From government to governance in the energy sector: The States of the Canada-U.S. energy relationship

American Review of Canadian Studies

Volumn 35, Issue 2, 2005, Pages 321-352

  Gattinger, Monica ^a  

^a UNIVERSITY OF OTTAWA   (Canada)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC RELATIONS; ENERGY MARKET;

CANADA; NORTH AMERICA; UNITED STATES; WESTERN HEMISPHERE; WORLD;

EID: 23844542055     PISSN: 02722011     EISSN: None     Source Type: Journal    
DOI: 10.1080/02722010509481375     Document Type: Article

References (66)

1. I would like to thank the many individuals in the energy sector who gave generously of their time, expertise, and insight to provide useful background information for this article and who read and commented on earlier drafts. I would also like to thank Erika Adams for her talented research assistance. My appreciation to Carol Higham and Mark Kasoff for their useful comments on an earlier draft of this article, as well as to participants at the ARCS' authors' conference for their comments on my paper presentation (Woodrow Wilson Center, November 12, 2004, Washington D.C.). Any errors and omissions remain the sole responsibility of the author.
2. This article examines the oil, natural gas, and electricity sectors.
3. Some portions of this section draw on "Power in the Canada-U.S. Relationship: the Politics of Energy," invited paper presentation to Relating to the Powerful One: How Canada and Mexico View their Relationship to the United States, a trilateral seminar organized by the Weatherhead Center for International Affairs at Harvard University, the Department of International Relations at the Instituto Tecnológico Autónomo de México, and the Norman Paterson School of International Affairs at Carleton University. Cambridge, Massachusetts, May 5-6, 2003.
4. Approximately 315 billion barrels of Canada's oil sands are considered potentially recoverable under anticipated developments in technology and economic conditions (Alberta Energy and Utilities Board, Alberta's Reserves 2002 and Supply/Demand Outlook 2003-2012 Statistical Series 2003-98. Alberta: Alberta Energy and Utilities Board, 2003).
5. gigawatt = 10,000,000 kilowatts.
6. Energy Information Administration, International Energy Annual 2002 .
7. Bruce Doern and Monica Gattinger, "Another 'NEP': The Bush Energy Plan and Canada's Political and Policy Responses," in Norman Hillmer and Maureen Appel Molot, eds. Canada among Nations 2002: A Fading Power. Toronto: Oxford University Press, 2002.
8. Indeed, energy resource exploration and development projects in Canada often depend integrally on American demand for their financial viability.
9. Bruce Doern and Monica Gattinger, Power Switch: Energy Regulatory Governance in the 21st Century. Toronto: University of Toronto Press, 2003.
10. Joseph M. Dukert, "The Evolution of the North American Energy Market: Implications of Continentalization for a Strategic Sector of the Canadian Economy," American Review of Canadian Studies 30, no. 3 (Autumn 2003): 349-359.
11. Indeed, energy is one of the sectors receiving attention in the Council on Foreign Relations' Independent Task Force on North America.
12. It should be noted that the Canadian government has not been the only one to institute protectionist policies in the energy sector. In the 1960s, the American government limited oil imports from Canada to protect U.S. energy producers.
13. Paul L. Joskow, "Electricity Sector Restructuring and Competition: Lessons Learned," Cuadernos de Economía 40, no. 121 (2003): 548-558.
14. Paul G. Bradley and G. Campbell Watkins, "Canada and the U.S.: A Seamless Energy Border?" C.D. Howe Institute Commentary, no. 178 (April 2003).
15. Increases in petroleum and natural gas imports to the U.S. from Canada should be interpreted with caution as the year 1980 marked a low point in these imports in relation to import levels throughout the previous decade. Having said this, import levels recovered by the mid- to late 1980s (by 1986, imports of petroleum had regained and surpassed their average annual level of 809 thousand barrels per day throughout the 1970s, and in the natural gas sector, by 1987, imports had regained and surpassed their average annual level of 947 billion cubic feet throughout the 1970s).
16. Bradley and Watkins, "Canada and the U.S."
17. I b i d.
18. North American Energy Working Group, North America-The Energy Picture, 2002.
19. I b i d.
20. I b i d.
21. The British thermal unit (Btu) enables quantities of different energy sources (oil, gas, electricity, etc.) to be converted into a common energy measurement. One Btu is equivalent to the amount of heat needed to increase the temperature of one pound of water by one degree Fahrenheit.
