National Energy Strategy
It seems as if each day there are new demands in Canada for the creation of a National Energy Strategy (NES). Many executives of energy companies are arguing that governments, federal and provincial, need to sit down with the energy companies and craft such a strategy. Even the media are beginning to jump on this bandwagon.
The Liberals are still paying for the backlash to the last time the federal government created a National Energy Program (NEP). The NEP dealt primarily with revenue sharing at a time of sharply rising oil prices and a large government budget deficit. It is unlikely that the energy companies and their shills in the Alberta Government have any such strategy in mind. Indeed, I suspect that revenue sharing is not a subject they want to be part of a NES discussion, even though the federal government faces a large budget deficit and oil prices have risen sharply in the past year – déjà vu.
When the private sector wants government to get involved in developing a strategy for their sector, the image of the Trojan Horse comes immediately to mind. The private sector’s preferred strategy is unlikely to be in the best interests of all Canadians. If it were, revenue sharing would be the lead item on the agenda.
In Norway, the government is the major beneficiary of North Sea oil revenues. As a result, the government does not have a deficit, and Norway has very generous social programs for all its citizens. Norway also is saving aggressively for its future generations. Norway has one of the largest sovereign investment funds in the world.
No, the oil patch wants projects fast-tracked through the environmental assessment processes. They probably would prefer that the environmental rules be watered down or eliminated altogether. They also likely want government to get rid of the land claim obstacles, preferably at no cost to the private sector. And they likely want government to commit to not introducing any carbon taxes and/or carbon emission limits, and to backstopping most new debt issued to finance new projects.
There always will be major risks for these projects. For example: demands from China might not materialize; the US might introduce a carbon tax and import restrictions on carbon-based energy and carbon-intensive products; new technologies might reduce the demand for all types of energy, especially oil; oil prices might collapse; etc.
If I am right in predicting the goals of the private sector, then let’s give them the Trudeau one-finger salute, and forget about a NES.
If they are so smart, let them figure out what First Nations want and compensate them accordingly. It should not have come as a surprise that the First Nations could effectively stall most every major energy project. For what have they been paying their lawyers?
If they are truly risk-takers, then let them assume the risks and figure out how to mitigate potential negative consequences including Black Swans. And as for the environmental rules, they should be satisfied that they are not more stringent.
But if they ever change their minds and are willing to share the windfalls from sharply higher oil prices, then perhaps government should sit down with them. The First Nations also should be sitting at the table as an equal partner in the negotiations and economic outcomes.
The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.