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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 287 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. A few weeks ago, Marla Orenstein, the Canada West Foundation's director of Resources, Environment and Economy, traveled to the UK as part of an energy commentators mission organized by the British consulate. She wrote about the UK's energy transition and climate policies in the foundation's latest energy innovation brief. I've interviewed Marla many times before.
Markham:She's an astute researcher who always provides interesting insights into complex issues, and because she and the foundation are located in Calgary, I was curious about what she thinks of the UK approach compared to Alberta, which has hunkered down and now does everything it can to protect its energy incumbents from the disrupt from the disruption caused by climate policy and the energy transition. So welcome to the interview, Marla.
Marla:Thank you so much, Mark. It's always a delight to be here.
Markham:Well, we'll see if you if you say that, after you've been on that if you're 5 or 10 minutes into the interview. Let's start at just a very high level. I'm very curious about why you went to the UK, in particular. But the we've been doing a lot of work here, about the role of China in the energy transition. Of course, Europe and the UK have been have been jousting with China lately over EV imports and so much of, and especially solar, panel modules.
Markham:I mean, those are basically putting the European companies out of business. And the ability of the Chinese to do to to manufacture clean energy technology at scale and do it at an incredibly low price. So that now it is a very competitive energy. What what was the takeaway? Like, what's the conversation like in the UK around that?
Marla:Well, I I'll I'll start by telling you, Ratchet, back to your first question about where do we go? Why did we go? This was a trip that was organized by the British consulate who's based in Calgary, And they brought over 3 energy commentators. It was myself and Peter Cherdsakian from ARC Energy and Emma Graney from The Globe and Mail. And we went we went all around the UK.
Marla:We were accompanied by Jonathan Turner, who is the the consul general, and Tiffany Langford, their senior energy policy analyst who put the trip together, and Alyssa Perron, who who's their their comms person and took a lot of photos. We we had the opportunity to to travel really of The UK considers itself to be, firstly, moral leaders in the net zero transition.
Markham:Oh, that's interesting.
Marla:Actually quite advanced in what they're doing. Clearly, there's ties with Canada. Then they wanna see how can how can they boost these ties. So we started off in Aberdeen, which as you know is traditionally an oil and gas hub and is rapidly changing. We were down in London, speaking with the government.
Marla:We went to this UK Canada summit that was arranged, with about a 120 different organizations represented. We went up to the Humber cluster, which is one of their many industrial clusters that is undergoing transformation. And I think Tiffany took it as a personal mission that success would be meeting as many people as possible. So we we got to meet a lot of different people and speak to a lot of different factions. The the thing that I was not expecting to actually see, I'd heard it, but I did not think this was to be the case once we started, you know, lifting up the rocks to look, Is that really everybody's on board with this being the the direction of travel, and it's gotta happen fast?
Marla:I thought, yeah, yeah, you're saying that, but soon as we started talking to people, they would be like, oh, no. We don't actually wanna go there. But we were talking to the kinds of entities, oil and gas producers, the Phillips 66 refinery, the kind of people who would have benefited from saying, let's put on the brakes a little bit, and yet they were going full full steam.
Markham:Okay. Then that sets up this question quite nicely because that is not the case in Canada. And in particular, the Alberta Energy Incumbents and I'm not just talking oil and gas companies, though the oil and gas emissions cap has emerged as a major issue, between Alberta and Canada. But also we're seeing the same thing with in the electricity system, in the power sector with the the big utilities and the their approach to the power grid and to the power markets in Alberta is I'm gonna be generous here and say really, really backward. So why given that you now have seen the UK approach Mhmm.
Markham:And you're familiar with the Alberta approach, what's your take on why might there be differences?
Marla:I think geography is everything. It comes back to context all the time. As I said before, the UK government cites its moral imperative, and it certainly does feel that way. But but what I observed were a couple of economic drivers that are really pushing this transition that come out of where the UK is located and what its history is versus what what's happening in Canada and Alberta. And the first of these is energy security.
Marla:We we've seen what's happened with Europe. They're right there by Russia. They've been fed by Russia before, and there's this huge desire for energy security both to wean off Russia, but also to insulate themselves from the types of price spikes that we saw when Russian gas was withdrawn. So energy security for them is a huge issue. It's not the same for us.