22. North American Energy Working Group, North America.
23. National Energy Policy Development Group, Reliable, Affordable, and Environmentally Sound Energy for America's Future. Washington: U.S. Government Printing Office, 2001.
24. Spencer Abraham, "Supply Diversity." Excerpted from U.S. Energy Secretary Spencer Abraham's remarks June 27, 2002 to the American Petroleum Institute in Dallas, Texas. The Daily Deal, July 18, 2002.
25. National Energy Policy Development Group, Reliable, Affordable, and Environmentally Sound Energy, 8-8 to 8-10.
26. North American Energy Working Group, North America.
27. I b i d.
28. For a more thorough examination of the energy-environment interface, see G. Bruce Doern, ed., Canadian Energy Policy and the Struggle for Sustainable Development (Toronto: University of Toronto Press, 2005).
29. Alan Toulin, "Kyoto costs must be clear, Dhaliwal says: Raises competitive issue: New conditions to ratification of emissions treaty." National Post, June 17, 2002, FP3.
30. Kate MacNamara, "Ottawa preparing Kyoto legislation: Russia's decision to ratify protocol makes pact binding," National Post, October 1, 2004.
31. Elke Krahmann, "National, Regional, and Global Governance: One Phenomenon or Many?" Global Governance 9 (2003): 331.
32. Tanjia Borzel, "What's so Special about Policy Networks? An Exploration of the Concept and its Usefulness in Studying European Governance," European Integration Online Papers 1, no. 16 (1997), http://www.eiop.or.at/eiop/texte/1997-016a.htm.
33. Joseph M. Dukert, The Evolution of the North American Energy Market. Policy Papers on the Americas, Volume 10, Study 6. Washington: Center for Strategic and International Studies, 1999.
34. My thanks to Mark Kasoff for suggesting the inclusion of a table to illustrate the complex of energy relations discussed in this article.
35. In the Canadian oil sector, a defining moment occurred in 2002 when the Oil and Gas Journal first included Alberta's oil sands in its calculation of reserves for the country. This boosted Canada's oil reserves from less than 5 billion barrels to over 175 billion, thereafter positioning the country second only to Saudi Arabia in oil reserves. The U.S. Energy Information Administration followed suit in its reserve calculations shortly thereafter, in part to send a message to the global oil market that North America possesses considerable energy reserves. This went a long way towards increasing American and global recognition of Canada's immense oil reserves and fuelled existing interest on the part of the Bush administration to develop the oil sands. This interest is tempered, however, by American interest in Canada's natural gas supplies. Oil sands production processes consume sizable volumes of natural gas and there is some concern on the part of the United States that development of the oil sands could reduce the amount of Canadian natural gas available for export.
36. A world market for natural gas is slowly emerging with the growing transportation of liquefied natural gas (LNG) by tanker. The U.S. currently imports the vast majority of its natural gas by pipeline and almost all of these imports come from Canada.
37. United States-Canada Power System Outage Task Force, 2004. Final Report on the August 14, 2003 Blackout in the United States and Canada: Causes and Recommendations.
38. For a more comprehensive examination of the electricity sector's shift to governance, see Monica Gattinger, "Canada-United States Electricity Relations: Policy Coordination and Multi-level Associative Governance," in G. Bruce Doern, ed., How Ottawa Spends, 2005-06 (Montreal: McGill-Queen's University Press, forthcoming)
39. Richard Cameron, "Canadian Perspectives on North American Energy Issues." Remarks by Mr. Richard Cameron, Assistant Deputy Minister, Energy Sector, Natural Resources Canada at North American Energy: The United States and Canada, an event organized by the Center for Strategy and International Studies, Washington, D.C., January 15, 2002.
40. Tony Seskus and Claudia Cattaneo, "U.S. oil warns over 'burden' of Kyoto." National Post. December 9, 2002, FPI.
41. This is not to say that the Canadian and American federal governments do not collaborate on environmental issues: the two governments cooperate on energy efficiency and energy technology, particularly for the development of less greenhouse gas intensive energy. Nonetheless, as Selin and VanDeveer note, provinces and states have been particularly active on climate change, with some of them exceeding federally-mandated requirements.
42. Claudia Cattaneo, "U.S. companies have altered energy scene," National Post, May 5, 2003, FP3.
