Chicago, IL
October 16, 2014
Check against delivery
Good afternoon, ladies and gentlemen. It is certainly great to be here today. You know, I want to jump right into our conversation, and I’m looking at the list of folks that I ought to acknowledge. There are so many distinguished people here. Suffice it to say I’m glad and honoured to be in your presence, both to our Ambassadors for making the trip here to this beautiful city, former premiers and the likes. Thank you for this opportunity. And of course a thank you to the Chicago Council on Global Affairs, specifically to Ivo and Rachel for putting on this opportunity for us.
U.S.-Canada Energy Summit: Re-energizing the Policy Dialogue. I probably couldn’t think of a more important topic right now, as the Ambassador mentioned in his opening remarks.
And I want to thank the Chicago Council for this opportunity. It was established in 1922 in the face of widespread isolationism here, an early indication that you would push against conventional wisdom, educate public opinion and influence public discourse.
Well, today, folks I hope that that tradition continues. I am humbled by the distinguished profile of everyone here today and the opportunity I have on behalf of the Government of Canada to be part of this summit.
Last year, this Council launched its Energy Initiative — prescient, no doubt, and motivated by recognition of the increasing importance of energy in global affairs.
As recent events in Ukraine have made clear, energy will continue to be at the forefront of national, continental and indeed global security. It has been indisputably elevated. It is a tool, for better or for worse, for exercising foreign policy.
As global leaders with extensive energy resources and expertise, Canada and the United States recognize that we have a role to play in the world energy stage. Together, we’re taking concrete action to help Ukraine, for example, define its energy needs most recently. And we’re working with the G-7 partners on priorities in support of Ukraine.
In fact, Secretary Moniz and I, stemming for our first visit in Rome — I was just four or five weeks into the job — we have provided support for the Ukrainian government’s efforts in energy contingency planning, including the deployment of a joint team to Kyiv to identify critical energy needs and actions, assistance to Ukraine regulatory, fiscal and environmental reforms, a plan to share expertise in energy efficiency techniques and technologies, and a joint reconnaissance mission of Canadian and U.S. geological surveys to Kyiv to evaluate Ukraine’s accessibility to quality indigenous oil and gas geological data.
It’s important geopolitically, but it does also provide a platform, an opportunity, if you will, for Canada and the United States — be it as competitors, be it in a complementary way — to bring our knowhow, our science, our technology, our innovation on the short term, certainly, to help them explore their indigenous options for energy and to set the ground for supply, not just for Ukraine, but for a burgeoning demand in the European market.
So we meet at a very, very important moment, a time when global energy paradigm is changing, bringing important new challenges and opportunities to the Canadian-U.S. energy relationship. And I should emphasize that this relationship is not confined to Canada and the U.S., although much of my discussion and I’m sure our questions will focus on it, must give due deference to Mexico who has gone through a transformative process of reform in energy. And I’m looking forward to December 15th, when my counterpart, Secretary Moniz, and my Mexican counterpart will get together in Washington for trilateral discussions.
But for tonight, I want to talk about the Canada-U.S. market integration and move forward and focus for a moment on addressing our energy relationship, its current state.
Now I think folks may have it wrong if they see that it’s not so cordial. There are challenges. There are issues, but as Secretary Moniz and I have discussed in three face-to-face bilateral meetings, including a great day in Ottawa where we hosted him for a number of activities, nothing could be further from the truth. Our relationship in energy and in trade, our ties historically are important and I believe will rise above some of the challenges.
Now I’ll mention the elephant in the room — Keystone XL. Our position has not changed. As one of my colleagues would say, it’s an important project that would create jobs and economic growth on both sides of the border while increasing North American energy security, and reducing greenhouse gas emissions. And we agree with the compelling point that the State Department has made that environmentally and economically this project should move forward.
However, ladies and gentlemen, we should spend time discussing the aspects of our relationship, the largest between any two countries in the world, that sometimes can get overlooked. There are already 70 operating oil and gas pipelines. Did I mention we’d love to see 71? But these go back and forth across our borders. Our electricity grids are so interconnected that it’s probably more accurate to refer to them as one grid rather than two. It’s revered around the world.
