Canada’s Clean Energy Future: Turning Policy into Action

It has been a year since the Pan-Canadian Framework on Clean Growth and Climate Change. What has been achieved and where would you recommend we orient our efforts going forward?

Firstly, I want to acknowledge it has only been a year. Often with policy, we very quickly move onto, “what have you done for me lately?” Just a year ago, we created a plan that was about as good as we could have hoped for. At the time, I was with the Pembina Institute and many in the environmental community looked at the ambitious framework as representing unequivocal policy wins on carbon pricing, methane, and national coal phase-outs. There was also significant progress on transportation and renewables. So the big achievement to date – and again, it has only been a year – has been those commitments.

“Many in the environmental community looked at the ambitious [Pan-Canadian Framework on Clean Growth and Climate Change] as representing unequivocal policy wins on carbon pricing, methane, and national coal phase-outs. […] The big achievement to date […] has been those commitments.”

Now, we are moving on to the quick implementation of the framework’s policies. This includes coming up with checks and balances to ensure that the plan is achieving its greenhouse gas (GHG) reduction goals and pushing the government to allocate enough money in their budgets for execution. Also, Canada and the environmental community have been working to shore up support for methane and carbon pricing in the face of what is going on in the US with policy rollbacks or entrenchments. Twenty-five percent of the global warming we experience today is caused by methane. In Canada, there is a lack of infrastructure to support methane capture. Building that infrastructure is employment intensive and wildly distributed around the country. You have to find the leaks, which means jobs. You have to seal the leaks, which means additional jobs. These are oil and gas careers that we can export to the rest of the world as we help them reduce their methane emissions, too. Overall, I believe progress in terms of speed of implementation, checks and balances, budget allocations, and shoring up support has been reasonable to date.

How credible is Canada’s global position in the environmental clean technology industry? Are we leaders, are we middle of the pack or are we laggards?

First, Canada’s global position is quite credible and full of opportunities. Not long ago, it would have been unfathomable for Canada to be receiving international recognition for its efforts in fighting climate change. This is a significant shift and it has just occurred from October 2015, with the election of the new federal government to the unveiling of the Pan-Canadian Framework in December 2016. In that short period of time, Canada went from being the international whipping boy of climate change to being recognized as amongst the most progressive jurisdictions in the Organisation for Economic Co-operation and Development (OECD). The bottom line is that Canada is very much an environmental leader in clean technology policy right now.

“It is clear that the current government is seeing environmental issues as economic opportunities.”

If you look at actual progress in policy implementation, however, we are middle of the pack or even trending towards laggards. At the great risk of sounding partisan, I do not lay that at the feet of the current federal government. We had 10 wasted years when Canada did virtually nothing. I also can put a stain on the previous Liberal Government of Martin and Chrétien because their years were wasted, too. Today, it is clear that the current government is seeing environmental issues as economic opportunities. They are embedding clean growth in the budgets and it is not just buried in the back, it is in the first 20 pages of the budget. The Prime Minister gets it, the deputy ministers get it, and they have hired good people. They are leaders in making bold commitments and having the right approach to fulfill those commitments – but the proof will be in the pudding. Canada’s credibility is now being based on its progress toward implementing the Pan-Canadian Framework. We will have to look at their milestones and interim targets to see whether they are hitting them or not.

You led the Pembina Institute, one of Canada’s leading NGOs. How do you look back on this experience?

I was Executive Director at the Pembina Institute for close to 7 years. I started in 2005, and back then maybe 1% of your readers remember the paper called “The Death of Environmentalism” by two writers from the US. Their logic in that paper was that the leadership of the environmental movement was collectively stupid; therefore, we needed to abandon the entire movement. It was quite the start to my Pembina career. Then, in January 2006, we had a new federal government that went from being ambivalent towards the environment to attacking us with things like CRA audits. You also had other groups around them attacking the financing credibility of the environmental movement. Again, I am mixing Pembina and the movement as a whole, because Pembina was part of the climate-energy movement. We were in this pressure cooker, but we came out stronger as a result because we were forced to think and act like a movement and be collectively smart instead of being collectively stupid.

“Canadian policy windows do not open very often, but when they do, they tend to be wide open. If you are well organized and prepared, you can shovel a lot of policy through before those windows close.”

Environmental policy windows first flew open in Alberta and then federally in 2015. Canadian policy windows do not open very often, but when they do, they tend to be wide open. If you are well organized and prepared, you can shovel a lot of policy through before those windows close. Pembina and the environmental community as a whole got a lot done. We implemented an ambitious climate leadership plan in Alberta, and then we implemented a similarly ambitious plan federally, the Pan-Canadian Framework. I am most proud of what we were able to get done during this special timeframe, how we were able to pivot very quickly when those policy windows opened.

I view those plans as the best we could have hoped for and yet, during my time at Pembina, Canada’s environmental record and all the related environmental indicators continued to trend downward. You do not like being in the environmental movement and seeing problems like greenhouse gas emissions getting worse. I will say – and this is a real credit to the conservation community – Canada did make some gains in parks and protected areas during my time at Pembina. Still, the nation lags terribly with a lot of its OECD comparative countries in terms of protected areas. Overall, we have made some gains, but Canada is still very much a laggard in executing its environmental goals.

