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Maclean’s roundtable: On Keystone, emissions and the decisions that link Obama and Harper


 

Evan Vucci/AP

Here’s a discussion of the big decisions, intimately linked, facing two leaders: Barack Obama’s coming yay-or-nay on the fate of the Keystone XL pipeline; and Stephen Harper’s overdue emissions regulations for the petroleum industry.

Joining Maclean’s political editor Paul Wells through the magic of email are Elana Schor, a staff reporter at Environment & Energy Daily and Greenwire in Washington;  David McLaughlin, a former Chief of Staff to Prime Minister Brian Mulroney and Finance Minister Jim Flaherty who served as the last President and CEO of the National Round Table on the Environment and the Economy before the federal government shut that organization down; and Paul Boothe, Director of the Lawrence National Centre for Policy and Management at the Richard Ivey School of Business, Western University. Boothe served as Canada’s federal deputy minister of the environment from 2010-2012.

Paul Wells

Thanks for joining us, folks. I was struck by something Elana Schor said on Twitter on Wednesday morning. Two big decisions face the governments of Canada and the United States. Both are delayed.

In Ottawa, the Harper government has to propose emissions regulations for the petroleum industry. Those emissions rules are the centrepiece of the Canadian government’s global-warming strategy, to the extent it still has any, and it’s pretty clear they’re key to nailing down Barack Obama’s approval of the Keystone XL pipeline. But the emissions regulations, which were expected by the end of 2012, have now been delayed repeatedly. Meanwhile Obama’s decision on Keystone has been delayed too, while he sounds increasingly skeptical that the project has any value. Obama has explicitly linked Canadian performance on carbon emissions to his decision.

Here’s what I want to ask each of you:

David, I know KXL is a White House decision, but to the extent the Harper government can influence it, how do you think they’re doing?

Elana, do you think the delay on emissions regulations and Keystone approval could suggest an attempt by Washington and Ottawa to cut a deal on both? What have you seen that would suggest that’s so?

Paul Boothe, what’s the path forward for petroleum emissions regulations from today?

David McLaughlin:

How is the Harper government doing on influencing KXL? Ask the President. But you asked me, so the answer is “Not well at all.” Of course the Canadians can influence Obama’s decision. They are. But it looks like the wrong way.

This isn’t all their fault. American politics is a political “honey trap” when it comes to Canadian politicians’ views of grand influence. Which makes the Prime Minister’s (he of steely-eyed political sobriety) strategy so utterly perplexing.

The essential problem is that Canada missed its moment. Obama’s pre-election punt on KXL gave time for a gathering storm of climate forces to coalesce. Prior to that, we had a winning argument: energy security. This has been the holy grail of much American rhetoric ever since the OPEC crisis of the mid-1970s. Canada could deliver on that. If Obama had made the decision then, he would have cited that argument most of all. Now, with cheaper shale gas coming on line in the U.S., his re-election behind him, and legacy thoughts ahead, that doesn’t cut as much of a swath anymore.

Canada and the PM are playing in a new frame — environment and climate change — which is an incredibly weak suit for the government. The GoWithCanada campaign featuring pristine panoramas of our natural beauty is not the same as having a robust climate change plan that we can put up and say, “See?”

“No Drama Obama” has injected a fair amount of political drama into the file of late. Why?

It looks like a signal to me: Up your climate game, give me some cover, and your case will be helped. After all, no U.S. President can afford to blithely write off a “worthwhile Canadian initiative” of this scale without contemplating country-to-country impacts.

I think the bigger question is now becoming: will Prime Minister Harper invest any more political capital in this file if he thinks the President won’t bite in the end? After all, whatever new climate measures the government brings forward, they will be written off by Mr. Obama’s climate constituency as insufficient. That never bothered Mr. Harper when it came to Canada. When it comes to the US, that is a whole different calculation.

Elana Schor:

David, I can’t disagree with you that punting the KXL decision until after his re-election has reoriented President Obama’s political incentives more towards making the pipeline into the climate change “symbol” that environmentalists want it to be. But any Canadian parsing the POTUS’ moves would do well to remember that he hasn’t given up on the “post-partisan” ethos of searching for a way to, at least nominally, give something to everyone involved in controversies that cross his desk.

So it’s as meaningful to me that Obama told Democratic senators last week of his hope that Canada can make more progress on oil-sands emissions as it is that he so publicly pooh-poohed KXL’s job-creation potential. I’m not saying there is overt deal-making at play in the simultaneous delay of both KXL and internal Canadian emissions regs — but there may not need to be, as Obama has stated pretty clearly he’d be more inclined to say yes if he had more confidence that the oil sands’ carbon footprint could be trimmed.

As David points out, the “country-to-country” effects of simply nixing KXL give Obama every reason to prolong the process. Could he wait until mid-2014, when his own domestic emissions agenda is further along in the US, and then declare that he had given Canada enough time to form a workable plan, that KXL’s goose is cooked? Possibly. But much depends on other moving pieces of the Washington chessboard (and how closely the Harper government is perceived as aligning with US Republicans’ quest to strip Obama of power over KXL, I’d add).

Paul Boothe:

The practicalities of regulation-making in the two countries makes the co-ordination of regulatory outcomes pretty difficult. In Canada, the formal process begins with a Notice of Intent (NOI) published in the the government’s official “newspaper,” the Canada Gazette. The NOI is followed by informal consultations with stakeholders and then publication of a draft regulation and impact analysis. Stakeholders are invited to submit comments in writing on the draft regulation. After the comment period ends, the government considers the stakeholder comments (and perhaps conducts more informal consultations) and publishes a final regulation and impact analysis along with responses to the written comments. Its also worth remembering that regulations generally don’t take effect immediately. The “coming into force” date may be two or three years in the future, depending on how long it will take regulatees to prepare to comply with the new rules.

