Canada, the EU and energy security: a historical perspective

ABSTRACT

Canada’s energy relations with the EC/EU have historically been driven by hopes for complementary trade and like-minded international positions, especially once international energy governance took on urgency in the 1970s. Since the early 2000s these two objectives have become less compatible as they pit transatlantic energy trade against the global climate change agenda. Not only does Ottawa have to reconcile hydrocarbon energy production and pledges to net zero carbon emissions, but it also has to balance short and long-term time horizons as the world embarks on its decarbonizing journey. Current Canadian plans for LNG and hydrogen facilities in the eastern part of the country illustrate the difficulty of navigating between immediate responses to a crisis – providing LNG to Europe to make up for deliveries from Russia – and longer-term plans to become an exporter of cleaner energy such as hydrogen to foster the next energy transition and help address climate change. Leaning on historical institutionalism and constructivism, the following analysis will show that Canada’s present and future energy relations with the EU are best understood as the outcome of decades of transatlantic energy diplomacy, institutionalized understandings of energy security and global frameworks which link energy and climate matters.

KEYWORDS:

• Energy security
• energy diplomacy
• transatlantic relations
• international energy history
• Canada-EU relations

Introduction

We will deepen our cooperation towards a net-zero energy transition, including by taking concrete steps in our energy cooperation to enhance security of supply and work to eliminate the EU and its Member States’ dependence on Russian energy. A dedicated working group on green transition and LNG is being created to develop a concrete action plan on these matters, and our officials will meet this week to further discuss enhancing energy-related cooperation.

We remain committed to organizing a Clean Tech Summit in Canada in 2022 to promote our shared commitment to the green transition of our economies, while at the same time helping to promote our energy security, currently under such threat from Vladimir Putin’s illegal war of aggression against Ukraine.

Joint Statement by EU President Ursula von der Leyen and Prime Minister Justin Trudeau

23 March 2022, Brussels (emphasis added)

In a March 2022 joint statement EU president Ursula von der Leyen and Canadian Prime Minister Justin Trudeau pledged their support to the “green transition” and “energy security.” In response to events in Ukraine, the two transatlantic partners committed themselves to further “energy cooperation” (European Commission, 2022b). Following up on this promise, in late August 2022, Canada and EU member Germany signed a “Joint Declaration of Intent […] on Establishing a Canada-Germany Hydrogen Alliance,” which was touted by the Canadian government as an “agreement to enhance German energy security with clean Canadian hydrogen.” (Government of Canada, 2022). Already a few months earlier, Natural Resources Minister Jonathan Wilkinson had announced that the Canadian government wanted “to help [its] allies with energy security, but […] also [remained] committed to fighting climate change.” Recognizing the inherent tension of both goals, he confidently added: “You can do both. You have to be able to walk and chew gum at the same time. We have to be able to think about how we help our allies at a time of great crisis” (Jang, 2022).

“Doing it both” perfectly encapsulates Canada’s foreign policy dilemma when it comes to its energy relations with the EU. As will be argued below, historically, Canada–EU energy relations were based on two main motivations, complementary trade and like-minded international positions, especially in times of international crises. However, since the early 2000s these two objectives have become less compatible as they pit transatlantic energy trade against the global climate change agenda. While taking on new urgency in the wake of the war in Ukraine, these inherent tensions between energy security and climate action are not new and have already posed foreign policy challenges to Canada as it aims to position itself as “a bastion of world energy security” (Government of Canada, 2007) and more recently as a future hydrogen producer with plans to export to the EU. Not only does Ottawa have to walk a thin line between domestic hydrocarbon energy production and federal pledges to net zero carbon emissions, but it also has to balance short and long-term time horizons as the world embarks on its decarbonizing journey. This holds particularly true for its relations with the EU, who considers itself a norm entrepreneur in the climate portfolio. Current Canadian plans for LNG and hydrogen facilities in the eastern part of the country illustrate the difficulty of navigating between immediate responses to a crisis – providing LNG to Europe to make up for deliveries from Russia – and longer-term plans to become an exporter of cleaner energy such as hydrogen to foster the next energy transition and help address climate change.

Using the current energy crisis in the wake of the Ukraine war as a starting point, this contribution explains the foreign policy challenges Canada is facing in its energy relations with the EU, in particular as it tries to navigate two different roles in the international system, that of a hydrocarbon energy producer and exporter and that of an advocate of global climate change action and transatlantic partner in net zero commitments. The following analysis is based on the recognition that energy is an extremely complex issue area. Energy resources, or more specifically oil and natural gas, are among the most globalized commodities. They often create integrated transnational energy spaces, such as in North America or within the EU. Energy lies at the intersection of politics and markets, bringing together two very different rationales of decision-making, separating public policy goals from market-driven profit-making rationales of homo oeconomicus actors. To complicate matters further, in both the Canadian and the EU cases, energy involves substate or national jurisdictions, as Canadian provinces have rights over these energy resources and EU member states keep the right to choose between different energy sources and decide on a national energy mix despite Community competencies over an EU energy policy, formally established through the 2007 Lisbon Treaty (Article 194). Finally, historically established cultural preferences and conceptualizations of energy as a strategic or commercial good and more recently the understanding of energy carriers as green or clean complicate Canada’s energy relations with the EU even further.

