Canada’s ambassador to the U.S. embraces Alberta’s energy role at the right time

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Canada’s ambassador to the United States, Kirsten Hillman, had been planning a trip to Alberta since 2020, but it was continually sidelined by the pandemic. She finally made it to the province this summer and says there was, in fact, no better time to visit.

Renewable energy investments are booming and oil producers enjoying high prices have made new commitments to reducing greenhouse gas emissions. Film production and creative industries are expanding. The economy is diversifying into tech, life sciences and machine learning. Alberta could also become a friendly country supplier of minerals critical to energy transition and defence applications in the United States.

It’s not the Alberta that many outsiders imagine. And part of Ms. Hillman’s job is explaining Canada to Americans – hence the visits to provinces and territories – so they have an up-to-date understanding of her country.

“It’s about making sure that people here are aware of currently what is happening in Alberta – not an image from 10 years ago, 15 years ago,” Ms. Hillman said in an interview with The Globe after her trip.

For instance, she said, she’s getting the word out in U.S. policy-making circles that companies representing about 95 per cent of Alberta’s oil sands production have pledged to hit net-zero emissions by 2050. “It’s not widely understood,” she said.

“We’re not only the number 1 foreign source of energy to the United States, but many people said to me they’re quite confident that … the Alberta energy sector in particular, in all of its forms, is really ahead of the curve.”

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Ms. Hillman is a career diplomat who’s already a veteran of Washington’s political churn. She served as deputy ambassador from 2017 to 2019 and was a key player as then-president Donald Trump pushed to replace the North American Free Trade Agreement. She was named as Canada’s envoy to the U.S. in March, 2020, just as COVID-19 hit, after having held the role on an interim basis for several months. She is the first woman to be appointed Canada’s ambassador to the United States.

Still, it’s always a difficult task for a Canadian official to get an American lawmaker’s attention. And although the U.S. buys more than half of its oil imports from Canada, it doesn’t usually think much about its northern neighbour in terms of energy – except when it comes to oil pipelines that have become symbols of the fight against climate change.

On that note: In this conversation with Ms. Hillman, I don’t ask about Keystone XL, the TC Energy project to transport more Canadian oil to the Gulf Coast caught in regulatory limbo for 13 years and officially kiboshed by the Biden administration on the President’s first day in office. She doesn’t bring it up, either. It’s over – even Jason Kenney has said the project is “done and dusted.” But that doesn’t mean that the outgoing Premier and other Canadian industry proponents wouldn’t like to see more transborder energy infrastructure built.

Global shortages of oil and natural gas made worse by Russia’s invasion of Ukraine changed the thinking around the resources: how long we’ll be dependent on them and where they come from. When I ask Ms. Hillman whether there are plans for a broader North American energy agreement, she only says there are continuing discussions about the joint goals of “environmental protection and securing energy supplies.”

“Both the U.S. and Canada are taking full steps to reduce greenhouse gases and both are on a path to energy transition. But as we know, as Americans know, that transition is going to take some time.”

Perhaps more keenly, Canadians, including Ms. Hillman, are trying to ascertain what the new U.S. Inflation Reduction Act will mean for the relationship between the two countries. The legislation, signed into law this week, is seen as a big step forward by those who want the U.S. to take strong action on climate issues. It includes US$430-billion in new spending on energy, electric-vehicle credits and health insurance, and came out of long, winding negotiations between West Virginia Democratic Senator Joe Manchin and Senate Majority Leader Chuck Schumer.

From a Central Canadian perspective, the most significant change to the bill is that the final version removed a provision that would have excluded vehicles made outside the U.S. from qualifying for generous new consumer tax incentives. Now the incentives apply to North American-made vehicles – a big win for Canadian officials and industry leaders.

But the passage of the act won’t necessarily impede U.S. oil and gas producers, or those who want to see all types of new energy infrastructure built.

The act also increases the value of 45Q tax credits available for carbon capture, utilization and storage (CCUS). Those are expensive projects that allow fossil fuel production and other industrial processes to continue, but with emissions injected into deep underground geologic formations. More CCUS projects in the U.S. are now likely to go ahead.

And Mr. Manchin – who’s a strong supporter of the U.S. importing more oil from Canada and worries about U.S. dependence on energy supplies from “countries who hate America” – made an important side deal during the negotiations. It stipulates that Democrats will put forward separate legislation, by the end of September, focused on speeding the approval of many types of energy projects.

The agreement would see the President designate at least 25 energy infrastructure projects as “high priority,” and prioritize necessary permits. The project list, which would be updated periodically, must be “balanced,” and include critical minerals, nuclear energy, hydrogen, fossil fuels, electric transmission and renewables.

The way domestic energy infrastructure is regulated in the U.S. is poised for a major reboot. That could some day mean something for energy infrastructure in Canada, too.

“I’m very interested to see where this takes us,” Ms. Hillman says. “We’ll watch it closely.”

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