraction of this resource could power Canada for generations. Yet instead of unlocking this potential, Canada continues sinking billions into fossil fuels—propping up an industry whose days are numbered.
Why Geothermal Has Struggled to Gain Traction
Canada has long overlooked one of its greatest untapped energy resources. Geothermal isn’t struggling because it doesn’t work. It’s struggling because the system was never designed to include it.
Canada could be a geothermal powerhouse, yet our grid remains dominated by fossil fuels. Billions in subsidies keep oil, coal, and natural gas entrenched—not because they’re the best option, but because government support and outdated policies have ensured their stranglehold on the energy sector.
In 2023, the Government of Canada provided at least $18.553 billion in financial support to fossil fuel and petrochemical companies. Just four of the top oil companies in Canada had a combined annual profit of over $25 billion.
- Julia Levin, Associate Director of National Climate, Environmental Defence (Study, 2024)
Fossil fuels were prioritized, hydropower became Canada’s renewable workhorse, and geothermal was left in the dark. The result? Canada has yet to produce a single megawatt of geothermal electricity, despite mapped resources capable of generating over 5,000 MW—enough to power millions of homes. Meanwhile, countries like Iceland have built thriving geothermal industries, proving what’s possible when the right policies are in place.
The barriers holding geothermal back aren’t technical. They’re structural. And they’ve kept one of the world’s most reliable clean energy sources on the sidelines.
1. High Upfront Costs Make It a Harder Sell
The challenge starts at the investment stage. While geothermal plants provide a lifetime of fuel-free, low-cost power, they demand massive upfront spending before a single megawatt is generated.
Drilling deep into the earth isn’t cheap. Exploratory wells alone can cost tens of millions of dollars, with no guarantee of success. Unlike oil and gas, where decades of drilling data help pinpoint reserves, geothermal exploration remains a gamble—and most investors aren’t eager to take those odds.
Even when a viable reservoir is found, construction costs are steep. A 1,000 MW geothermal plant costs around $4 billion to build, while a comparable natural gas plant costs just $1.2 billion. Investors looking for the fastest return overwhelmingly choose gas—even though geothermal is significantly more cost-effective in the long run.
High electricity prices can also be attributed to the increase in natural gas prices, Alberta’s main source of electricity generation. Prices surged by more than 60 per cent following the Russian invasion of Ukraine.
- Dr. Junaid B. Jahangir, Associate Professor of Economics, MacEwan University
Natural gas plants rack up billions in fuel costs over their lifetime, while geothermal has no fuel costs at all. But because those fuel costs are passed to consumers, investors don’t see them as their problem.
The financial system itself reinforces this short-term bias. Larger upfront investments mean larger loans and higher interest payments. Financing a $4 billion geothermal plant is far riskier than a $1.2 billion gas plant, making investors even more hesitant.
Yet, this isn’t a new problem. Hydropower faced the same hurdles. Large dams required massive capital investment, but they succeeded because of government backing that de-risked early development.
Figure A - Comparing Hydropower Costs to Natural Gas (2021):
* O&M = Operating & Maintenance, CCS = Carbon Capture & Storage
* Sources: U.S. Energy Information Administration, EIA Assumptions 2021
With construction costs nearly identical to geothermal ($3,083 per kilowatt vs. $3,076 for geothermal), hydropower thrived because it got the support it needed.
Geothermal never had that advantage. And in a financial system built to favor short-term returns, it’s struggled to compete—even though it’s the cheaper, more sustainable option in the long run.
2. Limited Government Support Left Geothermal Sidelined
The financial challenge could have been solved with the right policies. But instead of supporting geothermal, Canada doubled down on fossil fuels.
For over a century, government policies have propped up coal, oil, and gas, making them the default choice while emerging alternatives like geothermal were cast aside with barely a second thought. These policies shielded fossil fuels from risk and cemented their supremacy in Canada’s energy system.
Meanwhile, geothermal got next to nothing. Solar and wind, with their lower upfront costs, have benefited from substantial public investment, allowing them to scale far faster. Yet even they pale in comparison to the billions still funneled into fossil fuels.
Over the last four years, the federal government’s total financial support to the oil and gas industry was at least $65 billion. That level of support could have fully funded every major wind and solar project in Canada from 2019-2021 twelve times over.
- Julia Levin, Associate Director of National Climate, Environmental Defence (Study, 2024)
Compare this to the United States, which leads the world in geothermal capacity thanks to sustained federal investment. As of 2020, the U.S. had built over 3,673 megawatts of geothermal power. Canada, despite having some of the best geothermal resources in the world, has yet to produce a single megawatt.
