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Executive Summary

This paper conducts an enquiry into Canada’s foreign energy policy, and suggests that the design of a grand energy strategy is paramount to the construction of such a policy. The analysis that follows, of whether such strategy exists and what elements should be included in one, is framed by examining the position of the US, Canada’s largest energy customer and trading partner, in the evolving world of energy geopolitics.

Detailed analysis of the current global energy scenario and the historical evolution of American relations with the Middle Eastern powers lead to the conclusion that with time, the US will have to relinquish its dominant position as defender of free passage through the Strait of Hormuz and refocus its attentions from that region to the Western Hemisphere, whose energy potential is still emerging.

In this scenario, Canada’s bountiful energy endowments make it a key player. Nonetheless, there are substantial challenges to transforming these resources into a source of prosperity. The roadblocks vary in nature. Some, such as the environmental footprint of oil sands production, require technological breakthroughs, while others, such as the jurisdictional challenges inherent in provincial ownership of resources, are solely political. Adding to these difficulties is the fallout of the last National Energy Program (NEP), a policy put forth by Pierre Trudeau in the mid-1980s, which still affects much of the national debate. In fact, the current energy policy as stated by the Department of Natural Resources offers the same prescriptions as the policies of the Mulroney government, put in place in response to the NEP. Yet, it is a much different world that confronts Canada now.

This paper argues that to overcome these challenges the Prime Minister must define a clear vision and craft policies to achieve these goals, starting with the coordination of a national plan that reconciles energy and environmental policies. The development of a policy for the sustainability of hydrocarbon resources is central to this initiative because any country that comes up with new ideas and technologies to use, store and dispose of carbon will lead the way into the future. Canada should − and can − become the nation to tell the world “the 1001 ways of using carbon.” Related policies can then be judged by whether or not they make a contribution to the sustainability of hydrocarbon resources.

This will only come to fruition if a technological leap can be engineered – and the best model, this paper argues, is to follow the structure put in place by Alberta Premier Peter Lougheed, in the creation of the Alberta Oil Sands Technology Research Authority (AOSTRA), where his government partnered with other levels of government and private enterprise to bring about the advancements in technology development.

Once there is a national plan, the Prime Minister can move to the international scene by establishing strong partnerships that can provide the basis for Canada’s leadership in the energy sector, from the Arctic to the southernmost tip of the Western Hemisphere. There is a need to create a constructive energy architecture, which would include, among other initiatives, the creation of a forum where discussions on the future stewardship of our shared environment would take place.

This paper concludes by suggesting that although it is uncertain how long it will take for the US to reposition itself, it will eventually do so. And when that happens, the perceptions of Canada by our neighbours, close and afar, will depend solely on what Canada chooses to do. The stakes are high, but then so is the prize – prosperity in a peaceful and sustainable world.