And earlier this month, the U.S. Department of Energy issued — and I understand it’s been ratified — a presidential permit for a new $2.2 billion, 1,000-megawatt transmission line from Quebec to New York City. And the BP Whiting Refinery in Indiana has been upgraded to refine more Canadian heavy crude.
Our systems, ladies and gentlemen, are so interconnected that the United States Quadrennial Energy Review held its first international discussions in Ottawa. It recognized that after 12 meetings around the country, and unlike any other department in the United States government, Canada was an integral part of its energy supply, storage and distribution.
We help each other when unforeseen incidents occur, when our cities or parts of provinces or parts of states become compromised for energy sources. And Canada and the United States have an appreciable relationship that I’m sure, notwithstanding some of the problems we have, if you asked any border countries to, say, Russia, they would love to have some of our problems. Isn’t that the truth, Ambassador? So we should be focussing on the strength and the positive things that we have going for us.
Canadian crude exports have in fact grown 63 percent between 2005 and 2013 with almost all of that product being transported to the United States. We supply 97 percent of your natural gas imports and 98 percent of its electricity imports. In addition, 16 percent of the uranium imported by the United States comes from Canada.
And this goes both ways. Of all the energy imported by Canada, close to half of it comes from the United States. So yeah, folks, we matter to each other. We are each other’s biggest energy customers, with $140 billion in energy trade last year alone.
And as I said earlier, it’s the strength of our relationship that has and will continue to overcome specific projects and challenges, and I would submit respectfully, opportunities moving forward.
So let’s talk about Canada-U.S. energy cooperation. We’re collaborating on energy matters more than we ever have. U.S. Energy Secretary Moniz was in Ottawa, as I said, last month for a third bilateral since May, and this was, as mentioned, the first visit of its kind.
A major focus of that meeting was on a new memorandum of understanding. Now I know as a lawyer and as knowing there’s lawyers in the room, sometimes, a memorandum of understanding is only slightly better than an IOU. But this MOU was important to sign because it enables closer cooperation on some key responsible energy development and consumption, greater coordination on energy performance standards for consumer products to increasing reliability and security of North American energy infrastructure, specifically supply, storage and distribution.
And as importantly, it complements the next phase of the United States-Canada Regulatory Cooperation Council Joint Action Plan announced in August and moving forward in earnest. As I noted earlier, it will be important to expand our discussions further to include our Mexican counterpart and Mexico as America and Canada offer uniquely some research and development and innovation education opportunities ideally positioned to help Mexico in its energy reforms.
And with these reforms, continental energy security is within reach and economic geopolitical impacts could indeed be profound. Canada supports a timely and transparent reform process, and we welcome the opportunities that will come from a more integrated North American energy market.
But what I believe is the most important activity — the exercise of building public confidence — is something that can put Canada and the United States in a learning and sharing and beneficial relationship. As all of these opportunities and their corresponding issues and challenges will continue to raise legitimate questions and point to environmental leadership, particularly within the energy sector.
Another key issue here is ensuring our public in Canada and the United States that we as a country and in the context of our relationship will continue to share and pursue reducing greenhouse gas emissions. We have much to build on in Canada. We ranked second behind Japan in per capita investment in renewable energy in 2013, ahead of the United States, the United Kingdom and Germany. Canada possesses one of the cleanest electricity mixes in the world, with just under two-thirds of its electricity coming from renewable resources — the highest in the G-7.
And we now share the stage, and in fact lead, in carbon capture sequestration. I had an opportunity to visit Boundary Dam in Estevan just last week. Canada is moving forward on this particular project with considerable investments in research and development and we appreciate very much the important role and the leadership that the United States has shown in this costly, but important, technology.
In 2012, Canada’s per capita greenhouse gas emissions were historically low at 20.1 tonnes per person and about 12 percent lower than 2005. And since 2005, Canadian greenhouse gas emissions have decreased by 5.1 percent while the economy has grown by 10.6 percent. Last year, Canada had the second fastest growing clean energy market in the G-20.
