The International Energy Agency (IEA) defines energy security as ”the uninterrupted availability of energy sources at an affordable price”.
As they further elaborate, “Energy security has many aspects: long-term energy security mainly deals with timely investments to supply energy in line with economic developments and environmental needs. On the other hand, short-term energy security focuses on the ability of the energy system to react promptly to sudden changes in the supply-demand balance.”
When looking through the lens of the last four years of regulatory changes, judicial challenges, energy infrastructure project cancellations and the resulting sharp decrease in global investment in Canadian energy projects, one starts to wonder if Canada’s approach to energy security is not just short term- it is also short sighted and reactive.
Recent moves by Alberta Premier Jason Kenney, who has made a corporate tax rate cut a centerpiece of his effort to bring jobs and global investment back to the province-hit hard by the 2014 crash in global oil prices and pipeline delays -have a welcome long-term focus on energy security and are promising to Industry.
“The tax cut represents a material improvement in Alberta’s business environment, but it’s still only one part of the fiscal, economic and regulatory conditions that determine a region’s competitiveness, said Rich Kruger, chief executive officer of Imperial Oil Ltd. in a recent Bloomberg interview.
Kruger also praised other moves by Kenney’s government, including changes to the province’s carbon tax and reductions in regulations as helping to improve the environment as well.
“Any step that continues to enhance our competitiveness in a global industry, which oil and gas is because we’ve got to compete globally for capital, is a good step,” Kruger said in an interview. “How fast does it lead to new investment? That’s a different question because we still have other things we’re dealing with, like a lack of pipeline space right now.”
While individual new pipeline projects have been stymied by multi-layered regulatory and judicial hurdles, a bundled concept- incorporating transportation, power lines, pipelines & telecommunication infrastructure in a cross-Canada Energy & Trade corridor- could have a better chance of success navigating the myriad regulatory applications, consultations and approvals needed.
- Kent Fellows, co-author of a University Of Calgary School of Public Policy paper with Andrei Sulzenko summarizes the benefits in an abstract as follows;
“ The Canadian Northern Corridor concept involves the establishment of multi-modal (road, rail, utilities and communications) rights-of-way through Canada’s north and near-north across the country with an accompanying regulatory and governance structure to manage this right-of-way. The concept is proposed as a potential solution to the geographic, political and economic challenges, providing growth and diversification through access to rapidly expanding international markets and interregional trade within Canada. The Northern Corridor concept would create opportunities for Indigenous communities and support the facilitation of northern security objectives.”
According to Fellows, the long-term focus in Canada is shifting from North-South Trade to East-West trade. Although the US is our biggest trading partner, (which isn’t going to change soon) global development patterns increasingly indicate that the potential for incremental new trade is much stronger east-west than north-south. There is a lost potential due to internal trade costs (i.e.- we lose a lot of GDP to internal (interprovincial) trade costs, and much of those have to do with inadequate infrastructure).
A key success factor for the Northern Energy Corridor concept will be in getting a shared vision of energy security from provincial governments as well as the federal administration.
For more discussion of the topic of Canada’s Energy Security- Federal and Provincial cooperation and the Energy Corridor approach, attend a luncheon with Alberta Minister of Natural Gas, Dale Nally, Kevin Birn-VP, North American Crude Oil Markets, IHS Markit and G. Kent Fellows, Research Associate at U of C’s School of Public Policy, and Greg McLean CIM, MBA- Leader at Criterium Merchant Capital and Candidate for Calgary Centre in the upcoming Federal election
Thursday September 12th 11:00am to 1:00pm at The Calgary Petroleum Club. Tickets $50.00 and $60.00.To Register, go to Luncheon Registraton
Presented by the Petroleum Joint Venture Association