We need a Canada-India energy pact
They have the demand, we have a stable supply and together we can advance global climate goals while supporting employment in Canada’s energy sector, writes Vijay Sappani in the Financial Post.
The cancellation of the Keystone XL pipeline and the more general failure to build linear infrastructure complicates a perennial problem: how can we get Canadian oil, natural gas, and other energy products to global markets where they will fetch better prices? At the moment, Canadian energy exports go disproportionately to a U.S. market that is increasingly interested in achieving ambitious climate targets that likely will reduce future opportunities for Canadian fossil-fuel producers.
We need to find new large markets for our exports. It is time for Canada to shift some focus away from our largest trading partner and toward the world’s largest democracy. India is the world’s third-largest energy consumer. By 2040, according to the International Energy Agency, it will account for fully one-quarter of global energy demand. Growth this rapid will cause India’s reliance on overseas oil to reach 92 per cent of its needs.
If India has a growing demand for energy, Canada has a significant supply, including the world’s third-largest reserves of uranium and oil, not to mention substantial volumes of natural gas and significant expertise with green technologies.
Balancing the need for increased energy production with the need to address climate change, India is building infrastructure to boost its use of liquified natural gas and is aiming to generate more than half its electricity consumption using renewable energy by 2030. Whether we are talking oil, uranium, or solar, India needs strong, stable energy supplies and Canada needs a reliable consumer.
Two key drivers of India’s energy future are a move towards a gas-based economy and a push for cleaner use of fossil fuels. Indian Prime Minister Modi has committed to fight climate change even though, with 18 per cent of the world’s population, India uses only six per cent of the world’s primary energy. With 300 million Indians living without access to power and energy consumption projected to double over the long term, the transformative impacts will be huge.
As a uranium producer and exporter, Canada has much to gain. India operates CANDU reactors, which makes it easy for Canada to sell reactors, devices, equipment, and uranium to a customer well acquainted with us and our products. With a huge swath of its rural population set to become connected to the electricity grid, India represents a big potential market for innovative small modular reactors, on whose development Ontario, New Brunswick, Saskatchewan, and Alberta are collaborating.
India will take decades to transition to green energy. In the meantime, Canada can easily provide the crude oil and natural gas it will need as it pursues this transition. With nearly half of India’s energy consumption coming from coal, there is a strong environmental case to be made that oil and gas exports from Canada would bring a net environmental benefit for the planet.
At the moment, Canada exports just 0.2 per cent of its oil to India. Since 2018, Alberta Premier Jason Kenney has been pushing for increased Canada-India oil trade. Alberta’s Canadian Energy Centre notes that India will import two million barrels per month from Canada to replace supplies from Venezuela. But that is a drop in the barrel compared to India’s true demand. Moreover, it plans to increase the share of natural gas in its total energy mix from six per cent to 15 per cent by 2030. As the world’s fifth-largest producer of natural gas, Canada cannot afford to ignore this key market.
Before anyone gets too preachy about fossil fuels and climate change, note that while the Climate Action Tracker rates India as a “global leader” on climate change, it judges Canada’s climate commitments “insufficient.” India is the founder of the International Solar Alliance, which aims to mobilize investments of US$1 trillion by 2030.
An aggressive energy strategy and pact with India will create new jobs and secure markets for Canadian resources for decades. Saskatchewan and Alberta have already started along this route by opening trade offices in India. But a fragmented approach may not realize all the opportunities that are becoming possible.
It is time for a Canadian energy deal with India. They have the demand, we have a stable supply, and through cooperation, we can advance global climate goals while also supporting employment and income in Canada’s energy sector. Either we continue to sell our products at discounted rates to a single market in the U.S. or start the diplomatic task of working with India.