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Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 297 of the Energy Talks podcast. I'm energy and climate journalist, Marcum Hislop. My guest today is Heather doctor Exner Perot, senior fellow and director of natural resources, energy, and environment for the Macdonald Laurier Institute, a national public policy think tank based in Ottawa. And for those non Canadian listeners, that's Canada's capital national capital. Heather and I have been arguing about energy policy on social media for a long time, politely, of course, but sometimes quite vigorously, and I thought it was time for an extended conversation about the global energy transition and Canada's role in the energy system of the future.
Markham:So welcome to Energy Talks, Heather.
Heather:Delighted to be here, Markham.
Markham:Well, look. I'm delighted to have you. And you and I as I said, you and I have been disagreeing for a long time, and and you're joining us now from Calgary, which is my favorite city, I have to say. I lived there for many years. And, you have put in the order for good weather for me when I arrive next week.
Markham:Is that correct? Oh,
Heather:there's always great weather in Calgary in the spring. Can't miss.
Markham:Yes. That is true. I I can vouch for that. I can vouch for that. One of the things I wanted to get out of the way right away, Heather, is the is your CV.
Markham:And I have a lot of respect for experts. People who have put in the time and effort to, not only on the education side, but put in the the research time to understand the data, to understand the evidence. You know, I've got a lot of time for that, and you've done that. So give us and and the listeners, a little peek into your background.
Heather:Okay. Thanks for the question. Thanks for having me. So so I do have a PhD in political science from the University of Calgary. I'm from Saskatchewan, born and raised Saskatchewan, and lived there most of my life.
Heather:Just moved back to Calgary a couple years ago. And so I still consider myself a Saskatchewan girl. And how I came into all this and my angle on political science. I always say this, back in the nineties when you're my age and and a liberal arts, you know, white girl student, you went into international development. That's how you're gonna save the world.
Heather:Now a girl like me would go into climate change. And so I still still see the world and my work through a lens of development. And so and so, really, I started with indigenous development, then it was Arctic development. I really did my PhD more in Arctic development and Northern development, and that was always resource development. Those three things really at the end of the day was resource development.
Heather:And I was working at the University of Saskatchewan after my PhD at the International Centre For Northern Gardens Development, and Cameco was a big sponsor of it, sponsored a lot of the Northern Saskatchewan residents to take this distance master's program we had. And that was the first time in my life that I saw the positive influence of the resource sector on indigenous communities, on indigenous development, and how much faster and how much more meaningful the private sector could be than the government, which I've studied for decades also. And that's what makes a person a a free market libertarian, is to study indigenous development for 2 decades. I'll tell you that much. So that's how I came into the resource world.
Heather:Really was more on the mining side. Until about 5 years ago, I started to do more work for some of the oil and gas producing indigenous nations. Also working on the Arctic that was, you know, oil and gas development, green pieces, you know, you know, kind of oil campaign in the Arctic stopping Shell. That triggered again the, I would say, the dichotomy between environmental protection and economic development and where those two align and also where do indigenous people see themselves aligning on those 2. So just seeing all the shades of gray.
Heather:And so now since I started with the McDonoughrie Institute, that was really, you know, Russia invaded Ukraine and all of a sudden energy security, commodities, all those things. There was so much more demand, critical minerals. And so that's when I started there as the director of, energy resources environment, and that's since that's when we started our Twitter our Twitter discussion forum where I've been focusing on that. But I'd still say, like, my peer reviewed research with focusing on Arctic and indigenous development. I'm also a global fellow at the Wilson Centre, and I sit on a few indigenous and rural boards also.
Markham:Well, I'm fascinated to know that you're a fellow alumni of the University of Saskatchewan.
Heather:Yes. Did my undergrad there.
Markham:You were you were probably in short pants while I was doing my my BA and my MA there, But, nevertheless, that I it's, the University of Saskatchewan, for those who have never been there, is one of the most beautiful campuses in in all of Canada. It is in the fall when all the, the trees are out, the the Manitoba Maples and around the bowl. It is a and and all of the the old buildings are made of sandstone. Mhmm. And they're absolutely gorgeous, and I I have very fond memories of my of my time there as I'm sure you do.
Heather:Yeah. I really, you know, was I just thought all universities looked that way because in the movies, they look like what U of S looks like. And then my master's at Memorial and my PhD at Calgary, which were, you know, established in the sixties, kind of the worst architectural era. So I became quickly aware that not every campus is as beautiful as U of S.
Markham:Yes. I've I've been on Calgary's campus a number of times, recently, and, yeah, can't hold a candle to good old Saskatoon. Well, let let's get into the issues here. And one of the we're gonna start off with liquid, with LNG, liquid, natural gas. And you have been a proponent of further development on Canada's West Coast.
Markham:We've got, the $40,000,000,000 LNG Canada, which is led by by Shell, and there are some other partners in that project. We have some smaller ones like Wood Fiber, that is being built, just north of Squamish, and we have a long list of projects that have been approved but don't have a final investment decision yet. You've argued that the federal government is getting in the way, that has slowed down. I argue that the economics simply aren't there. So let's but let's start with your argument.
Heather:Okay. Okay. For me so exporting why are we exporting natural gas? You know? And your viewers and you'll be aware of it.
Heather:Because of the Shell revolution. Because of the technological innovation of fracking and horizontal drilling that unleashed tremendous amounts of natural gas in North America, more than we could have here, and actually made it economic to ship overseas, to actually liquefy it at scale and create a global market for natural gas. And so that's why we're here because North America is flooded with with cheap natural gas. And so we do wanna get it off of the continent into the hands of our allies. Most of our allies are energy importing.
Heather:South Korea, Japan, most of Europe, these are energy importers. They import oil, and they also, you know, are not self sufficient natural gas would like to have that. And so for me, the economic case is a no brainer. Globally, we've seen tremendous growth. United States went from 2015 of not exporting any, liquid financial gas to being the world's biggest exporter.
Heather:Australia, Qatar have grown. For the for Canada itself, it's, you know, taking what is a very cheap feedstock, cheapest the AECO price is the cheapest natural gas price in the world, and getting it off off our continent to to markets where they would pay meaningfully amounts more. Very good for indigenous development, has had great deals on the pipeline, great deals on the LNG export, great deals on the production. Very involved there. And then I'll say the environmental case, there's been nothing in the world in the last 40 years that has done more for reducing emissions than coal to gas switching.
Heather:And we all know Europe still depends to some extent on coal, but in particular, Asia is still growing significantly. Their coal for, for electricity production, if we could displace some of that, not only would that displace some emissions, but also the health hazards that you get from coal of the particulates. And that natural gas is clean burning, a far superior, feedstock, a far superior source. And so as much as we get into the hands of our allies, we absolutely should.
Markham:US Gulf Coast, just as an example. So at Kitimat, basically, on the West Coast of BC, you had no LNG development. Kitimat had an aluminum, smelter, if I remember correctly. It had some industry, but it didn't have the kind of development that you see in Texas, Louisiana along the Gulf Coast, and what that does is it inflates the capital cost. And in fact, I spoke to one expert, an economist, who estimated them at, two times the US, Gulf Coast cost.
