As U.S. tariffs threaten Canada’s export-driven economy, energy strategist Lance Mortlock argues the real danger lies less in specific duties than in Canada’s chronic over-reliance on a single export market.
Mortlock is the author of a new book, Outside In, Inside Out (ECW Press), which provides a playbook for leading businesses through uncertainty, and also a managing partner at global consultancy EY, where he leads the firm’s Canadian energy market segment.
Mortlock spoke with Canadian Affairs reporter Sam Forster about what he views as key priorities for Ottawa, including balancing decarbonization with competitiveness, backing nation-building projects and reducing Canada’s reliance on a single customer to its south.
SF: How exposed are Canadian energy exports to current U.S. tariffs?
LM: Commercially and technically, they’re mostly shielded [roughly 99 per cent of oil exports under the free trade agreement CUSMA].
But I would also say that most of our oil and gas is exported to the U.S. So from that perspective, we are exposed to whatever the U.S. president and administration decides.
In 2024, the equivalent of four million barrels of oil a day was exported to the U.S. That’s 95 per cent of our exports. And in 2024, almost all of our natural gas exports went to the U.S. So we are exposed in the sense that, for a long time, we’ve only had one customer.
SF: How coherent would you say the Carney government’s trade strategy has been amidst all of the diplomatic turbulence with the United States?
LM: I think as a country we’ve lacked an energy strategy in Canada for a long time, and we desperately need one. We also said to foreign markets for a long time, ‘There’s no business case for LNG.’ But somehow now there is …
Investors from the U.S. and Europe have, over the last 10 years, moved away from Canada as a place to invest at large because we haven’t really been open for business.
In the first six months of the year, venture capital invested in Canada was $2.5 billion. Venture capital invested in the U.S. for the same period was $250 billion; that’s a hundred times larger. Now, the U.S. market isn’t a hundred times bigger than the Canadian market.
SF: How feasible do you think it is to diversify Canada’s energy export strategy to be less dependent on the U.S. market?
LM: With the right policy and First Nations support, very feasible. We proved it with the Trans Mountain pipeline expansion and the LNG Canada [export terminal] … I think we have an imperative to make this happen. Because if not now, when? And if not us, whom?
The time is right. Never waste a good crisis. And we are in a crisis moment in our history.
SF: How optimistic are you that Ottawa’s creation of a Major Projects Office will be successful in bringing the provinces together to facilitate energy infrastructure projects?
LM: I am optimistic. I think the leader they chose to run the Major Projects Office, Dawn Farrell, is strong. I’ve had the opportunity to get to know her over the years, and I couldn’t think of anyone better to do the job. I think she understands the complexities involved.
She brings a background in utilities and transitioning away from coal successfully in Alberta. She built [the Trans Mountain expansion], our country’s most complex and challenging pipeline successfully at a time that we desperately needed it.
SF: If you could wave a magic wand and change something about the landscape here in Canada to actualize some of these projects, what would it be?
LM: The key thing right now is that we won’t get pipelines built unless some of the regulation changes. What upstream producers are saying is that there’s no incentive to grow production to fill the pipelines. They say, ‘We don’t want a pipeline with the current regulation that’s in place,’ and therefore the pipeline companies won’t build a pipeline.
The oil and gas emissions cap — which is a de facto production cap — is problematic carbon pricing. It is essentially an output-based pricing system, and that remains central at the moment.
Provinces vary in their compliance and it’s creating a patchwork of systems that are confusing and that creates uncertainty for investors.
We have regulatory duplication, environmental assessment delays, unclear permitting processes … The push for electrification and clean energy infrastructure is also raising electricity costs.
So at the end of the day, my view is that we need to balance decarbonization with competitiveness. I’m not saying decarbonization is not important. I would hope that there would be this great deal or compromise where [we say], ‘We’ll get another crude oil pipeline, but we also need to build pathways [for carbon] sequestration.’
Like, what’s the middle ground? We have more in common with each other as Canadians than we do differences. We all want our kids to have jobs. We all want prosperity. We all need taxpayer money to help support social programs. So where’s the middle ground where we can streamline regulatory processes?
SF: As someone who has worked closely with public and private sector stakeholders throughout your career, do you feel like there are chronic misconceptions about the challenges that the energy industry faces in Canada?
LM: Yeah, I think the average Canadian probably doesn’t appreciate … the significant contribution that resources at large — and I don’t just mean oil and gas; I mean mining and metals as well — the role that it plays in paying for social programs, supporting infrastructure, investment and creating jobs. I don’t always think that people equate those things together.
We need to do a better job of explaining the connection between energy resources and heavy industry, and how that equates to lower grocery bills, equates to jobs, equates to money that we can put in social programs.
This interview has been edited and condensed for clarity.
It isn’t the Canadian people that don’t know we shouldn’t have only ONE export market. It is our government. Common sense dictates you don’t put all your eggs in one basket. Our government feels they can run our elections like the American elections. The person who can give the most put downs wins. We want to hear what our government is going to do. We want to be informed. Yes this last election had to be based on who could best deal with the American President. What are the political parties in Canada thinking. We need strong intelligent leadership. The political parties have to stop treating Canadians like imbeciles. Take more polls. Hear what the people want because your decision making needs help. Now the Sask NDP wants to build hospitals! Why? There aren’t medical staff to work in them. Empty buildings will not improve healthcare. No common sense!