Justin Trudeaus Climat Plans

Assignment 1 – North American Business Context

In June 2014 the federal government of Canada announced the decision to build a pipeline across the country. The pipeline includes an extension of existing pipeline tracks to carry higher volumes of bitumen from Alberta to the coast of British Columbia. However, the reactions from environmental groups were extremely controversial. Opposing parties point out the importance of environmental goals to reduce fossil fuel consumption and in result decrease CO2 emission. Trudeau announced to reduce CO2 emission to 30% by 2030. To achieve this goal, Canada is aiming to continuously implement top-edge technologies, such as the production of carbon fibre from greenhouse gas. According to Trudeau's plans, these futuristic technologies will help federal states to restructure their economies and gain a sustainable lead. Nevertheless, it will be a challenge for Trudeau to find a majority, since Canada runs on a federal province consensus and these states have quite opposing agendas.

Alberta generates about 81% of Canada's gas and oil. Due to its industry structure, the state also produces about 40% of Canadas total CO2 emissions. At the same time, Alberta has a rather low population density. Only 12% of all Canadians live in Alberta. Many local jobs in Alberta depend on the oil and gas industry. Therefore, Alberta’s leading politicians demand high investments into the oil industry and infrastructure. Initially, the leading parties in Alberta were supporting Trudeau’s environmental goals. However, last August, the premier of Alberta withdrew her support from Trudeau’s plan when the federal government did not immediately appeal against a court ruling haltering construction of the Trans Mountain expansion. This pipeline expansion would have almost tripled the pipeline capacity. Canada is already exporting most of the oil and gas production.

The Economist (2018) suggests that Alberta should shift its primary focus from the oil and gas industry to more environmentally-friendly solutions to gain economic flexibility. Also, the production of oil and gas in Canada is technologically advanced and more environmentally friendly than in the US. However, fossil fuels will not be a sustainable economic source for future growth.

The article has multiple touchpoints to the North American Business context. Although the planned pipeline crosses North America entirely and consequently supports the North American trade, its impact is not limited to an economic viewpoint. The pipe project is affected by all topics that we will cover in the North American Business context, due to the involvement of diverse stakeholders, such as companies, indigenous people, environmentalists, and politicians. While newspapers mainly outline the economic impact, the pipeline would also involve social, environmental, and legal aspects. The pipelines realization would affect indigenous peoples’ land rights, since the pipelines expansion will cross their terrain. Politicians discuss to what extent the First Nations must be involved in the planning and if they are eligible to participate in the generated profits.

Besides, the environmental impact is highly controversial. On the one hand, the expansion of the oil production will harm Canada’s CO2-Emission footprint. On the other hand, oil production in Canada is much more sustainable than in the US, especially when considering the plans from David Sacks to use more technologically advanced systems. In consequence, the pipeline project might, even though it will increase the Canadian CO2 emission, decrease the CO2 emission on a global scale by shifting the production from the US to Canada.

By taking into account that the trade to the US is curial to the pipelines plans, the political situation gains importance. Even though the Canadian oil is competitive on a sustainable level, the oil price estimated might be too high to compete with the recent decreasing world commodity price. Since president Trump lowered the US environmental standards, the oil production in the US became more competitive on a price level. Since Trump is doing the opposite to the Obama administration, the political situation is quite uncertain, and long-term plans are risky. The election of Trump also harms Trudeau’s plans to realize environmentally sustainable options, since these technologies require higher investment and are less cost competitive on the world market, at least in the short term.