Securing Canada's energy future

Tories storm out of meeting on sharing energy with U.S
Kelly Patterson, CanWest News Service
Published: Friday, May 11, 2007

OTTAWA - Amid heated charges of a coverup, Tory MPs on Thursday abruptly shut down parliamentary hearings on a controversial plan to further integrate Canada and the U.S.

The firestorm erupted within minutes of testimony by University of Alberta professor Gordon Laxer that Canadians will be left "to freeze in the dark" if the government forges ahead with plans to integrate energy supplies across North America.

He was testifying on behalf of the Alberta-based Parkland Institute about concerns about the Security and Prosperity Partnership (SPP), a 2005 accord by the U.S., Canada and Mexico to streamline economic and security rules across the continent. The deal, which calls North American "energy security" a priority, commits Canada to ensuring American energy supplies even though Canada itself - unlike most industrialized nations - has no national plan or reserves to protect its own supplies, he argued.

At that point, Tory MP Leon Benoit, chair of the Commons Standing Committee on International Trade which was holding the SPP hearings, ordered Laxer to halt his testimony, saying it was not relevant.

Opposition MPs called for, and won, a vote to overrule Benoit's ruling.

Benoit then threw down his pen, declaring, "This meeting is adjourned," and stormed out, followed by three of the panel's four Conservative members.

The remaining members voted to finish the meeting, with the Liberal vice-chair presiding.

Benoit's actions are virtually unprecedented, observers say; at press time, parliamentary procedure experts still hadn't figured out whether he had the right to adjourn the meeting unilaterally. Benoit did not respond to calls for comment.

It's "reckless and irresponsible" of the government not to discuss protecting Canada's energy supply, says Laxer.

Atlantic Canada and Quebec already have to import 90 per cent of their supply - 45 per cent of it from potentially unstable sources such as Saudi Arabia, Iraq and Algeria, Laxer said.

Meanwhile, Canada is exporting 63 per cent of its oil and 56 per cent of its gas production, mostly to the U.S., he says.

"It's shocking the extent to which the Conservative party will go to cover up information about the SPP," says NDP MP Peter Julian, who also sits on the committee.

Other MPs raised concerns about recently revealed plans under the SPP to raise Canadian limits on pesticide residues to match American rules.

Questions were also raised about whether the effort will open the door to bulk water exports.

Representatives from the departments of Industry and International Trade defended the SPP as an effort to protect Canadian jobs in a competitive global market, without sacrificing standards.

They denied charges SPP negotiations have been secretive, saying civil-society groups are welcome to offer their input, and referred MPs to the government website, which lays out in general terms the SPP initiatives.

Ottawa Citizen
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Here was Gordon Laxer's presentation to the Hearing Committee:

Presentation on the SPP to the International Trade Committee

Gordon Laxer
Political Economy Professor, and The Director
Parkland Institute at the University of Alberta
May 10, 2007

Introduction

Parkland Institute is an Alberta-wide research network at the University of Alberta in Edmonton. We are supported by over 600 individual members and dozens of progressive organizations. Parkland Institute conducts research and education for the public good.

My remarks are on the energy and climate change implications of the SPP.

Why No Energy Security for Canadians?

I don’t understand why Canada is discussing helping to ensure American energy security when Canada has no energy policy, and no plans or enough pipelines, to get oil to Eastern Canadians during an international supply crisis. Canada is the most vulnerable member of the International Energy Agency - IEA, yet recklessly exports a higher and higher share of its oil and gas to the U.S. This locks Canada into a higher share under NAFTA’s proportionality clause. Instead of guaranteeing U.S. energy security, how about a Canadian SPP – Secure Petroleum Plan for Canada?

While rising Canadian oil exports help wean America off Middle Eastern oil, Canada is shirking responsibility to Canadians. Rising Canadian exports are perversely leading to greater Middle Eastern imports for Canada.

We import about 40% of our oil - 850,000 barrels per day, to meet 90 per cent of Atlantic Canada's and Quebec's needs, and 40 per cent of Ontario's. A rising share, 45 per cent comes from OPEC countries, primarily Algeria, Saudi Arabia and Iraq. Imports from North Sea suppliers – Norway and Britain –are shrinking (37 per cent).

Many eastern Canadians heat their homes with oil. Yet we have no plan to send domestic supplies to them. Why not? In which NAFTA country are the citizens most likely to freeze in the dark?

The National Energy Board’s mandate is to "promote safety and security ... in the Canadian public interest". Yet they wrote me on April 12: "Unfortunately, the NEB has not undertaken any studies on security of supply." This is shocking.

I asked the NEB about whether Canada is considering setting up a Strategic Petroleum Reserve under its membership in the IEA. The NEB replied that Canada "was specifically exempted from establishing a reserve, on the grounds that Canada is a net exporting country whereas the other members are net importers."

The IEA was set up by industrial countries in 1974 to counter OPECs boycotting power. The 24 members must maintain emergency oil reserves equivalent to 90 days of net imports. Only net-exporters are exempt. Canada shares this status with 3 other members.

Britain and Denmark have been net exporters, but set up strategic reserves, as required of European Union members. That leaves Norway and Canada. Norway doesn't need a reserve. Sensibly, it supplies its own citizens, before exporting surpluses.

Western Canada can’t supply all of Eastern Canadian needs, because NAFTA reserves Canadian oil for Americans' security of supply. Canada now exports 63 per cent of our oil and 56 per cent of our natural gas production. Those export shares are currently locked in place by NAFTA's proportionality clause which requires us not to reduce recent export proportions. Mexico refused proportionality. It applies only to Canada.

As well, we don’t have the east-west pipelines to fully meet Eastern needs. Instead, 5 export pipelines are planned.

