Premiers avoided traps to reach energy deal

The glass is decidedly half full on the signing of a Canadian Energy Strategy by the premiers on Friday in Newfoundland: at least there is something that has been agreed to for all to see. And while some argue the final document apparently isn’t as robust as were initial drafts in the context of climate policy, it shouldn’t have been.

A province-by-province approach has been taken to address the issues of carbon emissions — which is the way it should be because a one-size fits all prescription would have been doomed to failure.

No, Alberta doesn’t not measure its carbon management on an absolute basis and nor should it. As any economist will point out, as long as intensity per unit of output is decreasing, that’s what counts. The fact the actual units of output are growing, means the economy is expanding — and that benefits all Canadians.

This last point is what drove Saskatchewan premier Brad Wall to say what he did earlier this week: that we, as a country, need to stop apologizing for our energy resources and that “oil and gas are not four-letter words.” It means not giving more weight to one issue at the expense of another.

Yes, it’s critical that Canada does a better job in presenting a unified front at the upcoming Climate Conference in Paris later this year, but at the same time, it does not serve the country’s interests well by failing to recognize the long term economic consequences of not developing our rich natural resource endowment.

Many years ago, at a western premiers conference that took place in Calgary, then Prime Minister Pierre Trudeau asked the question of who spoke for Canada — something he saw as his role, in his capacity as Prime Minister.

But Alberta’s premier Peter Lougheed pushed back: “We all do,” said Lougheed, referring to the other premiers who were gathered.

One could argue Wall was channelling Lougheed this week, trying to remind his colleagues that tilting too close to the windmills, in the literal sense, is not in Canada’s best interests. The lack of pipeline infrastructure, which would support expansion and long-term investment, means a limit to economic growth that will be felt from coast to coast.

“By taking a position that truly serves the long-term national interest, Brad Wall was trying to speak for Canada,” said Dylan Jones, president of the Canada West Foundation.

A few weeks back there were people in the energy patch who pounced on Canadian Natural Resources Chairman Murray Edwards when he warned Alberta’s new government about the uncertainty created by the added variables of a royalty review and a climate panel — on top of a weak oil pricing environment.

But Edwards was simply looking out for his Canadian business interests; unlike an Exxon, Shell, Total or Statoil — who have substantive operations around the globe — CNQ is a quintessential Canadian company; its overseas assets complement what exists in Canada and are not big enough to warrant a wholesale shift of capital. The bigger, multinational players do have that ability; capital is mobile.

And in this case, it’s growth capital.

Think of it another way: Iran just signed an agreement governing the development of its nuclear program. The government is hungry for investment in its oil resources. Multinationals, among them Total, once again have Iran on the radar screen. It is not out of the question capital could flow there, at Canada’s expense.

Contrary to what certain special interest groups claim — and that realistically includes a portion of Premier Rachel Notley’s voter base — a climate change strategy and energy development — including the building of pipelines — are not mutually exclusive.

“We need to integrate environmental and economic policies because if we don’t do that, all we are doing is exporting our emissions,” said Jones.

The good news/ bad news out of Friday’s agreement is that it acknowledges the need for energy infrastructure but it still doesn’t deal with the fact that a federal body — the National Energy Board — can approve a project but the provinces can use other methods to stall or kill it.

“We need to have conversations aimed at there not being constant obstruction of projects. If there is a desire for a change in the law in some way, we should be discussing that and reaching a decision one way or another within our democratic processes. The idea we would have a legal framework that some would refuse to follow strikes me as problematic in a lot of different ways,” said Dwight Newman, the Canada research chair in Indigenous Rights in Constitutional and International Law at the University of Saskatchewan and a Senior Fellow with the Macdonald Laurier Institute.

That’s certainly the way Wall has looked at the issue. When he was premier of Alberta, Jim Prentice said he was going to negotiate with B.C., acknowledge the five conditions with respect to allowing the Enbridge Northern Gateway pipeline to proceed put forward by Premier Christy Clark and try and satisfy them. Wall didn’t like that — and was of the view that what should not be done is acknowledge it was appropriate to have the five conditions in the first place.

Unlike B.C., however, Ontario and Quebec have been more nuanced in that they have said if Alberta wants support it must accept those provinces conditions, but they are not going as far as B.C.

“Wall is right to say there shouldn’t be provincial conditions on pipelines and we shouldn’t be negotiating on that ...," said Jones.

As the two day meetings wrapped up the question is whether the CES signed on Friday is robust enough to overcome existing interprovincial barriers and enable Canada to reach its potential as a player on the international energy stage. Canada, with its natural resource endowment, cannot and should not, be left behind. Woe to the premier or the province who doesn’t understand this and is more worried about their own electorate rather than the long-term well-being of the country.