There have been many references over the past decade calling Canada an “energy superpower”. Apart from the political debate the term engenders, many see the label more as a marketing ploy rather than as a statement of reality.

There is no doubting Canada is a ‘super-producer’ of energy, ranking among the five largest energy producers in the world, behind China, the United States, Russia, and Saudi Arabia. But does this translate into being a ‘superpower’?

The United States Energy Information Administration in its report on Canada reinforces that conclusion. But it adds an important rider: “Just as the United States depends on Canada for much of its energy needs, so is Canada profoundly dependent on the United States as an export market.”

It’s an important point. As Canadian energy expert Mike Cleland pointed out in his excellent and still relevant 2007 article Canada as an energy superpower: how clean, how powerful, how super. Real power means “possession of control, authority or influence over other countries and having the ability to affect world events.”

He adds, being a superpower implies:

1 - A capability to influence the behaviour of other countries and the course of world events;

2 - The capacity to deploy that capability where and when it can be effective;
Articulate policies that specify how that capability can further one’s national interest; and,

3 - A will, credibly understood by others, to use the capability when called upon to do so.

4 - By these criteria, labelling Canada as an ‘energy superpower’ may not be totally accurate. For example:

Influence over the behaviour of other countries

*Canada has virtually no influence over geopolitical arrangements to control; the crude oil market such as the recent Russia / Saudi flooding of the oil market to suppress prices and hurt suppliers in North America.

*Canada, in spite of being a top 5 producer of crude petroleum has virtually no influence on international oil prices. In fact, bitumen from the Athabasca oil sands is sold at the Western Canadian Select (WCS) rate, which is often much lower than either the West Texas Intermediate (WTI) or Brent prices.

*Many Canadian suppliers are suffering huge financial losses from their oil patch operations, especially for the raw producers of crude bitumen.

*Companies with integrated supply chains including chemical refineries are in better shape, but still highly threatened.

Capacity to deploy “Superpower” capability

*Canadian crude oil and bitumen suffer from serious transportation bottlenecks due to insufficient pipeline infrastructure. Its best market for heavy, sour crude is the US Gulf Coast, which has very limited pipeline access from Western Canada. Canada’s export pipelines are at capacity and the incremental barrel of oil needs to be shipped by rail, which has a higher transportation cost and drives up pricing discounts.

*Western Canada Select (WCS), the price obtained for many Alberta producers of oil, averaged US$33.97 a barrel in June 2020, 18.6% lower than it was a year earlier.

*Canada’s natural gas resources are abundant. Over 70% of its current capacity comes from tight and shale gas formations in Alberta and British Columbia.

*While several LNG plants have been considered by major energy players for the British Columbia West Coast, it took over ten years before one project LNG Canada to start getting shovels in the ground.

*This major LNG project is a significant step for Canada’s energy industry as well as for the global LNG industry, Natural gas, including its liquefied form, is being used more and more extensively to fuel power plants, petrochemical plants and natural gas distribution pipelines to homes and offices, as well as to fuel various transport modes such as ocean shipping.

*In addition to LNG Canada, several LNG liquefaction and export terminals are already operating on the Gulf and Atlantic coasts of the United States, with others being planned, including on the US west coast.

*In spite of massive amounts of unconventional petroleum and natural gas deposits in Alberta and British Columbia, the ability of major energy producers in Western Canada to serve markets in Central and Atlantic Canada is limited for want of adequate pipeline infrastructure, especially for Alberta bitumen.

National Interest

*The huge growth in rail traffic carrying crude oil is causing system-wide congestion and creating bottlenecks for moving grain. Grain exports are as important to Canada’s national interest as is crude oil and the tradeoff between carrying these two commodities is not in the national interest. In addition, crude oil traffic by rail is associated in the public mind with serious accident risks. The Lac-Mégantic rail disaster comes to mind.

*In addition to infrastructure-related constraints on shipping raw bitumen, there is minimal domestic value-added processing of crude petroleum, natural gas and bitumen. These products are being exported raw. The national interest is much better served when the raw resources are processed in whole or in part in Canada. This value-added processing occurs only minimally, and raw exports rule the day. Through its being an economy based on “drawing water and hewing wood”, Canada is losing out substantial jobs and GDP benefits.