Markham:Now that's offset to some extent by lower operating costs because liquefying natural gas in a colder climate lowers your costs. That and then the problem the issue becomes transportation, getting it to to market. What does that cost? So the proponents like yourself have argued that when you shake everything out, Canada actually does have an economic l n g potentially economic LNG argument. And I saw, for instance, for example, I did an interview with someone who I whose name escapes me right at the moment, but we talked about, Wood Mackenzie's estimates.
Markham:And they estimate that would that Canadian LNG is is mid range. It's not Qatar. It's not the US Gulf Coast. It's about $9 $9.50 compared to the high cost like Russia, for example, which is 17 or $18. So on the face of it, there seems to be a case.
Markham:But then and I and I have to qualify this comment because I hate off the record or background, interviews or comments. And I get them all the time because people in the industry, in the oil and gas industry, don't wanna go on the record because if they're critical, they think that it's going to and I think with some justification, it's going to limit their job opportunities, and they may, in fact, you know, not have a job afterwards. But, anyway, on this in this weekend, a fellow who works in the LNG industry, is in a position to know, came on and said, look. You know what? At $8, $10, l Canadian LNG isn't even close to being economic.
Markham:This is why we're not seeing final investment decisions in all of these projects. It's not all the federal government. There are serious economic problems issues with these. So if we can just take that at face value, and it's not a I can't cite the source, but I bring it up as as one of the as kind of further proof for argument against putting a lot of emphasis on LNG in the West Coast.
Heather:Well, you don't have to be the cheapest producer to make money off of commodity, Mark, and as you know very well. We don't have to compete on oil with Saudi Arabia. We just have to produce it at less than what a buyer is willing to pay for it. So I think, you know, Saudi Arabia can produce oil for $15 a barrel. Canada can boost it for 45.
Heather:The market right now is for $85. We don't need to we we just there is a market for the barrel that we can sell at that price. At 8 or $9, there is a market for LNG. And then you can look at what the prices in Asia are, and it is a little bit volatile. But I think they're 14, $15 for, for it right now.
Heather:And and it goes up as high as 20, $22. So there is absolutely a business case. You can make money selling Canadian LNG to Asian markets at the price that they're willing to buy it today. And that is why LNG Canada went forward. That is why cedar LNG will probably have an FID in the next couple months.
Heather:They are moving through the process. You know, there's some things you need need to get in place for the investors, and they are doing that. It is moving forward. Now we should also think about getting the cost down. One of the reasons why the Canadian costs are higher than Gulf of Mexico, is because of our suffocating regulatory system and and the burdens that we put on producers.
Heather:And we just saw the world's most expensive pipeline in human history built in BC, you know, going from Alberta to BC with TMX. TGL also cost overruns out of 1,000,000,000 of dollars. So improving the regulatory burden so that producers can produce at a cheaper and be more competitive globally, well, that should be a focus. It shouldn't be like, oh, we just can't compete. Why don't we work on reducing costs, making our system more competitive so that we can be that provider?
Markham:2 points. First of all, back in 2018, the Canadian Energy, Research Institute, Resources Institute? Anyway, Siri, did a study comparing regulatory burdens and costs in the US and Canada. And what it found is that, for example, for pipelines, the costs, were not that much higher. They were longer, and the reason is Aboriginal consultation.
Markham:That is not in the American constitution. It is in the Canadian constitution. It cannot be avoided. And that added a tremendous amount of cost and delay to the Trans Mountain expansion, which is the pipeline you were referring to. It also was a big problem for Coastal GasLink, which is the pipeline that supplies LNG Canada.
Markham:It is just a fact of life in Canada. It's a constitutional issue, and unless another government wants to open up the constitution for change, it's the environment in which oil and gas companies and LNG companies have to operate. That is just the fact of life here. Now the other issue I wanted to take the other argue part of your argument I want to take issue with is what's going on in Asia and in the global, gas markets in general. And I'll start with just a general, comment, which is I had, Anne Sophie, Courbeau, who is, with Columbia University, but also used to be the head of BP's, gas department.
Markham:And she said, look. Yes. We're having a big supply, and, yes, there's gonna be some increase in demand for gas. But she said sometime in the 20 thirties, and my my I recall correctly was, like, mid 20 thirties, she said it's gonna peak, and we're gonna have a decline after that because of electrification, and we're not going to see as much demand in the emerging economies like Africa and Latin America as many people think. And she said, that's where we're going.
Markham:And and then if you look at the International Energy Agency, it's, APS scenario calls for gas and LNG to peak in 2030 and then decline thereafter. So if I'm an investor looking at an FID in a Canadian LNG plant, Yeah. Sure. At $8.10 you know, 8 to $10, now it's we're economic, but that's not the question. The question is, am I economic when I get the plant built, and do I get to recover, you know, 20 or 30 years of economic, activity where I can recoup my investment?
Markham:And that's the problem here. It's not the short term. Everybody knows you can make money at today's prices. It's tomorrow's prices. It's it's the 20, 30 prices that, is a major uncertainty and, really, a crippling issue for LNG development.
Markham:And it's not so much the regulation. It is essentially the market and where the market is going.
Heather:So let me address all three of those, Mark. So well, I'll start with the last one first. First of all, you know, BP also said that we would have peak oil demand in 2019. Sometimes these guys get it wrong. I am not an investor.
Heather:I am not a forecaster, but what I say is if I was the Canadian government or the BC government, let investors take that risk. Why do you care about a stranded asset? It's creating jobs. It's creating royalties in your province, in your in your country today. So why would I why would I prevent they're assuming the risk.
Heather:They've done the risk analysis. I don't know better than them. Let them make the risk. The other thing is is population growth. So we know that the world the population will not peak in the 2030s.
Heather:It'll probably peak in the 20 fifties. We know that almost all of that population growth is gonna come in in Asia and that northwest coast of BC is is perfectly situated to meet the markets in Asia. There are no Straits of Malacca. There are no Panama Canals. It's a straight shot where it's pretty darn, you know, safe from a geopolitical perspective right over to Asia where the markets and the money is and where the population growth is occurring.
Heather:So I would just say, let let the companies worry about the risk and the and if they're gonna have stranded assets, there's no reason for government to worry about that for them. Then I wanna talk about the American regulatory context. It is it is it's there's an American regulatory context and a Texas regulatory context. And we can all agree. I think, yeah, the American one is a much better if you're looking at California or Northeast United States.
Heather:They have a real problem developing pipelines. Why the Texas just you know, imagine if Alberta had coast. Imagine how much oil we would be exporting in natural gas if we had I always I always joke that it's imagine if Texas was landlocked and had to go through California. Of course, the situation would be different. That's actually the situation Alberta's in.
Heather:But but Texas has moved so fast on this. And I would say, you know, Texas and Qatar are going full steam ahead, and they're developing, and they wanna develop more. So they are not seeing this investment risk in the 2030s. Then the last thing I just wanna get to quickly is the indigenous consultation. We the oil and gas industry was not good at this for many decades, and they didn't need to be until the duty to consult.