To understand Canada–EU energy relations one needs to look at the history of Canada’s energy engagement across the Atlantic, its limitations due to the country’s geography and its close energy links to the United States, as well as the constraints the international system puts onto an oil-producing and exporting middle power such as Canada through its energy and climate regimes. In sum, Canada’s foreign energy policy toward the EU is the result of the intricate interplay of domestic politics, international structures and historical path dependencies. This contribution will focus on the latter and examine both the history of Canada–EU energy relations and the history of energy security in international politics, its changing meaning as well as its impact on Canada’s foreign energy policy.

The article is structured as follows. After providing a history of Canada–EU energy relations and a more general discussion of the concept of energy security, Canada’s specific engagement with energy security will be analyzed before the more recent linkage between energy security and climate action is traced in more detail. Finally, the role of LNG and hydrogen in future Canada–EU energy relations will be investigated. Leaning on historical institutionalism (Gorges, 2001) and constructivism, the following analysis will show that Canada’s present and future energy relations with the EU are best understood as the outcome of decades of transatlantic energy diplomacy, institutionalized understandings of energy security and global frameworks which link energy and climate matters.

History of EU–Canada relations

Current policy choices are the outcome of longer-term developments, historical precedents and past policy decisions. In part Canada’s dilemma persists since the 1970s, when energy concerns began to shape and help institutionalize Canada–EU relations reinforcing challenges Canada faces as a “staple economy” and exporter of raw materials (Dolata, 2022). From its beginning, energy formed an integral part of Canada’s involvement with the European Community/European Union. The two formal agreements, which Canada had signed with the European Community in 1959 and 1976, had immediate links to energy. In 1959, Canada was the first third country to conclude an agreement with the European Atomic Energy Commission EURATOM. Ottawa agreed to supply the Community with uranium and collaborate on the peaceful use of nuclear power. More than a decade later, in the wake of the 1973/74 oil price crisis and as Canada turned into a net exporter of oil and gas, Europe directed its attention to Canada’s hydrocarbon resources, which were considered safe alternatives to supplies from unreliable or problematic sources in the Middle East. More generally, Brussels hoped to gain easier access to Canada’s raw materials through an institutionalization of its transatlantic connections. Hoping that a comprehensive agreement with the European Community would open European markets to manufactured goods and help diversify its trade relations away from the United States, Ottawa reciprocated and signed the 1976 Framework Agreement for Economic and Commercial Cooperation, the first of its kind between the European Economic Community (EEC) and an industrialized third country (Barry, 2004; Bendiek et al., 2018; Potter, 1999; Verdun, 2021).

With this “contractual link” Canada and the EEC agreed to “to develop and diversify [their] reciprocal commercial exchanges and to foster economic co-operation” (European Communities, 1976). However, when it became clear that economic interests were not necessarily complementary and oil prices declined again in the mid-1980s, the framework agreement turned into an institutionalized forum for loosely discussing economic relations, including energy, and building trust as Canada and Europe became partners in emerging global energy governance (Boardman, 1981). Rather than engaging in direct transatlantic relations, Canada and the EU coordinated responses to global energy challenges in multilateral institutions such as the Organization for Economic Co-operation and Development (OECD), the International Energy Agency (Florini, 2011) or the North Atlantic Treaty Organization (NATO). Actual trade disputes between the two transatlantic partners were discussed elsewhere, either at the World Trade Organization (WTO) or in sectoral regional and global organizations as was the case during the turbot war in the mid-1990s (Barry, 1998). Still, the framework agreement and continuing negotiations over closer economic cooperation played an important political role beyond actual trade agreements. They allowed Canada and the EEC/EU to demonstrate Western solidarity when it came to global energy challenges attesting to the existence of what scholars have called a “transatlantic value community” (Haglund, 2012; Risse-Kappen, 1995; Tuschhoff, 2006). Thus, historically, stronger links emerged through shared global interests and norms, rather than through actual transatlantic trade based on complementarity. At the same time, even though the EU may see Canada as a “a key, and like-minded, energy partner” (European Commission, 2022a), in the past, it was often more interested in Canada as a friendly Western supplier of natural resources, especially during periods of supply crises.

What the current Ukraine war shows yet again is that while in general the EU appreciates the like-minded international position of Canada as a defender of the “multilateral liberal world order” (Verdun, 2021, p. 684), the immediate urgency of finding replacements for Russian natural gas supplies is more likely the reason for increased European interest in Canada. It can be expected that very quickly there will also be the realization though that Canada currently cannot step up to the plate due to the lack of LNG export facilities. Instead, the United States, who have completed construction of seven such facilities since 2015, increased their shipments of LNG to Europe. Originally an outcome of the U.S. shale revolution which necessitated the opening of new markets, transatlantic shipments began in 2016 and picked up since 2018 with more than a third of U.S. LNG exports destined for the European market. According to the U.S. Energy Information Administration, “LNG imports into the EU and UK increased by 63% during the first half of 2022” (U.S. Energy Information Administration, 2022b). The very vocal and public discourse on energy security also runs counter to what historically has been the modus vivendi of Canada–EU relations, characterized as “work[ing] behind the scenes” and “outside the attention of the mass public, to cultivate a good relationship and to collaborate in the international arena” (Verdun, 2021, p. 685). It should also be noted that actual transatlantic trade in Canadian-produced energy commodities and products is very small, as almost all Canadian exports are destined for the United States. For example, in 2021, 97 percent of Canadian crude oil exports went to the United States and only 2 percent to Europe (U.S. Energy Information Administration, 2022a). Thus, Canada–EU energy relations can only be understood in the broader context of global energy security.