43. Allan Gotlieb, "How to Talk to Washington." In Adam Stinson, ed., Playing in the "Bush-League": Canada-U.S. Relations in a New Era. Proceedings of the Canadian Institute of Strategic Studies' annual spring seminar held in Toronto, April 12, 2001. (Toronto: Canadian Institute of Strategic Studies, 2001), 37.
44. Gordon Jaremko and David Finlayson, "Industry brushes off minority fears," Edmonton Journal, 30 June 2004 A4;
45. and Kate MacNamara, "Oilpatch wary of NDP's role in minority government: sector fears burden of protocol," National Post, May 24, 2004, FP1.
46. See Jonathan Weisman, "Bush, Kerry chasing oil impossible dream?; U.S. dependence on imports likely to continue, some energy experts say," The Washington Post, June 4, 2004, A09.
47. Department of Foreign Affairs and International Trade, Canada: The largest energy supplier to the United States (information brochure), February 2004.
48. Canada's deputy head of mission stated this position in a speech to the annual conference of the New England Governors and Eastern Canadian Premiers and Canada's ambassador to the United States advocated this position to the U.S. Congress (see Bertin Côté, "Remarks to the New England Governors and Eastern Canadian Premiers." Notes for remarks by Mr. Bertin Côté, Minister (Economic) and Deputy Head of Mission, Canadian Embassy, Washington DC to the 27th Annual Conference of New England Governors and Eastern Canadian Premiers, (Quebec City, August 26, 2002) and Michael Kergin, Ambassador Kergin's Letter to Rep. W.J. Tauzin and Sen. P. Domenici, September 12, 2003).
49. Michael Kergin, Ambassador Kergin's Letter to [Secretary of Energy] Spencer Abraham, September 5, 2001;
50. Ambassador Kergin's Letter to [Under Secretary of State for Economic, Business and Agricultural Affairs] Alan P. Larson, September 17, 2002;
51. "Trust the market (and Canada)," Letter to the Wall Street Journal, Wall Street Journal, 15 May 2002, and Ambassador Kergin's Letter to Rep. W.J. Tauzin and Sen. P. Domenici, September 12, 2003.
52. and Ambassador Kergin's Letter to Rep. W.J. Tauzin and Sen. P. Domenici, September 12, 2003.
53. Claudia Cattaneo, "Energy ties." National Post, March 14, 2003, FP6.
54. Michael Kergin, Ambassador Kergin's Letter to Rep. W.J. Tauzin and Sen. P. Domenici.
55. Ben Geman, "Class-action bill pushes back House energy legislation timing, ANWR markup," Environment & Energy Daily, February 8, 2005. On March 16, 2005, an amendment to strip provisions to permit drilling in ANWR from a 2006 Senate budget resolution was defeated in a 49-51 vote, moving drilling in ANWR one step closer to legislative approval.
56. For a full discussion of the concept of "sensitized coordination," see Gattinger, "Canada-United States Electricity Relations."
57. David A. Wolfe and Tijs Creutzberg, Community Participation and Multilevel Governance in Economic Development Policy, Paper prepared for the Ontario Government Panel on the Role of Government, August 2003.
58. One need look no further than the recent "show-down" between Prime Minister Paul Martin and Newfoundland and Labrador's Premier Danny Williams over revenue-sharing arrangements for off-shore energy resources for an example of just how contentious multi-level energy relations in Canada can become. While the two parties ultimately resolved the conflict with the signing of the Atlantic Accord, the dramatic walk-out of Premier Williams on the talks in the months leading up to the agreement illustrate that a culture of collaboration does not always pervade federal-provincial energy relations.
59. Memorandum of Understanding Between National Energy Board and Federal Energy Regulatory Commission, May 10, 2004.
60. Wolfe and Creutzberg, Community Participation.
61. Disputes between the energy and environment ministers over fuel efficiency standards provide an example of this sometimes troubled relationship (See "Efford says key priority: to streamline regulatory process," The Hill Times, Energy Policy Briefing, April 5,11, 2004, 17;
62. and "Anderson says federal government could use national standards as a condition of funding to provinces on climate change," The Hill Times, Kyoto Policy Briefing, April 19-25, 2004, 19.)
63. Wolfe and Creutzberg, Community Participation.
64. See Wendy Dobson, "Shaping the Future of the North American Economic Space: A Framework for Action" Commentary no. 162, April. Toronto: C.D. Howe Institute, 2002
65. and John P. Manley, Pedro Aspe, and William F. Weld, Creating a North American Community: Chairmen's Statement, Independent Task Force on the Future of North America, New York: Council on Foreign Relations, 2005.
66. Indeed, Manley, Aspe, and Weld propose that collaboration in the energy-environmental domain "could form the basis for a North American alternative to the Kyoto Protocol" (p. 13).