Heather:Supreme Court affirmed the duty to consult in 2004. And then it was a real problem and has been a real problem. But guess what? Now they're getting really good at indigenous consultation and engagement. And that is why we are seeing pipelines are the areas where we can see the big equity deals first.
Heather:First of all, it makes good economic sense for the indigenous communities because you're getting a long term contract. It acts like government revenues, very stable revenues. They can pay off the loans, the equity loans that they get to get it and get some revenues. But the oil and get there's there's not a sector maybe in the world, and I studied this stuff pretty closely, than oil and gas in Canada that has become more sophisticated in engaging and providing meaningful benefits to indigenous people. Not at all perfect, but I defy you to find a better sector in the world.
Markham:Well, what are the things that they while they may have become better, that's a subjective goalpost because in 2019, the, Supreme Court ruled against the Trans Mountain Expansion Project because it hadn't undertaken adequate consultation. Nevertheless, I I do wanna move on
Heather:to the government that hadn't, not the industry. That was government that hadn't been adequate.
Markham:I wanna move on because we literally could argue this all day, and and there are arguments on both sides, I'll acknowledge. So let's just move on. I wanna talk about the oil sands and pipelines and CCUS, carbon capture utilization and storage. And at some point early on in this discussion, we need to talk about the global energy transition. Because a lot of the arguments that you're making are based on essentially OPEC's slow energy transition narrative.
Markham:That's the one that came out of the World Petroleum Congress in September that was in Calgary. It was followed up a couple of months later by the World Oil Outlook 2045, which is from OPEC, and it's and one of the fascinating things about that document is they're very, very upfront about what their assumptions are. And their assumptions are that markets in in the emerging economies, and they don't think Asia so much as Africa, will continue, but this they I guess they call it the non OECD markets. So they say the OECD markets, like Canada and the US and European, they will electrify. But in the emerging markets, they will not.
Markham:They will stick with the fossil fuels because, the assumption is that electric technologies like wind and solar and electric vehicles and batteries and heat pumps and so on are not economic and have to be subsidized and supported by public policy. That's essentially the, OPEC's argument for the slow transition. It's been adopted wholesale by, premier Danielle Smith in the Alberta government. She's made that I interviewed her, but I asked her questions at the press conference back in September. She made it absolutely no bones about that.
Markham:That's where she she, has landed, and others in the this debate have, you know, like, the oil oil CEOs in Calgary have come down in the same space. The problem with that is that there are big, big problems with, OPEC's modeling. I could go through it in detail and explain where they've already made mistakes, like underestimating China, for example, underestimating cost declines and cost curves in some of those key technologies like batteries and electrification of electric transportation. So from my point of view, the International Energy Agency's announced policy scenario, the middle ground scenario between steps and net zero is is far more likely. And if you look at all of the forecast out into 2030 and 2040 in the APS scenario, they all suck for for LNG, for oil, for for the very, the hydrocarbon exports that we're talking about.
Markham:And the thing that bothers me here is not so much because you made the point. You know, modeling works and they they get it right sometimes, they don't get it right sometimes, and you have to wait and see how things, roll out. But the my point here and that is, what did mom tell us? Hope for the best, plan for the worst.
Heather:I agree with that.
Markham:In Calgary, in Alberta, they plan for the best and pretend the worst is never not even an option. And I argue that before we go out spending tens of $1,000,000,000 of of things like CCUS and building pipelines and and and, by the way, subsidizing, the electrification of LNG and other kind aspects of this. The story, we don't even do the basic modeling, and I know this for a fact because I talked to, natural resources minister Jonathan Wilkins' offices and environment minister Steven Gilbo's office. And I asked them very specifically, have you before you committed 1,000,000,000 of dollars in tax incentives for carbon capture for the oil sands industry, did you model the oil sands competitiveness in the 20 thirties? And they and the answer, after much dancing around, I might add, I never got a straight answer, but the answer was clearly no, they did not.
Markham:And so here we are as a as a country committing God knows how many tens of bill like, literally, the oil sands wants $50,000,000,000 from government to subsidize its CCUS. I have that on record from Cam, Cameron, Mark Cameron. No. Mark Cameron, VP at Pathways Alliance. They want $50,000,000,000 of public money to subsidize CCS, and we have not even done the basic modeling to know what the risk is for the public treasury.
Markham:This is the kind of public policy formulation that is an abomination, and we should start doing what the Americans do. The Americans model everything to death so that when a policymaker in whether it's in Washington or in in Sacramento or in in, oh goodness. Where is the tech capital of Texas?
Heather:Is it Houston, San Antonio? Can't remember.
Markham:Yeah. Yeah. It's probably San Antonio, I think. That's horrible. I I know this.
Markham:I just had a had a brain fart. Anyway, the point is when policymakers sit down to commit public money, they should do so with the most information at their disposal. You can't make there are no certainties here, but you should at least make informed decisions. And in Canada, both in Alberta and at the federal level, our our public policy making process stinks. And we're committing we're committing we're undertaking terrific risk with public dollars at a time during intense disruption in the global energy system.
Markham:And it is going to, in my opinion, come back and bite us squarely on the heine. So I'll turn it over to you.
Heather:So, of course, Markham, I disagree with everything you just said. So let me start it. I've seen modeling from S&P Global. I've seen modeling from EIA. So e I I've seen the the out to 2050, oil demand modeling from EIA, and it's and it, you know, may plateau, but it doesn't decline fast.
Heather:And how could it with the growing population? And then I've seen the s and p for the oil sands, what people know, and I know you surely know, Markham, is that it is unconventional. It's not conventional. And, conventionally, you need to drill and you know that you lose a lot. Right now in shale drilling, you you will get through with in your 1st year, you'll go through the 50% of your reserves, and it slowly declines after that.
Heather:The so the decline rate is very fast. In the oil sands, there's practically no decline. You just keep digging and digging and digging, and you could do that at the rate we're producing right now. I think, you know, 3 and a half will be soon 4,000,000 barrels. You can do that for centuries.
Heather:That is how big the reserve is. And so there's almost no decline rate in the oil sands. And so the and so the cost competitiveness in the future, you just know is gonna get better and better. Because if there was a a drop in in demand, it would come from conventional. Would not come from unconventional where you're already sunk you already have the the money and the capital invested, and you can just keep going for a pretty low cost.
Heather:So that's the oil sands, why they're competitive into the future, why they will will be closer to the last barrel than having to go explore and drill for new conventional.
Markham:I I'm gonna respond to that in just a moment just so
Heather:that our listeners know. Yeah. Keep that in your in your pocket. Where I see the most potential for Canadian oil, why we need to keep producing that oil sands, is because shale is now plateauing. And people do we appreciate United States went to the world's largest importer of oil, to the world's largest producer of oil in a very short amount of time, and they're just like, they're, you know, 20,000,000 barrels a day, you know, including all their all their liquids and gas and everything.
