IEA Head Calls on Canada to Move Faster on Energy

The head of the International Energy Agency is urging Canada to move more quickly to develop and export its energy resources, warning that market conditions will only favor the country for so long.

Typically, countries buy energy based on price. But in the aftermath of the Iran war, “there will be an energy security risk premium,” Fatih Birol, the IEA’s executive director, told a policy conference in Toronto on Thursday. As a result, “the most important resource, or card, that Canada has today is trust.” 

He acknowledged the country has a reputation internationally for lengthy timelines on major projects, in part because of its multiple levels of government. “Canada doesn’t have the luxury to be slow,” he said, noting that many factors have come together to create a “golden opportunity” for the country. 

“The cost of missing this train will be incredible,” he said.

Birol warned that the world is losing 14 million barrels per day of oil because of the war in Iran, and that ramping up production after the conflict will be gradual. He reiterated that the IEA is prepared to take further action after members agreed in March to release 400 million barrels of oil to the market. 

He stressed that accelerating the speed of major projects shouldn’t come at the cost of lower standards, including those covering the environment and human rights.

“I wish there were a few more Canadas in the world,” he said, “so that we can have a much more reliable and sustainable global energy system.”

Asked after his speech what he’s told the Canadian government about oil and gas, he replied: “They have to develop those resources, but more importantly they have to make sure that they have new export destinations.” He said he believes Prime Minister Mark Carney understands the urgency.

Birol’s remarks come a day after Cenovus Energy Inc. Chief Executive Officer Jon McKenzie told analysts that higher costs for new oil sands projects mean they will only work economically if environmental rules are loosened. 

Slow Reputation

Canada has struggled for years to keep pace with peer economies on capital spending. Bank of Canada Governor Tiff Macklem told a Senate committee on Wednesday that international players are choosing to invest in countries with quicker regulatory regimes. 

“What is holding them back has been very long regulatory approvals,” Macklem said, adding that investors don’t want to lock up their capital for too long. “Many of these regulations are in place for well-intended reasons. We don’t want to just gut them, but where we can streamline these, make them more predictable, speed things up, I think that could unleash greater Canadian access to global capital.”

Transport Minister Steven MacKinnon told reporters in Ottawa on Thursday that his government is continuing work on speeding up regulatory processes for major projects, including through possible upcoming legislation.

Finance Minister Francois-Philippe Champagne said on the sidelines of the policy conference that he’s been having positive conversations with global executives, touting Shell Plc’s recent agreement to buy Canadian oil and gas producer ARC Resources Ltd.

“People understand that Canada is serious: serious about having more predictability when it comes to regulatory process, to have a process that is well understood,” he said, adding that the federal government is prepared to work with First Nations and the provinces. “If the question is, ‘Can we do better?’ Always.”