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Last week, Quebec’s and Ontario’s premiers announced their desire to work together on crucial issues, including climate change, interprovincial trade and infrastructure. It is very positive for Canada when our two largest provinces recognize the benefits of co-operation. We should certainly hope they succeed, but let’s also be mindful of the obstacles in their way.
Especially interesting is the prospect of greater interprovincial trade in electricity. This would be a game-changer in Canada, and a very positive one. Quebec has a great deal of low-cost hydroelectricity available to export, and its current U.S. markets are becoming less interested in purchasing long-distance hydro power because of their own development of low-price shale gas.
At the same time, Ontario’s economy continues to grow but has few options for increasing its electricity capacity at costs anywhere close to Quebec’s. So the idea of Ontario buying electricity from Quebec is obviously sensible.
Any idea that is so obviously sensible must have serious problems, and there are at least three that come to mind.
The first will be the pressures from within Ontario to resist importing cheaper Quebec electricity. It will be argued that Ontario has built a world-class nuclear industry and that refurbishing existing nuclear plants and building new ones is necessary to keep this expertise at home.
The fact that approximately nobody in the rest of the world wants to purchase this expertise or the associated technology will be ignored, or perhaps held up as an example of how government needs to do more to sell these products. Other “anti-importers” in Ontario will argue along the lines of securing jobs and economic development – that building electricity capacity (of any kind) within Ontario keeps the projects and associated construction jobs at home.
Though they may be dressed up and spun differently, these arguments are nothing more than simple protectionism. Hopefully Ontario Premier Kathleen Wynne will see this and focus on the bigger picture: In a world where Ontario needs electricity and Quebec has it in spades, it can only be good for Ontario to purchase it.
This brings us to the second obstacle, and it will come from la belle province. Quebeckers have no problem with selling their surplus electricity to Vermont and New York at prices that exceed the internal Quebec ones. Except in a few small industries, Quebec firms do not see themselves as competing with American ones.
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