Proposed emissions cap threatens critical Canada-U.S. energy trade

From the Canadian Energy Centre

The vast majority of Canadian oil exports to the United States are processed in Midwest states. Above, the Cushing Terminal near Cushing, Oklahoma is Enbridge’s largest tank farm and the most significant trading hub for North American crude.

Canada and the United States share something that doesn’t exist anywhere else. A vast, interconnected energy network that today produces more oil and gas than any other region – including the Middle East, according to analysis by S&P Global.

It’s a blanket of energy security researchers called “a powerful card to play” in increasingly unstable times.

But, according to two leaders in governance and energy policy, that relationship is at risk.

Analysis has shown that the federal proposal to cap emissions in Canada’s oil and gas sector would result in reduced production. That likely means less energy available to Canada’s largest customer, the United States.

Jamie Tronnes, executive director of the Center for North American Prosperity and Security, is a former Canadian political staffer born in northern Alberta now living in Washington, D.C.

Jamie Tronnes

Heather Exner-Pirot is a prominent energy policy analyst and senior fellow with the Ottawa-based Macdonald-Laurier Institute.

Heather Exner-Pirot

Here’s what they shared with CEC.

CEC: The U.S. is one of the world’s largest oil and gas producers. Why does it need imports from Canada?

HEP: It’s because all oil is not the same. The United States developed its refinery industry before the shale revolution, when they were importing heavier crudes. Canada has that heavier crude. They are now exporting some of their sweet light oil and importing Canadian crude because that’s what their refinery mix requires.

What’s interesting is that we have never exported more Canadian crude to the United States than we are right now. Even as they have become the world’s largest oil producer, they’ve never needed Canadian oil more than today.

They also import a ton of natural gas from us. They have become the world’s biggest gas producer and the world’s biggest gas exporter, but part of that, and having their LNG capacity being able to so quickly surpass Qatar and Australia, is because some of the production is being backfilled by Canada.

CEC: Will the incoming new administration (either Democrat or Republican) impact the Canada-U.S. energy relationship?

JT: I don’t see a big change happening in such a way as it did when the Biden administration came in with the axing of the Keystone XL pipeline. Now that Russia has invaded Ukraine, the global energy market has changed radically.

On the Republican side, Trump often repeats the phrase “drill, baby drill.” The issue is that the U.S. is already drilling about as much as demand allows.

I don’t think a Harris government would move quickly to limit oil and gas production without having a strategic alternative in place. It simply would make her look very weak, and she has explicitly said that she would not ban fracking.

In the post-COVID world, I believe that the Democrat side of the aisle is coming to the view that it was a geopolitical mistake in terms of securing North American energy dominance to cut the Keystone XL pipeline.

The reality is that being able to export refined Canadian feedstock is key to keeping the U.S. as an energy superpower.

The U.S. government continues to offer and subsidize tax credits for investment in carbon capture technology. Even though Trump has said that he would end all of those carbon capture credits and subsidies, it still would not stop the U.S. from importing Canadian oil and gas.

That’s only going to grow as things like AI continue to create more demand for energy. A huge amount of the United States electrical energy grid is powered still by natural gas, and that’s going to take decades to change.

CEC: Would a reduction in Canadian production from the federal government’s proposed oil and gas emissions cap impact the United States?

HEP: Yes, and we should be raising the alarm bells. The federal government has said it is a cap on emissions, not a cap on production, but all the analysis that Alberta and the oil and gas sector have done is that it will create somewhere between 1 million and 2 million barrels of production being shut in.

Well, 95 per cent of our exports are to the United States. If we are shutting in 1 million barrels or 2 million barrels, that all comes out of their end just when their shale oil is expected to plateau and decline.

A cap would also tap down natural gas production and LNG capacity. If you’re Japan or South Korea and you’re looking to secure 20 years of supply, the cap creates a lot of uncertainty with that Canadian supply. There’s zero uncertainty with Qatar’s supply. If you’re Japanese, these are not pleasant conversations. This is not giving you confidence. And if you don’t have confidence in LNG, you’re going to burn coal.

In a perfect world, Canada would supply LNG to Asia, the United States would supply it to Europe, and we’d be a pretty energy-independent Western alliance.

