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It’s all about us Canada looks for roadmap on economy, energy, environment at Obama-Harper summit; anxious to play ball, urged to diversify markets Gary Park For Petroleum News
A five-hour tete-a-tete at some yet-to-be-named location in Ottawa doesn’t sound very imposing for Barack Obama’s first presidential trip outside the United States on Feb. 19.
But these aren’t the times for fanfare, pomp and white-tie state dinners.
What Prime Minister Stephen Harper desperately needs is a clear understanding of where Canada will fit in the new U.S. policy framework.
For him, the focus will be on three issues: The economy (and whether that will involve trade barriers and renegotiating the North American Free Trade Agreement); energy security (and whether that could lead to development of Arctic natural gas); and the environment (and whether that will result in a U.S. ban on the import of “dirty oil,” meaning crude from the Alberta oil sands).
“It’s fair to say we need to have a discussion about the oil sands and how they contribute to North American energy security and what the environmental costs are,” Environment Minister Jim Prentice told the National Post.
“That same discussion should point out that the lion’s share of greenhouse gas emissions in North America currently come from coal-burning thermal electricity plants on the United States of the border.”
Obama hailed in Canada Obama is being widely hailed in Canada for his apparent determination to have an energy policy that decreases reliance on foreign sources of crude, while “rolling back the specter of a warming planet.”
He is being urged on by two Washington-based think tanks (the World Resources Institute and the Center for Strategic and International Studies) to “figure out how to achieve energy security and protect earth’s climate.”
The expectation in Canada is that Obama’s New Energy for America plan will lead to legislation to combat climate change, including Low Carbon Fuel Standards copying California’s tough automobile emission standards.
For Harper and the Canadian petroleum industry that carries alarming overtones that crude derived from the oil sands won’t be welcome in Obama’s America.
Even if the Obama administration can eliminate 4 million barrels per day of oil imports (the equivalent of current imports from the Middle East and Venezuela) within 10 years that is no guarantee that oil sands crude will be needed to fill the gap.
Instead, in the view of Nobuo Tanaka, executive director of the International Energy Agency, Obama could lead a global energy revolution turning the oil sands into a dinosaur unless Canada and Alberta get serious about cleaning up the mess created by development of the resource.
Measures could cost jobs But, as the ranks of unemployed grow by hundreds of thousands each month in the U.S. and Canada, there are concerns that harsh environmental measures will only add to those numbers.
John Richels, president of Devon Energy, is among those hoping that Obama will set aside his campaign pledges and take a more realistic view of the industry.
“If we are not able to get out and explore or produce oil and natural gas, it will hit a lot of Americans,” he said.
However, the Harper government — heavily criticized for foot-dragging on environmental matters — has sent out a strong message that it is seeking a joint U.S.-Canada strategy that embraces a cap-and-trade system for carbon emissions, a shared target for low-carbon power generation, a common mandate for producing bio-fuels and common fuel efficiency standards, so long as those measures don’t harm the economy.
Prentice said the Canadian government has mentioned the prospect of a bilateral approach in talks with U.S. senators and members of Congress, while conceding that nothing concrete can happen until there is an agreement with the Obama administration.
Arctic a key feature For Prentice, one of the key selling features of a common policy is opening up Arctic natural gas resources in Alaska and Canada.
In the event that Harper and Obama diverge from a shared path on the economy, energy and the environment, there is a building groundswell for Canada to take a more independent route.
The Canadian International Council, a Toronto-based think-tank founded by Jim Balsille (chief executive officer of BlackBerry maker Research in Motion), has urged a new national energy strategy to fend off any U.S. attempts to interfere in the oil sands.
“Canada can use fierce and multilateral competition for access to energy resources to position itself as a major energy power,” economist Annette Hester wrote in the council’s report.
“Canada is the top U.S. crude supplier and we are a nation that is in fact already helping our neighbor deliver energy security. Despite this, even U.S. legislators are now joining environmentalists in attacking the oil sands.”
But she said that “fragmenting Canada’s dealing with a strong counterpart, such as the U.S., may result in undermining (Canada’s) overall goals and ambition.
“In this day and age, any country that comes up with new ideas and technologies to use, store and dispose of carbon will lead the way into the future.”
To that end, Hester said Harper should champion technology development to bring governments and the private sector together to produce cleaner oil, suggesting that would get the attention of Obama’s White House and Congress.
New horizons a possibility If Canada finds itself at odds with Obama, the government should broaden its energy horizons and initiate discussions for a North Pacific Energy Security Framework that would include Russia and China, said the leaders of three Canadian think-tanks.
Depending on Obama’s direction on climate change, that could help Canada speed up diversification of its energy markets said Pierre Alvarez (former president of the Canadian Association of Petroleum Producers and now chairman of the Canadian Center for Energy Information), Michael Cleland (president of the Canadian Gas Association) and Roger Gibbins (president of the Canada West Foundation).
“Exporters depend on a robust international trading system and discussions surrounding a North Pacific (energy framework) provide Canada with the opportunity to defend a trading system aligned with Canadian interests,” they said.
The paper said a North Pacific pact could start out with six countries — the U.S., Canada, Russia, China, Japan and South Korea, which account for 54 percent of the world’s energy consumption.
Participants could work together to develop Arctic resources, promote investment in energy and energy trade, address climate change impacts and co-operate on policies, the coalition said.
The paper said that the U.S. has provided a secure market for Canada’s energy products, but an absence of other major markets has hamstrung Canada’s ability to fight policies harmful to its resource industries.
Gibbins told the Financial Post that the Buy American campaign sends a clear signal to Canada that Obama faces a challenge to maintain U.S. leadership in the international economy, while warding off protectionist impulses from Congress.
He suggested that building energy ties with Russia, which has a record of using energy as a political instrument, might encourage the development of a collaborative framework built on common interests.
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