Fears of a Canadian Oil "Sand Storm" Are Overdone

Fears of a Canadian Oil "Sand Storm" Are Overdone

March 10, 2009 11:27
by J. Wylie Donald

by Paul Cellucci

Forecasts of inevitable conflict between Canadian oil sands development and U.S. (and Canadian) carbon concerns, as expressed in this week's Wall Street Journal ("Sand Storm" by Hyun Young Lee, http://online.wsj.com/article/SB123620661145533445.html) strike me as unrealistic. When I became Ambassador to Canada, the two countries had already been working for years to harmonize policies, and the working groups have continued working to this day. In fact, it seems pretty clear from the recent Ottawa summit that Prime Minister Harper wants to take a North American approach to climate change and that President Obama has no interest in cutting off imports of oil sands oil.


When it comes to how each nation will approach climate change, the Journal article makes much of the distance between the United States' proposed straight-ahead cap-and-trade system and Canada's concept of reducing emissions intensity. But I suspect that as the conversation continues there will be adjustments on both sides. The likeliest outcome by far is a single continental carbon-control system, bringing in Mexico as well.


As for U.S. attitudes to oil sands, the Journal implies that the President played it close to the vest in Ottawa. But in a CBC interview the night before, he was quite explicit in placing oil sands in the same category as coal. He acknowledged that coal generates half our electricity and that phasing coal out overnight would shut down our whole economy. The President emphasized the need to develop alternative sources of energy and to work together on technologies like carbon sequestration to contain the environmental damage of old sources.


There is a lot of room now for these two countries to work together. And there's been a steady history of doing so. The North American Energy Working Group has been working since 2001, the Security and Prosperity Partnership since 2005. In fact, there's a lot of institutional momentum for all three NAFTA countries to come together on climate change and energy policy. The Trilateral Agreement explicitly speaks of clean energy research.


The Canadians' commitment to research is serious. They've set aside $400 million for what they call "Green Infrastructure" spending over the next two years, $1 billion over the next five. Canada has already invested heavily to develop the oil sands industry. We can expect them to protect that investment.



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