Marla:We produce way more than we could ever use. So that's a factor that's different between the two countries. The second is their history of deindustrialization. UK used to be a huge industrial powerhouse. I mean, everything, you know, back to textiles, those are gone.
Marla:But now coal is gone. Steel is half of what it was. Fishing is almost done. There's an oil and gas is on its way out, not because of the moral imperative, but because declining reserves. They don't have what we have in the ground.
Marla:So it they just somebody we spoke to described it as this change over the last couple decades from an industrial powerhouse to a services based economy. So excuse me. They're looking to use this transition as a way to reindustrialize. And then the third one that's super important is where they're located next to Europe. We're located next to the US.
Marla:It's our largest trading partner. They're located next to the EU. Almost all of their stuff goes to the EU. And in 2026, the EU is bringing a carbon border adjustment mechanism in. The walls are going up.
Marla:And if your products are not sufficiently low carbon, there's gonna be a tariff on them. So that's what's happening with their largest trading partner. So that is also a hugely strong economic influence.
Markham:In that case, I wanna bring in an observation that came from Kevin Byrne, who is, probably one of the world's most foremost experts on greenhouse gas emissions in the in the oil and gas, industry, and he works for, S and P Global now. And Kevin told me that, you can see the market, then he means the oil and gas market, struggling with the issue of pricing emissions and emissions intensity. He said, we're struggling today, but the market's gonna figure it out. They will put a premium on on low emission intensity hydrocarbons in the not too distant future. Combine that with climate policy, combine that with more carbon border adjustment mechanisms like the EU is putting in place.
Markham:I mean, right now, at this very moment, 3 Republican senators, including Lindsey Graham, of all people, are sponsoring a carbon pollution bill in in the US Congress. I mean, even that's a sea change. And and the Americans, through the, inflation reduction act, the chips act, the infrastructure act, are putting literally trillions into re industrializing like the UK are. So now our biggest, trading partner and cultural influence, especially in this particular context, is also changing. They're shifting more to the u UK model.
Markham:Are are we gonna catch up? Are we catching up? Like, does Alberta get it?
Marla:It it's a really good question. It's not the conversation that I tend to hear almost anywhere I go here in Canada, and and yet you're right. There's a lot of different geographies that are doing it, a lot of different markets. And it doesn't matter if they're doing it from a moral net zero perspective or whether they're doing it as a sort of a semi protectionist, reasons. The fact is it's coming.
Marla:And if we don't prepare ourselves, suddenly, again, those walls are gonna go up, and we're gonna be on the outside knocking on the doors to get in.
Markham:I couldn't I couldn't agree more. I mean, when I talk about the energy transition, in Alberta, it almost always comes back to climate and emissions. Mhmm. Oh my god. Either the well, either the climate change doesn't exist or it's not as big an issue.
Markham:You know, the 1.7% of global emissions argument that you hear far too often. For me, I never mentioned that ever. I talk this is an economic challenge and a business model disruption. That's what this is about. When a new technology comes along that potentially is provides a lower cost per unit than the old technology, It disrupts business models and it disrupts markets.
Markham:We're seeing the very early stages of that. That's what we need to respond. That's what Alberta needs to respond to. And that is not a message that I ever hear in Alberta.
Marla:I think it's one of the things that has been taken as a message in the UK. The when their approach to this transition is not to shun the the old oil and gas industry. They're saying this is our starting point. This is our advantage. How can we take what we have historically from the oil and gas sector and use that to build this new economy?
Marla:So that's not something they're leaving behind. That's that is the foundation of their transition right there. Because the skills that are needed, the people who are needed, all of this exists already in oil and gas, and so they wanna capitalize on that to to try to make things very quickly, not not have those people go away and then let's say, let's retrain all the massage therapists of the world to nothing against massage therapists. But but,
Markham:to But they're not welders and they're not engineers. And yeah.
Marla:Exactly. Yeah. Let's not start from nothing. Whether you're you're talking about welding or engineering, whether you're talking about project management or costs or sending energy around the world or or planning, consenting, any of that, those skills are absolutely needed, and they're facing a huge worker shortage right now. They they can't get people in fast enough to get this done.