The issue isn’t a lack of potential—it’s a lack of policy. Geothermal developers face fragmented regulations and no cohesive federal strategy to support them. While oil and gas benefit from clear financial incentives, geothermal projects are left to navigate a patchwork of provincial policies and compete for limited funding.
Without a coordinated national strategy, private investment never materialized. And without investment, Canada’s geothermal sector never had a chance to take off.
3. An Overreliance on Cheap Resources Stifled Innovation
Canada’s energy abundance has been both a strength and a weakness.
With vast reserves of oil, gas, coal, and hydropower, the country has never felt an urgent need to look beyond what’s already there. Instead of investing in next-generation clean energy, policymakers anchored themselves to familiar solutions—leaving technologies like geothermal stuck in the margins.
Take carbon capture and storage (CCS). Designed to trap emissions before they reach the atmosphere, CCS has a role in decarbonizing heavy industries like cement and steel, where alternatives don’t yet exist. But when it comes to electricity, CCS isn’t a long-term solution—it’s a stopgap. Yet its advocates aren’t pitching it as a bridge to cleaner energy—they’re using it as a license to keep burning fossil fuels indefinitely.
The machinery used in CCS will use between 10 and 40 per cent of the energy produced by a power station. This means that electricity will be more expensive to buy.
- Understanding carbon capture and storage, British Geological Survey
Retrofitting CCS onto fossil fuel plants is an expensive and inefficient way to generate “clean” electricity. Meanwhile, geothermal—one of the best zero-emission alternatives—remains ignored.
Canada’s abundance of fossil fuels made it easy to keep drilling and burning rather than invest in something new. But that strategy is now backfiring.
As global markets shift toward cleaner energy, Canada’s overreliance on hydrocarbons is becoming a liability. Even the fossil fuel industry sees the writing on the wall.
Leading oil sands companies are speeding up automation to lower production costs by cutting jobs because they will soon be competing in a shrinking market, as the peak of global oil demand is likely to occur in the next five years.
- Parkland Institute, University of Alberta (2022)
Meanwhile, hydropower—long considered Canada’s clean energy backbone—is facing growing instability.
Climate change is wreaking havoc on hydroelectric dams. Record-breaking droughts are drying up rivers, slashing electricity output. In 2023 alone, Canada’s hydroelectric generation dropped by nearly 4 percent due to extreme weather.
Unlike hydropower, geothermal doesn’t rely on rainfall or river levels. It provides stable, weather-independent electricity—exactly what Canada needs to anchor its clean energy future.
Geothermal isn’t struggling because it’s unproven—it’s struggling because Canada hasn’t made room for it.
4. Geographic Challenges Limited Geothermal’s Reach
Geothermal energy’s viability depends on geology, and Canada’s diverse landscape presents real obstacles. From the outset, energy planners dismissed it as impractical—an assumption that kept it sidelined.
It’s true that some regions, like the Canadian Shield, are difficult to drill through. The Shield covers nearly half of Canada’s landmass and is composed of dense, ancient rock, making deep drilling expensive and challenging. This has fueled the misconception that geothermal is unfeasible in Canada.
The Canadian Shield is composed of hard rocks like granite and makes up roughly 50 percent of Canada's landmass (map by Holly O'Rourke/The Canadian Encyclopedia)
But this assumption ignores a crucial fact: Western Canada is rich in geothermal resources. Alberta and British Columbia, in particular, sit on vast underground heat reservoirs—yet they’ve barely tapped into them.
The irony? Canada’s oil industry already has the drilling technology, skilled workforce, and expertise to lead in geothermal development. The same drilling techniques used for oil and gas extraction can be applied to geothermal wells.
And innovations in enhanced geothermal systems (EGS) and closed-loop technology are pushing the boundaries even further, making it possible to generate geothermal power in regions once thought unsuitable.
Yet because policies have never prioritized it, geothermal remains on the fringes—trapped by outdated perceptions rather than real limitations.
5. Systemic Inertia Slowed Progress
Canada’s energy system was never designed to include geothermal.
Year after year, policies, subsidies, and financial structures reinforced hydropower and fossil fuels. Geothermal never fit that framework—so it was never given a real chance.
The result is a system that reinforces the status quo. The oil and gas industry wields vast economic influence, shaping regulations in its favor while resisting change. Even as the world shifts toward cleaner energy, Canada remains locked into priorities that are not just outdated, but short-sighted.