Energy security

Russia’s attack on Ukraine and its adverse impacts on the availability of fossil fuels has brought home to Western European countries, foremost amongst them Germany, the urgency of diversifying their energy suppliers and mixes. Recognizing the need to reduce dependence on Russian natural gas – and to a lesser extent oil – has led to a resurgence of the energy security narrative in national and international politics. This energy security discourse which highlights the strategic and geopolitical significance of oil in international relations, last peaked in 2008, when amidst fears of peak oil production prices reached an all-time high of almost U.S.$150. At that time, the United States, who had not yet transformed into a net oil and gas exporter due to the shale revolution, was vying with China and India for oil deliveries from producers outside these regions. The fierce competition for oil spurred a hunt for new oil fields in offshore areas as diverse as the deep sea off the coasts of Brazil and West Africa and the shallower but icy Arctic. And while this was only another high point in a long history of noisy debates on energy security since the 1970s, this time round things started to look different. Unlike previous instances of the cyclically recurring discussion of energy dependence and concomitant security challenges, which had enfolded since the 1970s energy crises, the debate in the mid-2000s was not simply another historical iteration thereof. Increasingly, the geopolitical and strategic significance of energy, or more precisely oil and natural gas, was overlaid by the exigency of the climate change agenda. Since the 2000s, policymakers spoke of a nexus between energy security and climate change, especially in Europe (Dubash & Florini, 2011). This linkage reframed what was meant by energy security and what would constitute adequate and acceptable responses. No longer would energy security only be placed in a geostrategic context and limited to oil and gas. The meaning of energy security moved beyond securing energy to uphold a country’s economic prosperity and territorial integrity to also addressing environmental concerns of fossil fuel production and consumption as well as providing equal access to energy to resolve energy poverty within communities. This shift mirrored the general trend in security studies which was both broadened – from traditional to human security – and deepened by the inclusion of more critical approaches (Krause & Williams, 1996). As a result, future attempts to achieve energy security through fossil fuel supplies from friendly Western producers will likely conflict with net zero carbon emission goals. And while an energy crisis may tip the balance to the oil and natural gas supply side in the short term, longer-term trajectories remain driven by net zero commitments.

Contrary to popular notions, history does not repeat itself. As a policy challenge, energy security comes and goes, its significance in political decision-making and rhetoric waxes and wanes. However, this does not mean that energy security resurfaces in any predictable way; nor does it follow the same script. Rather it is historically contingent. And it is contingent on two different historical times, one short and the other long-term, or what Fernand Braudel has called événement and longue durée (Braudel, 1996). The immediate historical circumstances in which we witness energy security discussions emerging is driven by topical issues oftentimes during geopolitical crises or critical junctures. In the second half of the 2000s, it was the emergence of China and India as significant players in international politics, whose expanding economies led to massive increases in energy demands and fierce competition over limited energy resources with the then equally energy-thirsty United States. Earlier energy security discussions in the 1990s and early 2000s were driven by associating the 1991 and 2003 Gulf Wars with U.S. oil dependence later epitomized by Michael T. Klare’s 2004 book Blood and Oil. Already in 1980, President Jimmy Carter had openly related U.S. foreign policy interests to the unimpeded shipping of oil through the Strait of Hormuz warning that Washington would intervene militarily if safe passage of tankers and delivery of Middle Eastern oil to the Western world was prevented (Carter, 1980). According to this Carter Doctrine, the United States were willing to defend their energy supplies by military means, if necessary, thus turning an internationally traded commodity into a strategic good and confirming the ongoing securitization of energy that had defined U.S. responses to the 1973/74 and 1979 oil price crises. Because the formation of the concept was so closely linked to the U.S. experience during the 1970s world oil price crises, the term was for a long time limited to fossil fuels and the perspective of a net consumer.

The immediate historical contexts, in which energy security debates emerged, highlight geopolitical and geo-economic considerations. This is not surprising since they often arise in crises moments. Amongst the recurring themes, which dictate the urgency of the debates, are those of availability, and almost more importantly, availability at stable and affordable prices. For these reasons, the 1973/74 energy crisis would be more correctly referred to as an oil price crisis. Since the 1970s, whenever the supply of cheap oil to the Western world has been in jeopardy, governments, politicians and citizens alike demand more action in the name of energy security, almost following a standard reflex. In fact, the securitized notion of energy has become an institutionalized idea which drives policy discussion while limiting policy responses. As soon as oil prices and prices at the gas pump drop, those calls quickly die down impeding longer-term planning for reliable and affordable energy supplies.

