Energy Gets A (partial) Tariff Break
Overlooked benefits of US-Canada energy interdependence
𝙒𝙝𝙖𝙩 𝙘𝙖𝙪𝙜𝙝𝙩 𝙢𝙮 𝙖𝙩𝙩𝙚𝙣𝙩𝙞𝙤𝙣? Overlooked benefits of US-Canada energy interdependence, highlighted by cross-border electricity trade, as new 10% US tariff on Canadian energy imports are imposed.
𝙒𝙝𝙮 𝙞𝙩 𝙢𝙖𝙩𝙩𝙚𝙧𝙨? The reduced tariff on energy resources illustrates the importance of Canadian sources to the US energy system. Hydrocarbon flows (~4 MMbbl/d of crude and ~8 Bcf/d of natural gas) will take centerstage given the comparatively small scale of electricity exports from Canada (~US$3.2B in 2023) relative to oil and natural gas.
However, several US electricity markets like NYISO, ISONE, SPP and MISO take advantage of interconnections with Canadian systems to support grid balancing, while Canadian markets occasionally call on their US partners to shore up supply during low hydropower production periods.
While recent drought conditions in Canada have brought the electricity trade into near balance on average, daily flows remain highly volatile. Though small in absolute scale, these exchanges provide outsized reliability benefits.
As this once-stable trade relationship takes this fractious turn, what overlooked advantages of US-Canada energy interdependence might be at risk?
𝘿𝙚𝙩𝙖𝙞𝙡𝙨:
