<\/p>\n
ROLLERCOASTER ABROAD<\/strong><\/p>\n The geopolitical rollercoaster that characterized 2025 has continued unabated since we wrote our last editorial in September for Issue 4 of Volume 13. At this juncture, it is difficult to suggest that the remainder of 2026 will be anything but more of the same. There were, however, three notable developments that are likely to have consequential implications for Canada internationally and at home, particularly as it relates to energy and trade.<\/p>\n 2025 U.S. National Security Strategy<\/b><\/p>\n Released on December 5, 2025, the 2025 U.S. National Security Strategy (\u201cNSS\u201d) sets out the U.S.\u2019 foreign policy principles, priorities, and a focus on global regions. It is a significant departure from traditional U.S. NSS norms and realigns the position of the U.S. in the world order[1]<\/a><\/sup> \u2014 declaring that the U.S. \u201cmust be preeminent in the Western Hemisphere as a condition of its security and prosperity\u201d[2]<\/a><\/sup>. As discussed by the Asia Pacific Foundation of Canada[3]<\/a><\/sup>, \u201callies \u2014 including Canada \u2014 are expected to align with Washington\u2019s economic statecraft\u201d[4]<\/a><\/sup> \u2014 alignment \u201cof hemispheric security and co-ordinated economic statecraft take precedence over national discretion, particularly as it relates to China\u201d[5]<\/a><\/sup>. Defence and security critiques of the NSS suggest that the planned abandonment of core investments by the U.S. in \u201csecurity, open trade, democracy, and alliances\u2026the underpinnings of global peace will not make America First; it will make America weak\u201d[6]<\/a><\/sup>.<\/p>\n V\u00e9n\u00e9zu\u00e9la<\/strong><\/p>\n Escalating action on Venezuela by the U.S. arguably began in January, 2025, with the signing of an executive order that \u201cpaved the way for criminal organizations and drug cartels to be named \u201cforeign terrorist organizations\u201d.\u201d[7]<\/a><\/sup> Increasingly assertive actions continued throughout 2025. After initiating strikes on small vessels in the Caribbean Sea in September, 2025 (a significant portion of which were associated with Venezuela) in an effort to fight maritime drug trafficking in Latin America[8]<\/a><\/sup> and ramping up the pressure on the Maduro regime by seizing oil tankers that operate without U.S. permission and transport oil from Venezuela, Russia or Iran in contravention of the sanctions imposed by the U.S. and other countries[9]<\/a><\/sup>, the Trump Administration approved a military strike on Venezuela and on January 3, 2026 captured its president Nicol\u00e1s Maduro and his wife, Chilia Flores. Despite inditing Maduro and Flores for narco-terrorism[10]<\/a><\/sup>, President Trump confirmed shortly thereafter that \u201chaving a Venezuela that\u2019s an oil producer is good for the United States because it keeps the price of oil down\u201d[11]<\/a><\/sup> and that \u201cVenezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America\u201d[12]<\/a><\/sup>. A meeting with U.S. and international major oil producers on January 9 confirmed President Trump\u2019s overarching interest in Venezuelan oil \u2014 both investments to revitalize oil production[13]<\/a><\/sup> and monies realized from the sale of confiscated Venezuelan oil[14]<\/a><\/sup>.<\/p>\n Greenland<\/b><\/p>\n President Trump\u2019s fixation on Greenland resumed shortly after his re-election, in December 2024 when he stated in a Truth Social post that \u201cthe ownership and control of Greenland is an absolute necessity\u201d[15]<\/a><\/sup>. Actions and escalations continued through 2025 and into these early weeks of 2026[16]<\/a><\/sup>. With the release of the 2025 U.S. National Security Strategy and U.S. actions in Venezuela, it is clear that Greenland, Denmark, and the European Union broadly are taking these unwanted overtures seriously[17]<\/a><\/sup>, particularly in the face of the imposition of new tariffs on eight European countries \u2014 Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland \u2014 for opposing American control of Greenland, beginning at 10 per cent on February 1 and increasing to 25 per cent in June. The U.S. risks triggering the collapse of North Atlantic Treaty Organization (\u201cNATO\u201d)[18]<\/a><\/sup> and the use of the EU\u2019s anti-coercion instrument, the so-called \u201ctrade bazooka\u201d, which could impose a broad array of actions, including blocking U.S. access to EU markets[19]<\/a><\/sup>.