This article originally appeared in the National Post.
By Heather Exner-Pirot, August 24, 2022
German Chancellor Olaf Scholz was in Canada this week and you’d be forgiven for thinking, based on the agenda for his visit, that Germany has an urgent hydrogen shortage it needs to solve.
Scholz and Prime Minister Justin Trudeau journeyed to the western Newfoundland town of Stephenville on Tuesday to sign a deal for the export of “green” hydrogen to Germany in the coming years. But Scholz’s trip to Canada was never supposed to be about hydrogen. It was meant to address liquified natural gas exports, as Germany and the rest of Europe struggle to replace Russian natural gas in the wake of the war in Ukraine. In fact, natural gas prices in Europe hit all-time highs this week, trading at the equivalent of (Cdn) $530 a barrel of oil, worsening an energy crisis that is devastating households and industry alike.
Scholz approached Trudeau about LNG back in March, in Berlin, and again in June, on the sidelines of a G7 meeting in the Bavarian Alps. German officials planned this trip hoping that a deal could be announced by now. But those hopes were dashed as Germans came to understand what the oil and gas industry in Canada already knew: it is next to impossible to get pipelines and export terminals built in this country, and the federal government will suffocate any companies foolish enough to try with regulatory hurdles and delays.
Canada is blessed with world-class reserves of commodities across the energy and critical mineral spectrum, with excellent agricultural land and forestry resources to boot. We have far more than we could ever consume on our own, given our modest population. Only one other country shares such a privileged position: Russia. And the western world is desperate to reduce its dependence on it.
So where did Europe, Japan, South Korea and the United States look to find a reliable ally that has more natural resources than it needs, and what’s more, capacity to spare, not only to meet today’s needs but those of the multitrillion-dollar energy transition as well?
The obvious answer was Canada. Canadian producers’ phones have been ringing off the hook since February, with trade partners looking to buy more of our fertilizer, uranium, oil, gas, wheat and more. With security threats from Russia and China growing, this is not merely an economic strategy, but a security one as well.
But uniquely, maddeningly, the federal government seems intent on limiting producers’ ability to export more resources. The culprit: an uncertain regulatory environment that deters both investors and producers, and a lack of infrastructure to get it to global markets efficiently, from pipelines and terminals to railroads and ports. No other country in the world — certainly no other big western exporters such as Australia, Norway and the U.S.A. — have sabotaged their own resource development to such a degree. But it’s no longer just Canada’s resource industry that is feeling the pain.
Although lower-income Canadians are already struggling, Canada as a whole will be among the last nations to face the consequences of global food and energy scarcities. Others are not so lucky. According to the World Food Programme, more than 800 million people already cannot afford enough food to meet their daily caloric requirements and are living with chronic hunger. Farmers, drivers, pensioners and students are protesting in streets around the globe as food and energy crises become political ones. Governments and economies are collapsing.
But this is not only a developing world problem. In the United Kingdom it is estimated that a third of households will be in energy poverty (spending more than 10 per cent of their income on energy) this winter. Google searches for “firewood” have hit a new high in Germany as consumers wonder how they can stay warm this winter without driving up their electricity bills. High energy costs are spilling into all facets of the economy in Asia and Europe, with manufacturers boosting prices for everything from steel to chemicals to solar panels.
Amidst this background, Canada has announced — in the months following Russia’s invasion of Ukraine — both a 30 per cent fertilizer emissions reduction target for the agriculture industry, which cannot be met without impacting yields, and a 42 per cent emissions reduction target for the oil and gas industry, which puts future LNG projects in doubt. A just transition, indeed.
We want you to know Canada for our resourcefulness, not our resources, Trudeau told an audience in Davos some years back. Our allies must be questioning our resourcefulness right now. And they would surely like us to get back to developing those resources.
Heather Exner-Pirot is a Senior Fellow at the Macdonald-Laurier Institute.