Markham:I I wanna make a point here, and this is a hobby horse of mine, so regularly listeners will forgive me. In fact, they may wanna go get a coffee at this point. But I have interviewed doctor Paula Baumbin and doctor Brian Heffelbaum, of Alberta Innovates many times since 2016 when they launched the bitumen beyond combustion. And there is a message that I think is not getting through to Albertans, and that is bitumen is too valuable a resource to burn. Bitumen is one of is an amazing hydrocarbon.
Markham:Unlike most hydrocarbons, it is a sheet of carbon and hydrogen atoms. Because it's a sheet, according to doctor Bomben, who is a chemist, you can manipulate it. You can turn it into materials like carbon fiber, like asphalt binder, like activated carbon. There's many, many things that you can do with it eventually as you get, you know, the processes figured out and the science figured out. And when you talk about how the UK wants to pivot from its existing industry, oil and gas industry, and use that as the basis for an energy transition strategy, Alberta, thanks to bitumen, has exact I mean, my god.
Markham:The it has a better, opportunity than the UK, frankly. Yeah. And doesn't recognize it.
Marla:I think that this recognizing what the complementary opportunities are is is, is is key. So this reminds me of a conversation that I had at the Phillips 66 Refinery. And I I I was you know, they were they were fine oil products primarily right now for fossil fuels because that's what the world wants. And I said, are you not worried that as this transition happens and fewer and fewer, you know, fossil fuels are in demand that that you're gonna go under, so why are you so supportive? They felt that they were gonna be one of the last ones standing.
Marla:And the reason is because they, unlike their competitors, are also producing Coke from their process. And that Coke is needed as a physical product, not as not as a fuel, but as as a an actual product. So they're they're figuring out how to take what they're doing and get that extra value at it. And we we toured around the plant, and and and we were driving past these enormous stores of Coke. It was it was absolutely massive.
Marla:So so they really do have their mind to as things are changing, how do we not just keep playing into a diminishing market, but what is the real value of what we do?
Markham:That's, I I think that's is very insightful. And and I think that the fact that the Phillips 66, that particular refinery has thought about this, looked around and said, okay, what do we do? How do we make the transition? How do we make the pivot? And that's the thing that I don't see in Alberta.
Markham:I'm writing a column right now. And and it's in response to the Calgary Chamber of Commerce letter that it sent about the oil and gas emissions cap. And there are only 2 positions right now. That is you put the cap on and to hell with the consequences, or you keep the cap off because, oh my god, we're making a ton of money and this is really important and it'll be a big economic blow if you have to do that. And and that's true.
Markham:I mean, the Canadian energy regulator did net zero modeling and said if you put if the oil sands industry has to pay the full cost of decarbonization, you know, climate policy journal is mine. But you know what? I know because of my my energy journalism, I know that there are companies in Calgary that make new technologies like, makes the RFX heater downhole heater where you could replace steam with basic and microwave microwaves. That's essentially, in a nutshell, what it is. And you could pair it with wind, solar, and batteries, and you could, tomorrow, begin to decarbonize sag deproduct in situ production in in the oil sands.
Markham:I never hear those options. I never hear a third a third way to fix this problem aside from either it's one or the other.
Marla:Well, what I hear, Markham, is is a bunch of third ways. When I when I'm around in in Alberta, certainly doesn't make it to our politics, which tends to be a little bit more absolute, but there's a a lot of creativity and a lot of innovation that's going on. And and I think it for that to work, it really has to be fit to purpose and fit to geography, which kind of goes back to the first thing that I said. And and I'm gonna bring you another example of why some things work in some conditions and some things were don't work in other conditions. The UK is going great guns on offshore wind, and that makes sense for them.
Marla:Tons of shore, tons of wind, smaller land base, and they wanna keep the environmental impacts off of it. They've got the technology. They've got huge ambition, but they're actually really well on their way. I think that that there's a really good chance that they're gonna succeed in in that offshore wind play. Secondary to the offshore wind, they're creating hydrogen.
Marla:So it's not let's create hydrogen for its own sake. It's it's more that we're gonna have most times more wind than we have demand. How do we store that? What do we do with it? So they're turning it into hydrogen, which they're gonna use domestically in mobility and a heating, and they're also gonna create a pipeline directly from Scotland to Europe.