Although we have more than enough oil and gas to meet Canadians needs, Canada is the most exposed IEA member. Meanwhile, the U.S. is doubling its Strategic Petroleum Reserve.

Natural gas

Nor does Canada have a natural gas plan. At last summer G-8 meetings, Canada began negotiations to send Russian gas to Quebec. It is very risky. Recently, Russia cut natural gas exports to Ukraine and Byelorussia for political reasons.

Why import natural gas, when we could be self-sufficient and energy independent?

U.S. NEP

Those are official U.S. goals in its 2001 National Energy Policy - NEP. Domestic ownership too – remember Congress blocked a Chinese takeover of Unocal. The US didn’t draw up a continental security plan in 2001, but a national one, as Mexico has, like we should. Most countries have similar national policies.

No one is fooled by SPP talk that ‘North American energy security’ is anything more than US energy security.

I don’t advocate copying the U.S. on all energy policies - finding ‘their’ oil under someone else’s sands – Middle Eastern, and Alberta’s tarsands.

Strategic petroleum reserves help short-term crunches, but not long-term ones. Eastern Canadians’ best insurance is to restore the rule before the Free Trade Agreement - no energy exports before 25 years of ‘proven’ supply, not ‘expected’ supply.

The SPP is taking us in the wrong direction:

Quickening environmental approval of tarsands exports
More LNG terminals in Canada dedicated for U.S. export
Bringing in temporary Mexican workers without permanent resident rights

Paradigm Shift

Instead, Canada needs a paradigm shift to face the new realities:

security trumping trade – means that energy security for Canadians trumps NAFTA

climate change – The production of tarsands oil, ¾ of which is exported, is the single biggest contributor to our rising greenhouse gases. This is the gassy elephant in the living room everyone pretends not to see. Instead, we need a moratorium on new tarsands projects. Then, cut consumption to reduce carbon emissions.

NAFTA's proportionality clause – You won’t convince Canadians to cut fossil fuel use, as we must, if it means that whatever we save is exported to the U.S., the proportional requirement rises, and tarsands carbon emissions remain unchanged.

Conclusion

Instead of the SPP Canada needs a new energy security and conservation strategy. Canada has a NEP - No Energy Plan. It is not helping Alberta or other producing regions. The people of Alberta, the oil and gas owners, receive pitifully low royalties and other economic rents. Alberta and Norway have similar amounts of oil and gas, yet Alberta’s Heritage Fund was started in 1976 and has 12billion US. Norway started their fund in 1996 and has 250 billion US. Much of tarsands oil is shipped out raw without upgrading in Alberta.

Canada must do a national energy strategy differently – as a partnership with the producing provinces and territories. The 1980 National Energy Program had good goals - energy sufficiency, independence, Canadian ownership and security, but it was unilaterally imposed.

A new federal-provincial plan must raise economic rents in all their forms so producing regions can use the funds to transition to a post-carbon economy. Otherwise, in a generation, Alberta will become, not the rust belt like the U.S mid-west, but the fossil belt.

Recommendations

-No SPP before public hearings, bills before Parliament, the consent of Canadians
-No export of raw bitumen
-No environmental sacrifice zones in northern Alberta
-Higher economic rents
-Get a Mexican exemption on proportionality
-Finally, a new SPP – Secure Petroleum Plan for Canadians.

Part of the problem lies with the Canadian and US energy corporations determining the economic future of Canada. As soon as Ottawa decides to legislate some control of these companies, a pipeline may be built to the eastern provinces and a strategic petroleum reserve started. Don't blame everything on NAFTA and the US. Although I don't condone the energy heist that the US has commited through NAFTA, no country was forced to sign this treaty (damn you, Mulroney!). Perhaps the Canadian population should start a movement to revoke the energy (and water) portions of it.
I don't see much that US citizens can do to help secure energy for Canada and prevent more environmental trashing of Alberta. It's all up to Canadians to rectify this problem. Furthermore, this issue is a good reason for Quebec not to think about economic and political independence. This issue could be a uniting force between Quebec and the balance of Canada.

I think there is a disconnect with Central Canada caused by the historical political, population and manufacturing base in Ontario and Quebec and a national energy policy from Ottawa will be difficult to sell in Alberta and Saskatchewan.

I think most farmers are still p.o.'ed at Trudeau for telling them to sell their own wheat 30 years ago. :)

I hope that an energy shortage improves sovereignty in Canada and doesn't go the other way. Canada having a low population and abundant resources is better off nationalizing and lowering exports to the US. You can take that idea farther and in a gas, oil and/or refinery capacity shortage situation, Alberta and Saskatchewan are better off without the rest of Canada.

The west has the coal, oil and gas, but Quebec, Ontario and Manitoba have the hydroelectric power. It would be great for Canada to see the infrastructure go in to share those resources bilaterally across Canada rather than hydro getting exported to the US, the manufacturing jobs existing in Ontario and Alberta feeling that the US has done more for their economy than Central Canada and not really caring that there is a gasoline shortage in Toronto.

Saskatchewan has existed as a "have not" province in Canada with little political sway nationally. They have plenty of oil , gas and refinery capacity, but gas is $1.20/L in Regina today. I don't know if there is empathy in Alberta when someone from Central Canada starts calling the Alberta oil "ours".

A rational thinking Canadian would think that as soon as we signed the NAFTA proportionality clause that we would immediately begin work on securing our internal energy supplies to ensure that Canadians are first priority for something underneath our own feet. But, alas, you would be wrong. Why plan for the future when everything is running so well right now? Only when an emergency hits will we think, "oh geez, why didn't we do something in the beginning?" Fucking politicians. They are so far up the oil industries' ass they can't see the light of day anymore. And the Canadian public's apathy is not helping.