Heather:Just outrageous amount that they've been producing, but nothing lasts forever. It's nonrenewable resource. They are probably gonna plateau, cry in liquids. They've already plateaued, and they'll start to decline even as global demand keeps going up. So who is going to fill that gap?
Heather:It's gotta be Canadian. The other thing is that we will need hydrocarbons. Okay. I, you know, I want an energy transition. It will take some time.
Heather:But to get through all the internal combustion engines and light duty to get through all of it in heavy duty, that will take decades. It will absolutely a tractor that is bought today needs to last 30 years for that farmer that runs on diesel. And so it'll take decades to move remove all the stock to something else. And in that mean so we will need that gas and we'll need that oil for that, but we'll always need hydrocarbons for materials, for plastics, and for chemicals. We will always need it.
Heather:And, actually, heavy oil is pretty good. Already have refining capacity in United States that needs that quality of oil. We have growth that we're seeing. And and here is where we agree actually is bitumen beyond combustion, Markham, that you know that there are some material needs that you can produce. Carbon fiber, for example, with bitumen, it's a pretty good source for that.
Heather:Asphalt, if you're gonna move to all EVs, you're gonna need more asphalt because those are heavier vehicles. So there is going to be demand beyond the combustion, but regardless, you're gonna need demand for the combustion for the couple decades. And so if you care about the environment, I feel like if you're the liberals and you care about the environment, I make darn well sure that there is shovels in the if it's too late now because they took too long in the regulatory. They don't even have an approved carbon tax credit that you're so worried about. Haven't even approved it yet.
Heather:It's not even legislation. And now Paul Yea is gonna come in, and Trump's gonna come in, and COP 30 is gonna look very differently from COP 28. And if you cared about the environment, I would have those carbon capture projects shovels in the ground so fast, but here, we've been slow walking it. I just don't get it.
Markham:Okay. I'll I'll help you get it. I'm I'm happy to do that. First of all, the oil sands is not nearly as competitive as you would argue, and I will refer you to the, the, Canada Energy Regulators 2023 Canada futures, report, which comes out every year, and they did Not policies, and I interviewed the chief economist, and he made it very clear. He said, look.
Markham:If there are compliance costs as the world moves to toward net 0 and lowers its emissions, that will make a lot of the, the oil sands, production uneconomic. Because what you're we haven't talked about yet is just how emissions intense energy the oil sands, bitumen is. So there is an average of 68 kilograms of c 02 equivalent per barrel. That is the average, but the average disguises a lot of really, really high emissions. There are small inefficient, projects currently operating in Northern Alberta that have as much as a 160 kilograms of c 02 equivalent per barrel, which is the dirtiest oil on the planet.
Markham:It cannot bear the cost of compliance. It is not it has a smaller resource. It has poor resource, and this is the the another point that's poorly understood. Bitumen resources are the bitumen resource is not evenly distributed. Some of it is very good.
Markham:It has a low emissions intensity at as in its raw state, and some of it has a high emissions intensity. And these small inefficient projects really deserve to go. They are not they're just should not they when we talk about how compliance costs will squeeze out some of this production, that's the production that should be squeezed out. Now the more modern efficient ones, like some of the PFT in the mining side or the SAG d where, we're seeing solvent substitution and there are other things that can be done, that's that's fine. That can be competitive.
Markham:I don't have a problem with that. And on bitumen to beyond combustion, energy media has been on the record for 5 years that the, Alberta oil sands should be transitioned over time. We should build an advanced materials manufacturing industry in Alberta where you make carbon fiber out of bitumen, where you make asphalt binder, where you make activated carbon for for batteries. And over time, you build up a domestic demand for bitumen that will replace the demand for refineries that we currently have over time, over maybe 10, 20, but not 10, 20, over 20 or 30 years because that's how long it takes to make an industry and markets change. Now on the issue of demand for bitumen, there is 10 a half 1000000 barrels a day of heavy crude refining capacity in the world.
Markham:It is not going up. It's been stuck at 10 a half million for decades and since probably since the least the eighties. And 5,500,000 of that is in the United States. In the Midwest, pad 2, pad 3, Cat River. Anyway, in the Midwest, we basically own that market.
Markham:We've got some of the companies like Suncor already have their own refineries down there, and we own that market. In the US Gulf Coast, the competition is from Latin American producers, Brazil, Mexico, Ecuador, Venezuela when it was was producing, and we'll see where that that all goes. But, anyway, there is some we could probably hold our own in the US Gulf Coast. We have higher transportation costs. The, the other producers are all, nationally they're state owned oil companies, which have a history of supporting, you know, production even under the cost of cost of production.
Markham:There but it's very uncertain that we're going to be competitive in the US market long term. Gasoline, demand already peaked in 2017. They're talking about, diesel, which is used in freight a lot, peaking, in the very near future as transportation there begins to electrify. So I'm not saying that it will decline, but I'm saying that the oil sands, the modeling shows, and the data shows that the, bitumen is going to be in for a lot more competition than it has in the past, and costs right now, breakeven in West Texas Intermediate terms, are $32 to $45. And if you're at 45 bucks, everybody on the planet breaks even below $50.
Markham:So if you're at $45 a barrel in the oil sands, you're not competitive. You're barely hanging on by the skin of your teeth, and you're only doing it because oil demand right now is slowly growing. We're up to about a 104, 105,000,000 barrels a day. That if in my world, if you believe the IEA and the a a s, a p s scenario is gonna peak in 2030. And the wild card there, and I'm just gonna gloss over this a little bit because I think it's an important point that does need to be made.
Markham:China is the you and you I think you've underestimated China's impact on how it will electrify transportation by providing low cost EVs, how it is rolling out wind, but particularly solar in its domestic market, and it has so much overcapacity on the solar panel module market or module, manufacturing already, which will move into some of these emerging economies. It blows the OPEC's modeling right wide open, in my opinion. So if you look at the world from through my lens, it's a whole lot more uncertain than when you look at it through your lens. And uncertainty should breed caution, not throwing caution to the wind.
Heather:Alright. Let me respond, Markham. So you will always need a heavy a heavy barrel. Right? You can agree that you can't just displace it all with the sweet crude, that you need what Canada has.
Heather:In fact, Canadian exports are are have never been higher. Even before TMX's online, the Americans have never wanted more Canadian heavy, and that is because their product is getting lighter as they go through as they get through their reserves of shale. They need a heavier product, and they want Canadian heavy, and it's coming in. Who are competitors? Venezuela?
Heather:You really think United States would rather buy from Venezuela? Whether they do or not, it's very uncertain barrel, very tough to invest in. Iran, part of the reason we've been able to keep oil at 85, $90 a barrel is because they've been turning a blind eye to Iran. Look what happened this weekend. So now the sanctions will is tapping down on its exports.
Heather:So all so all of these other sources of heavy barrels are not from our friends. They are from people that we'd rather not import from. All of our global allies would much rather import from Canada, and that is what's gonna happen. And that's why there's that's why the differential has been closing in the last 6 months. It's because people do want that Canadian heavy barrel.
