The SPP and energy: Securing U.S. control of Canadian and Mexican resources

The fivefold expansion anticipated for oil sands products in a relatively short time span will represent many challenges for the pipeline industry. New and expanded pipelines will move more volume into existing and expanding interior U.S. markets, and offer shipments to California via the Canadian West Coast.

~ From a report of the SPP Oil Sands Experts Group based on a workshop in Houston, Texas from January 24-24, 2006

Energy, mainly the stuff coming out of Alberta’s tar sands, is arguably the sticky goo holding the Security and Prosperity Partnership together. A fivefold increase in tar sands production is actually built right into the SPP, and according to analysts nothing is going to get in the way of Canada reaching that target – not mass deforestation, water shortages or international agreements like the Kyoto Protocol. Currently, almost 100 per cent of tar sands crude heads due south to satisfy a growing U.S. demand for cheap and plentiful oil. And plans are underway for new pipelines designed to carry raw bitumen into the U.S. to be refined, which takes jobs out of Alberta too. Meanwhile, Canada has no strategic reserve of oil and gas in case of international shortages and currently imports almost half of the oil we use on a daily basis. The U.S. is also pushing to “enhance electricity collaboration” through the SPP, which could ultimately lead to a completely deregulated, market-driven electricity grid controlled by U.S. interests. Clearly, Canada needs a better plan than the SPP.

Losing control of our energy

Canadian energy is consumed primarily by the United States. Canada signed away significant control over energy when we agreed to a proportional sharing clause under the North American Free Trade Agreement. Under this clause, Canada cannot cut exports to the U.S. no matter what the state of our energy supplies, unless we cut the same proportion of supplies to Canadians. As a result, Canada now exports 70 per cent of our oil to the U.S. while importing 60 per cent of what we consume from other countries. We cannot cut back on the production of fossil fuels for the U.S. market, which is fine with our government because the new goal is to dramatically increase production and exports to the U.S. under new agreements in the Security and Prosperity Partnership.

Canada: energy superpower or clearing house?

Prime Minister Harper frequently refers to Canada as an “energy superpower” and yet his energy policy is designed to hand over even more control of Canada’s oil and gas to U.S. companies. One of the SPP's recommendations is for a "continental energy and natural resources pact." This would mean granting U.S. investors greater access to our energy supplies by creating an integrated marketplace – something the Bush administration and the energy industry have been pushing. At a meeting in Boston in November 2006, Natural Resources Minister Gary Lunn told energy industry executives, "I want you to know that the Canadian government will do everything we can to support you." Some superpower!

Energy: a continental resource

Energy was identified as a top priority of the SPP and it was decided that the North American Energy Working Group (NAEWG), established in April 2001, would be the venue for all energy-related discussions. Under the SPP, the NAEWG will further strive to remove barriers and enhance infrastructure interconnections within North America. It is clear by this group’s report that the future for all policies and regulations will be continental in nature. Indeed, the group makes constant reference to the North American energy sector and the “region’s” energy needs. Meanwhile the U.S. Federal Energy Regulatory Commission (FERC), largely responsible for botched deregulation attempts and the shift to a market system for electricity in the U.S., would very much like to push the same policies in an integrated North American electricity market. This would have a profound effect on the public systems of many Canadian provinces and would ultimately result in prices and rules for electricity that are made south of the border.

Either the SPP or the environment

Tar sands production is destroying the environment at an alarming rate. Alberta is poised to become one of the world’s main sources of greenhouse gas emissions. Tar sands development destroys vast tracts of land, clears forests, and consumes 26 per cent of Alberta’s groundwater. It takes between three and five barrels of water to extract just one barrel of oil. The resulting toxic wastewater cannot be put back into circulation, so it sits in 50-square-kilometre pools visible from space. Supporting the U.S. energy industry means Canada cannot introduce tough measures aimed at reducing greenhouse gases. Energy integration and an effective Canadian environmental strategy that would meet our Kyoto targets are mutually exclusive priorities. Either we continue to integrate our energy policy with the U.S. for their interests alone—as the SPP demands—or we get serious about greenhouse gases by creating a real "made in Canada" renewable energy plan. We cannot have them both.

What about Canada’s energy security?

The Alberta tar sands are more than 50 per cent U.S.-owned, with companies such as Exxon Mobil holding huge shares in the stalled Mackenzie Valley natural gas pipeline and offshore oil drilling in the Maritimes. And the U.S. is pushing for increased control over Canada’s electricity grid. This is what the U.S. refers to as “energy security” and the SPP would go nowhere without it. At the Council of Canadians, we believe that Canada deserves “energy security” too. We’re calling for a national energy security strategy that includes the following:

A Mexican-style exemption for energy from the proportional sharing clause. Mexico is not tied to U.S. exports and there’s no reason Canada should be;

A pivotal role for renewable energy that doesn’t depend on oil and gas from environmentally catastrophic sources like the Alberta tar sands;

A return to Canada’s previous policy of maintaining a 25-year supply of oil and gas to meet domestic needs first.

Canada needs an independent energy security plan that doesn’t tie us to U.S. interests and to the U.S. economy like the SPP is clearly intended to do.

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