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The Globe and Mail

Keystone shows us that relying on others leaves Canada vulnerable

Joe Oliver is former minister of natural resources and former minister of finance.

Now that Keystone XL has been rejected by U.S. President Barack Obama, the spinmeisters are busily at work trying to rewrite history for partisan or ideological purposes. So, let me deal with the prevailing myth that if only Canada's previous government had taken seriously the need to reduce carbon emissions, Mr. Obama might have approved the pipeline project. It's important to debunk the myth, because arriving at the truth has implications for our national interest.

The most obvious point is that U.S. domestic politics was clearly the driver for this decision. Constituencies at the core of the President's base were pushing hard for its rejection – environmental groups, liberal Democrats, like-minded fundraisers, assorted Hollywood stars and various media outlets. The U.S. administration was clear that optics played a key role. The President wanted to deal with this issue prior to attending the COP21 climate change conference in Paris, so he could arrive with his green reputation burnished and his environmental legacy established.

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As we know, the decision ignored overwhelming arguments in favour of the project: jobs, economic growth, national security, environmental safety, greenhouse gas (GHG) emissions and North American energy independence.

Our government had volunteered to impose regulations on oil production in concert with the United States, but Mr. Obama's administration did not take up our offer.

To my knowledge, the administration never suggested anything we should do to achieve a favourable ruling on Keystone. In my roles as natural resources minister and finance minister, I raised Keystone on numerous occasions with my counterparts, Energy Secretary Ernest Moniz and Treasury Secretary Jack Lew. On no occasion did either of them ever make such a suggestion.

During the seven years while the $8-billion project languished under multiple regulatory reviews and legal delays, the United States became the largest producer of oil and gas on the face of the planet. Indeed, one of the reasons that oil prices collapsed was the dramatic increase in U.S. production.

Furthermore, since 2010, the United States has built pipelines 14 times the length of the proposed 1,400-kilometre Keystone pipeline. That included the 780-kilometre southern leg of Keystone not subject to presidential approval, which was constructed last year. At the same time, the United States imported Canadian crude in increasing quantities, with an exponential increase transported by rail – nearly half a million rail cars last year. And let us not forget that emissions from the oil sands over all represent only about 1/1000th of global emissions.

If Canadian policy, against all logic and the facts, was a consideration for Mr. Obama, then why did he wait to make his decision until right after the election of a Liberal government, which had promised to make changes to our emission policies? We must also understand that those Canadians and foreigners who oppose our resource development, especially the oil sands, will not be sated by their victory. (To be clear, I am not talking about all environmental groups, First Nations or individual Canadians with legitimate concerns about the environment.) We need to face a harsh reality. Every single major resource project in Canada has been fiercely opposed by certain groups and individuals. It is obvious they will continue to do so, irrespective of our policies. If we let them have their way, Canada will be a poorer country, especially for lower-income Canadians. And we will be exposed to a fragile and volatile international economy, without the protection of resource wealth.

Canadian interests and policies were irrelevant to the Keystone decision, as they were to opposition from anti-development forces. It is important that we understand that relying on others leaves us vulnerable and weak. The implications of that inescapable conclusion leads to yet another. When our only customer needs us less and cares even less, we must find new markets for our oil and gas. The world is beckoning, but will not wait forever. We need to transport our oil and gas to tidewater so we can deliver it to an energy-hungry world. Fortunately, we can do it in an environmentally responsible way. Canada has an enormous opportunity for jobs, growth, funding for social programs and health care. The immense good fortune presented by our vast natural resources can lead to long-term prosperity and security. Let us take this setback as a call to action for the good of all Canadians.

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