The reverse National Energy Program

By Terence Corcoran  National Post

Enbridge CEO Pat Daniel brought his oil sands energy crusade to Toronto yesterday, visiting newspaper editorial boards to outline his vision of a National Energy Strategy (NAS) that would unleash the global power of Canada’s oil sands to save the world’s poor from energy shortages and fossil-fuel deprivation. Saving the Third World from energy shortages may not be the first thing that comes to mind in connection with the oil sands, but that’s the latest element in Mr. Daniel’s ongoing campaign for a comprehensive national oil sands development strategy.

To meet his objective, Mr. Daniel told National Post editors that Canada will need to bring in carbon taxes, cap-and-trade regimes, subsidies for renewable energy and major conservation efforts. The number one objective, he said, would be to develop Canada’s oil sands, a plan that includes Enbridge’s proposed Northern Gateway pipeline from Alberta to Kitimat, B.C., from where oil would flow to the energy-starved regions of the Asia-Pacific.

Whether this crusade for a national oil sands strategy is one environmental activists will embrace seems doubtful. Even more in doubt may be support from Canadians who already support the oil sands as a market-based development in a free trade economy.

That support could fade fast once they get a handle on Mr. Daniel’s multi-faceted plan to tax the hell out of consumers to get his plan up and running. If that’s what it takes to develop the oil sands, many Canadians may well say forget it.

We can all understand where Mr. Daniel is coming from. His company, Enbridge, is highly successful at running giant regulated utility systems whose profits are often guaranteed by governments. Recent annual returns of 12% on equity have kept steady through recession and recent slowdowns. When the government guarantees much of your profits, it’s hard to lose money. What Mr. Daniel appears to be looking for is not so much a National Energy Strategy as a national regulatory system to codify massive transfers of wealth from one energy source to another, from consumers to the oil sands, and from the oil sands to Third World countries.

The latest version of Mr. Daniel’s NAS looks much more explicit than earlier efforts, and much more interventionist.  In 2007 he was a leading member a Euro-Canadian Energy Roundtable that supported a new  national energy policy for Canada. “I believe firmly,” he said in 2007, “that developing and implementing a national energy strategy would help resolve many of the issues” facing the oil and gas industries.

A national oil sands strategy, he said in a 2009 speech to the Public Policy Forum, would help industry deal with regulatory hurdles. “This is of course a major concern to pipeline builders like Enbridge who are investing billions in infrastructure projects.” To sell the idea to the public and policymakers, Mr. Daniel then advocated imposing a tax on oil sands that would be used to fund education programs.  What better objective could there be than “investing the revenues from the oil sands development in the best possible industry to support sustainable long-term growth and prosperity for Canada: education.”

Yesterday, Mr. Daniel made no mention of the education tax. Instead, he raised the moral bar by portraying oil sands development as something close to a national effort to free the world’s poor from energy shortages. Canada has the oil sands, one of the world’s richest stocks of hydrocarbon, and billions of people in the world need that Canadian energy. It is, he suggested, a national imperative, a great humanitarian effort. “We do have a challenge, “he said. “We have too much hydrocarbon” and the world needs hydrocarbon.

In a dazzling mesh of environmentalism, corporate social responsibility mush and regulated industrial development theory, Mr. Daniel proposed carbon taxes and cap-and-trade carbon regimes for the oil sands and fossil fuels. The money would be used to fund renewable energy sources — of which Enbridge is a leading provider under various government-subsidized regimes in Alberta, Ontario and elsewhere.  Indeed, Enbridge and green groups helped design Ontario’s notorious feed-in-tariff subsidy system. Mr. Daniel logically supported Ontario’s transfer of wealth from electricity consumers to wind and solar power firms such as Enbridge.

In some ways, this is a giant national policy role-reversal. In the 1980s, the Trudeau Liberals brought in a National Energy Program that essentially involved nationalization and confiscation of oil revenue from Alberta and transferred it to consumers, mostly in the East. Mr. Daniel’s National Energy Strategy aims to transfer wealth from all Canadians into oil sands and renewable energy sources controlled by energy firms such as Enbridge. And all in the name of delivering cheap oil to save the Third World from shortages of energy.

Will Canadian buy it?

Financial Post

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