The U.S. is providing the blueprint. Canada can either play catch up and win, or risk being left behind
By Lisa Baiton
The evolution of the Biden administration’s view of energy security and America’s role in providing secure oil and gas to the world was recently made exceptionally clear – and should make Canadian policymakers sit up and take notice.
In her keynote speech at CERAWeek in Houston, one of the largest gatherings of energy producers in the world, U.S. Secretary of Energy Jennifer Granholm unequivocally communicated that her country is out to win. The U.S. wants to be the outright global leader in attracting investment for decarbonization and delivering responsible oil and gas production.
The U.S. plans to do this through the landmark Inflation Reduction Act (IRA) – which recently committed US$369 billion to energy security and climate change investments. In addition, the U.S. Department of Energy has been allocated US$62 billion to partner with the private sector to rapidly bring new clean technologies to commercial scale.
The U.S. is serious about decarbonizing while producing secure, reliable and responsibly produced oil and natural gas for themselves and the world. As Secretary Granholm bluntly stated, “we can walk and chew gum at the same time.”
She’s right. These two goals are not in conflict. They are, in fact, fully integrated. The world will continue to need secure access to oil and natural gas as part of a diversified energy mix. The world also needs to decarbonize. We can do both.
While Canada has taken some positive steps in this direction, our approach to climate and energy remains somewhat cumbersome and complex. On one hand, progress has been made on incentives for carbon capture and clean tech investment – but that is paired with things like a proposed cap on oil and natural gas production emissions that deters investment and could set Canada back from building the next generation of energy infrastructure.
The clear difference is that the U.S. is taking an incentive-based approach to attract investment from around the world, while Canada is taking a more prescriptive regulatory approach. One is offering carrots, while the other still relies heavily on sticks that discourage investment.
While we may not be able to compete with the scale of the IRA, there is an urgency to find a made-in-Canada solution that can put us on track as a world leader in decarbonization and carbon capture.
Do we want to compete for the billions of investment dollars now pouring into clean technology globally? If so, Canada needs a simple, integrated, co-ordinated approach between federal and provincial governments, and industry, on policy and incentives.
Today, much of that cleantech capital is sitting on the sidelines in Canada as industry and investors face an uncertain regulatory and policy environment which discourages investment in the new energy systems that would allow Canadians to prosper in a lower-carbon future.
If we can solve that, Canada has great potential as a reliable and responsible energy supplier to the rest of the world.
We can win too. We can work to make Canada a destination for clean technology investment. That will enable us to grow our role as safe, secure providers of lower-carbon oil and natural gas to the world while ensuring our own long-term economic and energy security.
There is a lot of work to be done. Getting climate and energy policy wrong has real-world catastrophic consequences – as we’ve seen with the current energy and inflation crisis.
But getting it right could be a generational opportunity for Canada.
Our oil reserves are larger than Russia’s. We have economic and prolific light oil and natural gas plays, which are among the biggest in the world, that can compete with any other country – and we have companies that operate with some of the highest environmental standards in the world.
There is growing world demand for responsibly produced Canadian oil and natural gas today because we are one of a few stable, democratic countries that produces more energy than we consume and have the resources to export it. Canadian natural gas has a role to play as a backup to growing renewable energy sources. Countries, including Germany and Japan, have looked to Canada as a potential partner in energy security by exporting liquefied natural gas.
Canada has the potential to make strategic policy choices to grow our economy, creating prosperity for generations while contributing to the stabilization of global energy markets by providing lower-emission oil and natural gas throughout the world.
The U.S. is providing the blueprint. We can either catch up and win together, or risk being left behind.
Lisa Baiton is the President & CEO of the Canadian Association of Petroleum Producers.
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