A National Energy Strategy for Canada: Current Opportunities and Challenges

Leonardo Tovar

You’ve probably heard this argument many times. The U.S. needs energy resources. Canada has the human capital and physical infrastructure to deliver them cost-efficiently. Let the market do its job and Canada benefits from its trade surplus with its southern neighbour. What about the environment, you say? Well, according to the Federal government, Canadians want to focus on the Copenhagen and Cancun accords that are as hazy as the mechanisms currently available to curtail greenhouse gas emissions.

This has been essentially Canada’s approach to energy since the 1980s.

But increasingly Canadians are demanding a national energy strategy that looks beyond supplying America’s energy consumption. An energy strategy that is socially acceptable, environmentally sensible, and focused on maximizing inter-generational economic prosperity. Easier said than done? Not really, there are three factors (hardly independent from each other) that are pushing for a stronger articulation of a pan-Canadian energy plan.

First, the ideological foundation for a potential energy strategy is already defined. Although there is a lack of clear consensus on the guiding objectives, most debates focus on security, affordability (allowing prices to reflect the real social cost of energy without denting drastically Canadians’ lifestyle choices), environmental performance, and fostering a culture of innovation. The Canada West Foundation has noted that to achieve these outcomes, the typical trio of principles (economic, environmental and social) must be complemented with political principles. By respecting constitutional division of powers and allowing inter-governmental players (not just federal and provincial officials, but also First Nations, Northern territorial and municipal leaders) to defend their stakes at the roundtable of energy discussions, political principles will strengthen rather than obstruct a workable national energy strategy.

The second factor is tied to the political principle described above. Western provinces have begun to exert pressure on the federal government for a clearer sense of direction on energy. The New West Partnership – which includes BC, Alberta and Saskatchewan – acknowledges that thinking in policy silos is no longer realistic. The Partnership wants the federal government to adapt its immigration system to suit labour needs, invest in critical infrastructure projects, and understand the contribution that oilsands development make to the national economy.

A pan-Canadian energy strategy must take into account all of these demands. Temporary foreign workers are supplying permanent labour market needs. By increasing alternatives to retain the skilled workers the provinces need, through policies such as immigrant nominee programs and the Canadian experience class, new Canadians can integrate faster into our social fabric while boosting energy production. Infrastructure spending and regulatory approval is needed to diversify energy projects. Whether it is building a pipeline to access Pacific markets or transmission lines to supply electricity to central Canadian provinces, a national energy strategy is essential for domestic economic development. The oilsands are expected to generate over $750 billion in provincial and federal taxes and 126,000 jobs in the next 25 years. During the same period, producers plan to spend over $177 billion in Canadian supply and services from outside Alberta, including $63 billion here in Ontario. Without a doubt, the economic benefits of Alberta’s resources reverberate across the country beyond equalization payments.

The third factor that presses for an overarching domestic energy strategy involves the private sector. Not only business associations demand a more predictable regulatory environment, but also the non-profit industry looks forward to having a framework to work with. Organizations such as the Pembina Institute, the Centre for Energy, and the Suzuki Foundation, among others, urge political leaders to coalesce around a comprehensive long-term plan for Canada that upholds environmental commitments at the same level of market principles.

In the past twenty-four months, these three factors have gained considerable ground. Political leaders and business insiders have become more vocal. Public media has picked up on it and commentators have widely disseminated the merits of a pan-Canadian approach to energy policy. To get the ball rolling, federal Natural Resources Minister Joe Oliver held a conference on July 19, 2011, with his counterparts from the provinces and territories in which industry leaders, environmental think-tanks and other stakeholders took part as well. Although this speaks to the political willingness of building a collaborative strategy to energy with input from all actors, the federal government risks being robbed of the opportunity to lead on this critical policy front.

Prime Minister Stephen Harper has to take it from here. Natural resources and energy ministers cannot consolidate an overall framework that deals with a myriad of issues – from immigration to aboriginal affairs, from labour force development to occupational health and safety – in one-day summits.

And this might be the greatest challenge to-date to a pan-Canadian energy strategy. Mr. Harper has expressed concerns of expanding the role of government, especially in the energy sector. At a recent radio interview in Calgary, Mr. Harper noted that “we always get nervous when we hear ‘national energy’ in the same sentence.” This may play well with his electoral base, especially those resentful Albertans who still remember the National Energy Program. But the New West Partnership shows that even Canada’s staunchest defenders of energy resources are no longer afraid of ghosts of energy policy past.

Back in September, Caitlin Schulz, one of PPG Review bloggers, asked whether Canada was ready for an energy strategy. She argued that despite “all the trials and tribulations that come with forging a national consensus… a national energy strategy is both economically and environmentally important to Canada’s future prosperity.” Evidently, it is now up to the federal executive to demonstrate leadership to position Canada as an energy superpower. This can only be achieved with a comprehensive energy plan that looks after Canadians for generations to come with a strong commitment to the environment and our social values. Our unofficial energy plan of supplying America’s energy needs one project at a time may not necessarily change as a result. But at least Canadians will have a guided vision of their energy resources. That would be a step in the right direction.

Leonardo Tovar is a candidate for the 2013 Master of Public Policy at the School of Public Policy and Governance. He holds two degrees from the University of Calgary, a Bachelor of Arts in Economics (Energy Market Specialization) and a Bachelor of Arts in Political Science (Minor in Latin American Studies).

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