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A time for true collaborative leadership
A Canadian Energy Sustainability Import Duty: Another Path to Resolution on Energy Based on Fairness
By David B Savage
10 Second Summary
All energy produced and consumed in Canada should be subject to comparable regulatory assessment. To ensure we evolve our energy production, consumption, conservation, technology and innovation, a C.E.S.T. is to be charged against those that have not yet passed the tests.
The Backgrounder
As Canadians, we are frustrated by the failure of Canada to create shared value for Canadians.
As we fail to have a national energy vision for our future, we are creating deep divisions within Canada and communicating to foreign investors; “Don’t invest in Canada, they never get things done.” Narrow-minded groups and politicians “trump” the national interest.
We are proud of our energy industry. We are proud of our nation. We are losing our leadership and credibility and attractiveness. We may fall out of the G7 as our economy is so restrained.
And, yes, there is always a risk of oil spills on water and land. Those that are directly affected by this risk, no matter how low, deserve standing and a voice in this conflict. The federal government has announced major new initiatives to protect our waterways from spills.
But even a one per cent chance of a major spill can have massive negative impacts.
So why are we focussing only on tankers carrying Canadian oil?
” … approximately 1.2 million barrels per day of oil that goes through the Strait of Juan de Fuca…I’m not worried about adding one more oil tanker per day. But I do worry about the boat diesel, heavy bunker fuel and chemical pollutants pumped from the bilges of the other 6,000 large ships that travel our waters each year, ships that are not nearly as closely scrutinized as those 35 Kinder Morgan tankers are sure to be.”
Sinking the myth of dangerous West Coast oil tanker traffic
Even our Indigenous peoples are battling. Forty-three first nations along the route of the current and proposed expansion of the Trans Mountain pipeline have signed agreements approving the proposal. Yet, …
Indigenous People fight Trans Mountain
Now we have a war going on between Alberta, British Columbia, Saskatchewan and the federal government. We have the minority B.C. government battling the Kinder Morgan pipeline expansion that went through many years and hundreds of millions of dollars of regulatory review before being conditionally approved in 2016. Significant populations in the Vancouver region fear an oil spill.
Saskatchewan and Alberta threatening to reduce oil to BC
And British Columbia is talking about a Constitutional challenge… and Canadian taxpayers may be investing hundreds of millions in Kinder Morgan…
Conflict, misunderstanding, misalignment of organizations and their leadership, lost productivity, wasted time and wasted resources resulting from limiting perspectives, distraction, and hard-line positions are damaging our today and our future.
I have invested my career in appropriate dispute resolution, interest-based negotiation, well-designed collaboration, and respect filled communications between stakeholders with diverse interests, fears, hopes and expertise. While provincial and federal governments are ramping up the battle, there are better ways. We can come together by focusing on our Canadian values. Nobody gets to be wrong. Nobody deserves to be denigrated. And with vision and a well-designed collaboration, we can find a better future together. If we fail to do this, our economy, environment, communities and indigenous peoples will all suffer.
This is a time for nation-making, not narrow-minded power battles. This is a time for true collaborative leadership that will find far better outcomes than what we see today.
The Problems
As Canadians, we value environmental, social and economic health. We, also, value fairness, integrity, justice, and opportunity.
According to the National Energy Board of Canada, “In the first eight months of 2014, total crude oil imports averaged 634 thousand barrels per day (101 thousand cubic metres per day).” If we assume that level of input at today’s oil price, that equals $456,480,000.00 every year that, largely east Canada, send out from Canada to Venezuela and other nations. No Venezuelan or other foreign import oil is subject to the same regulatory review that Canadian energy is.
The Energy East pipeline from the west to the eastern was killed for a few reasons. A key one was the federal government changing the rules mid-process to test the impact of the pipeline on climate change.
Millions of barrels of Alaskan oil have been shipped by tanker down the B.C. coast for five decades.
The Vancouver region imports oil, jet fuel and other energy every day by barge and ship from America. The Tsawwassen coal terminal and the Port of Vancouver ship massive amounts of coal, a significant amount from America, to Asia every day.