A lot of your work at Pembina revolved around the oil and gas industry. How would you characterize this sector’s transition in a world that is clearly decarbonizing?

We should first acknowledge that “transition” is a scary word to most people in the world. People that hear the word do not see themselves as part of it; they see transition as something that is foisted upon them. I have had these chats with many in the oil and gas sector who do not exactly cozy up to the word “transition”. Having said that, it is a different world for the oil and gas industry these days. Transition is happening and it is driven by a number of factors above and beyond decarbonisation. These include a need for social license, cost pressures, trust, and the nationalization of oil companies.

“Overall, we have made some gains but Canada is still very much a laggard in executing its environmental goals.”

In searching for a constructive path forward, conservationists have to be more effective when governments step up to environmental challenges – not just when the policy is announced with great fanfare, but then working with them actively on execution. The climate-energy movement has to clearly articulate an understanding of what happens if these governments are unsuccessful in implementation. We need to work actively with them to put together what they want, and what they want is proof points. The biggest proof point being tangible examples of how investments in energy efficiency are benefitting Canadians.

To add to the government’s challenges, there is still this big implementation gap. For example, green infrastructure money has been underspent. They announced the funds with great fanfare but then shovel-ready green infrastructure projects were not pre-brokered. So while the government has identified buckets of money, they lacked the details. Now, a leader for the Conservative Party is in place and the political edges are sharpening up with everything that is going on with the US and the Trump administration. No question, it is going to be a bumpier ride over these next three years than it was in the first few years.

““Transition” is a scary word to most people in the world. People that hear the word do not see themselves as part of it; they see transition as something that is foisted upon them.”

I was lucky enough to be a member of The World Economic Forum’s Global Agenda Council on the Future of Oil & Gas. It was co-chaired by ex-Shell Global CEO Jeroen van der Veer and Amy Myers Jaffe who heads up the energy program at UC Davis. We had a diverse group of people around the table: think tanks, CEOs, the Chinese Academy of Social Sciences and myself. What we concluded from two years’ worth of work is that the high demand oil growth scenario, from an estimated 90 million barrels a day up to 130 million barrels a day, is looking more and more questionable. Now we face the real prospect of major economies like the US or China shifting away from oil for a variety of reasons other than the climate. These include a change in demographics, economic conditions, innovation, and the falling price of batteries. While oil and gas are likely to be major sources of energy for decades, the industry is going to have to shed its high cost and high carbon barrels. It is going to have to incorporate greater artificial intelligence, automation, remote operation, and production. It is going to have to become leaner and greener, and that includes reducing methane leakage and increasing the recycling and reuse of inputs like water, heat, and steel.

“In Canada, we are going to figure out how to produce with the oil markets that are still there, even if demand peaks and declines. We are going to be innovative and produce energy at a lower carbon cost.”

In addition to the World Economic Forum work, I was on Shell Global’s external review community for a couple of years. At the risk of giving a gratuitous corporate promotion, I view Shell as a thoughtful company looking deeply at what these industry trends mean. It is trying to reposition itself from being a traditional oil and gas company to an integrated gas company. Shell is recognizing the trend towards electrifying mobility and heat, and the need for more electricity to meet those demands. I see other executive level professionals at thoughtful companies with the same understanding. I do not think, however, that this mindset has trickled down far enough in these companies. For example, if I were to speak at the Canadian Crude Oil Conference saying exactly what I just said earlier, a lot of that is met with skepticism and raised eyebrows.

What major national and global trends do you foresee on the horizon that will have a big impact on Canada’s future economy?

When you look at all trends and put them together, they say a few things: oil is going to peak and then decline, natural gas will increase as heat and mobility are increasingly electrified, renewables are going to grow very quickly and coal use will have to dramatically decline. Canada is a big oil producer and exporter. What does it mean for the country’s economy if consumption peaks and then declines? What does it mean for us as producers of clean natural gas? On the efficiency side, what does it mean for us if we need IT software to better optimize freights, routing and loading, or to apply big data analytics to aviation, rail navigation or smartphone applications? We need to keep pushing, keep looking at those trends and figuring out how we can capitalize on them as Canadians.

“Clean growth is now embedded in the future of the Canadian economy.”

Internationally, there are countries that have moved ahead of us on things like coal phase-outs or renewable targets and we can learn from them. In Canada, we have the long history of carbon tax and in Alberta specifically, we have something unprecedented: an emissions limits on the oil sands. No jurisdiction, as far as we can tell, has put an absolute cap on emissions for a major industry like Alberta. The emissions limit is now a key piece of the Pan-Canadian Framework. Currently, there are 89 federal programs that support clean technology development and entrepreneurs in the country. The federal government has also just set up the Clean Growth Hub to help entrepreneurs better access these initiatives. Clean growth is now embedded in the future of the Canadian economy.

In Canada, we are going to figure out how to produce with the oil markets that are still there, even if demand peaks and declines. We are going to be innovative and produce energy at a lower carbon cost. We are going to be the producers of the cleanest gas in the world for electricity production. The world’s population will grow from 7 billion to 9 billion by 2050, which is like adding two Detroits every week for the next 30 years. We have this climate problem, but we are still going to have to provide energy services to those extra 2 billion people. We need large companies, governments, and universities working at full capacity on solutions. Given the ingenuity of the sector and the gravity of the challenge, I believe the energy industry