Justin Trudeau reinvents his father’s National Energy Program

The as yet unnamed strategy is not as interesting as the original NEP. It may be politically more palatable.

Thestar.com
Feb. 7, 2016
By Thomas Walkom

Justin Trudeau is cobbling together a new national energy program. It is not the one that his father, Pierre, came up with in 1980. In many ways, it is the exact opposite.

But like the original NEP, the current prime minister’s as yet unformed and unnamed strategy is a comprehensive attempt to meet an array of national and political needs.

Pierre Trudeau’s original NEP was designed to protect Canadian energy consumers, particularly Ontario manufacturers, from sky-high oil prices.

In a nod to the economic nationalism of the time, it encouraged Canadian ownership in the oilfields.

And it allowed a deficit-ridden federal government to siphon off a portion of Alberta oil royalties.

It was bold, controversial and divisive. Albertans, who received below-market prices for their oil, hated it with a passion. Other Canadians, particularly those who benefitted from low gasoline and heating-oil prices, were more forgiving.

By the mid-’80s, with world oil prices tumbling again, Canada’s first NEP was rendered largely redundant.

It is remembered today largely as a gigantic political mistake.

Justin Trudeau’s national energy program is still a work in progress, built on a document created by the provincial premiers last July called the Canadian Energy Strategy.

Like the premiers, Trudeau is attempting to link two conflicting aims.

The first is to support the beleaguered Western Canadian oil industry. If high world oil prices were the problem in 1980, low prices are the problem today.

Hence the focus on pipelines. Pipelines, particularly pipelines that won’t be built for several years, can’t raise today’s price of oil.

But they can convince companies that investing in Alberta and Saskatchewan for future production is still worthwhile.

The second is the need to fight climate change. That’s a real imperative. If climate scientists are right, the world as we know it will not survive global warming.

But it is also a political imperative. The voters want government action.

To their credit, the premiers understand this. Their Canadian Energy Strategy recognizes that any expansion of oil production must, somehow, take into effect climate change.

Unfortunately, the premiers provided no formula for marrying these conflicting goals.

This is the task Trudeau appears to have set for himself.

What will Justin Trudeau’s national energy program look like? From what he has said both before and after becoming prime minister, three elements suggest themselves.

One: Unlike the original NEP, this one will make no bow to Canadian economic nationalism. The prime minister has made it clear he wants foreign investment. He has even used the hackneyed phrase “Canada is open for business.”

Don’t be surprised if he loosens the restrictions that the former Conservative government placed on Chinese investment in the oil and gas sector.

Two: From everything he has said over the years, it is clear he does want new pipelines linking the oilsands to tidewater.

He explicitly supported the doomed Keystone XL pipeline. He is more careful about the proposed Energy East line that would carry Alberta oil to New Brunswick. But he has said nothing to suggest he is opposed.

In fact, recently announced interim reforms that give his cabinet more leeway over the approval process for this controversial west-to-east line may increase its chances of success.

Under the new rules, pipeline proponents will have to go though more hoops. But that’s political reality. As far as aboriginal hoops are concerned, it is also the law.

Three: In return for pipelines, the oil producing provinces will have to give something on climate change. That’s the quid pro quo. It’s also what Alberta’s New Democratic Party Premier Rachel Notley has already done.

I’d be surprised if Trudeau makes the provinces do enough to meet Canada’s already inadequate greenhouse gas reduction targets. Notley certainly hasn’t. But she has won praise for doing something, no matter how inadequate. Trudeau may be as lucky.

In a nutshell, that’s the new NEP: foreign investment, pipelines and a bow to climate change.

It’s not as sweeping as the first Trudeau’s version. Nor is it as interesting. It may be politically more palatable.