Understanding by others

*Canada has acquired the reputation internationally as a serious polluter of greenhouse gases in both its heavy industries such as mining, steel and concrete and in fossil fuels mining including the Athabasca oil sands and fracking tight natural gas in British Columbia with heavy levels of fugitive methane emissions.

*To a degree, our high carbon footprint reputation is being offset by Canada’s commitment to shutter coal-fired power plants and by putting a price on pollution through carbon taxation.

*British Columbia’s carbon tax has received positive reviews. Quebec has been collecting a tax on “hydrocarbons” (petroleum, natural gas and coal) since 2007 and is active in a carbon trading market with California. Alberta has an intensity-based carbon tax.

Canada’s Ecofiscal Commission published The Way Forward, A Practical Approach to Reducing Canada’s Greenhouse Gas Emissions. This report discussed Canada’s carbon management policies within the context of a joint federal-provincial framework but acknowledges it is the provinces that are demonstrating stronger leadership.

The federal government implemented a coordinated nation-wide carbon price, beginning at $20 per tonne of carbon dioxide equivalent emissions (tCO2e) in 2019 and eventually rising to $50 per tonne. The federal jurisdiction regarding this tax is currently being litigated through the provincial and ultimately the federal supreme courts.

Successfully operating in a social democracy such as ours and within the context of the federal-provincial division of powers is a prerequisite in being an energy superpower. Admittedly the relative roles of provinces, the federal government and of First Nations are an evolving tableau and encouraging this evolution to percolate is a prudent approach.

How can Canada become an energy superpower?

The global energy outlook is uncertain. Energy demand and prices have significantly declined largely due to the pandemic. There is a serious global oversupply of both petroleum and natural gas due to both geopolitical factors and reduced demand. International energy companies are searching for alternative uses for fossil fuel molecules. Possible alternatives include zero-emissions hydrogen, carbon capture and storage technologies and reducing the carbon footprint of bitumen and conventional oil mining. See Bloomberg video on “Alberta eyes cleaner future as hydrogen superpower”.

There are signs that expanding Canada’s green energy infrastructure is emerging globally as a unique vehicle to grow the economy back from losses caused by the pandemic.

The time is ripe for Canada to build on its reputation for innovation and research to become a major supplier of clean energy innovation and expertise to the world.

With our human and natural resource strengths, energy is one area where Canadian’s can work together to show real global leadership—providing energy that is sustainable, clean and reliable.

Indeed, Canada has all the attributes to be a ‘responsible energy superpower’. These include:

*An endowment of virtually every primary energy form spans the nation and that can be developed more sustainably;

*An abundance of natural gas, which is an ideal bridge fuel to the clean economy. Methane has about 40% less carbon than competing fuels including coal, diesel and gasoline.

*When LNG Canada is fully built and operational, its exports to Asia will likely reduce net emission of GHGs as coal is being replaced by lower-carbon LNG.

*The human talent to be a global technology leader throughout the energy supply chain, and in all related services and technologies;

*The opportunity to contribute to world energy needs that underlie sustainable economic and social development—especially in developing countries; and

*The potential to supply abundant quantities of sustainable energy and energy technologies—hydro, bio-energy, wind, solar, cleaner fossil fuel, low risk nuclear and demand-side management—to an energy-hungry world.

Our competitive advantage lies in our strong science and technology capability to improve energy production productivity; our ability to sequester greenhouse gas emissions; and our ability to derive maximum industry benefits and to grow real output through a strengthened energy value chain.

The pursuit of these energy-related opportunities would contribute to the sustained prosperity—more jobs, increased wealth creation and expanded quality of life—not just in Canada, but globally.

A new role for Canada as a ‘Responsible Energy Superpower’ would involve more than just improving the supply and efficiency of production. It would embrace responsible resource development; respect for different societies, the recognition of indigenous rights, and a commitment to helping others more seriously affected by climate change.

Building Canada’s energy superpower credentials from an environmental and carbon management perspective is a long-term undertaking, which is being developed within the context of our federal-provincial framework, indigenous rights and the higher courts.