Heather:There is more demand for it. And so I don't see that going away. I just wanna talk about the emissions intensity of oil sands because, yeah, that is their Achilles heel. But all heavy oil barrels are more emissions intense, and you know that. Nothing is worse than the Venezuelan and Guyana oil, actually, which which is the big competitor of Canadian oil.
Heather:It sounds far worse. And they don't have a carbon capture. They don't have the $75,000,000,000 Pathways Alliance plan. Venezuela and Guyana oil will always be more emissions intense than Canadian heavy oil. You would much rather have our barrels.
Heather:But the emissions intensity the emissions in the oil and gas sector in Canada peaked Markham in 2015. The absolute emissions peaked in 2015 even as projection has grown, by a tremendous amount. And that's That
Markham:that isn't true, by the way.
Heather:Oh, that's Statistics Canada data. I'll send it. You can link it into your thing. That's not the oil and gas sector. That's that's Canada.
Markham:Sorry. I I don't often interrupt guest, Heather, but I have the e triple c spreadsheet that breaks down all provinces and all sectors, and I can show you and I will and you and I will exchange spreadsheets
Heather:We'll exchange spreadsheets.
Markham:But I wanted to make a point for listeners because this I wanna rebut your argument because it and I it clearly shows that oil emissions, absolute emissions follow supply. Emissions intensity falls, but it's the fall in emissions intensity is overwhelmed by the increase in supply, which leads to an increase in, in absolute emissions, and they barely plateaued last year.
Heather:So so, anyways, my data from the government of Canada shows otherwise, but we can share that. But, anyways, you can at least agree that emissions intensity of the barrel has gone down. That is absolutely obvious. And here is where the oil sands have an advantage versus conventional. You have about, really, a dozen facilities producing most of those, you know, you know, almost 4,000,000 barrels a day.
Heather:And because they are geographically concentrated, that it is much easier to capture the carbon than in a conventional oil field where you're where you're pockmarked with 100 of drills, you know, across Texas, for example. With these dozen facilities, you can have a carbon trunk line. You can connect them all to a a carbon pipeline where you can have a few small modular reactors is the plan, and that is proceeding. Where instead of using natural gas to heat the bitumen, to make it run, you can use industrial heat from small modular reactors. So there are very there are very good near term in fact, the oil sands is showing, I think, on carbon capture and small matter reactors and industrial heat on a scale that no one else is showing what is possible.
Heather:And because it is a very lucrative, very profitable business, very profitable reserve that can actually spend tens of 1,000,000,000 of dollars on these climate tech innovations, and it's showing the way for the world. This is probably our greatest contribution to climate policy in the world is to show climate carbon capture and SMRs at scale that that they're going to show. And the last thing I wanna say on China, I mean, okay. They got some more solar. They're also ramping up coal production.
Heather:We we guys turn a blind eye to Chinese coal electricity production, and it's outrageous. And if if solar and wind were just gonna solve all the world's problems and solar is so cheap, why do they keep ramping up on on coal? Answer me that.
Markham:Oh, I absolutely will. And you can, listeners can go back in the episodes, and I forget which episode number it is, but Herbert Crowther of the Eurasia Group, described the Shuangtang, policy from 2020, the 2 carbons policy. And what what has happened is that China has decided because, wind and solar costs, particularly solar, have fallen so low, now 11¢ a watt compared to 40¢ in the US, so low that they have decided that they are going to decarbonize their electricity system and keep coal as backup. Now you and I might I like, I the idea of coal is back up to wind and solar, I find I would prefer that they not do that, but this is what China has done. And so why are they building out, coal plants?
Markham:It's because eventually, as they ramp up their renewables deployment, it will serve as backup. That is why. And this is a point that made too far too many Canadian observers are talking about China as if it's the 20 tens and not the 20 twenties. China has made a major about face in its policy, and God forbid. I don't know why I I don't like the idea of defending China, but I wanna point out the reality.
Markham:This is what's going on over there. And we, western commentators have severely underestimated the impact that China is going to have on the deployment of clean energy technologies, not just renewables, but all of the demand side technologies like electric vehicles and heat pumps and electro, electro industrial, processes. And this is this is something that isn't appreciated. So we had, John oh, don't remember. Rondo Heat Battery.
Markham:He's the CEO of Rondo Heat Battery. And he's so his argument is you can take renewables, then you can run it through their technology, which is essentially adapted from 200 year old British steel making technology, heat up bricks, and then you control the, the diffusion of the heat off the bricks and turn it into industrial heat, and it can be done today. And in renewables can be done today. And then in in Calgary, in the place where you live, Heather, there's a company called Accellaware that makes basically a downhole microwave heater for SAGD production, which is half of the oil sands production, and the the oil companies are ragging the puck because they're always very slow at at adopting, new technologies, and I can tell you that because I spent 5 years talking to engineers all over North America about that very issue. So there is alternate models to decarbonize the, oil sands today or in the very near future rather than waiting 10 years, maybe 15 years for the uncertain technology that is small modular reactors.
Markham:Nobody's built an SMR in North America or anywhere else. Nobody's proved out that technology yet, and we can't sit around. The industry would love us to sit around and wait 15 years to see whether it works or not, and on the off chance that it does, and what if it doesn't? And then we've wasted all of those years, pursuing uncertain technology while ignoring technology that may not be exactly as perfect as SMRs in this application, but would do the job just fine at a lower cost. Now, what else have we got here?
Markham:I'm gonna leave it fine.
Heather:Let me respond to our partners. If you would. I'll respond to China because this is the blind spot that I see in the environmentalist movement that you love renewables. You love the Chinese model. You want those cheap solar panels.
Heather:This our biggest geopolitical adversary right now is China, and we are actively moving towards an energy system that depends on them. This is a definition of insanity to me. So not they control so much of the critical minerals market. They have their paws all over the critical minerals market, and everyone appreciates that. This is a top concern also for Wilkinson.
Heather:You know what I mean? This isn't MLI right wing conspiracy. This is all governments, IEA, everyone, recognizing the problem of critical minerals. They control the critical mineral supply chain. They control most of the processing.
Heather:And then they develop lithium the And they subsidize it on their end, and then we subsidize it and mandate that you must have those things in Canada. And, really, we are actually subsidizing an energy system that depends on China when we are almost fully domestic in nuclear and when we can have environmentalist moon, for some reason, wants us to depend on China. And the environmentalist moon, for some reason, wants us to depend on China.
Markham:I okay. First of all, I wanna push back on being described as an environmentalist. I energy Media is not has never described itself as an environmentalist. We are rooted in the energy industry and in the energy transition. 40 years ago, when I was doing my graduate work at the at our, alma mater, it was my my, thesis title was the transition from horses and steam to power farming in Saskatchewan 1900 to 1911.
Markham:It was not nothing to do with environmentalism, and that's my framework 40 years later for understanding the global energy transition today. It's s curves and and Everett Rogers bell curve on adoption, on consumer adoption, all of that stuff. So I wanna push back hard on being called an environmentalist and being grouped in with the green pieces of the world. Fair enough?