Marla:It but it to me, it's not the let let's start with nothing and let's start building a hydrogen play. It's the it's starting with offshore wind, which makes sense for them, and hydrogen is secondary to that. So I really think that that that's an example of looking around and saying, what's our geography? What's our assets? What's our resources?
Marla:What makes sense right here? And the solutions that we're developing in Alberta have to look different than the ones that are in the UK, but I do see people starting to look at that here.
Markham:I agree. And and looking at competitive advantage comparative advantage. Right? You're an economist. Comparative advantage is really important.
Markham:And the comparative advantage economist.
Marla:I am in no way an economist, so take that with a grain of salt.
Markham:Oh, okay. Well, I'll I'll I'll I've had enough conversations with you that I'm willing to give make you an honorary economist for this context.
Marla:I will take that. Don't tell the real economists.
Markham:It's our little secret. But here the the the problem here is that, you know, we've just had a hugely controversial move by the, Alberta government to put a moratorium on wind and solar development. They lifted it. Now it's considered not a kind of a soft moratorium because the rules will restrict that kind. And and it Alberta has the best wind and solar resources in all of Canada.
Markham:And the the really key part here, there's then I'll mention 2 things. 1 is we're not far away from a marginal cost of 0 for for renewables. It it it's China is is scaling up and driving down costs so fast. That's within, you know, our line of sight. The second thing is, and this is something that I know for a fact Alberta hasn't wrapped its head around, is a renewables oriented grid, a inverter based grid looks very different than the traditional grid.
Marla:Mhmm.
Markham:You cannot you cannot pop wind and solar in as a replacement for thermal generation. It doesn't work that way. When you go to intermittent generation, which is and you do it because of so low cost. That's why you do it. You have to reengineer your grid.
Markham:Alberta has 14% wind and solar and has not reengineered its grid, which is why it's having problems. It hasn't done the work and made the investments to to accommodate the the, all of the wind and solar that it's that it was building. I mean no wonder it's had problems. But the advantage of having access to such low cost, clean, and abundant electricity, now that's a competitive advantage and we're not talking about.
Marla:Yeah. I completely agree. And, I I always wonder how we can use that advantage province, whether it's, you know, transportation or resources or space or or or whatnot. So I I think putting that together in a way that that makes a competitive advantage, it it really is the key.
Markham:And that leads me to point Marla's, top, top 4 takeaway, which is the UK is taking an industrial planning approach. This is the approach that China took 25 years ago. It's the approach that the EU has taken. It's the approach now that the Biden administration is taking, and it's the approach the federal government says it's taking and is not taking. When when Christian Freeland says, oh, we want a muscular industrial policy, I thought we were really gonna get something.
Markham:And what we did got was what Jonathan Wilkinson, our, natural resources minister says is just, oh, well that means carbon tax regulations and and subsidies. That's not an industrial planning approach. That's pathetic. And
Marla:But the industrial planning approach comes in is those regional energy and resource tables, but those are nowhere at the same sort of scale as what Exactly. Other other players are doing.
Markham:And Alberta only recently agreed to sit on one of those. Mhmm. They were the last province to come to the table to take to even begin to think about this. And so Alberta is has not embraced industrial strategy nor has it embraced industrial policy that is off the table. Would you agree?
Marla:I would say that I'm gonna be very politically astute here and say, I think that the UK's approach is certainly different than anything you will find across Canada right now in terms of its scale, in terms of the organization, and in terms of what's being brought to the table. But, you know, so when I was traveling, I I was thinking again about what's different and why and, also, what's different in the UK versus the US. And and I had an observation that I did not put down in this energy innovation brief, but I'll share it with you, Mark. I mean, you can tell me if you think that this holds water or not. I think that different, different countries that are managing to successfully start addressing net zero are doing it only if they align with the historical strengths of that country.
Marla:And I'm gonna give you three examples here. China has historical strength in taking a top down centralized government planning approach. Boom. That's what they're doing. That's what they've done historically in other things.