The Government of Canada does not keep any direct proceeds from pollution pricing. Approximately 90 percent of the proceeds go back to individuals.
Carbon pricing could have helped level the playing field, but instead of funding clean energy projects, most of the revenue goes directly back to consumers.
That means no direct investment in geothermal, no national strategy to integrate it into the grid, and no plan to make use of one of Canada’s best untapped energy resources.
If Canada wants to break out of this cycle, it will take more than recognizing geothermal’s value and what it can provide. It will take bold policy shifts to give it a real chance to compete.
Unlocking Canada’s Geothermal Potential
Canada has spent far too long overlooking its geothermal potential, but that can—and must—change. The obstacles holding it back aren’t a death sentence. Far from it. That means they can be overcome.
We have the expertise. We have the resources. And we already have more than 170,000 abondoned oil and gas wells drilled deep into the earth in Alberta alone. The only thing missing is the strategy to make geothermal a real part of Canada’s energy future.
Tapping Into Canada’s World-Class Drilling Expertise
If there’s one thing Canada excels at, it’s drilling. For over a century, Canadian oil and gas companies have perfected the techniques needed to access underground reservoirs.
The same expertise and infrastructure that built Canada’s energy sector could drive a geothermal revolution. Yet instead of harnessing these skills to build a thriving domestic industry, we’re exporting them while letting opportunities at home slip through our fingers.
One thing working in the geothermal industry’s favor is that the skills, engineering know-how, and drilling technology required are virtually identical to those used in the oil and gas sector—it just requires deeper drilling.
- Kirsten Marcia, President and CEO, DEEP Corp. (CBC News, 2023)
Fossil fuel jobs are disappearing, while clean energy jobs now account for 40 percent of energy sector growth—far outpacing fossil fuels. Yet instead of investing in geothermal, Canada is letting its skilled workforce and world-class expertise slip away.
Directional drilling, enhanced well casing techniques, and subsurface mapping—everything used in oil and gas—directly applies to geothermal. Yet while fossil fuel jobs decline, geothermal developers struggle to secure even modest funding—despite offering a natural transition for Canada’s energy workers.
This makes no sense. Geothermal rivals nuclear power in reliability without the challenges of radioactive waste, making it one of the cleanest and most dependable energy sources available.
Redirecting just a fraction of Canada’s oil and gas expertise could transform geothermal into a world-leading industry. But while other nations seize the opportunity, we continue to let this resource sit idle beneath us.
Alberta: The Perfect Candidate for Geothermal Leadership
If any province is poised to lead Canada’s geothermal revolution, it’s Alberta. Home to vast underground heat reserves and an experienced oil and gas workforce, Alberta has everything needed to make geothermal a reality—except the policies to support it.
Right now, Alberta stands at a crossroads. The province is grappling with declining fossil fuel jobs and a growing stockpile of inactive wells—thousands of which could be repurposed for geothermal energy instead of being left to rust. By leveraging its existing infrastructure, Alberta could dramatically cut the costs of geothermal development and transform dormant assets into a foundation for sustainable energy production.
The oil industry was in depression. The only growth industry was well abandonment… Why don’t we just turn them into geothermal wells? Why don’t we generate geothermal energy?
- John Redfern, President and CEO, Eavor Technologies (Global News, 2023).
The economic case is undeniable. Alberta’s 1.7 million households consume roughly 12,240 gigawatt-hours of electricity annually—demand that could be met with just 1.55 gigawatts of installed geothermal capacity. As of 2023, building this capacity would require an estimated $8.15 billion CAD investment—but the returns would be massive.
- Annual revenue: $2.03 billion CAD
- Annual operating & maintenance costs: ~$294 million CAD
- Net earnings over 30 years: $24 billion CAD
- Net earnings over 45 years: Nearly $43 billion CAD
With those kinds of returns, the initial investment could be fully recovered in just eight years—making every subsequent year pure profit.
And the benefits extend beyond revenue. Geothermal projects in Alberta could create thousands of long-term, high-quality jobs, offering a natural transition for workers displaced from the oil and gas sector. They would strengthen Alberta’s economy, diversify its energy portfolio, and reduce reliance on volatile fossil fuel markets.
The beauty is that geothermal is a constant source of energy which is not going to change. It’s probably going to be there forever, as long as your well is functioning.
- Saeed Salehi, Associate Professor of Petroleum Engineering, University of Oklahoma (Vox, 2022).