Heather:Very fair. Okay. Now My apologies, Mark. My apologies.
Markham:We've you're forgiven. So let's move on. In terms of, China, the the I am a big fan of when I when I talk about China, it's not as a fan of China. It's as a recognition of the threat that China poses to the west. And I'm a big fan of the fact that the Americans finally woke up.
Markham:And by the way, and I say this all the time, Heather, to so listeners are rolling their eyes now because they hear it again, but maybe you haven't, heard it yet. But in Gina Riamondo's, speeches from 2022, the secretary US secretary of commerce, She said very clearly in those speeches, we have now adopted a clean energy industrial policy strategy because in 2020, we woke up to the threat that China posed to our to supply chains. We realized that we were way too vulnerable onto to Chinese supply chains and that they had, they had built because China started this in 2000, right, investing in in their industrial strategy around EVs and batteries and what have you. And they said, okay. We get it.
Markham:We're now behind the 8 ball, and now we're going to bring in the infrastructure act and the chips act and the inflation reduction act and act in some other defense spending. And They're they're literally committing over the next decade probably between a $1,000,000,000,000 and $2,000,000,000,000 to catch up or develop competitive advantages in other areas based on their innovation ecosystem. Europe now is responding to that in its own way with its green industrial plan, because it doesn't wanna get left behind. So what Canada has clearly done is said, okay. The Americans now have got this new vision.
Markham:They're investing a $100,000,000,000 already in battery plants. They're transitioning over their automotive industry. All of that stuff, we wanna be part of that, and I get that. And that that is our historic trading partner. 75% of our exports go there.
Markham:That's where we're currently plugged in. This is not the idea that somehow we're all cheerleading on the side for for China to take over the world and bring this, cheap energy technology exactly opposite. The case is the argument is exactly the opposite.
Heather:But what's happening in practice, though, is still that, Markham. And and this is this is what I don't think people appreciate. Why your energy transition can't happen as fast as you think is because of critical minerals in the mineral supply chain. That is the bottleneck. And, in fact, global capital expenditures in the mining sector peaked in 2013 over a decade ago, and we've added 8,000,000,000 people since then.
Heather:And there is still no money coming into mining, and part of it is ESG. Part of it is a social license. Part of it is a regulatory burden. Canada's producing fewer critical minerals than we were 5 years ago. And so we cannot transition off of fossil fuels without replacing it with something, and we have not been building the mining cap capacity to replace it with something.
Heather:And that thing is happening on that front. I went to the Prospectors Developers Association of Canada Conference, probably the biggest mining conference in the world. People are still starved at capital. Projects are still not getting FIDs.
Markham:Yeah. The, again, you know, the mining industry in Canada is, like, 5 to 10 years behind on that. Because if you pay attention to the global battery industry as an example, in response to shortages of critical minerals, battery engineers have developed new chemistry. So it used to be, like, 10 years ago, even 5 years ago, we talked about lithium ion with, nickel magnesium cobalt, and then there were nickel magnesium cobalt shortages. So those clever engineers went back and said, What about if we do lithium ion phosphate batteries?
Markham:And suddenly, that just swept through China and now is being adopted by, Tesla and even GM and Ford and and other manufacturers. Now we're we're facing other shortages, so they're going, well, what if we went with sodium ion? So now we're seeing sodium ion batteries enter the market where basically it's salt, and there's plenty of salt in the world. That's not a short critical shortage. Then we're seeing other chemistries and other technologies come into the stationary market with you which used to be lithium ion and MC batteries.
Markham:Now we're seeing redox batteries, vanadium, redox batteries. We're seeing, compressed air. We're seeing all kinds of innovation in the energy storage space in response to those critical minerals. So for me, and and for the the experts that that I've interviewed on this podcast, critical minerals are not the impediment to a fast energy transition that they were considered even 2 or 3 years ago because of innovation, which is the very thing that conservative, commentators are talking about all the time. And I here's what I here's a question for you that I post to my friends in the industry all the time.
Markham:And and it has a little bit of background. From 2,003 to 2,008, I spent that time in the oil and gas industry, And every day, all day, I sat in front of the desks of engineers, oil and gas engineers from Midland, Texas to Bakersfield, California to Calgary to Lloydminster, Alberta. I know how engineers think. And why is it that we somehow, the oil and gas industry thinks it has the most clever engineers in the world, and engineers in the batteries or other spaces, clean energy spaces, aren't just as clever. Well, as it turns out, they are just as clever, and they're coming up with all sorts of innovations that are driving the cost down and driving the and addressing these kinds of mineral shortages and other kinds of shortages that are that are cropping up on an occasional basis.
Markham:And because they are able to innovate is why we're going to see a faster than expected energy transition. Over to you.
Heather:So innovation can only take if if innovation could take us over the finish line, we would just make internal combustion engines less we've had you know, but the but the technology matured 40 years ago. Technology does mature. The technology behind transmission lines is about a century old. And so and so innovation only gets you so far, but you guys already always talk about batteries, And it's not for me even about batteries. The bottle the bottleneck commodity is going to be copper, And you can't do anything on electrification without copper.
Heather:And it's not just the batteries. It's everything. And it's also the transmission, the distribution, the electrical steel. And so just keep your eye on that. You know?
Heather:Again, if you wanna fossil fuels are 80% of our energy system. You wanna replace it, you have to replace it with something. And I am just telling you that it is it is plain for everyone to see that money is not going into mining yet. China is actively in here for your China angle. China is now actively manipulating the rare earths market, the nickel market, the lithium market, the tungsten market, the cobalt market.
Heather:It is it is crashing prices so that no western producers could come into it. It is retaining its monopoly on the processing side. All the things you just talked about to turn salt into something you can put in a battery that's useful takes a lot of high end processing. We don't have that yet. These things will take time.
Heather:It will take capital. And then you have to see, will it create destruction in demand then? Can an EV battery compete with an internal combustion engine when you have to go through all those processes? Maybe it can, but I don't think it can in a in a short amount of time.
Markham:Boy, that's a that's a podcast episode in itself to answer that question. But I I wanna I wanna explain I wanna take give you one anecdote as a dis to disprove your argument about critical minerals. So you said copper is gonna be the the bottleneck here in okay. So trans everybody agrees that transmission is absolutely critical to the expansion to the electrification of western economies. And and and so one of the things that we've seen come up now, is the introduction of what's called reconductoring or recabling.
Markham:So you have these old 100 you know, 50 year old cables or 100 year old cables, whatever they are, and they're not very they're not modern. I mean, they you know, they have they have, resistance and restrictions, what but they can be replaced with now, wires that have no copper. They have their carbon fiber and aluminum, and they conduct 3 to 4 times the electricity that you can with the current technology. So you don't even have to build new right of ways. You don't have to build new towers.
