Will Carney's energy deal with Alberta give him clout against Trump's tariffs?

WASHINGTON, D.C. — With the government’s new energy deal with Alberta , including plans for an oil pipeline to the West Coast, Prime Minister Mark Carney is determined to forge a new export route to gain leverage in trade talks with Washington.

But two questions remain: will the plan have any impact on U.S. President Donald Trump and, perhaps more importantly, will the pipeline ever actually get built?

Some analysts says that boosting oil exports to Asia could give the federal government more sway in future trade talks with the White House, even if it’s tough to quantify.

“If I were the United States, I’d have a little bit of fear of missing out and that would incentivize me to negotiate,” said Heather Exner-Pirot, senior fellow at the Macdonald-Laurier Institute. “But how they calculate things in the White House these days seems to be beyond my understanding.”

Still, on economic terms alone, it would give Canada options, which means “buyers in the United States will have to (compete) with buyers in Asia, so we will get a top dollar for our oil,” she added.

Martha Hall Findlay, director of the School of Public Policy at the University of Calgary agreed, saying more energy export options should strengthen Canada-U.S. trade relations.

It’s not just Canadians who think the plan could work, either.

Andrew Hale, a senior policy analyst at the Heritage Foundation, a conservative Washington-based think tank, thinks a pipeline to the West Coast could be a game-changer for Canada-U.S. relations.

“I think that would be massive … Canada can then say to the Trump administration, ‘look, if you’re going to tariff all of our stuff, and in the same breath say that you want us to impose the same tariffs in China, that the United States has, well, I’m sorry, but that’s unreasonable.”

Hale noted that his conversations with Canadians this year have given him the impression that many feel that they’ve been willing to do certain things the U.S. is asking for, while getting little in return.

Getting a pipeline built, “if they can do it quickly, I think it would have a huge impression on Washington,” he added.

Pipeline proponents see the West Coast route as additive to U.S. exports, not a replacement — unlocking Asia demand proven by Trans Mountain (TMX) while boosting GDP and doubling non-U.S. exports by 2035.

With global political and economic influence shifting its focus from the Atlantic and traditional Western markets toward the Pacific region and Asia, Exner-Pirot believes this is an opportunity for Canada to develop new relationships, “providing food and especially energy to those allies in India, Japan, Korea and Southeast Asia.”

“Going south, doing a Keystone XL is more ‘energy colony,’ and going west to the Pacific is more ‘energy superpower,’” she said, noting how Canadian oil and gas is outperforming its peer indices and even the broader S&P 500. She and her colleagues expect U.S. shale to soon peak, making this the perfect time for Canada to rise as a safe, reliable supplier.

Gary Mar, president and CEO of the Canada West Foundation, a Calgary-based think tank, said Alberta’s current production of four million barrels a day could double in 20 years, reducing reliance on the U.S. while generating revenues similar to the $1.7 billion from TMX expansion this year.

Proponents also pushed back against the idea that the pipeline would undermine Carney’s climate bona fides. The MOU refers to both emissions and the Pathways carbon capture project, committing to the transport of low-emission Alberta Bitumen and a $16.5-billion carbon capture, utilization and storage network.

Given that the International Energy Agency has acknowledged that oil demand is not peaking, Hall Findlay said the plan to responsibly produce oil could even put Canada in a position to displace dirtier — in terms of both emissions and politics — oil from Russia and Iran.

“There are customers around the world who, let’s be honest, would rather not be dependent on Russia. So the opportunity for us, I think, is huge, especially when you add in the geopolitics,” Hall Findlay said.

But opposition to the deal with Alberta, from environmentalists and First Nations, could still frustrate Carney’s plan to make Canada an “energy superpower” and gain leverage with Washington.

David Tindall, a sociology professor at the University of British Columbia, saw Carney present at COP21 in Paris in 2015, and noted that the prime minister “talked quite passionately about the need to deal with climate change.” The MOU was a bit surprising to Tindall, but he has done his own polling this year, showing majority support for new pipelines.

Climate concerns aside, placing bets on the success of this project remains risky, the experts and academics say, citing everything from climate activism and First Nation opposition to simple trust issues.

Tindall, for example, said that while polling may support a new pipeline, Carney seems to have underestimated how strongly people in British Columbia feel about these issues. In B.C., he said, “there’s a lot of talk about the risk of oil spills, in particular,” and strong support for the tanker ban. He also pointed to First Nations concerns.

Notably, the Assembly of First Nations chiefs voted unanimously on Tuesday to demand the withdrawal of the new pipeline deal, throwing their full support behind First Nation opposition to the pipeline in B.C.

Hall Findlay, who is optimistic about the possibility of a pipeline, said there’s a classic “chicken and egg” problem with it.

“The producers aren’t going to enhance production if they don’t know they have egress, and the pipeliners aren’t going to build a pipeline unless they know the producers are going to increase production.”

But time could be on Carney’s side. Exner-Pirot noted how Enbridge just announced its mainline expansion to over 400,000 barrels, and TMX is planning its expansion.

“I feel like we have time to get this right,” she said, pointing to the extension announcements and how the sector is already seeing the emissions cap being cancelled, giving it the opportunity to grow.

“We’re in a good situation,” she added, expressing hope for completion of a pipeline by 2031.

National Post

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