Right now, Alberta’s inactive wells sit idle—a liability instead of an asset. Many have been orphaned, abandoned by companies that no longer exist, leaving taxpayers to foot the cleanup bill.
But what if they weren’t abandoned? What if, instead of writing off these wells as waste, we converted them into clean power sources?
That’s exactly what companies like Eavor Technologies are proving can be done. By repurposing existing wells, these projects can slash development costs, making geothermal more competitive than ever.
The upfront cost of drilling is one of the biggest financial hurdles for geothermal energy. But Alberta already has hundreds of thousands of wells drilled deep underground. Instead of spending billions to drill new ones, why not use the infrastructure we already have?
Unlike traditional geothermal, Eavor-Loop™ systems extract heat from hot rock via conduction. Hot rock is almost everywhere beneath our feet, which means that Eavor can mine its energy from virtually anywhere across the planet.
New innovations like the Eavor-Loop are rewriting the rules of geothermal energy. Unlike conventional geothermal plants that rely on underground reservoirs of water or steam, Eavor-Loop operates as a closed system. A specialized fluid circulates through a sealed underground network, absorbing heat as it moves. Once it reaches the surface, that heat is converted into electricity before the fluid cycles back down—no fracking, no groundwater depletion, no emissions, no risk of running dry. Just clean, consistent power.
This changes everything. Geothermal is no longer confined to geological hotspots. Areas once dismissed—whether due to dense granite, low temperature gradients, or lack of water—are now viable. Closed-loop systems don’t just expand geothermal’s reach; they make it truly scalable. Suddenly, the immense heat beneath Canada’s surface isn’t just theoretical—it’s an untapped powerhouse waiting to be unleashed.
The opportunity is there. The workforce is ready. The only thing missing is the vision to bring it to life.
Making Geothermal a Key Player in Canada’s Energy Future
With bold leadership and smart policies, Canada can turn this overlooked resource into a clean energy powerhouse. But time is running out, and the stakes couldn’t be higher. Here’s how we make it happen:
1. De-risk Exploration to Attract Investment
Exploratory drilling is one of the biggest financial roadblocks to geothermal development. Companies can’t justify sinking millions into test wells without knowing if they’ll strike viable heat. That’s where government-backed geological mapping and exploration funding come in. By taking the uncertainty out of the equation, Canada can unlock investment and kickstart development. This isn’t about handouts—it’s about opening doorways to innovation.
2. Forge Public-Private Partnerships
Governments and businesses must work together to share both the risks and rewards of geothermal development. Countries like Iceland and New Zealand have already shown that public funding can spark private-sector breakthroughs. Canada can follow suit by co-funding projects, streamlining permitting, and providing guaranteed purchase agreements that make geothermal a viable investment.
3. Level the Playing Field with Financial Incentives
Fossil fuels have been subsidized for decades, while geothermal has been forced to compete on an uneven playing field. That needs to change. Low-interest loans, tax credits, and direct government financing would make geothermal projects cost-competitive from day one. The long-term economics of geothermal are already superior—policies just need to tip the scales in favor of clean energy.
4. Reinvent Carbon Pricing to Fund Solutions
Carbon pricing shouldn’t just penalize polluters—it should fund the transition to clean energy. Instead of rebates that disappear into household budgets, carbon tax revenue should go directly into geothermal, Small Modular Reactors, and other sustainable solutions. A predictable, long-term strategy will give investors confidence that Canada is serious about building a clean energy future—rather than just managing emissions.
A Chance to Lead
The world is moving away from fossil fuels. Canada can either lead this transition—or be left behind.
Geothermal energy is more than just a solution; it’s a chance to rewrite Canada’s energy story. It can power millions of homes, create thousands of lasting jobs, and bring energy security in an era of mounting instability. But more than that, it’s the chance to build a future that’s both sustainable and prosperous, and to embrace innovation without losing sight of the foundation that has powered Canada for generations.
Canada faces a choice: cling to a fading industry or seize the future—one powered by innovation, not extraction.
The choice is right in front of us. The benefits are undeniable. The only question is: will we act?
Geothermal is just the beginning. The same workforce, infrastructure, and expertise that built Canada’s energy sector can fuel the next revolution: hydrogen. The world is demanding cleaner energy, and Canada has everything it needs to deliver—if we choose to lead.
Curious about why I wrote this book? Read my Author’s Note →
Want to dive deeper? A full list of sources and further reading for this chapter is available at: www.themundi.com/book/sources