Markham:You just go in, take the the wires down that you've got, replace them with with these new cables that are far more conductive, and not only that, they allow you to do things with data that you couldn't do with the old cable. So now you can introduce artificial intelligence, predictive analytics in a way that allows you to route the the electricity on your transmission system to be much more efficient, and you can get far more, transmission out of your existing infrastructure than you could before. And that doesn't even that doesn't go anywhere near power electronics and digital controls and all of the other plethora of new technology that is basically revolutionizing power sectors around the world. And what I find, and here's another anecdote for you. It wasn't that long ago, probably about last year, maybe the year before that, I heard an oil and gas vice president in in Alberta say, oh, EVs will never catch on because, you know, they'll blow the transformers in my in my neighborhood.
Markham:That is the most brain dead approach to the electrification of transportation I've ever heard. I talk to utilities all the time as as I sit on the US Energy Associations, panel journalist panel when we interview, elect, utility CEOs and and vice presidents, plus the ones I've done like enmax and and others in Canada, they've been working on this problem for years. They understand exactly, and they're already working on battery matter, battery management systems, time of use rates, load shifting, demand response. There's all kinds of little, you know, techy stuff that people like you and I, we, don't really understand. And, oh, and I also interviewed Otto Roman, who's the AISO, Alberta electric system operator grid planner.
Markham:He's in charge of the grid in Alberta, and he talked about all the ways they're using this technology already, and they're planning to do a lot more of it in Alberta. We don't talk about that. And he said, we can make the power grid better, more flexible, more responsive, lower cost, all of that using renewables, plus all of these new technologies that are required when you integrate inverter based resources into your power grid. And so a lot of that discussion, which is highly technical and, you know, doesn't make for good headlines, a lot of that is left out of the discussion around the energy transition in Canada and particularly in Alberta, where we, you know, we debate silly things like acts the tax and and stuff like that as opposed to getting down to the meat of the issue, which is the kind of conversation we're having today.
Heather:Well, I mean, that all sounds great to me. Electricity costs have been rising for just about everyone for the last few years. So maybe all these innovations and and and efficiencies haven't come online yet. Everyone would like to see cheaper electricity. I'm just saying to go back to your original line, Markham.
Heather:It sounds like you are preparing for the best, and and I'd say prepare for the worst. I I hope I hope the energy transition goes smoothly. I hope there's no problems from China. I hope there's no commodity constraints. I hope everything is just cheaper and cleaner.
Heather:Everyone does. But let's maybe keep some oil supply in a friendly country like Canada in case it doesn't go that smoothly. And that would be my argument. Don't let the companies worry about the stranded assets. Let let Suncor and CNRL put their money into these places and worry about stranded assets.
Heather:As government policy, make sure that we have that that backup in case everything that you just described doesn't go as smoothly as planned?
Markham:You know what? I'd be quite happy to do that if they weren't asking for government money while they're shoveling money out to their shareholders or through the back door. And so I've gone through the investor presentations of every one of the big oil sands companies. And what they're saying to investors, 75% of whom, by the way, don't live in Canada, But what they're saying to their investors, their shareholders, is, look, we're gonna have record amounts of free cash flow in the next, you know, during this decade, basically, because oil prices are expected to be up. We will give you back 75 to 85% of our free cash flow.
Markham:Meanwhile, we're gonna go to Ottawa and ask for cash, 1,000,000,000 tens of 1,000,000,000 of dollars to build carbon captions and storage. We're gonna get that from taxpayers while we're shoveling $63,000,000,000 a year out to our shareholders. Now I'm sorry, but as a as a matter of public policy, that stinks.
Heather:So you're worried about $50,000,000,000 over 2050 to basically eliminate emissions out of the oil sands. They gave 55,000,000,000 in royalties and taxes to government last year alone. And so if you're amortizing that, now you got 26 years, $2,000,000,000 a year when governments are already getting $55,000,000,000 a year in a good year, seems like a tremendous deal from a climate perspective.
Markham:First of all, royalties are not a tax. And and they and non Canadian, listeners may not understand this, but under the Canadian constitution, the resources in a province belong to the province. And that means the provincial government, and that means the people of Alberta. So the the, oil companies don't own the resource. They lease the resource.
Markham:They they buy they, in fact, they they participate in auctions to lease the resource from the owner who is the taxpayer. So when the taxpayer gets $55,000,000,000, some of that, big portion of it, I think in Alberta, it was, like, $23,000,000,000 last year. It's a return on the asset, not a tax. And as far as other taxes go, why should oil why should companies not pay taxes? They enjoy roads and an educated workforce and all the benefits that come with working living in an advanced democracy.
Markham:They should pay their share as well. And I wouldn't even object to paying the $2,000,000,000 a year or up to 2050 if they weren't returning the capital in a sunset industry. And and that argument comes from doctor Phil Verlager, the veteran American oil economist, started with Gerald Ford back in 73, 74, who says the first sign of a failing industry is returning capital to the shareholders. And he says that's what the oil sands companies are doing. So if the oil sands companies wanna spend their own money on carbon capture and storage, then they're welcome to worry about stranded assets, and I won't worry about it either.
Markham:But as soon as you ask for taxpayer dollars, then I I'm as a taxpayer, I am involved in that discussion.
Heather:Well, if there's no emissions cap, I'm sure there'd be a perfect trade off. So, anyways, I'm happy for the governor, Alberta, to put in its share also. And and, of course, they pay taxes, but it's it's I I find talking to a lot of people, they would rather punish the oil and gas industry than reduce emissions. It seems like reducing emissions comes number 2. So for me, it's such a no brainer.
Heather:If you if you think there's still gonna be demand for oil in the future, and even at even your your precious IEA still sees, I think, 30,000,000 barrels, in 2050, even the best scenarios, we will still need some oil from friendly sources. Here, we have a chance to make our biggest reserve pretty much net zero. And and you guys just don't wanna do it because you just hate oiling us investors.
Markham:What is with this you guys business?
Heather:I just said Open your own word that you just said 2 minutes ago. I
Markham:what I said let let me let me flesh out the argument for our listeners here. If we're talking about an oil only market, we're talking about providing feedstock to refineries in the United States, which is the current model. Very little of the, the bitumen that is produced in Northern Alberta actually stays in Canada, and most of it goes is exported down into those heavy crude refineries in the United States, in the Midwest, the US Gulf Coast, and a little bit to California. That's where it goes, about 3 and a half 1000000 barrels a day. Okay.
Markham:So if we were looking at this rationally, we would say bitumen is one of the most fantastic resources you could possibly have. I've had doctor Paulo Bomben from Alberta Innovates explain them to me. He's a chemist. Explain to me the molecular structure of bitumen as opposed to regular hydrocarbons. And he said, bitumen is entirely different.
Markham:It's a sheet of hydrogen and carbon atoms. When it's a sheet, you can manipulate it. You can turn it into things like carbon fiber and and asphalt binder and activated carbon. So we don't wanna stop the exploitation of the resource. We wanna stop burning it and start making things with it.