Victoria and Montreal dump massive quantities of raw sewage into their adjoining and international waterways. Those decisions are economic yet not environmentally driven. Yet, both the government of British Columbia and Quebec oppose Canadian oil pipelines. How does this make any sense? How does this align with our Canadian values of fairness, integrity, and opportunity?
Canadian oil is held hostage to the opposition and to a massive discount since America is our only foreign customer. The differential means that when the West Texas Intermediate index price for North America oil is $60US, Canadian heavy oil producers receive $23 less ($37US or only 61% of WTI). This hostage tax costs Canada an estimated $40,000,000 every day. If Canada could capture 10 to 15 billion dollars each year to use for our economy, social and environmental goals, why wouldn’t we?
The Proposal
Therefore, while Canada, Alberta, Saskatchewan, British Columbia and First Nations ramp up a battle over the expansion of the Kinder Morgan pipeline, here is another approach. This one clearly embraces the Canadian values of fairness, integrity, justice, and opportunity. Unlike the current battle between jurisdictions, this proposal should not set Canadian against Canadian. This one will place every source of energy subject to the same review.
Effective immediately (as soon as it can be enacted as law), every source of imported energy to Canada will be subject to the exact same regulatory review as Canadian energy has been facing for 90 years. These reviews have ever increasing hurdles to get over. We must review the fairness and appropriateness of them. But, all energy must be reviewed on the same basis. No longer shall American, Venezuelan and Saudi oil be imported without review.
While the review process gets re-evaluated and all energy sources get their regulatory review processed, every non-Canadian oil barrel will be taxed at the same rate as the differential paid by Canadian producers. For example, assuming the above 634 thousand barrels per day and the current differential of $23US this Canadian Energy Sustainability Duty would bring an estimated $7,000,000,000 Cdn. per year to Canada.
The Canadian Energy Sustainability Duty revenues could then be used to fund environmental, social and economic sustainability, the Canadian oil, natural gas, wind, solar and geothermal producers, education, healthcare and /or centres for innovation and collaboration.
While we can debate and battle about Canadian energy, we can agree that the Canadian values of fairness, fairness, integrity, justice, and opportunity must demand that all energy produced and/or consumed in Canada be treated in the same fashion and subject to the same rules, regulations, laws and processes.
Will such a tax align with our international trade agreements? We will design it to honour those energy commitments. But, we are not restricting energy exports nor are we providing international traders a huge subsidy in their competition with our own businesses.
This Canadian Energy Sustainability Duty over time (two years to 10 years) will gradually drop to almost nothing since our Canadian energy industry will be more globally attractive, innovative, and economic.
As an environmentalist, a businessperson and a community servant, I dream of a healthy future for Canada and all our people. Let’s collaborate to further enhance our environmental protection, economy and sustainability.
We are fools to fight one another and provide non-Canadians with an economic advantage over Canadians. Initially, the Canadian Energy Sustainability Duty tax (C.E.S.T.) will have similarities to the Carbon Tax. Unlike the Carbon Tax, the C.E.S.T. will incentify evolution of our Canadian energy industry. We do already have globally attractive regulatory frameworks. We can evolve to serve the interests of all Canadians and become recognized as the energy provider of choice. We can focus on conservation, environmental protection, education, economic development and global competitiveness.
Shall we cut off energy from other provinces, continue to send billions of dollars to foreign oil producers, or sell our energy at a 35% discount or starve our opportunities to evolve and create shared value or continue in our self-righteous dismissal of people that don’t agree with me…?
Canada must act to create greater clarity and equality for energy producers, exporters and importers. Let’s talk. Let’s be better together.
A great way to start more engaging, productive and collaborative conversations on energy is the Newtonian Energy Shift Game.
– David B. Savage serves organizations creating better ways to work together internally and externally. Clients have David assess, design, coach, train, and evolve their collaboration, negotiation, dispute resolution, and business development capacities and successes.