Toward a Cleaner and Leaner Energy Future for North America

Energy and Environment will be key topics when the leaders of North America gather for a Summit in Canada on June 29.  Because of a closer orientation among the three governments, the leaders of Canada, Mexico and the United States have a real opportunity to think about cooperation across our continent in a new way.  President Obama, Prime Minister Trudeau and President Peña Nieto can enunciate a shared strategic vision of energy security and environmental protection.  That vision, already presaged when Trudeau visited Washington in March, can better align the United States, Canada and Mexico on energy and environment approaches to support prosperity and well-being in North America.  If done well, such cooperation can also become a model for collaboration in other regions, as well as contribute to a more resilient global energy supply.

Mexico, one of the United States’ top energy suppliers and clients, is in the midst of a major reform of its entire energy sector (oil, electricity, gas, transmission, production, sales, etc.), which among other things opens the sector to serious participation by private companies for the first time since the 1930s.  Canada, the largest U.S. energy supplier and most integrated U.S. energy partner, has set a goal forging “an ambitious North American clean energy and environmental agreement,” under new Prime Minister Justin Trudeau.  The United States has developed new technologies revolutionizing U.S. oil and gas production and has committed to a vigorous set of measures to protect the environment and to support innovation of greener technology.  The current period of low prices for both oil and gas has meant huge challenges but also significant incentives to improve efficiencies in all three countries, and the industry is responding by becoming leaner and more competitive.

At a recent Wilson Center event, Former Canadian Environment Minister and Premier of Alberta, Jim Prentice pointed out that if the three countries handle this situation well, they can reap three big gains: 1) an energy security advantage with sufficient energy supplies from the three nations’ resources; 2) an industrial advantage via low priced and plentiful energy; and 3) an environmental advantage by greater use of natural gas, hydro power and solar and wind energy and through better coordinated, high-quality norms and standards.  Such regional cooperation could have international benefits too.  The International Energy Agency’s 2014 World Energy Outlook reports that the three countries represented some 20 percent of the oil and gas supply in the world and 20-25 percent of the expected additions to the global supply over the next 25 years.  A well-coordinated approach in North America will have big international impact.

Energy Flows between Canada, Mexico, and the United States, taken from Power Play: Energy and Manufacturing in North America

A new book published by The International Monetary Fund, Power Play: Energy and Manufacturing in North America, provides an excellent contribution for the officials preparing for the NALS summit at the end of June.  The authors thoroughly analyze energy production and potential in the three countries and the degree of energy sector integration currently in place.  Then, they examine the benefits of closer integration of North American energy markets.  The book concludes with a strong argument for closer collaboration in between Canada, Mexico and the United States, calling for the three countries:  a) to shape collaboratively a strategic framework for North American energy policy; b) to develop a shared strategic assessment of infrastructure needs and opportunities; c) to move toward more common standards for safety, security and the environment, starting with priority topics; d) to work cooperatively to support innovation for new, safe, greener technology; e) to make greater joint efforts to counter climate change; and f) to help lead efforts to reconcile energy development with climate change goals in international fora.

These recommendations constitute what would be an excellent outcome from the North American Leaders Summit (NALS) in June.  Officials from all three countries have been working in these directions both bilaterally and trilaterally since the last NALS meeting in February 2014.  Following that meeting, the three Energy Ministers met for the first time since 2007 at the request of their leaders and have now met three times, most recently in Canada in February.  They have agreed on priority work areas, established a Working Group on Climate and Energy, and in February, signed a new agreement on expanding cooperation and information sharing.

Much of the ongoing work is technical but very important nonetheless.  U.S., Canadian and Mexican officials launched and are building a first-ever shared energy data base/website that can help inform planning and investment decisions across the continent.  Officials are talking about how to make energy infrastructure more resilient.  They are looking at how to better plan to respond to emergencies.  They are discussing best practices for the development of unconventional oil and gas, while regulators have also increased exchanges about best practices in their areas of responsibility including safety and security issues.  The three countries are collaborating on a wider range of environment-related issues, including low-carbon electricity; clean energy technologies; energy efficiency; carbon capture, use and storage; climate change adaptation; and reducing emissions from the oil and gas sector, including methane.  The government teams, for example,  are coordinating for the upcoming June 1-2 Seventh Clean Energy Ministerial (CEM7) in San Francisco and the first-ever “Mission Innovation” ministerial, which is designed to better harness public and private sector R&D for the breakthroughs needed to achieve clean energy goals.  Finally, the three governments are looking at how they can help meet the energy security needs of our neighbors in Central America and the Caribbean.

This is a big agenda for trilateral cooperation, but one that can have important impacts across the continent as well as internationally, as the new IMF book makes clear.   Furthermore, it is fair to say that the general agreement on climate action between the three governments presents an unprecedented opportunity for cooperation.  On June 29, the ”Three Amigos” summit can send a clear message about the importance of this collaboration for the U.S., Canada and Mexico with a vision of the benefits possible for all three countries, and the leaders can charge their officials with a concrete work program to make this strategic vision reality.

This article was originally published on the Mexico Institute's blog on Forbes.com.