Canada needs to beware U.S. energy protectionism – including policies that insist this country adopt greenhouse gas emission regulations for its oil and gas industry while giving U.S. and offshore producers a free pass, says former Conservative environment minister Jim Prentice.
In a speech delivered in Halifax on Tuesday, Mr. Prentice cited U.S. renewable energy strategies that discriminate against Canadian hydroelectric power from Quebec and Labrador, as well as proposed low carbon fuel standards, like the one in California that disadvantages oil sands companies while exempting heavy oil producers in that state.
"Canada must continue to fight for a continental energy marketplace that is free of national and subnational impediments – interventions by government, while well meaning, are nevertheless potentially damaging and counterproductive," said Mr. Prentice, now deputy chairman of Canadian Imperial Bank of Commerce.
In an interview, he sided with TransCanada Corp., which complained recently that the U.S. Environmental Protection Agency is urging Washington to work with Alberta and Canada to reduce greenhouse gas emissions from the oil sands as part of the review process for the Keystone XL pipeline.
TransCanada said the EPA recommendation would amount to an infringement of sovereignty.
Mr. Prentice also expressed concern if the pressure to regulate flows only one way.
"It's an infringement of sovereignty if the Americans are telling us to [cut oil industry emissions] and they're not doing anything," he said in the interview.
But he said Canada and the United States should work together to harmonize environmental and climate change standards so energy producers enjoy unfettered access to a continental market that may require no imports from offshore.
As well, there needs to be "consistent rules on production that comes in from Mexico and Venezuela" so those producers don't enjoy a competitive advantage.
When he was environment minister, Mr. Prentice advocated for a Canada-U.S. energy pact that would include a harmonized environmental approach, but that Canadian effort went nowhere with the Obama administration. Instead, the two governments have worked to fashion common emission standards in areas such as motor vehicles and appliances, while pursuing their own priorities in regulating energy producers.
Canadian refiners are particularly worried that they will face onerous emission regulation while their competitors in the U.S. do not.
Ottawa and Alberta are now negotiating with industry on greenhouse gas regulations for the oil and gas sector, which Environment Minister Peter Kent expects to introduce later this year.
While U.S. officials are watching with interest, there are no talks between the two countries to adopt a common approach.