Need to diversify energy markets and improve environmental sustainability
Canada has an opportunity to be an energy superpower in the next decade but needs to take action to diversify and strengthen energy markets, Jim Prentice, Vice Chairman, CIBC told an audience at the Calgary Chamber of Commerce today.
In laying out a roadmap for Canadian energy over the next decade, Mr. Prentice identified hazards along the route and thoughts on how to navigate around them. He pointed out that the marketplace is changing for Canadian energy given a slow decline in U.S. demand for imported energy and rising demand in developing countries.
“In 2021, Canada will be an energy superpower,” said Mr. Prentice. “But mere ownership of resources does not make us a superpower. We are the world’s largest producer of energy in all forms when measured per capita. We have the oil, natural gas, hydro power and uranium. But we are still missing one vital component: a diversified market.”
He added that access to the U.S. market is facing tougher scrutiny by U.S. regulators and pressure is growing both at home and abroad to make the oil sands more environmentally sustainable.
“Canada will either be an environmental leader or have other jurisdictions dictate our environmental policies. It should be lost on no one that the President of the United States has spoken twice this spring about Canada’s environmental policies. The world is calling upon Canada to improve its environmental performance vis-a-vis the oil sands.”
To achieve the goal of being an energy superpower, Mr. Prentice believes Canada must do two things:
- First, we need to clear away the impediments that are depriving the Canada-U.S. energy relationship of its natural continental market-based strength.
- Second, we need to diversify our market to the Asia-Pacific.
“Today, virtually all our energy exports are destined for the United States. We have one customer… and that makes us a price-taker rather than a price-maker,” he added.
He identified four impediments in Canada’s energy relationship with the U.S.
1) Low-carbon fuel standards. He notes that 47 seven separate jurisdictions in the U.S. are now developing their own low-carbon fuel standards which he characterized as an attempt to download American environmental compliance costs onto Canadian producers.
2) Growing protectionism in the renewable sector. He is concerned that some U.S. jurisdictions are trying to nurture their renewable industries by setting renewable portfolio standards that shut out Canadian hydro, “the cheapest and most abundant source of renewable electricity.” An estimated 25,000 MW of Canadian hydroelectricity could be developed in the next 25 years which would significantly green North America’s electricity system.
3) The optimal flow of oil to Gulf Coast refineries. These refineries were designed to process heavy crudes and are struggling to get sufficient volumes due to limited pipelines.
4) Getting regulatory approval for the Keystone XL pipeline project. The most difficult impediment at the moment.
“Canada’s energy objectives must reflect our own national interest,” he said. “We need to have diversified markets to ensure the best marginal price and to reduce our market risk. And the road to diversified markets runs through our west coast and beyond to the countries of Asia-Pacific.”
He sees opening up Canada’s energy trade to the Asia-Pacific for both liquefied natural gas (LNG) and oil. He believes it critical that we move forward with investments in the transportation and distribution.
Mr. Prentice laid out a straightforward and achievable road map to make Canada an energy superpower by 2021. He told the Chamber of Commerce audience that we need to:
- Continue with efforts to remove impediments to a free market in North American energy trade;
- ‘Double down’ on efforts to get Keystone XL approved and built;
- Make oil sands production more sustainable, fully develop our prodigious hydro resources, and improve our track position in the global clean energy race; and
- Diversify our energy markets by creating a corridor to the west coast for Canadian oil and LNG.
“That is how Canada can become an energy superpower by 2021.”
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For further information:
contact Kevin Dove, Senior Director, Communications and Public Affairs, 416-980-8835 or [email protected]