The search for energy security has also become a requirement of high-energy societies and constitutes an outcome of the accelerated use of hydrocarbon resources since the 1950s (McNeill & Engelke, 2014). This longue durée historical development, which dates back to the transition of Western societies since the onset of industrialization and formation of capitalist economies is the second current that impacts the re-emergence and direction of energy security debates. The reliance of Western societies on fossil fuels and related products, especially plastics, have led to a high level of dependence of everyday life and prosperity on the availability and affordability of oil and gas. For that reason, fossil fuels are not like any other commodified raw material, they are foundational to modern life. And they have become so pervasive that the detrimental effects of their usage have led some to speak of an entire geological time that is defined by human impacts on the earth system, the Anthropocene (Crutzen & Stoermer, 2000). As societies became more cognizant of the fact that there are increasingly detrimental effects related to burning fossil fuels, the meaning of energy security underwent incremental change and gradually opens up to include considerations of efficiency, alternative energy carriers and demand-side behavior.

The concept of energy security is not only impacted by two different historical chronologies, but also by different acceptance in different locales. While an extremely imperfect source, Google Books Ngram Viewer, which displays graphs showing how the phrase has occurred in a corpus of books over a specified time period, nicely plots these ups and downs in the popularity of the term.¹ It also shows that it is mainly in the English language publications that we have had early peaks of authors writing about “energy security” in the 1970s and early 1990s, while the German (Energiesicherheit)² and French term (sécurité énergétique)³ really only entered publications in significant numbers in the second half of the 2000s. Europeans were much more reluctant to follow the strategic classification of oil in the 1970s and 1980s relying on an understanding of oil as a commercial good at least until the early 2000s (Herranz-Surrallés, 2016). Countries like Germany trusted the Soviet Union and then Russia to be reliable commercial partners. They reasoned that energy relations were best served by long-established commercial partnerships in which both partners had financial stakes and thus no incentive to jeopardize those commercial ties. Not surprisingly, then, European member states resisted attempts by the United States in the early 1980s to formally include energy security into a modified remit of NATO and even went ahead with supply deals with the Soviet Union (Bösch, 2014).

Things began to change in the mid-2000s. Germany re-evaluated its long-held trust in markets to deal with energy problems when deliveries of Russian gas to Western Europe were halted during Russian pipeline disputes with Belarus and Ukraine in 2006 and 2007. Holding both the G8 and EU chairmanship at the time, Germany turned into an agenda setter by placing energy security prominently onto the G8 summit and EU agenda (Dolata-Kreutzkamp, 2008). After years of debate in Europe which followed the publication of a Commission green paper in 2000, the 2007 EU Lisbon Treaty devoted an entire chapter to energy policy including direct references to energy security (Maltby, 2013). Equally, within NATO energy security took on new urgency as new member states in Central and Eastern Europe grappled with their high dependence on Russian energy deliveries (Legendre, 2007). Supported by the United States, energy security was discussed at NATO summits in 2006, 2008, and 2009, but in the end as oil prices dropped again and some NATO members were reluctant to antagonize Russia, it only entered the 2010 NATO Strategic Concept in the limited meaning of energy infrastructure security. Even the 2014 Ukrainian crisis was not grave enough to significantly rekindle the debate on energy security, despite the publication of the European Energy Security Strategy by the EU Commission in May that year.

Instead, Germany expanded its energy trade relations with Russia and supported the construction of the Nord Stream underwater pipeline system in the Baltic Sea directly connecting Russian gas facilities with German transmission and distribution systems, the first phase of which was completed in 2011 and the second just recently in 2021. In response to the current war in Ukraine Berlin did, however, stop the licensing of the second pipeline system which led Russia to retaliate by reducing the amount of gas going through Nord Stream 1 claiming that maintenance work necessitated a reduction by 40 percent (Reed, 2022).

Canada and energy security

Historically, Canada has found itself somewhere in the middle of these discussions, especially since it was on the brink of becoming an important oil and gas producer and exporter when the United States, its ally and neighbor to the South, with which it shared an integrated energy market, responded to the 1973/74 oil price crisis by introducing what Daniel Yergin has called an “energy security paradigm” (Yergin, 2006). As Washington situated its response to its energy dependence firmly within discussions on national security, Canada, whose security was equally integrated with the United States through NORAD (North American Air Defense Command) and other defense collaborations, did not have much choice but to adopt the securitized rhetoric around energy and align its energy security discourse with that of Washington, even more so when the two countries signed their free trade agreement, which included a separate energy chapter and came into effect in 1989 (Clarkson, 2009; Jegen, 2011). Ottawa also essentially agreed with its Western allies on the strategic significance of oil. However, this acquiescence did not translate into an activist endorsement. In the early 1980s, Canada was not particularly insistent about including energy security into a broadened NATO agenda, which the United States were unsuccessfully pushing for.

Canadian governments embraced a joint transatlantic approach to dealing with energy security, just not within NATO or through bilateral relations with the European Community. Instead, Ottawa participated in international energy governance through its membership in the OECD, which it had joined in 1960 and whose Oil Committee dealt with supply questions and OPEC boycotts before the International Energy Agency (IEA), a separate OECD agency which Canada helped found in 1974, took over this role (Türk, 2014). Directly linked to the financial repercussions of the 1973/74 oil price crisis, Canada also quickly joined like-minded Western countries in establishing the G7 and contributed substantially to the ill-fated Conference on International Economic Cooperation (1975–1977), better known as the North–South dialogue, which was co-chaired by Canadian diplomat Maurice Strong and devoted one of its four thematic areas entirely to energy.

