It’s clear the time is now for Canada to explore new ways to engage with its southern neighbour, given changes to U.S. energy and environmental policy expected under President Joe Biden’s administration, including cancellation of the Keystone XL pipeline—a body blow to Canada’s economy. An expert panel on the energy sector and Canada-U.S. relations met on Feb. 16 to discuss how the Canadian government might proceed.
The panellists at the webinar, hosted by the Macdonald-Laurier Institute (MLI), expressed a mainly optimistic outlook for the next four years based on the long history of the fruitful Canada-U.S. relationship, despite the occasional dispute.
Finding the right balance in respecting the sovereignty of both independent nations is essential, noted MLI senior fellow JP Gladu, president of the Alberta to Alaska Railway.
It hinges on “convincing America that we in Canada matter … and that continental solutions are really in everybody’s interest, and also convincing Canadians that America is a vital part of Canada’s prosperity,” he said.
The future of Enbridge’s Line 3 and Line 5 pipelines come into question. Gladu said these two projects are absolute musts for Canada, adding that millions of Eastern Canada consumers would be directly impacted if Michigan’s governor is successful in shutting down Line 5.
“Then and only then, particularly on this side of the border are Canadians going to really understand the pace of energy transition doesn’t happen overnight and the importance of energy sovereignty. … We’re going to be reliant on oil and gas for a long time,” he said.
Gary Doer, a former Canadian ambassador to the United States, said Prime Minister Justin Trudeau would be right to focus attention on lines 3 and 5 going forward.
“You’ve got to decide where you’re going to spend your energy, and we’ve got some items on our to-do list,” he said.
But even if the two countries are now more ideologically aligned, that doesn’t diminish the need for Canada to stand up for its best interests, said Lisa Raitt, vice chair for global investment banking at CIBC Capital Markets and a former natural resources minister.
“We’re still going to have to have tough negotiations across the border,” she said.
While Canada and the United States indeed vastly differ in size, the lone American panellist, Maryscott Greenwood, CEO of the Canadian American Business Council, said the asymmetry argument is not totally justified.
“It’s not exactly right, because Canadians have all of the natural resources and freshwater that the U.S. is going to want and need forever,” she said. “It’s not always the elephant and the mouse. There are some areas where Canada really has the advantage.”
Raitt and Doer said it’s in Canada’s favour that it had already worked with Biden in the past, during the Obama administration, and many ties already exist below the official level.
Retaliation as an Option
“I don’t think Canada can stand by this at all,” said MLI distinguished fellow Jack Mintz in a pre-recorded message about Biden’s decision to cancel the Keystone XL permit.
Mintz, a President’s Fellow at University of Calgary’s School of Public Policy, proposed a few retaliatory approaches, noting that the tough part is getting a good deal for Canada.
One form retaliation could take is imposing a tax on the digital services provided by the U.S. tech titans, Mintz said. Another is to apply a carbon border adjustment on manufactured goods, since the United States—aside from a few states—doesn’t have a carbon tax or a cap and trade system.
Doer suggested a more holistic approach, linking climate discussions with cross-border energy issues.
“We can benefit by having one table, dealing with everything, with all the items, not just project by project,” he said.
Nevertheless, the pain for Alberta is very real—and a lot less tax revenue will be going to federal coffers from that province, Gladu added.
“I think Canadians often don’t understand that the oil and gas sector is a major contributor to our way of life,” he said.
On Feb. 16, the Conservatives succeeded in moving their motion forward to create a special House of Commons committee devoted to Canada-U.S. relations.
“The Canada-U.S. committee will get answers for Canadians about … the economic impacts of the cancellation of the Keystone XL pipeline and the threat of the Line 5 pipeline cancellation on both our countries,” said Conservative Leader Erin O’Toole in a statement following passage of the motion with all-party support.
“The [Canada-U.S.] relationship is bigger than the problems we’re encountering,” Raitt said.
“We’re really lucky to have America on our side,” said MLI senior fellow Ken Coates, the panel’s moderator.
“I really hope America feels the same way. Canada is a great friend—we’re a little bit too quiet sometimes, but I think this relationship is one of the most powerful in the world.”