Can Trudeau play hardball with Obama over oil sands, market access?

Justin and Barack hit it off over climate change objectives. Will Canada now get a new oil sands pipeline?

Judging by the sidebar meeting between President Obama and new Prime Minister Trudeau at the APEC Summit in Manila, Canada has just been schooled in the new political realities of global energy hard ball.

President Barack Obama

A Canadian Press story says the two leaders discussed energy in the wake of the rejection of Keystone XL pipeline by Obama, who said he had environmental concerns about approving the transport of “dirty oil” from Alberta across the United States. Asked how he might convince the United States to accept more of the “dirty oil,” Trudeau replied that Canada’s environmental record “was not good in the past and we need to do better.”

Justin Trudeau said he wanted to “reassure Canadians and others that we are serious about meeting our emissions reductions targets.”

Barack Obama added that both countries are important oil and gas producers and “make no apologies” but need to shift from carbon intensive energy to cleaner energy for the sake of their children and grandchildren.

Canadian Prime Minister Justin Trudeau.

“This is going to be a messy, bumpy process worldwide,” Obama said. “But I am confident that we can get it done and the fact that we now have a very strong partner in Canada to help set up some global rules around how we approach this will be extraordinarily helpful.”

Conclusions we can draw from these comments?

One, if Canada wants better access to American markets, it has to get on board with Obama’s climate change agenda. Two, Trudeau gets it.

His successor, Conservative Stephen Harper, did not. Keystone XL and a clear shot to the coveted heavy oil refineries on the Texas Gulf Coast – which require 2.7 million barrels a day of heavy crude but get only 10 per cent of their requirements from Canada – was Harper’s single-minded approach to bi-lateral relations from the time Obama assumed office in 2009.

Harper basically poisoned relations with Canada’s biggest trading partner and most important ally over the issue, which explains why Obama visited Canada only twice and hasn’t set foot there since 2010. A bigger diplomatic insult is hard to imagine.

Now, the new Liberal PM is more closely aligned with the Obama climate agenda  and – Voila! – the relationship has thawed and Obama is saying nice things about America’s northern neighbor.

The newfound chumminess is too late for Keystone XL. That poor pipeline project became an international symbol, a rallying cry for activists determined to kill the social license for fossil fuels, as I argued in a recent column.

But the Texas heavy oil refinery market still awaits, currently being served by American political antagonists like Venezuela and Nigeria. As the Canadian Association of Petroleum Producers has said, if there is a US market, Canadian oil will find a way there, mostly likely by rail in the short-term.

If Trudeau can nurture a cozy relationship with the White House (dare we draw the comparison to Ronald Reagan and Brian Mulroney?), perhaps Keystone XL might be resurrected or another pipeline proposed. Who knows?

But the game now is clear: If Canada wants something, it has to play ball on the climate file.

Time will tell if Justin Trudeau is ready for the Big Show or will remain stuck in the minor leagues.

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