We are seeing an international paradigm shift on climate change, which will bypass Canada if we remain locked into unlimited energy exports. Until Canada gets a “Mexican exemption” and exits NAFTA’s energy-proportionality clause, there is little chance of Canada fulfilling its modest, international Kyoto targets, let alone going far beyond them. “Proportionality” is a colonial arrangement requiring Canada to export the same share of energy resources as in the past three years.
The U.S. focus since 9/11 on “security trumping trade” places security of the American oil supply at the forefront of its policies. When the U.S. champions national ‘oil security’, ‘oil independence’ and even ‘domestic ownership’, it is hard to keep other countries from pursuing similar goals.
Economic nationalism, coupled with an internationalism that breaks from Bush’s imperial ambitions, is returning. Recently several countries have shifted toward national energy policies and public ownership. Government-owned oil companies now produce 77 per cent of world oil production.
Major petroleum-producing countries are discussing, or carrying out, “nationalization” of the industry. Restrictions on foreign ownership and control are returning. These initiatives are led by Russia and radical, left-nationalist governments in South America, like Venezuela and Bolivia.
Public debates about “peak oil” highlight the need for energy conservation, ensuring security of supply for consumers at affordable prices, and moving quickly to non-carbon fuels.
Canadians are not immune from these shifting ideas but policy shifts are another matter. The gap presents an opportunity to bust through NAFTA’s heart and gut the Waco, Texas “Security and Prosperity Partnership.”
From Public Debate to Policy Shift
Canadians are ahead of politicians, ranking the environment as a top issue and supporting the return of economic nationalism. A September, 2005 Leger poll showed that 51 per cent of Canadians who had an opinion were to the left of the NDP on the government “nationalizing” oil corporations. Thirty-four per cent of Albertans agreed. Similarly, the majority of Canadians want to reverse foreign ownership and control of the economy.
Finally, politicians seem ready for environment action. St phane Dion’s surprise election as Liberal leader and his advocacy of green capitalism places the environment at the top of Canada’s political agenda. Dion’s focus follows Jack Layton’s continued environmental commitment and the election of the savvy Elizabeth May as Green Party leader. Quebeckers’ strong environmental focus means that Harper’s government must show movement.
But several factors block effective action: NAFTA’s proportionality clause, foreign ownership and Alberta’s reckless policy of encouraging rapid tar-sands expansion.
Reining In Tar-Sands Exploitation
The tar sands are the single largest contributor to the growth of greenhouse-gas (GHG) emissions in Canada, consuming so much of Canada’s diminishing supply of natural gas to make oil from tar. GHG intensity of tar-sands oil is almost triple that of conventional oil. Since tar-sands production is projected to triple in the next decade, with tar-sands oil to reach 85 per cent of Alberta’s total oil production by 2015, GHG emissions are likely to rise sharply, even if major efficiencies are found.
Why develop the tar sands so rapidly? So Canada can export most of it 75 per cent already to the U.S.
Tough environmental policies will not help much as long as Canada is locked into energy exports. Canadians are unlikely to lower consumption much if most of the energy saved is exported to the wasteful U.S. Canada would still be as big an international GHG culprit, and still turn northern Alberta, an area larger than the Maritimes, into a moonscape.
Meanwhile, eastern Canada imports almost one million barrels of oil per day. Forty-two per cent is North Sea oil, a secure, but declining source. But, 41 per cent of imports are from OPEC countries, with Algeria, Saudi Arabia and Iraq the leading sources to get eastern Canadians through those cold winter nights.
The U.S. has a strategic oil reserve of three-quarters-of-a-billion barrels to weather a supply crisis. Canada does not have such a reserve nor has it ever discussed creating one. It needs one at least until Canada regains control over its energy supplies.
Canadians have naively assumed that, because we have such great energy resources, we can take care of Canadians’ needs during a supply crisis. We cannot. There are insufficient east-west oil-and-gas pipelines to fully meet eastern needs. Furthermore, proportionality ensures that Canada will continue exporting 63 per cent of its total oil production, and 56 per cent of its natural-gas production, to the U.S. even if Canadians run short. We also need a national electrical grid.
A Canadian Exemption
Canada should demand its own “Mexican exemption.” Mexico is in NAFTA, but is exempt from energy proportionality. Why not Canada, too? If the U.S. refuses to budge, Canada can exit NAFTA by giving six months’ notice.
To break through the current impasse, Canadian progressives should start a focused campaign to exit from proportionality. Few Canadians know about proportionality. When they hear about it, most get angry. Let’s inform them. To be successful, such a campaign needs many partners and diverse tactics.
It’s important to bring environmentalists on side, to reach the public through research reports, books, op-eds and videos, and to lobby political parties. We should mobilize activists around specific campaigns to halt more exports through new oil-and-gas pipelines and new export-oriented electricity-transmission lines. We should stop liquafied natural gas (LNG) imports.
In Alberta, there are widespread calls for a moratorium on new tar-sands projects. We need to go further and permanently cap tar-sands production to between two and 2.5 million barrels per day, rather than allow the projected five to six million.
In addition, we need a federal-provincial strategy on tough environmental regulations, high royalties to the provincial and First Nations owners, part of which should fund alternatives to fossil-fuel energy. We need public ownership and restrictions on foreign ownership.
The international paradigm shift presents Canadians with the first major opening since the Canada-U.S. Free Trade Agreement to retake control over our resources. We need this to meet international environmental commitments. Let’s seize the day.
This article appeared in the March/April 2007 issue of Canadian Dimension (Standing Our Ground).