In the early twenty-first century, as peak oil discussions exposed energy vulnerabilities of the West, Canada joined European countries, including Germany, in insisting more explicitly on energy security. Unlike its partners on the other side of the Atlantic, however, Ottawa’s stance was mediated by its position as an energy producer and exporter. This meant that oftentimes the Canadian government would insert itself into transatlantic discussions on energy security as a potential “savior.” For example, in a July 2007 statement at the Canada–EU summit in Berlin, Prime Minister Harper spoke of Canada as an “emerging energy superpower” and “a bastion of world energy security” (Government of Canada, 2007). And while his Liberal successor Justin Trudeau may not have used the same language, he certainly also frequently tapped into similar imagery, making energy security a bipartisan issue.

Not surprisingly, since the new millennium EU–Canada summits have often included discussions on energy. In sync with the peaking energy security debate, Canada and the EU established a High-Level Energy Dialogue in 2007 and the European Commission specifically mentioned Canada as one of its potential partners on energy security matters in its 2008 EU Energy Security and Action Plan (Baumann & Simmerl, 2011). In 2016, both partners signed a Strategic Partnership Agreement, which also included a paragraph on energy and reference to energy security. However, as will be elaborated further below, it was part of a larger section entitled “Sustainable Development” and only one amongst many joint energy policy goals which were driven by the mutual recognition “of the importance of the energy sector to economic prosperity and international peace and stability” (European Union, 2016).

The current crisis has brought Canada and other oil producers outside Russia windfall profits and increased the country’s political currency as a transatlantic partner who could help out “Canada’s European friends and allies [who] are experiencing an energy security crisis” (Natural Resources Canada, 2022). In an attempt to phase out more gas deliveries from Russia, Germany entered into talks with Ottawa over the construction of two east coast LNG export terminals in New Brunswick and Nova Scotia. Chancellor Olaf Scholz and Prime Minister Trudeau used the June 2022 G7 meeting in Bavaria to discuss the issue further. While mainly a corporate decision, Canada promised to look into ways to expedite the projects of the multinational Spanish company Repsol and Calgary-based Pieridae Energy (Alkousaa et al., 2022). However, when the German Chancellor and Canadian Prime Minister met again in Canada in August 2022 and signed an agreement on future hydrogen cooperation, LNG was not a top priority.

In Germany, Canada did not only feature in plans to increase LNG imports, but also appeared in discussions on uranium supplies as some politicians demanded a reversal of Berlin’s decision to decommission nuclear power plants (Neuerer & Stratmann, 2022). Canada also played a role in the standoff between Germany and Russia over gas supplies through the Nord Stream pipeline system. Russian provider Gazprom blamed the above-mentioned cut of deliveries by 40 percent on the German company Siemens who failed to deliver a turbine for Nord Stream 1 which had been repaired in Canada but due to Canadian sanctions could not be shipped back to Germany (Reed, 2022). Only after Ottawa took the “difficult” decision to make an exception to its sanctions, was the turbine delivered to Siemens in Germany (Banerjee, 2022).

Evidently, Canada is benefitting from the resurgent energy security discourse. The country has made its way back into European decisionmakers’ minds, as they look for alternative energy producers. As in 2007, Canada positions itself as a savior and bastion of energy security. However, 2022 is not 2007. Things have changed, including the energy security narrative, which now goes well beyond its geopolitical origins to be compatible with and include climate action goals.

Energy security and climate change

In the twentieth century energy security policies often focused on supply diversification. As mentioned above, looking for new oil and gas suppliers led Western European decision-makers to look across the Atlantic to Canada. Increasingly, however, diversification was to be achieved through changing the energy mix, switching to different energy carriers and championing clean energy technologies and energy efficiency measures. The EU institutionalized this approach with the passing of its 2019 European Green Deal. This redirection was the result of developments that date back to the late 1990s and early 2000s, when the EU started paying more and more attention to climate change and openly linked climate, energy and security (Dubash & Florini, 2011). As energy security went through a revival and was temporarily turned into a geopolitical priority by the EU and NATO in the mid-2000s, a climate change and energy security nexus emerged (Jegen, 2011). In the EU, climate change and energy security were now considered two sides of the same coin (Dolata-Kreutzkamp, 2008; Piebalgs, 2009; Vogler, 2013).

