A regional energy revolution in our grasp

Colin Robertson spells out the infrastructure and partnerships needed in North America to maximize gains from recent developments in the energy sector.

By: /
20 March, 2015
By: Colin Robertson
Vice President and Fellow at the Canadian Defence and Foreign Affairs Institute

The North American energy revolution is underway. Fuelled by energy self-sufficiency, Canada, the United States and Mexico can create an economic powerhouse that will rival any other regional bloc and guarantee continental sustainable prosperity.

This past weekend, scientists, environmentalists, energy industry representatives and government officials from all three nations met in Beaver Creek, Colo., for the annual Vail Global Energy Forum.

Inspired by the spring skiing, the stocktaking was lively, opinionated and optimistic.

The Mexican energy reforms enacted by President Enrique Pena Nieto – combined with those to education, labour and banking – signal a second Mexican revolution. The reforms promise to curb the economic drivers behind illegal immigration by creating jobs and security within Mexico. This will benefit Canada. U.S. concerns about its southern border inevitably act as a damper on efforts to create a more open northern border.

The Mexican reforms have already opened opportunities for the Canadian energy sector. We are building pipelines and infrastructure for energy generation. Mexican regulators are looking to Alberta’s Energy Regulator for best practices.

We will gain more business when we reform our visa requirement that relegates Mexicans to second-class status within North America. The fix seems obvious: a secure North American traveller program modelled after NEXUS.

Innovation – fracking and continuous improvements in conventional and renewables – is driving the U.S. energy revolution. The United States is now the world’s biggest oil and gas producer (and top in wind production). This remarkable turnaround is already spurring a re-shoring of manufacturing.

Secure energy is also a geopolitical game-changer. Former secretary of state Condi Rice told Vail participants that it creates a better economic base for North America and “for anyone who is dependent on oil and gas.”

U.S. industry is pressuring Congress to reverse its ban on U.S. crude oil exports. They argue that U.S. product will break the grip of OPEC and Russia as the principal suppliers to Europe, Asia, the Caribbean and Latin America.

For Canada, these developments mean that a national energy policy based on exporting to the United States must change. We have to diversify our markets if we are to take maximum advantage of our resources. This means pipelines to both coasts, new storage terminals and upgrading our existing refinery capacities. This should be a national priority, a sesquicentennial project on the scale of building of our continental railways, the trans-Canada highway and the St. Lawrence Seaway.

It also means the kind of North American collaboration on energy policy that we achieved on trade and investment. The North American free-trade agreement integrated our markets based on supply chain dynamics. Today’s North American car is built from parts made in all of our three countries.

We need to start with a common understanding of the North American energy picture: What is our capacity? How do we maximize its efficiencies?

We need infrastructure that links our resources safely and efficiently to processing, transmission, transportation and to markets. We need to plan for the future including electricity grids that respond to the recharging of electric vehicles and refuelling infrastructure for natural gas and hydrogen vehicles.

Second, let’s look at the development of common standards on sustainable land and water use. We should be developing “best in class” North American regulations that set the global standard. Canada’s Oil Sands Innovation Alliance is a model for industry pooling of best environmental practices.

Third, we need a permit system for new infrastructure including pipelines and transmission grids that is transparent, reliable and, to the extent possible, above politics.

Fourth, we need energy literacy. Industry needs to work with civil society and environmentalists to explain, educate and demythologize. Hollywood tends to vilify the energy industry. Highly publicized, poorly handled accidents – Deepwater Horizon, Lac Mégantic – have left the public increasingly skeptical around energy development.

National governments must lead the North American energy dialogue. The recent continental energy ministers’ meeting should become an annual affair. As with politics, all energy is local. State and municipal governments manage much of the regulatory authorities. Our emissions standards originated in California. States’ and provinces’ experimentation in carbon pricing and the practical application of renewable and alternate energies, become models for national and continental practice.

Colorado Governor John Hickenlooper hosts the first-ever continental summit of provincial premiers and states’ governors in Colorado Springs this October and he told the Vail Forum that the agenda includes energy co-operation.

The North American energy revolution is upon us. Let’s take advantage of natural synergies between our resources and markets in North America.

This article first appeared in The Globe and Mail.

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