Joe Oliver: How Justin Trudeau can avoid a historic energy blunder
Joe Oliver, Special to Financial Post
Tuesday, Mar. 8, 2016
Joe Oliver: The prime minister has the chance for a Nixon-in-China breakthrough. Ben Nelms/Bloomberg
The inability to diversify our energy markets is jeopardizing Canada’s prosperity. Quebec’s application for an injunction on the Energy East pipeline, First Ministers’ divided views on a national carbon tax and Leonardo DiCaprio’s Academy Award confusion of a Chinook with global warming are the latest sundry developments impinging on this critical problem. Pipeline construction is stymied by politics and undergoing contested regulatory reviews, preventing transport of oil to eastern Canada or to tidewater and tankers to foreign markets. As a result of a relentless campaign waged by well-funded opponents, public opinion has moved from belief in exaggerated claims about environmental risk to toleration of the damaging consequences of inaction, to the cusp of capitulation to the truly mad — an energy powerhouse abandoning energy exports. That would be a historic blunder.
To understand our predicament and what to do about it, let’s examine the facts and set out some common sense realities.
Canada has enormous oil and gas reserves, which will exceed domestic requirements for hundreds of years. The International Energy Agency forecasts almost 75 per cent of global energy demand will come from fossil fuels in 2040. However, our only export market is the U.S., which buys our oil and gas at a multi-billion dollar discount to the international price. Moreover, it needs less because of its massive shale discoveries, while we need to export more due to our increased production. But if we cannot deliver outside North America, it is irrelevant that most of the world is energy-deficient. At stake are tens of thousands of jobs and tens of billions of dollars in revenue to governments for health care, education and infrastructure.
The only rational reason for not doing everything possible to export our oil is significant environmental risk. Determining that risk is the responsibility of independent regulators who conduct comprehensive scientific reviews and consult broadly. As to global GHG emissions, Canada represents an insignificant 1.6 per cent and the oilsands a minuscule 0.01 per cent. Offsetting that meagre amount can be helped by replacing transport by rail with safer pipelines and exporting our oil and gas to reduce coal burning worldwide.
Let’s not be duped by foreign rhetoric that is contradicted by facts on the ground. President Obama bolstered his green cred by turning down the Keystone XL pipeline. Yet he is happy to see the construction of so many domestic U.S. pipelines under his watch that their length would encircle the globe, and he approved American oil exports after a 40-year hiatus. Heavy Mexican crude is eating into our diminishing U.S. market share. The U.K. is aggressively developing its shale industry. The Saudis ship crude in tankers up the St. Lawrence River, even as Alberta tries to convince Quebec politicians to accept domestic oil. Iran is gearing up production now that sanctions are lifted. Everywhere, energy exporters are busily capturing market share, including the market of our own country. Meanwhile, Canada cannot get its act together.
Canada would not be the country it is today if consensus had been a precondition to progress. Dissenting views must be seriously considered, however, if opponents are NIMBYs or ideologues who ignore science, the national interest should prevail.
Not every environmental group is adamantly opposed to resource development. However, several clearly are, which I called attention to when I was minister of natural resources. In spite of a hyperbolic feeding frenzy over my comments, the subsequent four years repeatedly proved my point. Indeed, I cannot name a single major resource project that these radical groups do support, even those with regulatory approval. It is a fool’s errand to try to change their minds. Appeasement merely feeds defiance.
What should the federal government do? Remove the moratorium on oil-tanker traffic off B.C.’s north coast. Consider support for the construction of a B.C. upgrader or refinery, perhaps with a government guarantee. Facilitate aboriginal economic participation. Restrain regulatory duplication, scope creep and dilatory tactics. Advocate for pipeline projects if and when an independent regulator recommends approval. Critically, communicate to Canadians the facts and urgency of the issue.
The prime minister has the chance for a Nixon-in-China breakthrough. Rather than abdicate leadership as a “responsible referee” (shades of honest broker?), Justin Trudeau should emulate the current U.S. president, who extolled green policies even as the U.S. became the world’s biggest oil producer. The Liberal government’s high-profile concern about climate change provides a comparable opening to support pipeline development.
Trudeau has a golden opportunity for nation building. Otherwise, he risks leaving behind a legacy of missed opportunities and economic decline. Science, economics, national security and common sense all support opening our energy markets to the world.