When it comes to energy, we consider ourselves realists, not zealots. While we look forward to the day when renewable energy can overcome intermittency and stand on its own in the marketplace, we believe that fossil fuels will continue to play a crucial role in providing energy for decades to come.

Unfortunately, too many Canadian policymakers like to pretend that the clean-energy future has already arrived, while paradoxically treating the country’s oil-and-gas industry like the goose that laid the golden egg.

During the energy boom, the illusion of the former could comfortably coexist with the latter. High energy prices helped make renewable energy more competitive with fossil fuels. And all the money sloshing around in the energy sector meant companies could afford to placate policymakers’ numerous demands.

These days, however, the tables have turned. Politicians who thought they had the luxury of time to extract maximum concessions from energy players are learning some hard truths about the business cycle.

Toward the end of September, the Canadian government finally approved the C$36 billion Pacific NorthWest liquefied natural gas project after three years of review. But it came with 190 conditions attached at a time when such projects are getting cancelled by their sponsors left and right as the global energy sector continues working through its crash.

Perhaps the approval was merely a way for the government to appear like it’s doing something when it would prefer to do nothing. After all, it’s pretty clear that in this environment the project’s chief stakeholder, Indonesian state-owned energy giant Petronas, would probably end up shelving it.

Indeed, a couple days later, it was reported that Petronas is considering selling its stake in the project, though it’s more likely that Pacific NorthWest gets put on indefinite hiatus.

As we noted in this column last month, the fact that Canada failed to diversify its export markets during the energy boom has created existential conditions for the country’s gas producers during the bust.

To recap, Canadian gas producers are now in the awkward position of competing for domestic market share against U.S. producers in the advantageously situated Marcellus Shale formation.

Meanwhile, Canadian oil producers are also stuck with the U.S. as their sole export market, while contending with a lack of sufficient pipeline capacity to move their products there.

The latest glut has been exacerbated by the shutdown in the oil sands earlier this year due to the wildfires in Alberta. Since projects came back on line, there’s been a rapid buildup of supply.

Given pipeline constraints, the industry is expected to move more crude by rail in the months ahead. Before the wildfires, Canada was moving 109,00 barrels per day by train to the U.S.

As we’ve observed previously, if there’s demand for a commodity, it will find its way to market. And the volume of oil being moved by trains is the environmentally unfriendly consequence of the U.S. government’s rejection of the Keystone XL pipeline for being, yes, environmentally unfriendly.

The Treacherous Three

For its part, the Canadian government has stalled on several key projects that would help move land-locked crude to overseas markets, including Enbridge Inc.’s (TSX: ENB, NYSE: ENB) Northern Gateway pipeline, Kinder Morgan Inc.’s (NYSE: KMI) Trans-Mountain pipeline, and TransCanada Corp.’s (TSX: TRP, NYSE: TRP) Energy East pipeline.

The federal government’s approval of the C$7.9 billion Northern Gateway project, which would move crude to Canada’s West Coast, was overturned during the summer by the Federal Court of Appeal due to a lack of consultation with aboriginal groups.

Since then, Enbridge and the federal government have indicated that they intend to continue pursuing the consultation process, though the next stage is ill-defined, and no one seems to know when it might lead to an approval.

The C$15.7 billion Energy East project, which would move crude to Canada’s East Coast, is embroiled in a similarly contentious regulatory process. Allegations of conflicts of interest arose when media reports suggested that TransCanada lobbyists had met with members of the government’s regulatory-review panel. Consequently, the regulatory process was adjourned until a new panel can be appointed.

In theory, the C$6.8 billion Trans-Mountain pipeline, which involves the twinning of a longstanding pipeline along mostly existing rights of way, wouldn’t be all that controversial. But it, too, is taking heat from environmental groups and aboriginals.

The Liberal government has said it plans to approve one crude pipeline before the country’s next election in 2019. Gee, thanks.

Among the aforementioned trio, the most likely candidate is rumored to be the Trans-Mountain pipeline.

The government is balancing economic considerations against political ones.

As a political party, the Liberals face significant competition from the left-leaning New Democratic Party, and they’re wary of alienating core constituencies among environmentalists, as well as in key provinces, such as British Columbia.

On the economic front, the country was already suffering from slow growth even before the tumult in the energy sector. A resurgent oil and gas industry would go a long way toward improving Canada’s fortunes.

To that end, it would be helpful if the current government demonstrated its seriousness by shepherding more than one viable energy export project to final approval.

If no one in the current government is willing to be an adult, then perhaps financial considerations will eventually force them to be.