Canadians must fight U.S. protectionism in the energy sector, Prentice says

OTTAWA – Canadians need to step up their efforts to maintain free and open energy markets for Canada’s oil, gas and electricity in the United States, says former Conservative cabinet minister Jim Prentice.

Prentice, now senior executive vice-president at CIBC, was in Halifax on Tuesday to discuss how Canada will fare in a North America that is on the verge of becoming energy independent.

“If we play our cards right, there will be profound opportunities for Atlantic Canada and for our country as a whole,” Prentice said in prepared remarks delivered to the Maritimes Energy Association in Halifax.

But Canadians can’t take access to the U.S. market for granted, he added.

Rather, they should be vigilant about signs of protectionism coming in the form of low carbon fuel standards or regional requirements to use specific amounts of renewable energy, Prentice warned.

“Canada must continue to fight for a continental energy marketplace that is free of national and sub-national impediments. Interventions by government, while well meaning, are nevertheless potentially damaging and counter-productive.

“Even green protectionism is protectionism nonetheless.”

Before the federal government pulled the funding from the National Round Table on the Environment and the Economy, the advisory body warned frequently that Canada’s exporters would face increasingly tough environment-based trade barriers unless Canada, too, imposed stringent standards.

But it should not be a question of Canada having to meet higher standards, Prentice argues. In an interview, he said some of the U.S. measures — while they may mean well — simply distort markets.

In some cases, “the net effect is they don’t recognize Canadian hydro as renewable (energy),” while in other cases, low-carbon requirements are designed specifically to keep out Canadian oilsands products, he said.

“These kinds of sub-national requirements are damaging and we have to deal with them.”

Ideally, Canada and the United States would recognize that their environmental standards should be as integrated as their energy markets are, and would harmonize their demands, he said.

Prentice proposes setting up bi-national working groups “with real teeth” that would establish policies for both countries.

If U.S. markets stay open to Canadian products, the Canadian energy sector stands to profit handsomely, not just from oil and gas sales but also from hydro-electricity, he added.

Prentice — who stepped down as environment minister in November 2010 — has been a strong advocate of fully developing the energy potential of the Lower Churchill River so that Atlantic Canada can define itself as a major exporter of clean electricity.

He acknowledged that cheap and abundant natural gas in North America means volatility for Canadian oil and hydro-electricity exporters. But as heavy users of electricity look for ways to wean themselves off fossil fuels, Prentice believes the long-term potential for hydro is promising — as long as U.S. markets stay open.

Of course, pipeline infrastructure is just as crucial, both for market access to the United States and to the rest of the world, he added. Prentice expressed optimism that approvals for both the Keystone XL pipeline through the United States and the Northern Gateway pipeline through British Columbia would be forthcoming.

And while keen to see a West-to-East pipeline across Canada, a pipeline to tidewater on the West Coast would be particularly crucial for shipping Canadian oil to growing markets in Asia, he added.