When Vladimir Putin launched the Russian army into Crimea and lent support to insurgents in eastern Ukraine, he jolted Europe out of the long period of complacency about where it gets its oil and gas.
Europeans began to remember that Russia supplies around one-third of Europe’s oil and gas imports. Having Putin’s hand on the tap that provides the energy to heat their homes and fuel their industry leaves Europe vulnerable to energy blackmail. That’s why allies of the Canadian Chamber of Commerce have begun telling me that interest in Canada as an energy supplier is growing.
There’s more than Russian hegemony at work, of course. Canada’s long campaign to negotiate an ambitious trade agreement with Europe has meant that opinion leaders there are hearing from, and about, Canada more often.
This week, I have accepted an invitation from our European partner organization BUSINESSEUROPE to do what I wouldn’t have thought worthwhile in the past — highlight the opportunities that can emerge on both sides of the Atlantic if Canada becomes a major supplier of oil and natural gas to Europe.
Along with Canadian business representatives and political leaders like the minister of energy from New Brunswick, I will be explaining to Europeans how we can help resolve their energy supply challenges.
It is in the best interest of both Canada and Europe to deepen their centuries-old partnership into greater co-operation on energy. Europeans are looking for trading partners who will respect market forces over geopolitical manoeuvring and who share Europe’s values in environmental protection and respect for human rights.
Over the past decade, North America has been transformed into an energy powerhouse, first through technology breakthroughs that unlocked the oilsands as an economically viable source of crude, and more recently, through the surge in shale oil and gas resources in the U.S. These new sources of energy mean that Canada must start to look beyond North America — our only market today — if we want full value for our energy resources.
The past year has seen a number of small but important steps forward on the EU/Canada energy partnership. Last June, a proposed LNG facility on Canada’s East Coast signed a long-term contract with E.ON. Just last week, Europe’s first major shipment of Canadian oilsands crude arrived on the coast of Spain. The proposed softening of European Fuel Quality directive will help give Canadian crude oil a more equal playing field in European markets.
But these small steps alone won’t be enough to establish the kind of partnership on energy that will serve the needs of people on both sides of the Atlantic. We also have to invest in transportation infrastructure in Canada over the medium to long term. For these investments to happen, a clear signal needs to be sent from the EU that Canadian energy is welcome.
Because 80 per cent of Canada’s electricity system is powered by non-emitting energy sources like hydro and nuclear, oil and gas production is Canada’s largest source of greenhouse gas emissions. Canada’s federal government has not announced any plans for regulating greenhouse gas emissions from that sector and has pulled away from international agreements. These acts have left many Europeans skeptical of our commitment to environmental protection and addressing climate change.
But Canadians have been North American leaders in policy responses to greenhouse gas emissions. Much like the member countries of the EU, Canadian provinces have large latitude to set policy in areas under their domain. Canadian provinces have been taking action on GHGs, including implementing North America’s first comprehensive carbon tax (B.C.), first mandatory greenhouse gas emission reduction targets for large emitters (Alberta), first ban on coal-fired electricity plants (Ontario) and first compulsory cap-and-trade regime (Quebec).
Nor have Canadians been inactive on the technology front. The Canadian Oil Sands Innovation Alliance is a partnership of 13 Canadian companies that have shared 560 innovations worth $900 million to date with the aim of reducing environmental impacts.
Projects like Shell’s Quest Carbon Capture and Storage project will reduce emissions from upgrading oilsands by a million tonnes of carbon dioxide each year — equivalent to taking 175,000 cars off the road. The next generation of oilsands technologies could take this impact even further. Companies are exploring the use of solvents in in-situ oilsands production, a technique that could reduce greenhouse gas emissions from production by as much as 85 per cent.
Canada can become another Norway for the EU, a reliable energy partner with strong environmental regulations and deep respect for human rights. But achieving this vision will take time, money and effort. We hope our presence in Europe this week will be a step toward making this a reality.