U.S. President elect Donald Trump speaks during an election night event at the West Palm Beach Convention Center in West Palm Beach, Fla. on Nov. 6.JIM WATSON/AFP/Getty Images
Donald Trump promises to upend everything in sight – big tariffs on all imports; climate science is a hoax; and on, and on, and on – but the U.S. president-elect is, at heart, a transactional negotiator, a man who loves to bargain, and to win.
In the perilous months and years ahead, as Canada fights to defend its economic interests, we must embrace a cold-eyed realpolitik when we’re back at the bargaining table with Mr. Trump. That starts with oil, this country’s No. 1 export.
First, however, Canada can and should continue to be bold on climate policy. Stake that on the firm economic ground of clean power. Mr. Trump may likely again withdraw the U.S. from the Paris climate treaty. Last time, the process took more than three years. These days, however, global gains in climate mitigation, from China to Europe, have morphed from do-good aspirations to an inevitable free-market reality where the best product and price wins.
Clean energy, starting with solar power and batteries and soon electric vehicles, are poised to be economic winners. As this space wrote in mid-October, look at Texas. A Globe and Mail feature in late October, on the ground in the state that birthed the modern oil industry and today is America’s leader in green power, detailed the simple reason: it’s not the climate, it’s the money.
Mr. Trump rejects climate science but demonstrates a money-focused bargainer’s flexibility. He ridicules EVs yet Elon Musk is his new best friend. And will Mr. Trump really cut off every dollar of Joe Biden’s clean energy cash cascading into Georgia, a state he took back from the Democrats? Yes, there’s Project 2025 and its plan to abandon U.S. climate policy but Mr. Trump, aiming to win an election, distanced himself from that manifesto.
In this uneven and hard-to-predict terrain, Canada can retain climate ambitions. But it has to be pragmatic, too. In a word: oil. With the threat of devastating tariffs, Canada has a strong hand to play – not quite a royal flush but something like a full house.
Step one: Canada needs to abandon the well-intentioned but overly complicated oil emissions cap, tabled on Monday. No other country has one. As this space and others have long argued, the oil companies must invest more in climate – for their long-term viability – but on government oversight, a stronger industrial carbon tax and tightened methane rules are the smart policy answer. Both are already working.
And both are constitutionally validated by legal precedent, the carbon tax in 2021 at the Supreme Court and methane at the Federal Court of Appeal in 2016 (in a case the Harper government won against industry on behalf of federal climate policy).
Step two, the big one: in this new world of a second and unbridled Trump presidency, it’s time to muscle up. Be un-Canadian. No more sorrys. Act like a winner.
This country is the world’s No. 4 oil producer and the No. 5 producer of natural gas. Canada’s fossil fuel output has soared 26 per cent since Justin Trudeau took office in 2015. Most crucially, while the U.S. is the world’s top oil producer, Canada is by far the top exporter of oil to the U.S. – and we continue to wrest market share from OPEC and Mexico: 54 per cent of all U.S. oil imports this year are Canadian, up from 52 per cent last year.
Mr. Trump’s win sparked some chatter of a revived Keystone pipeline. That is a pointless distraction. Canada should not further yoke itself to America.
The economic wisdom of a diversity of exports – all the oil flowing to the Pacific on the new Trans Mountain pipeline – is paying dividends. And it is bargaining power. Further, one can guess Mr. Trump won’t eagerly slap tariffs on Canadian oil that represents close to a quarter of all the oil Americans consume use every day. Mr. Trump doesn’t seem like a guy who wants to advertise he’s to blame for more expensive gasoline. Or higher costs for homes, industry and electricity: Canada supplies the U.S. with close to 10 per cent of all the natural gas it uses.
Canadians need to understand and leverage all this. We can push forward on climate, focused on clean power. Demand for fossil fuels in the next decade will teeter into long-term decline as demand wanes. But for the next four years Canada must wield its strengths. When tussling with a strongman, box like a nimble heavyweight, with the confidence and ambition of a winner.