U.S. efforts to reduce emissions from its coal-dependent power sector could be a boon to Canadian producers, as the two federal governments committed Thursday to greater integration of the electricity system.
Even as the Obama administration stalls on the highly contentious decision on the Keystone XL pipeline, U.S. Energy Secretary Ernest Moniz and Natural Resources Minister Greg Rickford committed at a meeting in Ottawa to increase collaboration in energy research, regulation and trade.
"We have an energy infrastructure that is very, very tightly linked and it is very important that we together look at how it develops," Mr. Moniz told a news conference.
Under proposed regulations issued by the Environmental Protection Agency (EPA), states must reduce the greenhouse gas emissions in their power sectors and will have a variety of means to achieve that reduction, which is primarily aimed at coal-fired power plants. Canadian utilities are gearing up to sell power from low-emission sources such as hydro, wind and nuclear.
During meetings with Mr. Moniz, Mr. Rickford reiterated the Harper government's desire to see the Keystone pipeline approved. But that decision is in the hands of Secretary of State John Kerry and President Barack Obama, and won't be made until a Nebraska court rules on a challenge to the state's granting of a permit.
Both sides are eager to move the bilateral energy conversation beyond the bitterly contentious issue of the stalled pipeline. The two cabinet ministers signed an agreement promising greater co-operation in areas such an environment protection in the unconventional oil and gas sector, the further development of an efficient and clean cross-border system, and the increased use of natural gas in the transportation system.
Mr. Moniz's visit is the first by an American energy secretary since 2006. On Friday, he is scheduled to meet with leaders from the Canadian energy sector – including TransCanada Corp. and Calgary-based environmental group, Pembina Institute – to get their input into a major energy policy review that he is heading.
Both the oil and gas and electricity sector are urging the administration to streamline the environmental review process that is required for cross-border energy infrastructure projects, including pipelines and transmission lines, that must receive presidential permits.
Mr. Rickford applauded the fact that Mr. Moniz would travel to Ottawa to get input from Canadian energy producers on a U.S. policy review. His visit "speaks to the integral nature of our energy relationship over all, not the least of which involves one of the most sophisticated and modern electricity grid systems known the world over," the minister said.
In a submission to Mr. Moniz's energy review, the Canadian Electricity Association – which represents producers – urged the Department of Energy to reduce the time it takes to approve new transmission lines, and to ensure the EPA regulations explicitly allow states to import power from Canada to meet their needs.
"There is significantly growing opportunity for exports of Canadian electricity into the U.S.," association president Jim Burpee said in an interview. But he said it is critical that the Americans do not raise new barriers to that trade, either at the state or federal level.
The two energy ministers also spoke of the importance of showing energy leadership in the world, to support the Ukraine and Europeans that rely heavily on Russia for their gas supplies.
Critics in the U.S. argue that the Obama administration should end the 40-year-old ban on crude oil exports in order to reduce reliance by European allies on Russia. Mr. Moniz said the government is reviewing whether to lift the prohibition but stressed that, despite rapidly growing production, the United States will remain a major importer of crude for the foreseeable future.