Identifier
Created
Classification
Origin
08COPENHAGEN324
2008-06-06 11:05:00
CONFIDENTIAL
Embassy Copenhagen
Cable title:  

DEPUTY SECRETARY'S MEETING WITH CANADIAN RESOURCE

Tags:  PGOV PREL SENV KGHG ENRG EPET CA 
pdf how-to read a cable
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C O N F I D E N T I A L COPENHAGEN 000324 

SIPDIS

E.O. 12958: DECL: 06/01/2018
TAGS: PGOV PREL SENV KGHG ENRG EPET CA
SUBJECT: DEPUTY SECRETARY'S MEETING WITH CANADIAN RESOURCE
MINISTER LUNN N GREENLAND


Classified By: Regional Environmentl Officer Erik Hall.
For reasons 1.4 (b&d).

C O N F I D E N T I A L COPENHAGEN 000324

SIPDIS

E.O. 12958: DECL: 06/01/2018
TAGS: PGOV PREL SENV KGHG ENRG EPET CA
SUBJECT: DEPUTY SECRETARY'S MEETING WITH CANADIAN RESOURCE
MINISTER LUNN N GREENLAND


Classified By: Regional Environmentl Officer Erik Hall.
For reasons 1.4 (b&d).


1. (C) Summary: Deputy Secretary Negroponte met with
Canadian Minister of Natural Resources Gary Lunn on May 28
following the Arctic Ocean Conference at Ilulissat,
Greenland. They discussed the recent U.S. listing of the
polar bear as a threatened species, energy resource
exploitation in the Canadian Arctic, climate change and
carbon markets, trade and legal issues. End Summary.


2. (U) Background: The Deputy Secretary was accompanied in
this meeting by Ambassador Cain, OES A/S McMurray, Legal
Advisor Bellinger, D Special Assistant Wittenstein, and REO
Hall (note-taker). Minister Lunn was accompanied by
Ambassador to Denmark Fredericka Gregory; Legal Advisor Alan
Kessel; Claude Carriere, Associate Deputy Minister of Natural
Resources; and Monique Carpentier, DirGen in the Ministry of
Natural Resources.

Polar Bear Listing
--------------


3. (C) Minister Lunn explained that Canada's decision on
whether to list the polar bear was different from that of the
U.S., since the polar bear hunt was economically important to
some Canadian communities. A bear trophy could bring up to
$50,000 from hunters. Lunn said Canada had entered into an
MOU with the U.S. Department of Interior over protection of
the polar bear, which had also raised some concerns among
indigenous communities of the far north. A/S McMurray said
the U.S. was interested in continuing these discussions.

Energy in the Canadian Arctic
--------------


4. (C) After agreeing the outcome of the conference had been
positive, Lunn proceeded to outline tremendous potential for
Canadian energy exploitation to supply the U.S. market.
Canada is working with the U.S. to open up the Mackenzie
River basin bordering Alaska, he said. Gas hydrates and
methane potential is vast in the far north (10 times Canada's
oil sands reserves),if methods can be developed to exploit
it. Joint research is ongoing with Japan, he said. Asked by

the Deputy Secretary about cooperation with the U.S., Lunn
said he had discussed the issue with Energy Secretary Bodman.
Canada has the potential to supply 25 percent of U.S. energy
needs, he said.

NAFTA/Trade
--------------


5. (C) The Deputy Secretary acknowledged that border
"thickening" with Canada was an unfortunate consequence of
national security concerns. Lunn said NAFTA had given Canada
a new relationship with Mexico, but had complicated Canada's
border relations with the U.S., its sole market for energy
due to infrastructure constraints. Canada is working on
diversifying to permit export of its energy to Asia, to cut
the "captive market discount" estimated at U.S. $10/barrel of
oil. Canada is now considering seeking bilateral discussions
with the U.S. on border trade issues, outside of NAFTA.
Kessel said Canada is working on a police ship rider program
with the Coast Guard, which is nearing agreement. Lunn said
that for 32 U.S. states, Canada is the number one trade
partner. PM Harper and President Bush had held positive
discussions in New Orleans, he said.

Climate and Carbon Markets
--------------


6. (C) Lunn admitted that Canada's greenhouse gas emissions
had risen 32-33 percent since 1990, while the U.S. increase
during the same period was 17-18 percent. He said that in
the future, Canada's stringent carbon constraints would
increase the cost of Canadian fossil fuels. All new oil
collected from sands as well as coal extraction must meet new
carbon capture and storage requirements from 2012. Canada
wants a "real" carbon trading system, "unlike Europe and
Russia's 'hot air' system," he said. Lunn expressed hope
that a U.S.-Canadian carbon trading system will evolve. The
largest carbon sequestration and storage project in the world
was transporting 10 million metric tons of carbon emitted

from U.S. power plants in Wisconsin to Saskatchewan, where it
was being injected into oil fields where 99% would be
captured for at least 5,000 years.

Legal Issues
--------------



7. (C) The Deputy Secretary raised the importance of
resolving outstanding boundary disputes between Canada and
the U.S., saying our respective legal advisors are "talking
about talking." Legal Advisor Bellinger asked whether Canada
had heard from Sweden, Finland or Iceland, who had not been
invited to this conference. Kessel said the issue had come
up at the first meeting of the Arctic Council coastal states
in Oslo in November. The Canadian view was that if the other
three Arctic Council members had an interest, it was better
to invite them. Keeping the group limited to the five
littoral states also risks appearing to exclude the
indigenous permanent participants of the Arctic Council. The
Deputy Secretary said he understood the Danish rationale for
use of the five as an Arctic Council core group on certain
issues, but not for everything.


8. (U) The Deputy Secretary's party reviewed this cable.
CAIN