Blogs & Comment

If confirmed, Harper’s Keystone XL gambit looks like a dangerous gamble

Is the PM calling Obama’s bluff?

The Keystone XL saga has yielded yet another unexpected twist. On Friday afternoon CBC reported that, according to anonymous sources, Prime Minister Stephen Harper sent a letter to U.S. President Barack Obama in late August proposing “joint action to reduce greenhouse gas emissions in the oil and gas sector.”

What does this mean?

The story is still developing, but here are some preliminary thoughts:

What actually happened?

Establishing whether this was an intentional leak or a source speaking to CBC without authorization from the Prime Minister’s Office would be enormously helpful in trying to assess the PM’s strategy and evaluating execution. Though we can’t be sure, Harper’s notoriously tight control on message and the timing of the leak — on the sidelines of the G20 meeting of world leaders in St. Petersburg, Russia — suggest the news broke with the PM’s blessing.

What’s the aim of the letter?

After the leak, the PMO has remained tight-lipped and hasn’t confirmed the letter was sent. The Globe and Mail reports Ottawa is worried that implementing oil and gas regulations in Canada only would push energy investors down south. The paper quotes PMO spokesman Stephen Lecce stating: “Canada and the U.S. have integrated economies and oil and gas sectors, which underscores the importance of continuing to work together to reduce greenhouse-gas emissions.”

Perhaps. But this seems a little strange. First, the Conservatives’ promise to deliver oil and gas sector regulations dates back to 2008. If concern about asymmetrical cross-border GHG rules is why the government has twice busted its self-imposed deadline on this, then Ottawa should have tried harder to get to a concerted U.S.-Canada effort to curb emissions — and started doing so a long time ago.

Besides, should new environmental regulations truly harm Canada’s competitive advantage, they would do so compared to oil and gas development opportunities across the world, not just in the U.S.

Rather, assuming the leak was authorized, the letter could be an attempt to call Obama’s bluff, removing any reasonable objections to the Keystone XL project.

Also, by calling for joint action, Harper seems to be undermining Obama’s GHG strategy, which has so far focused on the coal sector, a very large emitter in the U.S., and spared the oil and gas industry. Insisting that Canada adopt new rules on its own would now put the spotlight on what the White House hasn’t done on climate change, rather than what it has done.

Execution

The letter, for what we know, sounds both pleading and adversarial: “I’d do anything you want — but you have to do it too.” If the leak was intentional, this creates the potential for serious hiatus in the bilateral relationship: Obama, it seems, must now decide between publicly snubbing Harper’s plea and, essentially, playing Ottawa’s game.

Erica Alini is reporter based in Cambridge, Mass., and a regular contributor to CanadianBusiness.com, where she covers the U.S. economy.