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Canada as an emerging energy superproducer

Type: Research Studies
Date Published: March 14, 2013
Authors:
Research Topics:
Energy

Canada as An Emerging Energy Superproducer explores the meaning of the term “energy superpower” and whether Canada could become an energy superpower or a superproducer of energy. It also examines how Canada’s energy resources, production, and net exports rank from a global perspective and provides an overview of the economic benefits flowing from energy resource production, including the royalty payments that flow to governments, and interprovincial energy trade.

Prime Minister Stephen Harper’s government has frequently referred to Canada becoming an “energy superpower”—a term usually reserved for countries that are in a position to leverage their market power with respect to energy exports and are willing to exercise opportunities to do so. Canada is not about to become or striving to be an energy superpower but yet is clearly on the verge of becoming a superproducer of energy. Because Canada is energy self-sufficient most of the increase in oil, gas, uranium and hydroelectric production will be exported. Consequently, Canada is bound to soon be one of the world’s largest exporters of energy commodities.

Increased energy resource development, production and interprovincial trade will bring substantial economic benefits. The energy resource sector is already a large employer and contributor to Canada’s GDP. But the construction and operation of expanded and new energy commodity production and transportation facilities will bring tremendous additional economic benefits in terms of employment, labour income and economic growth. This will raise household incomes and provide individuals and families with improved living standards.

Another benefit of becoming a superproducer of energy will be increased government revenues from production royalties and fees. Canada’s energy resource producers already contribute at least $19 billion to governments each year in the form of royalties, lease payments and fees. Going forward, these payments can be expected to increase as petroleum and uranium production increase and new hydro facilities are built. Growth in oil sands bitumen production alone could contribute as much as $50 billion per year to the Alberta government by 2033 compared with $4.5 billion in 2011.

The study concludes that further growth in energy production would be of net benefit for Canadians as long as the risks associated with becoming an energy superproducer and net energy exporter are managed to avoid or minimize any negative impacts that energy sector growth could have on other areas of the economy.

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