Grant Bishop is the Calgary-based founder of KnightFork, which builds data-driven tools for carbon pricing and the energy transition.
When the Canadian government banned imports of Russian crude oil in early March, many noted that this alone would be a toothless measure. Canada had not imported any Russian crude since 2019, and even that year’s Russian barrels only represented 0.03 per cent of Canadian crude oil production.
Nonetheless, Canada has been importing many other goods from Russia, totalling $2.1-billion in 2021, with refined petroleum products, fertilizers and metals among the largest categories. But with Vladimir Putin’s forces bombing civilians and nuclear plants on behalf of his vile regime, it remains perplexing why Canada has not yet banned Russian imports altogether.
The Canadian government hasn’t been alone in its hesitation. The broad reluctance by Western countries to quickly cut off Russian energy and materials highlights an urgent need to retool our economies so that we’re prepared to cut off and confront despots who threaten free peoples around the globe.
Now, with the U.S. taking the step of banning Russian energy imports, it is time for Canada to reinvent itself as an arsenal of energy for the world’s democracies. That will involve displacing the energy and material exports of bad actors in the global markets, from Russia and beyond.
Indeed, it has already been mooted that the U.S. should enter into Faustian deals with Iran or Venezuela to increase petroleum supplies. But each dollar of gross domestic product in such countries will spew significantly more carbon into the atmosphere than output in the U.S. or Canada. If we don’t supply the continuing global demand for hydrocarbons, it will be kleptocracies and dictatorships that continue to benefit from pushing out dirtier energy and materials.
Our key aims, then, should be to develop and deploy technologies to decarbonize our own energy consumption; rapidly decarbonize our petroleum production; and quickly increase export capacity for oil and liquefied natural gas (LNG) to supply the world.
First, renewable power generation faces a big climb to close its gap between variability and reliability. Promising grid-scale battery technologies are reaching real commercial readiness, but system operators must integrate long-duration energy storage into grids.
Pushing ahead on nuclear is also a must. Aside from providing reliable power, nuclear is uniquely capable of helping decarbonize heat-intensive industrial processes. Canada has a developed nuclear ecosystem and regulatory experience, but Ottawa’s earlier enthusiasm for nuclear appears muted under the present Natural Resources Minister. To provide the world with substitutes for coal and gas baseload generation, Canada should work closely with our allies to accelerate development and deployment of small modular reactors.
Second, expediting carbon sequestration is the linchpin for decarbonizing Canadian petroleum production. Networks for carbon capture, use and storage (CCUS) are the most rapid way to decarbonize gas-fired power generation and many large industrial emitters. For instance, Canada imported $346-million of Russian-produced urea last year – a product that is spread by farmers to replenish nitrogen in soils but emits carbon after being spread. Instead, Canada could ramp up our own ammonia production, using our abundant natural gas as feedstock and capturing the byproduct carbon dioxide from those plants.
To encourage CCUS rollout, nonpetroleum projects that capture carbon should be made eligible for credits under the pending final Clean Fuel Standard regulations. As well, enhanced oil recovery projects should be eligible for the federal government’s pledged investment tax credit for CCUS.
Canada should also implement border carbon adjustments, which impose a tariff on imports based on their embodied emissions and rebating carbon levies paid upstream to exporters. Unlike our present patchwork of provincial systems, border carbon adjustments would require national collection of carbon levies, with the federal government ideally returning revenues to source provinces after rebates to exporters.
Finally, North America must ramp up our petroleum exports. By decarbonizing at home, we can free up supply for export, but we must build the infrastructure to pivot abroad.
Our federal government must prevent any disruption to LNG Canada and the Coastal Gaslink, commencing first flows as soon as possible. Other proposed LNG projects that are languishing under regulatory uncertainty should be accelerated.
Canada should also work with the U.S. to resurrect the Keystone XL pipeline. This would increase crude oil supply to the Gulf Coast, in turn allowing greater American oil exports. Approval could be conditional on decarbonization targets for Canada’s oil sands. Such approval would rile his party’s left flank, but that’s not who Joe Biden needs in the coming midterm elections.
It was his predecessor Franklin D. Roosevelt who called for his country to be “the great arsenal of democracy,” rallying America “for the defence of our civilization and for the building of a better civilization in the future.” Innovating and building is also how democracy will win today’s fight.
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