Despite the clear connection between the two sides of the coin, only one has undergone significant institutionalization through global agreements. While the concern for climate change has led to the 1997 Kyoto Protocol and the 2015 Paris Agreement, there is no global equivalent for energy security (Leal-Arcas, 2016). And while the IEA also includes energy security in its remit, the more recent establishment of an International Renewables Agency (IRENA) in 2009 highlights the new focus on ensuring sustainable pathways to the world’s energy future. This poses a particular challenge to a fossil fuel producer such as Canada. The EU, which sees itself as a leader and norm entrepreneur in promoting sustainable energy, did not shy away from antagonizing Canada in cases where it considered the goals of energy security and climate action as incompatible. The EU Fuel Quality Directive is a case in point. This directive, which was adopted in 2009, stipulated a reduction of the carbon intensity of petrol, diesel and biofuels used for transport by six percent between 2010 and 2020. It proposed to consider oil sands production as five times more carbon-intensive than conventional oil. This would have essentially barred entry into the EU of oil from Canadian oil sands production. After significant lobbying by Canada in Brussels and European capitals, the final adoption of the directive treated Canadian unconventional oil the same as conventional oil and left the European market open to Canadian oil sands production. While Ottawa’s intervention paid off in this instance, longer term developments and commitments to greening and decarbonizing Europe’s energy will necessarily lead to challenges for Canada which depends to a certain degree on their oil and gas industries for jobs and revenues, especially since these are concentrated in one province, Alberta, presenting political challenges for the federal government.

A closer look at the transatlantic dimensions of energy security in the twenty-first century shows that the Canada–EU High Level Energy Dialogue as well as the 2016 Strategic Partnership Agreement reflect this challenge of bringing together strategies to address geopolitical energy dependence and planetary climate change. Energy security is only one of three objectives of transatlantic energy cooperation. “Energy opportunity” and “sustainable and affordable energy” are the other two. When summarizing the aims of Canada–EU energy collaboration, there is no mention of energy security. Both partners pledge to work together “to support open and competitive markets, share best practices, promote science-based, transparent regulation, and discuss areas of cooperation on energy issues” (European Union, 2016). Following this new direction in transatlantic energy cooperation, Canada and the EU organized a number of energy-related workshops and a series of webinars on clean and energy technologies since 2015. In March 2021, a joint workshop on CETA (Canada-European Union Comprehensive Economic and Trade Agreement) opportunities was devoted to zero-emissions vehicles, the circular economy, hydrogen and carbon, as well as carbon capture, utilization and storage (CCUS), an area in which Canada is specifically interested. In April and June 2022, the first two meetings of the EU–Canada Dialogue on Hydrogen took place virtually, highlighting the current emphasis placed on hydrogen as a fuel of the future and the interest of both partners, who have each adopted a hydrogen strategy (Federal Ministry for Economic Affairs and Energy, 2020; Natural Resources Canada, 2020), to work together in this area. Already there exist various hydrogen cooperation projects, for example between Quebec and the EU through the Quebec-Europe Research and Innovation Circle and between Canada and Germany, who agreed on a Memorandum of Understanding on the Establishment of an Energy Partnership in 2021 (Natural Resources Canada, 2021).

Until recently, the emphasis on science and technology and the clean energy sector has been a prominent feature of the annual Canada–EU High Level Energy Dialogue. In the wake of the war in Ukraine, however, emphasis shifted to LNG and the Dialogue started focusing on “oil and gas markets in Canada and the EU” and “the evolving global LNG market” (European Commission, 2022a). As described above Canada positions itself as a potential provider of LNG in the short and hydrogen in the long term. This combined LNG/hydrogen role allows Canada to link energy security with climate action. Encapsulating the broadened understanding of energy security Prime Minister Justin Trudeau explained that energy security did not only mean to “transition […] just off Russian oil and gas, but off of our global dependence on fossil fuels” (Platt, 2022). And even the short-term LNG plans, which are to bridge toward a cleaner energy future, follow decarbonization rationales. When discussing ongoing talks between Canada and Europe on east coast LNG export projects, Natural Resources Minister Jonathan Wilkinson reportedly cautioned that “for the projects to go ahead they would ‘almost certainly’ have to use clean electricity rather than natural gas in the liquefaction process and have the ability to eventually transition to exporting hydrogen” (Williams, 2022).

Current responses to the energy crises resulting from the war in Ukraine essentially aim to square the circle of ensuring a steady flow of affordable energy and at the same time accelerating the clean energy transition. In March 2022, the EU announced its ambitious REPowerEU action plan “to make Europe independent from Russian fossil fuels well before 2030” (European Commission, 2022c). Focusing on natural gas and combining shorter and longer-term energy policy goals, the EU commits to diversifying its supplies and increasing the use of what it calls “renewable gases,” but ultimately it also aims to completely shift away from natural gas accelerating what the EU had already promised in its European Green Deal. Concluding the REPowerEU Communication with the statement that “[t]he need for greater security of supply is adding a new impetus to the objectives of the European Green Deal,” the EU frames the current crisis as an opportunity to speed up the decarbonization agenda. This interpretation which sees energy security and climate action as compatible can also be found in recent G7 communications, in which member countries agreed “to work together to accelerate a clean and just transition towards climate neutrality, while ensuring energy security” (G7, 2022b).

The May 2022 G7 Climate, Energy and Environment Ministers’ Communique is a good example of how traditional understandings of energy security are now wedded with notions that are more closely linked to human and environmental security, not least as it addresses both food and energy security. The 39-page document devotes an entire subsection to the aim of “[i]ncreasing energy security through an accelerated energy transition” (G7, 2022a). While the G7 ministers acknowledge the adverse impact of the war in Ukraine on “energy supply security” and refer to their commitment to phasing out their “dependency on Russian energy,” the longer-term agenda is driven by decarbonization and “an accelerated clean energy transition,” even and especially during the current crisis: “We remain convinced that the most important contribution towards energy security is an accelerated and prudently managed clean energy.” At the same time and even though the G7 ministers are critical of “private finance currently still supporting non-Paris aligned activities especially in the fossil fuel sector,” exceptions to ending government support to fossil fuel industries are still permissible to a limited degree if they pertain to “national security [or] geostrategic interest” (G7, 2022a).