No NOI for regulation of oil and gas industry GHGs has been published yet. So far we have only seen informal consultations between the government, the industry and some provinces. So it would probably be a year or more before a final regulation could be passed. The government could, in theory, bypass its own regulatory process, but that might not inspire much confidence south of the border. Such a move would certainly leave it open to criticism and, perhaps, legal challenge in Canada. Finally, even the publication of draft regulation does not give much certainty about the final outcome. In past regulatory processes like the one for coal-fired electricity GHGs, the final regulation differed substantially from the initial draft.

David McLaughlin:

I find Elana’s and Paul Boothe’s comments both cogent and revealing. Put them together and a KXL “fix” is not as simple as it sounds. Process is policy here and timelines for getting new climate-friendly regs in place that may be placatory on the pipelines are not as straightforward as some suggest. Even then, as much as the President might want to use approval of KXL as a means of leveraging more climate action by Canada, the political and the regulatory time lines need to coincide. That is rarely the case.

What seems undeniable, though, is that the initiative on getting KXL approved has passed from Canada to the United States. Perhaps this was always so, but we have clearly invested a fair amount of ministerial time-on-task, and now advertising dollars, to promote the Canadian position. Even then, we have often seemed a step or two behind at important junctures. Sure, it’s an American process not a Canadian one. But we have had a fair amount of experience — bittersweet for sure — on just how political and arbitrary that can be. You can’t get ahead of the curve if you keep your heels stuck in the ground.

Paul Wells:

Everything I read from you guys makes me think that there is no co-ordination between the White House and the PMO on a regs-for-pipeline Grand Deal. If there is, we’ll find out, and Obama and Harper will look like strategic geniuses. But in that alternate universe, I’ll still wonder why Obama spent months publicly badmouthing a pipeline he planned to approve, in front of the very Democratic base audiences that would hold it against him if he crossed them. It makes no sense. I don’t buy it.

Instead, Harper continues his strategy of foot-dragging on climate-change policy — a strategy that hasn’t particularly hurt his domestic political chances since the 2008 election — while Obama tries, very belatedly, to influence events in a Northern neighbour country he mostly ignored until this spring. They’re similar men in so many ways: aloof, allergic to deadlines and stakes-raising. But it’s opposites that attract, and these two seem simply to have mutually dismissed each other.

Paul Boothe:

There is another important link between the two countries’ climate change policy that hasn’t been mentioned yet. Namely, both have the same targets for reducing greenhouse gases by 2020.

In 2009 in Copenhagen, Prime Minister Harper pledged to reduce Canada’s emissions by 17 per cent by 2020, matching the commitment of President Obama. Back then, the betting was for an economy-wide cap-and-trade system in the U.S. to meet the target. That proposal failed in Congress, but the cheap natural gas revolution and stringent air quality regulation by the EPA have led some experts to suggest that the U.S. is on track to meet its 2020 target even without cap and trade.

In Canada, the situation is different. We don’t have as much electricity generated by coal and the new federal regulations that will lead to the phasing out of coal-fired generating plants in Alberta, Saskatchewan and Atlantic Canada won’t have much effect until after 2020.

Current estimates are that we about half-way to closing the gap between business-as-usual emissions in 2020 and our target. Much of the heavy lifting has come from provincial actions like Ontario’s decision to close its coal-fired generating plants, B.C.’s carbon tax and a number of Quebec measures. Federal regulations of car and light truck emissions (in concert with the U.S.) have helped too.

The oil and gas sector is the only major emitter of GHGs that remains unregulated in Canada. Thus to fulfill his Copenhagen promise using regulations, the Prime Minister needs ambitious reductions in oil and gas sector emissions. So there is a lot at stake in this regulatory round. As soon as we see the draft regulations for oil and gas sector emissions, we will know if Canada has a chance of meeting the Prime Minister’s 2020 pledge announced in Copenhagen.

Elana Schor:

Since I inadvertently kicked off this dialogue by observing that KXL and Canada’s oil sands emissions regs both remain unresolved, I should mention what launched that train of thought: A source inside Obama’s meeting with Democratic senators last week said that the president independently raised the prospect of asking Canada to spend some of its profits from the pipeline — the economic benefit that would come from getting Alberta oil to tidewater — on fighting climate change. Does this mean the tradeoff has to come in the form of stronger oil sands rules that, as I now understand from David, are not on the formal glide path to coincide with a KXL permit? No. But I remain unconvinced that the president is not looking for a reason to say yes, and I would not describe Obama’s jobs comments as “publicly badmouthing” Keystone XL. I’m not as familiar with the prime minister’s personality, but in addition to Obama’s deadline allergy, he also likes nothing more than a good intellectual case for a decision — and when it comes to the pipeline, it appears he just hasn’t heard a strong argument (yet) that it’s in the U.S. national interest to approve.

One point on Paul Boothe’s observation above about Canada and America’s differing paths toward the same GHG reduction targets: The same shale-drilling techniques helping the U.S. cut its footprint through natural gas are also dimming the prospects for KXL by tapping tight oil deposits here at home. But a lot of the U.S. media errs by describing light, tight shale oil and Canadian oil sands crude as apples-to-apples competitors. The truth is more complicated, with many refineries still eager for extra heavy oil capacity to increase their diesel production — a move that might not affect U.S. gas prices but does help its trade deficit. Simply put, there’s no reason that Canada won’t hang on as America’s No. 1 foreign oil supplier, and even send significant volumes of oil sands south … whether that supply comes from KXL is what remains to be seen.


 

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