<\/p>\n The Trump administration\u2019s Greenland agenda is not without risk in the U.S., as seven in 10 U.S. adults disapprove of Trump using federal funds to try to purchase Greenland[20]<\/a><\/sup> and 86 per cent disapprove of using force to obtain the territory[21]<\/a><\/sup>.<\/p>\n It remains unclear however, whether escalating U.S. interest is purely related to security concerns, or whether it is punishment for President Trump\u2019s failure to win the Nobel Peace Prize.[22]<\/a><\/sup> One can only hope that as the political realities of the upcoming mid-term U.S. elections become more pronounced, rhetoric from the Trump Administration relating to Greenland will ebb.<\/p>\n Canada and the EU Respond<\/b><\/p>\n Perhaps in recognition that \u201chope\u201d is not a strategy, Canada and its European allies are continuing to pursue global partnerships and trading relationships, demonstrating their continued agency in these matters and negotiating around the edicts promulgated in the 2025 U.S. National Security Strategy. On January 17, 2026 the European Union and Mercosur[23]<\/a><\/sup> ended 25-years of negotiation by signing a Partnership Agreement (\u201cEMPA\u201d) and Interim Trade Agreement creating one of the world\u2019s biggest free-trade zones[24]<\/a><\/sup> and Prime Minister Carney continues to advance new strategic partnerships with China[25]<\/a><\/sup>, Qatar[26]<\/a><\/sup>, and Saudi Arabia[27]<\/a><\/sup> to position Canada in the \u201cworld as it is, not as we wish it\u201d[28]<\/a><\/sup>.<\/p>\n At the time of writing this editorial, Prime Minister Carney is in Davos, delivering what is being reported as a \u201cprovocative speech\u201d[29]<\/a><\/sup>; \u201camounting to a rallying cry for smaller counties to work together to wrestle economic control of their future\u201d[30]<\/a><\/sup>. The Prime Minister\u2019s remarks[31]<\/a><\/sup> clearly set out the imperative of the moment and Canada\u2019s path for the future. An adverse reaction by the Trump Administration at some point in the coming days or weeks does, however, remains a real risk.<\/p>\n BUMPER CARS AT HOME<\/strong><\/p>\n The question is, of course, whether the Canadian federation is institutionally flexible enough and the players therein are sufficiently motivated to make our experiment in co-operative federalism work for the benefit of all Canadians, sooner rather than later.<\/p>\n There have been positive developments that point to a spirit of greater willingness to cooperate. On November 27, the governments of Canada and Alberta signed a Memorandum of Understanding (\u201cMOU\u201d)[32]<\/a><\/sup> to work cooperatively, and within their own jurisdictions, striking a new partnership to lower emissions, unlock natural resources, and build a stronger, more sustainable, and more competitive economy[33]<\/a><\/sup>. In addition, Ontario and Canada have signed a new cooperation \u201cagreement that will significantly streamline environmental approvals for major infrastructure and resource projects through a \u2018one project, one decision\u2019 model\u201d[34]<\/a><\/sup>. Ontario has now joined the ranks of British Columbia, Manitoba, Prince Edward Island, and New Brunswick, all of whom have signed similar agreements. Cooperation agreements with Quebec, Newfoundland and Labrador, Nova Scotia, Saskatchewan, Alberta, and Yukon remain in discussion[35]<\/a><\/sup>.