The current crisis is essentially putting to the test whether traditional energy security and the clean energy transition can be both pursued at the same time. As will be discussed in the next section, the tension between both goals is also reflected in the disagreement over long-term LNG contracts and clean versus green energy, a distinction that goes well beyond semantics and impacts Canada–EU energy trade.

LNG and hydrogen

Even before the 2022 Ukraine crisis, hydrogen was hailed as the fuel of the future. It has been touted as the long-term solution to “achieving net zero emissions and an energy-secure future” (G7, 2022a). The EU (European Commission, 2020), Canada (Natural Resources Canada, 2020), Germany (Federal Ministry for Economic Affairs and Energy, 2020), and the province of Alberta (Government of Alberta, 2021) have all announced hydrogen strategies over the last few years. Alberta and Canada see European markets as important export opportunities, while the EU and Germany look across the Atlantic for hydrogen supplies. Partly as a result of these complementary interests, Canada and Germany signed a Memorandum of Understanding on the Establishment of an Energy Partnership in March 2021. In it, both partners pledge to “collaborate on clean hydrogen, its derivatives and potential applications, and identify potential cooperation projects on the production, usage and trade of clean hydrogen” (Natural Resources Canada, 2021). They are also partners in the recently launched G7 Hydrogen Action Pact which champions hydrogen to enable a “full decarbonization” (G7, 2022a). In August 2022, Ottawa and Berlin agreed to establish a Canada-Germany Hydrogen Alliance (Government of Canada, 2022).

This is not the first time that hydrogen has been considered a pathway out of an energy crisis. Visions of a hydrogen economy go back to the 1970s when hydrogen was hailed as an alternative fuel (Gregory, 1973; Jones, 1970; McElheny, 1974; Ward, 1979), which could even contribute to energy security (Silverstein, 1980). Already in the early 1990s the European Community ran a hydrogen pilot project with Quebec (Gretz et al., 1990). In part because of the emergent nexus between energy security and climate change in the twenty-first century, the fuel has undergone a revival and, as outlined above, entered the Canada–EU Energy Dialogue. Even before the current war in Ukraine, experts considered hydrogen as a potential challenge to Russian gas deliveries to Europe since it would allow the EU to wean itself off Russian supplies (TASS, 2020).

Against this backdrop of a hydrogen hype and because LNG and hydrogen use similar infrastructures, Canada has become a sought-after partner for the EU and especially Germany during the current crisis. To many in Europe, LNG shipments look like one of the promising alternatives to Russian natural gas. And Canadian observers agree, not least because it would establish secure export markets for LNG which could switch to hydrogen in the future, something that many observers hope would be technically possible in the future. It could help push through construction of domestic pipelines, on which the success of hydrogen would depend (Tscherning, 2021), connecting Alberta with the east coast and also more generally the continued support of oil and gas production in Canada despite net zero emission goals. A recent piece by the Canadian Global Affairs Institute (CGAI) insisted that “Canada can and must help Europe in [its] transition [away from Russian natural gas]” (Calnan, 2022). Realizing that there is currently no LNG export facility in Canada, it suggests that “[t]o accomplish this, European countries, Canada and the United States should form a transatlantic energy security alliance built around flexible long-term contracts between North American natural gas suppliers and European sources of demand.” Such an alliance would simply extend the integrated North American gas market geographically and Canada would contribute to “European energy security by contributing to the massive, low-cost North American natural gas market which makes LNG exports economical.” Rather than Canada supplying Europe directly with LNG, existing U.S. facilities, to which Canada could export natural gas, would ship more LNG to Europe. This transatlantic alliance is a triangular one and really depends on the U.S. playing along.

In essence, the likelihood of increased energy trade between Canada and the EU or EU member states is closely linked to Canada’s energy relations with the United States and influenced by domestic differences in energy needs. Since the 1950s, an increasing proportion of Canadian oil and gas is exported to the United States and a considerable share of that production is provided by U.S.-owned firms or through U.S. investment. As a result, Canada is part of an integrated North American energy space. This integration was institutionalized in the late 1980s through the Canada-U.S. Free Trade Agreement (Clarkson, 2009). At the same time, since the shale revolution has turned the United States into a net producer and exporter of oil and gas, Canada has not only lost customers down south, but also competes with its neighbor for future exports markets in Asia and Europe. As a consequence, redirecting lost market shares from the U.S. to European customers will not be easy. Equally challenging will it be to redirect oil and gas flows from their existing North–South axis to Canadian routes to the Pacific and Atlantic Oceans, which are currently hindered by opposition to pipeline expansions through British Columbia and Quebec.