Canada is making a concerted effort on energy efficiency, efforts that have been recognized by the International Energy Agency, which ranked Canada second in energy efficiency improvements between 1990 and 2010. And we’ll continue to make those investments in green infrastructure, energy efficiency, clean energy technologies and cleaner fuels. These are shared goals, shared values, as between Secretary Moniz and I personally and obviously as governments.
But the questions of global markets and responsible resource development also have our most serious attention. We intend, ladies and gentlemen, to develop our oil and gas resources responsibly, and we will meet the burgeoning desire and demand from countries and regions around the world who want to do business with a country that offers political and economic stability.
As you know, the International Energy Agency has projected that global energy demand will increase by one-third by 2035 and that 76 percent of this demand will be met by fossil fuels. So the question is not whether we will develop these resources, but how we will develop them. We will develop them responsibly, and there are tremendous opportunities for Canada and for Canada in the United States in its energy relationship.
I’d like to focus for a moment on the favourable investment climate in Canada. Major resource projects worth some $675 billion are underway or planned in Canada over the next 10 years. Canada is open for business. I’m sure in these councils and forums you hear that frequently. We have the resources the world needs. That came out in our discussions this morning in a magnificent roundtable. We are one of the most favourable investment climates. In fact, Bloomberg rates Canada as the second best country in the world to do business.
We have the lowest overall tax rate on new business investments in the G-7, and we have developed a comprehensive plan that we call, and as I’ve alluded to earlier, responsible resource development.
Let me tell you a little bit about it, folks. Under this plan, we’ve modernized our regulatory regime for major projects, providing investors with a review process that is predictable and timely, disposes of some of the redundancies, and we’ve taken clear and concrete steps to ensure that our resources can be brought to market safely and efficiently.
One of the measures, not the least of which include pipeline safety measures, which I’m working through legislatively as we speak. I point out to our friends and to our detractors that Canada has more than 72,000 kilometres of federally-regulated pipeline with a 99.999 percent safety record. And we want to improve that because this is an exercise in building public confidence. Prevention, preparedness, response and liability — I’ll allude to that a little bit more. But nonetheless, these are important steps that we are taking as a country and we hope that it’s a message that is heard loud and clear from folks, from investors to government and to folks who focus on environmental stewardship and leadership that Canada is in the game and very conscious and willing to take the steps for responsible resource development.
This responsible resource development sets the foundation for Canada to pursue what I think of as three critical elements for energy development: diversifying our energy markets; safeguarding the environment; and engaging with communities.
First, let me talk about diversifying our energy markets. And let me say, ladies and gentlemen, that market diversification is not a priority for Canada. It’s an imperative.
Our longstanding relationship with the United States has led to a situation in which Canada exports 97 percent of its crude oil and 100 percent of its natural gas to one market: the United States. As any businessperson will tell you, that’s just too many eggs in one basket. I mean we love you guys, but market diversification is an imperative for Canada, and I’m here to make that loud and clear to you folks here today.
Fortunately, increasing demand for oil and gas from around the globe presents Canada on the medium term, say 2017-2022, an opportunity, in fairness, we can’t afford to miss. A series of proposed investments from liquefied natural gas terminals on our Pacific and Atlantic coasts to pipeline supports on both coasts are moving forward to help get Canadian energy to tidewater and markets around the world. We’ve already begun small shipments of Canadian oil to new markets, including Spain and even India. There is, by my own admission, still work to do. And I’ve alluded to some of the important steps that we’re taking as a government to engage the Canadian public and hopefully the United States public on responsible resource development.
The second critical element is a commitment to environmental stewardship and leadership. Our bottom line is actually simple. No project proceeds unless and until a thorough and independent science-based review demonstrates it to be safe for the public and for the environment. A broad range of measures introduced by our government are strengthening marine, pipeline, as I mentioned earlier, and rail safety to create the safest energy transportation system in the world, bar none.
And we’re aligning and enhancing our liability regimes for all of these pipeline, nuclear facilities and offshore exploration to boost investor confidence and to send a strong and consistent message that the health and safety of our communities, of our country and its waters will not be compromised.
So that brings us to what I think is the most important element of this, and that’s community engagement in an effort to build public confidence. It’s essential to responsible resource development for Canada. And I think we can both benefit as countries to sharpen our focus in these regards.