<\/p>\n The effort to build interprovincial energy infrastructure, particularly an oil pipeline to northwestern B.C. continues to face significant challenges, not withstanding the positive narrative surrounding the Canada-Alberta MOU, including:<\/p>\n Domestic challenges aside, there is new pressure to speed up major project approvals following the Trump Administration\u2019s actions in Venezuela, as argued by Alberta Premier Danielle Smith in her letter to the Prime Minister posted to social media on January 8, 2026[42]<\/a><\/sup>. Premier Smith reiterated the need for a new one million barrel per day oil pipeline to Canada\u2019s pacific coast and the expansion of the Trans Mountain pipeline, and insisted that the approval process be shortened ever further to six months from application. Even with the tepid reaction[43]<\/a><\/sup> from the major oil producers to President Trump\u2019s request for at least US$100 billion in spending for Venezuela and aggressive efforts to bolster production[44]<\/a><\/sup>, oil and gas analysts at BMO Capital Markets suggest that any material increase in production from Venezuela that makes its way to the United States would likely push Canadian oil sands production out of the Gulf Coast market (Petroleum Administration Defense District 3), requiring additional pipeline capacity to access Asian markets[45]<\/a><\/sup>.<\/p>\n THIS EDITION<\/strong><\/p>\n It is tradition that the first issue of ERQ of each year include a review of the developments in administrative law relevant to the energy bar and regulators. This year is no exception, and we are pleased to once again present as a Regular Feature the \u201c2025 Developments in Administrative Law Relevant to Energy Law and Regulation\u201d by Paul Daly, University Research Chair in Administrative Law & Governance, University of Ottawa. This year\u2019s edition covers three key areas: (1) extension of the Vavilov<\/i> framework to cover areas of administrative decision-making that were not yet subject to the \u201cculture of justification\u201d; (2) recent cases on the correctness review; and (3) cases relating to aspects of procedural fairness, including bias and adjudicative independence.<\/p>\n The remainder of the articles from our contributing authors in this issue of ERQ have a decidedly electricity grid focus.<\/p>\n The first is an article by David Morton, former Chair and CEO of the British Columbia Utilities Commission and Advisory Board Member of the Canadian Energy Reliability Council, entitled: \u201cInterprovincial Cooperation and Energy Reliability\u201d. Morton explores the governance and institutional structures needed in Canada to enable the movement of electric power east – west by looking at the Alberta experience, analyzing the Canadian federal jurisdiction over international and interprovincial power lines, and reflecting on the evolution of the U.S. Federal Energy Regulatory Commission\u2019s jurisdiction over interstate transmission, wholesale energy markets, and reliability. Morton concludes that the challenge of interprovincial cooperation is less about electrons than about institutions and trust and that Canada\u2019s energy future depends on the development of a rules-based partnership between provinces.<\/p>\n David Brown, Professor of Economics at the University of Alberta and Canada Research Chair in Energy Economics and Policy, outlines several key elements of ongoing electricity market reforms in Alberta, in his article: \u201cSimplified Versus Integrated Market Designs: A Review of Alberta\u2019s Evolving Electricity Market\u201d. Brown begins by describing Alberta\u2019s existing market design, how it developed growing pains over time, and explores approaches used in other jurisdictions to mitigate these challenges. Brown uses the experience and empirical evidence from jurisdictions worldwide to highlight the trade-offs being made in Alberta\u2019s final proposed Restructured Energy Market (REM), particularly as it relates to the short-run operation of the electricity market. How the proposed REM interacts with long-run resource adequacy objectives is also discussed, before Brown concludes with the parting thought that time will tell whether the design choices in the proposed REM will lead to additional required market reforms in the future.