Marla:That's what they're doing here. That's how they're getting there. In the US, what the US does well is the pursuit of the almighty dollar. And so the inflation reduction act and other things are basically scattering the pots of money where they want people to go and blowing the whistle and saying, and you're off. And people are running towards those as fast as they can.
Marla:That's what they've historically done well. The UK has historically been really good at creating these organizational structures for economic success that are sort of public and sort of private, whether it's, you know, the the British East India Company or the Hudson's Bay Company or certain types of government mechanisms, you know, inventing the financial industry. They they've done really well at creating these these systems that are backed by government and strong, but where the the private entities take it forward, and that's what they're doing in their industrial planning approach here. They're taking that that same sort of thing, where they're bringing together industry and government and working together and saying, how do we create a framework for success that will allow you guys to do the work? So they have a long history in that.
Marla:When I think about what historically does out does Canada do well on those sort of, you know, US, China, UK comparison, I'm not exactly sure what ours is. I think we've always just relied on our abundant resources themselves.
Markham:I had this very debate in in October of 2022 with professor, doctor Michael Warnek, who who is the former clerk, clerk of the privy council for the federal government, which means basically the top bureaucrat. And his response was, we'll muddle through. That's our that's our response. But you know the exception to that? You know the exception to that?
Markham:Alberta. Peter Lawheed did exactly the opposite of that. He created, he bought into Syncrude. He and he, put a $100,000,000 into to do the research that resulted in SAG d. And he the oil sands would not exist without Peter Lawy.
Markham:Then he created the Alberta Energy Company, which I won't bore anybody with the the history, but essentially, it created the petrochemical cluster that Alberta has today, which is the 2nd biggest in in the North America behind Texas and and Louisiana. Alberta's energy wealth today would not be nearly what it is without the activist approach, and he called it an activist government of Peter Lougheed from 1971 to 1986. Mhmm. That's one of the things
Marla:would do today in this current situation.
Markham:He'd create a crown corporation and build in a in a in a advanced materials manufacturing industry based using, bitumen as an input. That's what he do.
Marla:Mhmm.
Markham:One of many things I might add. And look, I a shout out here and I wanna, I I'm I'm going to do a, full disclosure because the Alberta Federation of Labor is one of my clients, has been since 2016. We're freelancers. We hired guns who will work for anybody who cuts a check for us, and they have. And and I've written a report, helped write a report, sorry, called skate to where the puck is going.
Markham:They lay out this exact strategy, and they and they quote Lougheed, and they argue for an activist state approach just like Lougheed's approach. And Gil McGowan, the president, is the only one who is talking about that that I'm aware of in Alberta. So are there are there strategies? Are there approaches? Yes.
Markham:There are. We're just not talking about them. Okay. So hang on a second. I think we've exhausted the industrial planning approach.
Markham:Let's go and talk about opportunities for Canada and the UK to help one another. That's your 5th takeaway.
Marla:It it is. There there are definitely crossovers. Part of it comes back to the expertise that we have and they have they're doing, excuse me, offshore wind really well, as I said. We're we're just nascent in that. There's there's plans afoot in Newfoundland and Nova Scotia and off the coast of BC.
Marla:They've been doing it for a while. So what can we pull from them in terms of their expertise? That would help us. Conversely, they're they're really bullish on CCUS. They think that they're gonna have either have no CCUS today, but they are sure that they're gonna have a whole bunch up and running by 2030, which I have to say, on the trip, Peter Chertakian was highly questioning the ability to actually get that done.
Marla:Yeah. But if they want the expertise, we have lots of people who've been working on CCS and have actually effectively established it here. So that sort of knowledge transition could help. Both countries are interested in in using SMRs and getting those established pretty quickly. So, again, where we can share, whether it's technology approvals or or any other learnings, could boost it.
Marla:And then going back to that that question of skilled workers, the UK is desperate desperate for getting skilled workers working on a whole bunch of different types of of things, whether it's CCUS or wind or hydrogen or or nuclear. And we've got people who who do have the skills. So if we can find some way to plug that gap, I think that's a win as well.
Markham:Okay. We'll leave the, discussion around CCUS and SMRs, for another day. That's fairly controversial, but it is true that Canada has, made those part of its, energy plant. There's no doubt about that. And Alberta has experience, certainly in CCUS.