Existing LNG producers cannot simply increase shipments, nor can new facilities be quickly built. In the short term, there will be most likely a bidding war on existing LNG shipments. In the medium term, new facilities may go online, however, going by historical precedents that may not be a given. The CGAI publication argues that only long-term contracts can give LNG producers the security that they need to invest in these long-term projects. However, as the above discussion on the energy security–climate change nexus has shown, there is no appetite in Europe to lock-in what can only be considered a bridging technology to a net-zero future based on renewables and energy efficiency. This may also explain why during the visit of the German Chancellor to Canada in August 2022, there was little official talk of LNG. Europeans are only interested in LNG as a short-term remedy. For example, Ottawa-based German diplomat Gerhard Schlaudraff cautioned in May 2022 that “[i]f the typical offtake agreement in the LNG business is 20 years, and we want to be out of gas in 2045, there is not so much time for any of these projects to come online” (Beer, 2022). It should also be mentioned that even though the March 2022 Joint Statement by Canada and the EU and the more recent discussion between Olaf Scholz and Prime Minister Justin Trudeau all explicitly mention LNG, the REPowerEU plan does not list Canada as one of the LNG sources it hopes to tap.

Time is not on Canada’s side. An April 2022 analysis by Global Energy Monitor cautioned that on average it took three to five years to build LNG facilities in the United States (Global Energy Monitor, 2022). And the Globe and Mail reminded Canadians that these five years only hold if companies “already have their pipeline route plans firmed up” (Jang, 2022). According to industry experts, it takes decades before there are returns on investment. In the medium run, there may be competition from cheaper exports from producers such as Qatar and from increasingly affordable renewables. In the long run, increased LNG imports clash with the EU commitment to decarbonize. Demand side approaches to energy dependence and climate change do not need new suppliers of energy carriers.

History is also not on Canada’s side. A view to the past dampens expectations that Canada will automatically benefit from the short-term search for LNG and the longer quest for hydrogen. Even though experts expect that both blue (hydrogen produced from natural gas in facilities equipped with CCUS technologies) and green (from renewables) hydrogen will be exported to Europe (Dickel, 2020; Layzell et al., 2020), there have been divergent perspectives on the desirability of the two different types of hydrogen with the EU and Germany preferring green hydrogen. Early Canada–EU discussions had to navigate conflicting ideas about green (renewable energy) and clean (lower carbon emissions) forms of hydrogen. Domestically, this also reflects a divide between Quebec, who based on its history with hydrogen pilot projects and abundance of hydropower champions green hydrogen, and Alberta, who sees in blue hydrogen a way to future proof its fossil fuel industry. The Canada-Germany Energy Partnership took Ottawa’s side and refers to “clean hydrogen” (Natural Resources Canada, 2021). Similarly avoiding the color-coded hydrogen categories, the G7 communiqué which launches the G7 Hydrogen Action Pact reflects a compromise by using the wording “low-carbon and renewable hydrogen” (G7, 2022a). Yet, as the above discussion has shown there are much longer-term shifts occurring which will keep this disagreement over renewables-based hydrogen and net zero hydrogen alive. Canada can expect continuous challenges of its reliance on fossil fuels.

Conclusion

The history of Canada-Europe energy relations since the end of the Second World War is replete with calls for closer cooperation in times of crisis and the hope that energy trade will grow. Increasingly, these calls were driven by energy security rhetoric and matched by Canada’s self-portrayal as an “energy superpower” and “bastion of energy security.” In the twenty-first century as the meaning of energy security was broadened and linked to climate change action, complementary energy interests of Canada as an energy producer and exporter and the EU as an energy consumer and importer were no longer sufficient to bring about increased transatlantic energy trade. The coexistence of traditional security rationales, climate exigencies and corporate energy actors create a considerable policy dilemma for Canadian decision-makers. A look towards the historical contingent circumstances as well as fate of past energy security discussions are useful in understanding these challenges. Energy security is a concept that has a specific historical origin and is an idea that has been institutionalized over time to influence transatlantic relations. It is impacted by both historical crisis moments as well as long durée developments such as industrialization, capitalism and the Anthropocene. While historical analysis may help us better understand the current policy challenges for Canada, as historians we also know that sometimes critical junctures do introduce significant upheaval and long-lasting change, so while the current crisis still enfolds, we hold our breaths.

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Petra Dolata

Petra Dolata is the former Canada Research Chair in the History of Energy at the University of Calgary. She is the Scholar in Residence at the Calgary Institute for the Humanities, where she co-convenes the Energy In Society working group. She has published on the history of energy, Canada’s natural resources, foreign and Arctic policies, and the concept of energy security. This article draws on research supported by the Social Sciences and Humanities Research Council.

Notes

1 Google Books Ngram Viewer: energy security, 1965–2019, American English, https://books.google.com/ngrams/graph?content=%22energy+security%22&year_start=1965&year_end=2019&corpus=28&smoothing=0.

2 Google Books Ngram Viewer: Energiesicherheit, 1965–2019, German, https://books.google.com/ngrams/graph?content=Energiesicherheit&year_start=1965&year_end=2019&corpus=31&smoothing=0.

3 Google Books Ngram Viewer: sécurité énergétique, 1965–2019, French, https://books.google.com/ngrams/graph?content=sécurité+énergétique&year_start=1965&year_end=2019&corpus=30&smoothing=0.