<\/p>\n Brady Yauch, Director, Markets and Regulatory, and Brendan Callery, Senior Manager Eastern Canada, both of Power Advisory LLC, discuss the arrival of the electricity Market Renewal Program in Ontario on May 1, 2025 in their article: \u201cBreaking Up is Hard to Do: Ontario\u2019s Transition to a New Market Design\u201d. Yauch and Callery first discuss five of the well-understood and well-known deficiencies of the legacy market in Ontario that dated back to market opening in 2002, before discussing four key overarching design components that are central to the overhaul of the renewed market. Yauch and Callery highlight the expected financial benefits associated with improving the economic efficiency of the IESO-administered market and note that the market design of the Market Renewal Program broadly aligns with the design of markets across North America, particularly in New York, New England and the mid-western to eastern United States. The authors provide a detailed assessment of energy market performance for the more than six months the renewed market has been in operation, before closing with the thought that the impact of Ontario\u2019s changing electricity supply\/demand balance may lead to amplified price impacts that are independent of the renewed market design.<\/p>\n The article: \u201cRegulatory Questions for Grid Modernization\u201d by Kenneth Costello, former regulator with the Illinois Commerce Commission and researcher at the U.S. National Regulatory Institute, continues the focus on electricity grids, albeit at the distribution level. Costello postulates that robust support for grid modernization from diverse interests should not presume its social desirability and net benefits to utility customers. Utility regulators should perform their due diligence to determine whether grid modernization investments are good for customers and society in general. Costello sets out nine critical questions that regulators should ask when considering grid modernization investments. The article then concludes with a brief overview of three key challenges regulators must overcome when considering grid modernization: information asymmetry, risk allocation, and the consequences for cost allocation and rate design.<\/p>\n The final article in the electricity grid theme, \u201cBeyond Queue Seniority: Customer-Centric Solutions for Interconnection Scarcity\u201d by Travis Kavulla, Head of Policy, Base Power Company, and Kevin Thompson, Regulatory Affairs Manager at NRG Energy, addresses the issue of congestion on the grid given that transmission capacity is become scarce. Whether it is the growth in renewables or the arrival of data centres, the era of abundant transmission capacity is over. The old system of \u201cfirst-in-time, first-in-right\u201d doesn\u2019t seem to be working anymore. The article examines how American and Canadian jurisdictions have been approaching the question and then proposes a market-based approach to solving the allocation of transmission capacity.<\/p>\n We conclude this issue with a book review of Bruce McIvor\u2019s latest book \u201cIndigenous Rights in One Minute: What you need to know to talk reconciliation\u201d. University of Alberta Faculty of Law Professor Tamara (Baldhead) Pearl reviews the book and provides an excellent context for the reader to situate McIvor\u2019s book in modern day aboriginal law. The book review not only provides a useful overview of the book, it also provides Professor Pearl\u2019s professional and personal insights on the state of law affecting Indigenous rights in Canada.<\/p>\n <\/p>\n <\/p>\n <\/p>\n<\/div>\n 1<\/a><\/sup> Gisela Grieger, European Union, Parliamentary Research, \u201cThe 2025 US National Security Strategy\u201d, PE 779.261 (December 2025).<\/p>\n<\/div>\n<\/li>\n 2<\/a><\/sup> Vina Nadjibulla, \u201cWhat Trump\u2019s New National Security Strategy Means for Canada\u2019s China Policy and Indo-Pacific Engagement\u201d (8 December 2025) Asia Pacific Foundation of Canada, online: <asiapacific.ca\/publication\/what-trumps-new-national-security-strategy-means-for-canada<\/a>>.