Markham:I mean, it's going back to the Quest project in, what, 2,008? It it's it's got a long history of of doing this and expertise. I've I've interviewed
Marla:was raised by almost everybody we spoke to as well.
Markham:Yes. Exactly right. I mean, I've interviewed some of those companies and asked them this very question. Do you have the expertise? Do you have enough engineers?
Markham:Do you have enough other, trained technical people that you could pull off a big CCUS project like the oil sands, is contemplating? And the answer is yes. I don't know if they were just giving me a sales job, but that was that was their reply. So, okay. So clearly, there are opportunities for Canada and the UK, but we're the the thing that bothers me here is and this gets back to your comment at the beginning of the interview, is everybody's pulling in the same direction in the UK.
Markham:Mhmm. Everybody gets it. Everybody knows that it has to happen. And the the benefits of political consensus should not be underestimated because what you're seeing in UK is a political consensus that the energy transition is coming. We need to pivot to it.
Markham:What you're seeing in Canada is a lack of political consensus, and therefore, we spend all of our time fighting over stupid things like the carbon tax. And while the big issues that we should be having a conversation about get ignored. Fair comment?
Marla:It's not just a political consensus in the UK that we saw. It is a cross sectoral industry consensus as well, and it's politics across all levels. It's not just we're talking about federal or federal versus whatever the, you know, the next level down is. We we spoke with, for example, Aberdeen City Council. 40% of their workforce is in oil and gas.
Marla:They're on board. They are they are doing what they can to to do this. So it it really was from from every segment that you could think of that that was moving in that same direction.
Markham:You you mentioned Aberdeen. The the Scotland has a, Scottish, Energy Transition Authority. Mhmm. I I struggle to find the equivalent in Canada, any place in Canada, and and certainly not in Alberta. So what do we do?
Markham:How do we fix our give Marlon 5 minutes. Tell me how we're gonna fix Alberta.
Marla:Oh, good lord. Yeah. How much money you have for this one? I I'm not sure. Again, we are grounded in geography.
Marla:We're grounded in having responsibility for different things. This doesn't happen the same way in the UK. So so following their model completely does not help. However, the lessons that they're giving us about why they see advantage in an energy transition, not just as moral imperative, but what are the economics that are driving it, is absolutely the way to go. They are taking an approach that is more carrots than sticks.
Marla:They really only have one stick, which are these emission trading credits, so they're not layering a whole bunch of different regulations the same way to make things confusing and punitive. Those are lessons that I think that that we should be taking away. I
Markham:okay.
Marla:Did I fix it, Markham?
Markham:No. You you you you went some way towards it. And the the thing that that that struck me as you were talking, particularly at the end, is this idea what you were talking about was the federal oil and gas emissions cap because all of the province, including Alberta, have an industrial emitters carbon tax.
Marla:Mhmm.
Markham:And what the federal government wants to do is overlay a cap and trade system on top of that. And the industry has said quite right. Are you nuts? Why would you do that? Why would you give us 2 carbon pricing systems that we now have to administer and, and account for.
Markham:And, and, and it's confusing. We don't know how those 2 systems will work together, let alone, you know, so, and we kinda liked the carbon tax that we have. We kinda like that system. And not only that, but in late 2022, I'm not sure that most Albertans understand this, the the federal government opened up no. That's not true.
Markham:The equivalency agreement between Alberta and Canada came up for renegotiation. And they actually the Alberta agreed and said, okay. We're gonna tighten stringency. Instead of 1%, we're gonna do it at 2% a year. So we're gonna do it faster than we had intended.
Markham:It's gonna increase the compliance costs for our oil sands companies. But still, it was it was it the Penman Institute says they need 5%. So it was a little bit of a nod towards it. You the federal minister Jonathan Wilkinson, minister Steven Gilbo, you had the agreement open. You had them at the table.
Markham:If you were gonna put an emissions cap, if that's what why didn't you just toughen up the carbon tax? And and we didn't do it. And now look at the mess we have on our on our hands, and I can't imagine the UK would be dumb enough to take that approach.
