Canadian Prime Minister Stephen Harper said on election night May 2 that Canadians don’t like surprises. He hasn’t pulled any.
He also promised “strong, stable” government if voters gave his Conservative party a majority win. If that means sticking with tested performers, he’s delivered.
In naming a cabinet that was little changed from its pre-election makeup, Harper showed he will rely heavily on proven veterans to guide Canada through the next four years and keep his government on track.
For the complex energy industry, which overlaps several departments, it will take time to decide who wields the greatest influence within cabinet and what priorities Harper has set beyond his expressed desire to build an “energy superpower” from Canada’s extensive oil and natural gas resources.
Greg Stringham, vice president of marketing and oil sands at the Canadian Association of Petroleum Producers, hopes the Harper government will use its newly won control over the House of Commons to demonstrate that Canada already has strong environmental standards in place for oil sands development and is prepared to reduce red tape to gain the confidence of international investors.
Gateway an initial testThe initial test of Harper’s “superpower” goal will the government’s handling of Enbridge’s Northern Gateway pipeline project to open export routes to Asia for oil sands crude, freeing the resource from the confines of an economically and environmentally uncertain United States market.
That brings into play the ministers of natural resources, environment, aboriginal affairs and northern development (previously Indian Affairs and northern development), industry and foreign affairs.
For natural resources, Harper has named Joe Oliver, a political rookie, as his fourth holder of the office in five year.
Oliver, who turns 71 this year, brings a wealth of other experience to the table, including stints as an investment banker at three brokerage firms and head of both the Ontario Securities Commission and the Investment Dealers Association of Canada.
His understanding of the financial markets was welcomed by CAPP President David Collyer, who said an investment perspective on the industry’s ability to attract capital is “pretty fundamental.”
Collyer also suggested that Oliver’s experience on what “makes an effective regulatory system” will be beneficial.
In a brief comment, Oliver said that because he has “raised capital for companies and governments in Canada and internationally, many of them located in Ontario, Quebec and Alberta, I think I have a background that may be relevant.”
As well, he said the Harper government is committed to “responsible exploitation” of Canada’s natural resources, notably the oil sands sector.
Oliver’s agenda also includes negotiating a fiscal agreement with partners in the Mackenzie Gas Project, taking a leading role in talks with the provincial governments on drafting a national energy policy and setting a course for hydro, nuclear and renewable energy.
GHG emissions to be curbedRetained as environment minister, Peter Kent was quick to promise federal regulations to curb greenhouse gas emissions in the oil sands and coal-fired electricity sectors.
But he was emphatic that Canada — in the absence of any sign of action in the United States — will not introduce a carbon tax or cap-and-trade system in the next few years.
“It’s been off the table for some time now,” he said. “We just don’t believe it’s practical or advisable.”
Instead, Canada will introduce “flexible guidelines” for Canada’s largest polluting industries, allowing individual sectors to meet their targets through measures such as technological improvements and carbon capture and storage, Kent said.
He said there is a “reasonable” chance Canada can achieve its pledge to reduce GHGs by 17 percent from 2005 levels by 2020, matching a target set by the Obama administration.
Kent said bitumen producers will be given a period of grace rather than face a “hard line of sudden conversion.”
That seemed consistent with Collyer’s view that the government should avoid imposing absolute emission reductions in the near term at a time when the oil sands sector is ramping up its crude output.
But Kent said all polluters, including oil sands operations, “will be expected to reduce GHGs.”
Project oppositionOliver, Kent and John Duncan, reappointed as aboriginal affairs and northern development minister, will all have roles to play in Northern Gateway along with Kinder Morgan’s plans to increase its crude shipments out of Vancouver and three possible LNG export ventures.
Those projects face daunting opposition from First Nations and environmentalists to overland pipelines and tanker traffic off the British Columbia coast.
Roger Gibbins, chief executive officer of the independent Canada West Foundation, said the answer lies in a full public discussion over whether community groups should be able to block the flow of oil and gas out of British Columbia ports when the traditional U.S. export market is “in trouble.”
On that issue, Harper has been clear: “We’re not going to create artificial bans on the West Coast that don’t exist in other parts of the country.”
To varying degrees, the trio of ministers — Oliver, Kent and Duncan — will have to deal with an increasingly powerful and unbending aboriginal leadership over the development of oil and gas in northern Canada and emerging divisions within those communities between those who welcome the economic benefits of resource exploitation and those who fear the potential harm to traditional lifestyles.
Foreign ownershipChristian Paradis, who has been moved from the natural resources portfolio to industry, will have the final say over whether specific investments by state-owned foreign enterprises in the resource sector will meet Canada’s standard of corporate governance, yield a net economic benefit to the country and pass a national security test.
The current focus is on PetroChina’s proposed US$5.4 billion acquisition of a 50 percent stake in Encana natural gas assets in British Columbia and Alberta — a deal that has twice faced regulatory delays since being announced in February.
Leo de Bever, chief executive officer of the Alberta Investment Management Corp., which manages the province’s C$70 billion of public sector funds, said more public debate is needed about foreign investment, given that resources are “part of the national wealth” and as such Canada should “retain some semblance of control over economic activity.”
Also in the Canadian government’s energy picture is John Baird, the new foreign affairs minister and a trusted lieutenant of Harper.
Known for his forthright manner, he will need to mix that with diplomacy in countering international criticism of Canada’s oil sands record and in presenting its case for sovereignty over Arctic territory and resource development.