For Canada’s part, we’re committed to a meaningful dialogue with resource-based communities to engage them in development and environmental safety from preventing incidents in the first place to enhancing our ability to respond to increasing liability and compensation required of companies involved in exploration for energy, mandatory reporting in the extractive sector that aligns with the efforts here in the United States and in Europe.
And in addition to that, a critical element of our engagement is with First Nations communities to ensure that they are part of responsible resource development from the very start.
I can tell you as a nurse and a lawyer — don’t hold the last part against me — who’s lived and worked in isolated remote First Nations communities for some eight years of my life, there are incredible opportunities here. It’s often framed as challenges and/or issues, but I believe that these communities represent important sources of human resources for responsible resource development and jobs and business opportunities and important contributions, unique expertise in environmental and transportation of energy, particularly our coastal First Nations on the Atlantic and the Pacific coasts.
So I’ve laid out a little bit about responsible resource development. I want to talk specifically about U.S. and Canada. If it is true that our house is in order or that we are moving substantially towards that, for the purposes of today, and I’m sure the Summit has and will continue to address our relationship, diversifying our energy markets, strengthening environmental protection and engaging communities are all important parts, as I have said, but there’s really a fourth priority, and it sort of stands alone. It’s our energy relationship with the United States.
Even as the United States becomes more energy self-sufficient and both Canada and the United States take steps to reduce our reliance on oil, the United States will continue to require several million barrels a day of imported oil for decades to come. And with the appropriate infrastructure in place, this is a need, a demand, folks, that Canada can meet reliably and responsible as your key friend and ally.
The United States has a clear choice. It can do business with Canada, as it has, and I’m sure will continue to do. Some of the alternatives have posed problems here in the United States. Venezuela’s supply of crude from which Canada would further displace in the Gulf has no emission regulations and has threatened to cut off oil exports to the United States no less than five times.
Canadian oil sands offer an alternative to less certain heavy crude suppliers, all the while creating jobs on both sides of the border. In fact, according to a study from the Canadian Energy Research Institute, Canada’s oil sands could support nearly 170,000 jobs annually in the United States over the next 25 years. This includes software developers in Bothell, Washington, to manufacturing jobs in virtually every state and a good many refinery jobs in and around Chicago. Upgrading and refining capacity is what the United States has. This is a potential for a very complementary relationship.
Let’s move forward. About 2,000 American companies have contracts to supply goods and services to the oil sands. In sync with the United States, we’ve introduced tough new emission standards for our cars and trucks. All of these measures have led to real progress. Canada has reduced GHG emissions equal to shutting down 37 coal-fired electricity generation plants. The long-term trend for greenhouse gas emissions per barrel is downward, falling by 28 percent between 1990 and 2012. And I believe with a more robust investment in oil sands, we can build on further success as an energy source.
Now I realize that some of our vocal critics may not know that the oil sand crude has similar emissions as California heavy crude. In fact, oil sands today emit less GHG than all of the coal plants in Kentucky. On a relative basis, the emissions are minuscule — about .01 percent of global emissions. But we accept our responsibility as citizens of the world, and we will do more and do so in close cooperation with our American friends. We have to. And there’s an incredible opportunity here tonight in moving forward.
So let me close by reiterating the importance of what you’re doing here over the next couple of days and the importance of energy in global affairs. In such an uncertain world, it is more important than ever that Canada and the United States work together as partners, act together as friends, as family and lead together as allies, as we do in so many regards, particularly right now. For Canada, that means first and foremost supporting our closest friend and ally while increasing our supplies to new markets and therefore supporting global energy security.
In those efforts, this Council and this Summit provides an important forum for discussing the challenges and opportunities before us. I appreciate the contributions you have all made in coming here tonight and having these important discussions.
For my part, ladies and gentlemen, my name is Greg Rickford. I’m the Member of Parliament for the great Kenora riding, some 300,000 square kilometres of northwestern Ontario. It’s a privilege and an honour to serve my constituents and in my capacity as the Minister of Natural Resources to Canadians and Americans to serve you too. Thank you for this opportunity.