<\/p>\n<\/div>\n<\/li>\n 3<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 4<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 5<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 6<\/a><\/sup> Emily Harding, \u201cThe National Security Strategy: The Good, the Not So Great, and the Alarm Bells\u201d (5 December 2025) Center for Strategic International Studies, online: <csis.org\/analysis\/national-security-strategy-good-not-so-great-and-alarm-bells<\/a>>.<\/p>\n<\/div>\n<\/li>\n 7<\/a><\/sup> Ben Finely, Konstantin Toropin & Regina Garcia Cano, \u201cA timeline of U.S. military excalation against Venezuela leading to Maduro\u2019s capture\u201d (3 January 2026) PBS News, online: <pbs.org\/newshour\/world\/a-timeline-of-u-s-military-escalation-against-venezuela-leading-to-maduros-capture<\/a>>.<\/p>\n<\/div>\n<\/li>\n 8<\/a><\/sup> \u201cUnited States strikes on alleged drug traffickers during Operation Southern Spear\u201d (last visited 21 February 2026) Wikipedia, online: <en.wikipedia.org\/wiki\/United_States_strikes_on_alleged_drug_traffickers_during_Operation_Southern_Spear<\/a>>.<\/p>\n<\/div>\n<\/li>\n 9<\/a><\/sup> Christiaan Triebert, Nicholas Nehamas & John Ismay, \u201cU.S. Forces Seize Sixth Oil Tanker Linked to Venezuela\u201d (15 January 2026) The New York Times<\/em>, online: <nytimes.com\/2026\/01\/15\/us\/politics\/oil-tanker-seized-venezuela.html<\/a>>.<\/p>\n<\/div>\n<\/li>\n 10<\/a><\/sup> JURIST Staff, \u201cThe Charges Against Nicol\u00e1s Maduro: What the Indictment Alleges\u201d, JURISTnews<\/em> (5 January 2026), online (blog): <jurist.org\/features\/2026\/01\/05\/the-charges-against-nicolas-maduro-what-the-indictment-alleges<\/a>>.<\/p>\n<\/div>\n<\/li>\n 11<\/a><\/sup> Kayla Epstein & Osmond Chia, \u201cTrump says Venezuela will be \u2018turning over\u2019 up to 50 million barrels of oil to US\u201d BBC<\/em> (7 January 2026), online: <bbc.com\/news\/articles\/c4grxzxjjd8o<\/a>>.<\/p>\n<\/div>\n<\/li>\n 12<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 13<\/a><\/sup> Natalie Sherman, \u201cTrump seeks $100bn for Venezuela oil, but Exxon boss says country \u2018uninvestable\u2019\u201d BBC<\/em> (10 January 2026), online <bbc.com\/news\/articles\/c205dx61x76o<\/a>>.<\/p>\n<\/div>\n<\/li>\n 14<\/a><\/sup> Supra<\/em> note 11.<\/p>\n<\/div>\n<\/li>\n 15<\/a><\/sup> Avery Lotz, \u201cTrump\u2019s Greenland threats leave allies sweating: How we got here\u201d AXIOS<\/em> (7 January 2026), online: <axios.com\/2026\/01\/07\/trump-greenland-denmark-threats-timeline<\/a>>.<\/p>\n<\/div>\n<\/li>\n 16<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 17<\/a><\/sup> \u201cIn their words: European governments criticize Trump\u2019s tariff threats over Greenland\u201d The Associated Press<\/em> (18 January 2026), online: <apnews.com\/article\/greenland-denmark-trump-europe-reaction-57db561ff97b038fef951cd9770b5a74<\/a>>.<\/p>\n<\/div>\n<\/li>\n 18<\/a><\/sup> Avery Lotz, \u201cTrump defiant as NATO rages over Greenland \u201cblackmail\u201d tariffs\u201d AXIOS<\/em> (19 January 2026), online: <axios.com\/2026\/01\/19\/trump-greenland-nato-tariffs-europe-denmark-norway<\/a>>.<\/p>\n<\/div>\n<\/li>\n 19<\/a><\/sup> Auzinea Bacon, \u201cTrump has tariffs. Europe has a \u2018trade bazooka.\u2019 This Greenland standoff could get ugly, fast\u201d CNN<\/em> (19 January 2026), online: <cnn.com\/2026\/01\/18\/business\/europe-greenland-trump-tariffs-trade<\/a>>.<\/p>\n<\/div>\n<\/li>\n 20<\/a><\/sup> Anthony Salvanto et al, \u201cCBS News poll finds more Americans say ICE being too tough; Republicans feel protesters have gone too far\u201d CBS News<\/em> (18 January 2026), online: <cbsnews.com\/news\/ice-trump-greenland-trump-poll<\/a>>.<\/p>\n<\/div>\n<\/li>\n 21<\/a><\/sup> Ibid<\/em>.<\/p>\n<\/div>\n<\/li>\n 22<\/a><\/sup> Aamer Madhani, Geir Moulson & Emma Burrows, \u201cTrump ties his stance on Greenland to not getting Nobel Peace Prize\u201d The Associated Press<\/em> (20 January 2026) online: <apnews.com\/article\/greenland-denmark-us-trump-starmer-9b01eb577363ee6e913722fe3d40d68e<\/a>>.<\/p>\n<\/div>\n<\/li>\n\n
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