U.S.-Canada Energy Trade: Set for a Rebound
October 21, 2021
Canada is critical to U.S. energy security, and the United States is Canada’s essential export market. Few countries have such closely integrated energy systems. Canada is the largest source of U.S. crude oil, petroleum products, and natural gas imports, and at least 70 crude and natural gas pipelines cross the border. Bilateral energy trade fell by nearly 40 percent last year to $85 billion due to the economic downturn in both countries, but higher consumption and energy prices will lead to a rebound this year.
Hydrocarbons account for most of the trade value. The United States imported 3.6 million barrels per day (b/d) of crude from Canada last year (61 percent of its total imports)—compared with 815,000 b/d from all of the Organization of the Petroleum Exporting Countries (OPEC) states combined. Canada is a key source of crude for refineries in the Midwest region; its energy trade with Illinois is nearly double its energy trade with Texas. Canada also supplied 27 percent of U.S. petroleum product imports, mainly in New England and the Midwest. Bilateral gas trade between the two countries is also extensive, including both southern and northern flows. The United States imported 6.8 billion cubic feet per day (Bcf/d), mainly from Western Canada, while sending 2.5 Bcf/d north of the border.
Electricity trade is relatively small but has growth potential. The two countries traded 77 terawatt-hours in electricity last year, with Canadian exports accounting for 87 percent of this trade. Nearly two-thirds of electricity exports from Canada came from Ontario and Quebec, mainly from nuclear power and hydroelectricity in Ontario and hydroelectricity from Quebec that supplies the Northeast region. Despite the drop in overall energy trade last year, electricity trade rose by 11 percent due to robust hydroelectricity generation in Canada.
Looking ahead, the United States and Canada are partnering on efforts to decarbonize the electricity sector as both countries pursue net-zero targets. A National Renewable Energy Laboratory study this year suggested that Canadian hydroelectricity could help meet greater U.S. electricity load over the coming decades. Canadian hydroelectricity could help state governments meet their clean energy targets and could play an important role in helping to offset variable supply from wind and solar. But expanding electricity trade depends on building more transmission lines, and this has been challenging in recent years due to local opposition in New England.
The Center for Strategic and International Studies (CSIS) Energy Security and Climate Change Program partnered with the Embassy of Canada in the United States to produce this map depicting energy trade between the two countries. The map illustrates the total energy trade for each U.S. state and Canadian province, broken down by imports and exports for various commodities. A timeline shows significant milestones in the U.S.-Canada energy trade relationship, including international agreements that have bolstered trade and energy connections. CSIS has updated this map annually since 2018.
Ben Cahill is a senior fellow with the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.