Biden's pick for energy secretary could mean trouble for Alberta's oilpatch, experts say

Experts say the emphasis the president-elect and his team are placing on emissions reduction will pose significant challenges for Alberta's oil and gas industry, but will also create opportunities.

Jennifer Granholm, who was born in Vancouver and served two terms as governor of Michigan, was recently announced as Joe Biden's nominee for secretary of energy.

The U.S. Department of Energywill be responsible for helping develop and implement clean technologies needed to reach Biden's fossil fuel reduction targets. Transition to clean energy is one of his top priorities, aiming to hit net-zero emissions by 2050 a goal shared by the Trudeau federal government in Canada.

"My commitment to clean energy was forged in the fire," Granholm said in a speech in December, referring to Michigan's difficult recovery after the 2008 financial crisis.

"Clean energy remains among the most promising jobs and economic growth sector in the world."

Despite the title, the energy department's primary responsibility is to maintain the U.S.'s nuclear weapons.

Granholm will be arm's-length from pipeline decisions, but her background and stance on environmental issues sends a broader message about the administration's plans for a green energy transition. She was also governor when across-border pipeline (owned by Alberta-based Enbridge)burst, contaminating the Kalamazoo River. She declared a state of emergency, criticizing Enbridge's response as "anemic" and "wholly inadequate."

It could spell trouble for the ongoing work on the Keystone XL pipeline, which Biden has vowed to rescind permits for.

"She has been a vocal opponent of Keystone XL. So it's not going to be good for the Alberta oilpatch," said George Hoberg, a professor at the School of Public Policy and Global Affairs at the University of British Columbia.

"There really is a major conflict between the priorities of the Kenney government and the incoming Biden administration and one of those entities has a lot more market power."

Keystone's rocky road

Keystone XL was cancelled five years ago by the Obama administration, then was revived by Donald Trump in 2017. Construction on the project began in Alberta last summer, but the pipeline has been bogged down in court challenges from landowners and environmentalists.

The Alberta government invested $1.5 billion in the pipeline last year, and promised another $6 billion in loan guarantees in 2021. Premier Jason Kenney says he isremaining optimistic about the future of the project, even with an unenthusiastic president-elect.

"We are working with many people in the United States who support this project, including many people in the Democratic party," Kenney said in October, emphasizing Alberta's financial stake in the project.

"It would send a very, very negative message, should a future U.S. administration cancel a project that's partly owned by the Canadian government."

Prime Minister Justin Trudeau has said he supports the project and will try to make a case for the pipeline to the new U.S. administration.

Right now, 98 per cent of Canada's oil exports go to the United States, according to the federal department of natural resources, and the oilsands comprise 97 per cent of Canada's proven oil reserves.

Hoberg says federal officials are likely to focus on common ground with the U.S., like hydropower, electric vehicles and zero-emissions goals, which doesn't help Alberta's beleaguered oil and gas sector.

"I do think it's time for Alberta to begin seriously facing the climate challenge and figuring out how to make that transition to a clean energy economy," he said.

"I'm looking forward to seeing how the rest of Canada is going to work to help Alberta with this transition."

Diversification on the horizon

The Canadian Association of Petroleum Producers congratulated Granholm on her nomination.

"Canada and the United States share an integrated North American energy network and our long history of co-operation on energy has resulted in significant benefits for both countries. We look forward to continuing that relationship with the new administration starting in 2021," CAPP said in a statement to CBC News.

CBC also reached out to Alberta's energy minister for a statement but did not hear back.

The province's former NDP energy minister says Alberta's energy industry has a chance to adapt as priorities shift south of the border.

"I think there's an appetite for diversification, which plays well into markets in the United States, and I think there's still an appetite to decarbonize the barrel," Marg McCuaig-Boyd said.

"We certainly have the technology and the innovative spirit in Alberta."

While she's concerned about the impending threat to Keystone, she says she trusts that Canada will be able to effectively argue the safety and economic benefit of the project to the Biden team.

Daniel Kammen, a professor of energy who worked with Granholm at the University of California-Berkeley, says she's firmly committed to decarbonizing the economy. He also pointed out that the two countries are more likely to partner on wind, solar and clean technology than oil. He says Alberta should seize the opportunity to pitch its other resources.

"I really think this is an opportunity to build forward at a time when clean energy is dropping in price and is clearly needed for the planet."

The U.S. Secretary of the Interior has the main say in the approval of pipelines. Biden's pick, Deb Haaland, rose to fame for her staunch opposition to the Dakota Access pipeline.

Plus, the president-elect's new special envoy on climate, John Kerry, was the one who in 2015 announced that Keystone was incompatible with the Obama administration's goals.

While Keystone was granted approval by Trump's interior secretary in January 2020, Biden could shelf the project again or kill it completely.