In an era when energy security has eclipsed environmental rhetoric, Canada stands at a strategic crossroads as an energy superpower. Its two largest trading partners are the United States, accounting for 76 percent of all export trade, and China, with four percent of all exports.
A strategic opportunity
The United States is the largest energy producer in the world, while China is the world's largest energy consumer and global emitter. The natural tension between these two superpowers has been underscored by U.S. military operations over the past four months. During the recent China-U.S. summit in Beijing, President Xi Jinping invoked the idea of the Thucydides Trap, an ancient historian's warning about Sparta and Athens that a rising power's challenge to an established one makes war almost impossible to avoid.
While Xi signalled a preference for cooperative competition, the backdrop is stark. In January, the American rendition of Nicolas Maduro put Venezuela, the country with the world's largest oil reserves, under American control. China depended on about 500,000 barrels a day of Venezuelan heavy crude. Within a week, that oil, representing four percent of Chinese seaborne supply, was headed to U.S. refineries. China planned to replace that supply with Iranian crude. Within two months, the U.S. Navy was overseeing a blockade of the Strait of Hormuz, through which China had been receiving over 7 million barrels a day from Iran and other Gulf nations. Within four months, half of China's seaborne energy supply was under U.S. Navy control.
China's energy vulnerability
China is self-sufficient in dozens of ways but is extremely vulnerable when it comes to the oil and gas that powers transportation, electricity, manufacturing, and industrial processes. It is an understatement to say that China is in the middle of an urgent search for diversified, dependable supply to reduce its energy vulnerability.
Canada is perfectly positioned to meet Chinese demand. It has vast reserves that exceed those of the U.S. and Russia, and its crude matches Venezuelan and Iranian chemistry almost perfectly, providing a seamless substitution into China's refining network. Geographic proximity via Pacific routes gives Canada a decisive edge over more distant, risky suppliers. Existing delivery models like the Trans Mountain Expansion (TMX) and the already-blueprinted Northern Gateway pipeline can deliver nearly 450,000 barrels a day to Asian markets. Increasing these exports could replace China's entire Venezuelan supply without relying on risky maritime chokepoints.
Economic and geopolitical benefits
Domestically, a West Coast pipeline of this scale would generate billions in annual revenue at current prices, create thousands of direct and indirect jobs, and deliver billions in federal and provincial taxes. But this is more than just an economic opportunity. In an era of global great power competition over energy security, Canadian pipelines are strategic geopolitical assets. Energy infrastructure can confer trade and economic hard power as Canada forges long-term, contract-based energy ties with China that compete directly with Russia, diversify its dependency on the U.S., and reduce global exposure to maritime chokepoints.
Canada has proven Asia Pacific demand with the Trans Mountain pipeline TMX, which tripled throughput to 890,000 barrels a day in 2024. In addition to its own economic impact, the diversified market focus on Asia also narrowed Western Canadian Select price discounts and dramatically increased non-U.S. export volumes, adding billions to the Canadian economy from trade and pricing leverage.
Alliance and independence
In the contest of wills between the U.S. and China, Canada is obviously allied with the Americans. But a pipeline supporting Chinese energy security spells out a powerful alliance between two close friends, not servility. Canada has the freedom, and the economic imperative for its own stability, to build global market access to Asian and European markets that need its energy.