Markham:If you start making things with it, that literally, the bitumen resource, the $170,000,000,000 1,000,000,000 barrels of reserve, which is one of the largest in the world, it could go into the 22nd century. If you're making stuff with it, if you're burning it, electricity is going to eventually displace oil. Whether it happens fast or whether it happens slow, it's going to we're gonna electrify transportation, and that's where it's gonna go. So my argument here is not to stop exploiting, the oil sands. It's to build an alternate market in the materials manufacturing.
Markham:It is to clean up the environmental damage that the tailings ponds and others do. There are and I can we've done the work on this, so listeners are gonna have to take it to set face value. There are between $260,000,000,000 and $300,000,000,000 of unfunded environmental liabilities in Alberta for the oil and gas industry. And we're talking about things like orphan wells and and orphaned, gas processing facilities and 440,000 kilometers of pipeline on and on and on. And then, all of course, there's these giant tailings ponds up in Northern Alberta.
Markham:The oil industry has got a series Achilles heel problem. It's both emissions intensity, environmental liabilities, decline potentially declining markets, and the industry is absolutely wedded to the status quo. It had sun when Suncor said, we're out of the energy transition game. We're sticking to our knitting. That was the most innovative company, oil company that Canada had.
Markham:Now it's gone back, and it's doubled down on the status quo. It is a disrupted incumbent, and this is how incumbents behave, and the are they are not the owners of the resource. The people who own the resource, the people of Alberta, need to stand up and say, you are not using that resource in the most the best beneficial way, and we're gonna change that. That's what I'm arguing.
Heather:Well, I mean, we hardly disagree there. And I think the Alberta government is actually maybe the most progressive province in advancing, actually, climate tech, on hydrogen, on on carbon capture, on SMRs, the advanced reactors. I mean, it's doing tremendous things. And and so, yes, emissions reduction in Alberta is, as you know, the one funding all that bitumen beyond combustion. Wants to see that market, thinks there is value for the Alberta, citizen, the Alberta taxpayer in capturing more of a price for its bitumen as carbon fiber than it currently gets as gasoline.
Heather:So I think, you know, we all wanna get the most out of it, and I think the Alberta government's been pretty proactive in doing that. 1st jurisdiction in North America to have a carbon price,
Markham:Alberta, 2007. That's actually not true. BC brought in its carbon price in, in 2007, but that was a consumer tax, whereas Alberta brought in ESCR, which was an industrial emitter's tax. So the 2
Heather:How many weeks earlier was BC's mark? Come on.
Markham:But there were 2 different types of tax. 1 was a consumer, 1 was an industrial emitters. That's the key point here. Not exactly whether one was weeks before or after. But the the again, getting back okay.
Markham:Listeners, you didn't you didn't get to see this, but I did a spit take when, when Heather argued that Alberta is the most progressive. Alberta is the most regressive. I have read the emissions reduction, and energy development plan backwards and forwards, and it is nothing more than a recitation of of, hopes, and and dreams and some of the stuff that the Alberta government has been doing already. There's no plan. There's no time table.
Markham:There's no commitment of resources. There's no vision that we could honestly say this is where we need to go, Alberta, over the next 30 years so that we can decarbonize and move and transition into these other areas that we just talked about. Alberta is suffering from some of the worst political oh, no. Let's not let's keep politics out of this. The worst energy policy, mismanagement in North America.
Markham:You might maybe Wyoming is worse. Maybe parts of tech you know, maybe the the Texas Railroad Commission is worse in some respects. But overall, Alberta is an abomination, and they're going to stick to the status quo and fight off any kind of attempt to do something different because that's in the short term interest of the oil and gas industry, which just refuses to look at its long term future in Alberta in the ways that we talked about, which have been beyond combustion. I am no fan of Alberta energy policy as you pro as you probably have guessed.
Heather:Well, I mean, I just I don't, you know, separate Danielle Smith and the UCP from Albertans, who you know are leading carbon tech. Like I say, you know, you could take away all of Albertans' individual emissions having the innovation in hydrogen. Those are things that you can actually export and scale elsewhere that is actually going to make a difference. Reducing methane emissions. Really world leaders in reducing methane emissions.
Heather:So these are the things that I think other countries can look and actually replicate instead of just saying, you know what? We need to grow. We need to do less. This is, I think, Alberta saying, we need to do more.
Markham:But you're setting up a you're setting up a straw man here because you you polarize the the argument. You said, okay. There's all these nasty environmentalists over here who just wanna shut things down and phase things out, and we're gonna move to somehow this, you know, fuzzy, warm, enter electric future and how we get
Heather:you know, won't be warm when very cold and dark.
Markham:Well, hey. Okay. Fine. You know? But that's the problem.
Markham:Is that's the way you that's the way you set it up. Those those folks are are leading us to a, you know, energy poverty, future, And then there's the, oh, the status quo over here, and we wanna stick with the status quo as my and we wanna tinker with the status quo and have a very, very, very slow transition off that status quo, and I'm arguing for a third way. I'm arguing that there is in fact already the technology or soon will be the technology to go into the to transition into this future where Alberta and and folks, 80% of Canadian oil comes from Alberta. Alberta all by itself is the 8th largest, oil producer in the world. This matters.
Markham:Alberta is a player. Alberta is an energy superpower already and has been for a long time. So this this argument about Alberta really matters in terms of not just emissions, but energy Canada's energy future and its exports and its and its economy. And I argue that doubling down on the status quo during a time of disruptive change is the absolute worst strategy ever. And I think that what the industry and the Alberta government are doing is, at best, the best construction you can put on it is that they are tinkering at the edges.
Markham:They are not addressing the fundamental issues, and I think that probably sums up my critique of the Alberta approach better than any, and and this may be a good, place for us to to end this conversation. But I but I do owe you the the last chance at rebuttal, so I'll turn it over to you.
Heather:Well, I won't rebut. I mean, we disagree, and we've explained how we disagree, and I think it's been in discussion. And now now let me just say that, you know, the answer to a lot of these problems is gonna be nuclear. And I would like to see people like you embrace nuclear more strongly. It produces that electricity.
Heather:It produces heat. It produces can produce hydrogen, can desalinate. Very limited resource footprint. We have all that uranium in Saskatchewan. We're pretty much a domestic nuclear supply chain.
Heather:Just a perfect the best energy source in the universe, and we can, you know, replicate it here on Earth, using all Canadian resources. So let's agree, all of our sides to come together and unite behind nuclear.
Markham:Let's not. Nuclear is, modern nuclear is untested and over generally comes in over budget and, and and takes a long, long time to build. And that's a whole, viper's nest I don't I don't wanna get into. But, Heather, thank you very much for this. I think it's been an enlightening conversation.
Markham:We have touched on I think we basically talked about the all of the issues that, affect Canadian energy policy and in particular, Alberta. There there isn't much we we left out, and I so I think that if anybody wants to know, we we'll have a transcript of this along with the audio file, so that if you wanna just read through it, you can do that. But, Heather, I really appreciate this. You've taken time out of your day, and you've done a very good job of defending the, that position. So thank you.
Heather:Thank you, Markham, for having me. I appreciate these discussions of people who don't always think alike, and I think we need more of them.
Markham:Agree wholeheartedly. Thank you.