I wish we would be honest that we need a different way to reduce emissions that does not take away from production, because that capacity is a big part of what we offer our allies right now.

JT: It threatens the security of North America in a big way because the energy dominance of the United States is tied to Canada. Especially with what’s going on in Russia and other countries, it behooves us as Canadians and me as an American to remember that security is not freely granted.

We have to make sure that we are thinking more holistically when we think of things like emissions cap legislation that’s going to have knock-on effects and may even increase emissions. If you’re trying to replace that feedstock, it’s got to come from somewhere.

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Natural gas pipeline ownership spreads across 36 First Nations in B.C.

Published on June 14, 2025

Todayville

Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group

From the Canadian Energy Centre

Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee

The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.

In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.

In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.

“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.

“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”

Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.

The name Stonlasec8 reflects the different regions represented in the agreement, he said.

The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.

It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.

“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.

He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.

There is overlap between the communities in the two groups, he said.

CDEV vice-president Sébastien Labelle said provincial models such as the Alberta Indigenous Opportunities Corporation (AIOC) and Ontario’s Indigenous Opportunities Financing Program helped bring the federal government’s version of the loan guarantee to life.

“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.

“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”

Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.

The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.

Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.

“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.

“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”

Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.

“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”

Canadian Energy Centre

Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project

Published on June 10, 2025

Todayville

From the Canadian Energy Centre

Billions in government revenue and thousands of jobs across provinces

Announced in 2006, the Northern Gateway project would have built twin pipelines between Bruderheim, Alta. and a marine terminal at Kitimat, B.C.

One pipeline would export 525,000 barrels per day of heavy oil from Alberta to tidewater markets. The other would import 193,000 barrels per day of condensate to Alberta to dilute heavy oil for pipeline transportation.

The project would have generated significant economic benefits across Canada.

The following projections are drawn from the report Public Interest Benefits of the Northern Gateway Project (Wright Mansell Research Ltd., July 2012), which was submitted as reply evidence during the regulatory process.

Financial figures have been adjusted to 2025 dollars using the Bank of Canada’s Inflation Calculator, with $1.00 in 2012 equivalent to $1.34 in 2025.

Total Government Revenue by Region

Between 2019 and 2048, a period encompassing both construction and operations, the Northern Gateway project was projected to generate the following total government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $11.5 billion
Federal government revenue: $8.9 billion
Total: $20.4 billion

Alberta

Provincial government revenue: $49.4 billion
Federal government revenue: $41.5 billion
Total: $90.9 billion

Ontario

Provincial government revenue: $1.7 billion
Federal government revenue: $2.7 billion
Total: $4.4 billion

Quebec

Provincial government revenue: $746 million
Federal government revenue: $541 million
Total: $1.29 billion

Saskatchewan

Provincial government revenue: $6.9 billion
Federal government revenue: $4.4 billion
Total: $11.3 billion

Other

Provincial government revenue: $1.9 billion
Federal government revenue: $1.4 billion
Total: $3.3 billion

Canada

Provincial government revenue: $72.1 billion
Federal government revenue: $59.4 billion
Total: $131.7 billion

Annual Government Revenue by Region

Over the period 2019 and 2048, the Northern Gateway project was projected to generate the following annual government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $340 million
Federal government revenue: $261 million
Total: $601 million per year

Alberta

Provincial government revenue: $1.5 billion
Federal government revenue: $1.2 billion
Total: $2.7 billion per year

Ontario

Provincial government revenue: $51 million
Federal government revenue: $79 million
Total: $130 million per year

Quebec

Provincial government revenue: $21 million
Federal government revenue: $16 million
Total: $37 million per year

Saskatchewan

Provincial government revenue: $204 million
Federal government revenue: $129 million
Total: $333 million per year

Other

Provincial government revenue: $58 million
Federal government revenue: $40 million
Total: $98 million per year

Canada

Provincial government revenue: $2.1 billion
Federal government revenue: $1.7 billion
Total: $3.8 billion per year

Employment by Region

Over the period 2019 to 2048, the Northern Gateway Pipeline was projected to generate the following direct, indirect and induced full-time equivalent (FTE) jobs by region: