The Latest Pipeline War Update: an Opportunity for a Diversified Energy Future for Canada?

Following on US President Barack Obama’s endorsement of climate change action in his second term inauguration speech, the US Ambassador to Canada, David Jacobson, has implied that Obama is looking to see greater forward motion by Canada on climate as a trade-off for approval of the Keystone XL Pipeline1,2. The Canadian government went on to defend its record last week. Canadian Foreign Affairs Minister John Baird challenged the US to improve its own performance on coal-fired power generation—taking credit for provincial actions to close coal-fired electricity plants in Ontario3. Meanwhile, US protests against Keystone XL gained major attention over the weekend. And that was just the last few days. There are six leading Canadian pipeline proposals in play right now4, in hopes of addressing the glut of oil sands production currently backing up in Alberta. The price per barrel of Canadian heavy oil fell below $50 at the end of January, due to inadequate pipeline capacity, over-reliance on the US market and “an earlier-than-normal pattern of seasonal downtime” at US Midwest refineries, according to Mining.com5. This inability to move Canadian heavy oil to market is reducing revenues to the government in Alberta, with a large provincial deficit predicted. So, with Northern Gateway and Keystone XL by no means sure things, TransCanada Corp. and Irving Oil are looking to convert an existing natural gas pipeline to carry oil “West to East” to St. John, New Brunswick on the East Coast.6 We again appear to be reverting to the familiar Canadian economy vs. the environment debate, as efforts are made to find a short-term solution to move the resource. But others are seeing recent events as opportunity. Is Obama’s desire to leave a legacy the push Canada needs to build a national energy strategy that comprehensively supports a diversified energy future? David McLaughlin, former President and CEO of the National Round Table on the Environment and the Economy, noted in The Globe and Mail that Canada should not be taken by surprise that access to markets for our oil resource has “gone green”7, with full costing of the carbon content of oil coming online in different jurisdictions. Megan Leslie of national opposition party, the NDP, was also quoted as saying “why isn’t this government actually thinking about how to diversify our energy sector? Why aren’t we actually using the oilsands strategically to help us towards a just transition to a green-energy economy?”8 Elizabeth May, Leader of the Green Party of Canada, also noted that, “It gets hard when Canada doesn’t have a real climate plan. If Canada was coming – I go back to when Mulroney was the architect of an acid rain plan that worked and the approach was come to the US with clean hands, show the US that we’re taking the appropriate steps in Canada and then asking them to do the same…. We don’t have credibility to say that, which actually undermines the case that the keystone XL pipeline should be approved.”9 Calls for a national energy strategy are not new10, and neither is the need for a framework within which clean energy innovation can be encouraged, and resource development managed—in conjunction with efforts to create energy efficiencies in our infrastructure, including transit and transportation, housing and more11. It remains to be seen whether the Keystone XL decision, when eventually made, will be the catalyst for regional Canada to come together on this issue. Or whether the overall shift to greener global markets will simply overtake us. Sources

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