Marla:You know, the mess that that we have tends to fall around the sticks, and the cooperation across different orders of government tends to happen around the carrots in some ways. When I think about where where there's a lot of cooperation and everybody is moving on the same side and wants to get something built that's new, I think about the SMR agreements. I think about hydrogen strategy. Think, you know, like, those things where we say, let's let's do something because we know this is a good thing. It's it's where we get into the sticks and the multiple layers of that, and are they working at odds to one another?
Marla:So we all wanna get to that outcome. I truly believe that all governments in Canada, including the Alberta government, wants to get to that net zero future. The question is, how? How do we do this in a way that is sensible and makes sense economically and all the rest?
Markham:You actually, in that, very articulate answer, sparked something that I had not thought about before, and that is the conflict comes around sticks. And when I look at China, when I look at the EU, when I now look at at the Biden administration's many, you know, policies and pieces of legislation to encourage, reindustrialization around clean energy, it's mostly carrots. Mhmm. There are very few sticks. There's some you know, the Environmental Protection Agency has got some emissions regulations and some you know, they're trying to get the oil and gas industry to clean up methane emissions with sticks.
Markham:But the sticks are relatively minor and they're not wielded in a really punitive way. But this is a problem in Canada, is that we we get into these and and okay. Maybe the federal government does come in for some criticism here because it the carbon tax, both at the consumer level and at the industrial level, well, at the consumer level, it's it's seen as a big stick and a very punitive stick. And maybe even though this is a much costlier and less efficient way to approach things, maybe we need to go, you know, to more carrots. Maybe that would help solve our problem.
Marla:Yeah. I I guess there's also the question of should it be domestic sticks or international sticks. We in the UK, it really is, as I said, that carrot space approach, not just incentives, but providing organizational supports and industry frameworks and clusters, and how do we make this work together? So it's a lot of thought and work, not just dangling dollars or pounds, so to speak. But the the sticks that exist will be things like the carbon border adjustment mechanism that exists in Europe.
Marla:The UK doesn't have to impose that. That's gonna exist. Similarly, there will be in Europe, and this will affect us as well, emission standards for fuel that's imported. The industry is gonna have to meet that if they wanna sell, and so you don't need to to add sort of a necessarily another domestic stick if that's gonna be big enough. So it's not that I don't want to get to that future.
Marla:I absolutely do. But we need to look at what the different motivators are that are in place and say, is this sufficient? Do we need to tweak it? Where's this going? How do we add to it?
Markham:I I'm I I've been a a fan of carbon pricing, and I bought the economist's argument. You know, in in Alberta, we have very articulate defensive carbon pricing. People like professor Trevor Thome at the University of Calgary, professor Andrew Leach at the University of Alberta have done a lot of work at the at the popular level, you know, writing on magazines and on online defending carbon pricing. The the problem is that the elegance of a carbon tax and the efficiency of a carbon tax, no one cares. Really.
Markham:I mean, at the end of the day, consumers don't care. All all they care about the price of groceries and the price of gasoline and and so on. And there's a I interviewed Dan Doctor. Danny Cullenworth from Stanford about 2021, I think it is, and he had written a book with a colleague and he said look we love, we're economists, we love carbon pricing, but we also know that politics exists in the real world. And you if if you can't make a carbon price work the way economists would love to make it work, then you have to rely on other other policy levers.
Markham:Other you have to go you have to dig into the policy toolbox and come out with other things like more carrots or different types of sticks or whatever will work for your jurisdiction. And I and I don't know the answers to this. You know, I I don't wanna lecture Trevor Toam about what Canada, you know, what policy should be or not be. But can we not have the conversation? Can we have the discussion about this at least in a rational evidence based way?
Markham:That's the thing that drives me nuts about what's going on.
Marla:Rational, evidence based, and nonpoliticized.
Markham:That may be a tall order, but the first two, I think, are are possible.
Marla:Yeah.
Markham:Well, look, Marla, this has been a great conversation. I knew we this would be very enlightening when we started it, and it's turned out to be true. Thank you very much for this. And I haven't interviewed you for quite a while, and we really need to not let it get, so much time between the next interview.
Marla:That sounds great. Thank you so much for this opportunity, Mark. I mean, it was a fun trip, and I love talking about it.
Markham:Indeed. Thank you very much.
Marla:Thanks. Bye
Markham:bye.