Canada Must Diversify its Energy Pitch to U.S.

Jul 18, 2014

As the dust settles from yet another Keystone XL decision delay from the Obama administration, Canadian officials continue to scratch their collective heads about the United States’ decision to deny Gulf Coast refineries the heavy crude they so desperately need.

Canadians see approval of the pipeline as a “no-brainer” and any delay is seen as additional evidence of the current administration’s ambivalence toward its largest trading partner. These slights have led to a constant flow of articles decrying the “insult” and claiming that the relationship is at its historic ebb.

While the pipeline has become a powerful symbol of America’s commitment to its northern neighbour in Canada, in the United States it has morphed into a litmus test of the environmental commitment of the president. Domestic opposition to the pipeline, including the deep pockets of billionaire Tom Steyer, is now the driving force behind the delay.

These domestic concerns trump, and always will trump, the concerns of a foreign country, no matter how close the relationship is. However, Canada does offer another cleaner energy source that could alter the conversation around fossil fuel imports. In addition to touting the benefits of Keystone to the American economy, Canadians should do more to talk up the benefits of their hydropower potential.

Delineating the future of Canadian energy down to one metal tube isn’t a winning strategy. A more nuanced and diverse approach to energy exports could win some concessions. Opposition to the pipeline has grown from a bipartisan local revolt in Nebraska centred on the safety of the pipeline itself, to a more general discussion about how the North American neighbours want to produce energy in the decades ahead.

Rather than “ethical oil” or the benefits of “energy independence,” Canada should focus on the clean power it does produce. Similarly, the U.S., in a desperate attempt to reduce its carbon footprint, exemplified by the Environmental Protection Agency’s new existing power plant rules, should encourage the import of clean Canadian power while taking a measured and pragmatic approach to importing Canadian fossil fuels.

Stephen Harper’s determination to win the pipeline’s approval has led to a steady stream of provincial and federal ministers to Washington to push for the project. Most come to discuss the benefits of Canadian fossil energy, of which there are many, and emphasize the interconnected nature of our economies. They also assert, correctly, that Canadian crude will largely displace Venezuelan crude (equally heavy and polluting), a politically important distinction that has been lost among the pipeline’s opponents.

What they don’t often discuss is the massive amounts of untapped hydropower that Canada could potentially export to the United States. This immense clean power source already supplies 34 per cent of Vermont’s electricity; a long-standing relationship between Manitoba Hydro and Minnesota Power has lessened the state’s reliance on coal. Each terawatt-hour of Canadian hydropower exported to the United States displaces between 500,000 and one million megatons of CO2. The Canadian Hydropower Association estimates that Canada holds 163,000 megawatts in untapped energy, enough to drastically reduce the United States’ carbon footprint.

For its part, the U.S. must increase incentives for building and importing additional hydropower from Canada. Many state renewable portfolio standards exclude Canadian power in favour of domestic renewables. While encouraging domestic and local green energy is a laudable policy, the intermittent nature of solar and wind demand a more consistent base load. Canadian hydro can act as a complementary source driving down emissions while competing on price.

The federal government and the states should do all they can to ensure Canadian hydro’s acceptance as a “renewable” energy source. The infrastructure necessary to bring Canadian electricity into the United States often faces extensive hurdles, mostly from NIMBY locals and politicians eager to fend off “foreign” energy. Friendly state regulations for the import of Canadian hydro energy would go a long way toward increasing American consumption of this low greenhouse gas emitting resource.

While Keystone is now ultimately a symbol of environmental commitment in the United States and a symbol of America’s commitment to Canada in Ottawa, the pipeline undoubtedly remains an important, though not essential, piece of infrastructure. Denying the pipeline is a misappropriation of valuable resources in the fight against climate change. Conversely, Canadian proponents of the pipeline must convince a skeptical U.S. administration that it is committed to a sustainable future.

The marriage of increased Canadian export of renewable hydro energy and the responsible development of fossil fuels makes the case for Keystone XL stronger and American commitments to reduced GHG emissions more attainable.

This article was first published on The Star.

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