Canada eyes US energy markets

Ottawa fears the US president-elect could adopt policies that hurt its oil industry.

Canada is taking steps to secure it’s position in the US oil market  [GALLO/GETTY]

The Canadian government has moved quickly to try and secure its position as the largest supplier of petroleum to the US even as Barack Obama, the US president-elect, voiced a desire to end American dependence on “dirty oil”.

Dirty oil refers to petroleum that is considered environmentally unfriendly because of its higher carbon content.

Obama referred to this type of energy supply as “a 19th century fossil fuel that is dirty, dwindling, and dangerously expensive”.

Canada’s oil sands, located mainly in the western province of Alberta, are a bountiful source of such fuels.

Hoping to prevent the loss of a valuable market, Canada moved with surprising diplomatic speed to introduce a trade-off that plays to two of the president-elect’s core campaign pledges: weaning America from the ‘foreign oil’ stranglehold and introducing tougher measures to curb greenhouse gas emissions.

Double-edged sword

Stephen Harper, the Canadian prime minister, has also proposed creating a continental carbon emissions trading regime in return for guarantees that the American energy markets will continue to buy all of Canada’s exportable oil.

A trading system would set caps on the amount of carbon-based pollutants companies can emit; it financially penalises overpolluters but rewards those who control their emissions below the ceiling figure.

However, some analysts are sceptical of Harper’s offer.

“Harper’s overture is pure political opportunism,” Andrew Nikiforuk, the author of the just-published Tar Sands: Dirty Oil and the Future of a Continent, recently said.

“Given the Canadian government’s successive failure to control climate-disrupting emissions from the tar sands, Harper wants to ‘continentalise’ the problem and thereby secure exemptions for the tar sands – now a carbon making nation within Canada,” Nikiforuk said. 

Climate change agreement

Harper may face an uphill battle to convince his US counterparts of the merits of  carbon-trading mechanism.

Christopher Sands, a senior fellow at the Hudson Institute in Washington DC, goes a step further and says: “I think that Canada does need to show greater sensitivity to the arguments of its critics that oil from the oil sands is ‘dirty’.”

At a meeting of American mayors in Miami last year, Canadian fuel emissions were sharply criticised.

In a final statement on the issue, the mayors said: “The production of tar sands oil from Canada emits approximately three times the carbon dioxide pollution per barrel as does conventional oil production and significantly damages Canada’s Boreal forest ecosystem – the world’s largest carbon storehouse.”

Sands says that Canada needs to propose establishing a North American climate change agreement .

“After all, [it is] an appeal to the new (Obama) administration to undertake the difficult task of designing and implementing a complicated bit of legislation and then imposing it on US states that have, in the absence of federal leadership, begun to act on their own.”

Canada’s economic woes

Harper reminded Obama of the strength of US-Canada relations [GALLO/GETTY]

Canada is already required to guarantee oil supplies to the US market under the North America Free Trade Agreement (Nafta) negotiated in 1993.

This cosy arrangement could be scrutinised if and when Obama fulfils his campaign promise to revisit the terms of Nafta.

Given that Canada is America’s largest supplier of oil, petroleum products, gas, electricity and uranium, with an average of $1.7 billion (Cdn) worth of goods crossing the border every day, the Nafta re-negotiations and the disdain for oil from the tar sands could further weaken the Canadian economy.

The Harper government hopes Obama’s goals will be tempered with the realism of uncertain economic times and the implicit linkage between energy, the environment and the economy.

Jim Prentice, the Canadian environment minister, echoed that hope.

“When you’re talking about the environment, you’re also talking about energy, and when you’re talking about energy, you’re also talking about the economy,” he said shortly after the US election.

“No closer friends”

Harper called Obama immediately following his victory, reminding the president-elect that “there could be no closer friends and allies,” and that “our most important relationship is always with the United States.”

However, given the Canadian government’s conservative leanings, and Obama’s contrary orientation, there are bound to be teething troubles.

Canadians remember the last time Washington had a young, charismatic Democrat and Canada had a Conservative leader: President John F. Kennedy and Prime Minister John G. Diefenbaker.

It was also the time when the US was involved in a standoff with Cuba and wanted to position US missiles on Canadian soil, both of which did not find favour with Diefenbaker.

In one testy exchange, the Canadian prime minister is reported to have told Kennedy: “We are a power, not a puppet.”

The rhetoric this time around is just getting started, but Jim Flaherty, Canada’s finance minister, has already told the new incoming powerbrokers that he sees his nation as an “emerging energy superpower.”

Whether superpower or not, an early test will come late in January when the new US president begins receiving foreign heads of state.

Bowing to tradition by inviting the Canadian prime minister as his first guest in the White House may prove to be an early good sign.

Source : Al Jazeera

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