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Obama’s trip to Canada: modest expectations

US President Barack Obama’s 6-hour trip to Ottawa on Thursday, while brief and lacking in the pomp and circumstance normally associated with presidential trips abroad, will arguably be one of the most important of the early period of his presidency.
Canada is the largest trading partner of the US, particularly in the energy and transportation industries. So how the two countries work out some particularly difficult issues running the gamut from the so-called “smart grid” technology in the power sector to carbon sequestration and cap-and-trade will have dramatic impacts in both countries for years to come.


While it’s not likely that there will be any major announcements on these fronts on Thursday (six hours, after all, is just six hours), we should be on the lookout for signs that might indicate that Obama and Canadian Prime Minister Steven Harper are on the same wavelength. Or, whether Obama’s more liberal and interventionist approach to everything from the econimic stimulus package to environmental policy does not mesh with Harper’s more conservative worldview (not to be confused with US conservatives’ worldview).
The new president, who is even more popular in Canada than in the US, and the largely unpopular (in Canada) prime minister, already have signaled their desire for a new, more cooperative relationship on key issues such as climate change. But that overarching goal faces several big hurdles, not least among them the development of Canada’s vast tar sands reserves.
Obama neatly finessed the issue of Canadian tar sands development in an interview Tuesday with the Canadian Broadcasting Corporation, describing the “dilemma” of the US economy’s need for the oil from the sands, while having to confront the huge carbon footprint associated with the oil sands production process. His comments to CBC, relying on hoped-for technological breakthroughs in carbon sequestration, could not have been music to the ears of environmentalists on both sides of the border, who view tar sands as “dirty oil.”
But they had to have at least somewhat relieved producers and investors who have already sunk tens of billions of dollars into the development projects, and who are living through the latest collapse in oil prices.
Beyond oil sands development, the future Canada-US energy relationship will also hinge on how well the countries bilaterally handle their shared power grid. The US will not be able to get to its ultimate goal of a far more energy efficient grid without Canada, and it is uncertain how much money and effort Ottawa is willing to spend on this, or other energy infrastructure.
The newly minted US economic stimulus package contains around $11 billion in spending on the transmission system, while Canada’s stimulus plan contains C$0 (US$0) for smart grid development. Canada is leaving the matter to each province, hardly a promising framework for a continent-wide solution.
Obama has also put the US taxpayer’s dollars behind his talk of boosting the role of renewables in the energy mix. The stimulus package has $20 billion for tax cuts, mainly for renewables, and another $6 billion in loan guarantees for that sector. Like the smart grid, there is nothing of note in the Canadian federal stimulus package on renewables, unless spending on forestry is shoehorned into that.
If Obama’s ideal of a continental solution to energy (including Mexico, which I am leaving out for now, given its own particular mix of problems) is to become a reality, having Canada as a full partner will be mandatory. The first signs of whether Obama’s dream scenario will come true should become apparent in both the formal communique and press conference on Thursday.

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Tags: emissions, oil sands

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