Oil pipeline politics are once again in high gear in Canada. Alberta Premier Danielle Smith is advancing plans for a 1 MMB/d pipeline to the West Coast of British Columbia, while B.C. Premier David Eby remains firmly opposed. At the same time, during a recent trip to Washington, Mark Carney and Donald Trump reportedly discussed the potential revival of the Keystone XL pipeline, which, if completed, would carry Canadian crude south to the United States.
To help us unpack the complexities of Canada’s pipeline politics, our guest this week is the Honourable Jason Kenney — former federal MP and cabinet minister (first elected in 1997 and re-elected five times), former Premier of Alberta, and now a Special Advisor at Bennett Jones.
Here are some of the questions Jackie and Peter asked Jason Kenney: How did you manage to bring together Alberta’s fractured conservative movement, and do you think that unity could unravel given today’s polarized political climate? What are your thoughts on the “Alberta Next” initiative? What’s your assessment of Prime Minister Mark Carney’s first six months in office and his efforts, such as Bill C-5, to accelerate infrastructure development? Under the Canadian constitution, can B.C. block an oil pipeline through the province? Why were you disappointed by the federal Energy and Natural Resources Minister, Tim Hodgson’s, comments about B.C.’s attempts to block the oil pipeline?
Content referenced in this podcast:
Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/
Check us out on social media:
X (Twitter): @arcenergyinst
LinkedIn: @ARC Energy Research Institute
Subscribe to ARC Energy Ideas Podcast
Apple Podcasts
Amazon Music
Spotify
Episode 299 transcript
Disclosure:
The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.
Announcer:
This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.
Jackie Forrest:
Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.
Peter Tertzakian:
And I’m Peter Tertzakian. Well, Jackie, in the spirit of time stamping our podcast, we are recording on the day where the Blue Jays are in game seven. Are you following the game?
Jackie Forrest:
I am, yeah. Who can’t be? As you know, I’m not a big sports fan at all, but I am following it. So apparently, if they win today, they will be off to the World Series, and I looked it up this morning. The last time they won the World Series or even were in it was 1993, so 32 years it’s been quite a long time-
Peter Tertzakian:
1993, it’s a long time.
Jackie Forrest:
Yeah. And what the way the Americans have been treating us this year, it would be nice to have a Canadian team win, wouldn’t it?
Peter Tertzakian:
Would they get invited to the White House?
Jackie Forrest:
Apparently, I’ve heard they’re not going to.
Peter Tertzakian:
Oh, so it’s only to the Peace Tower or-
Jackie Forrest:
Yeah, or the PMO or something like that.
Peter Tertzakian:
The PMO, which is across the street, I think, at the moment of the Peace Tower. Okay. So we’ll see. By the time we reconvene for our podcast next week, we will know the outcome of that. In the meantime, we’ve had some interesting events, as always. We’ve got oil prices below 60. We’ve got a minister in India who’s questioning our reliability as a trading partner for energy.
Jackie Forrest:
Over the weekend, the high commissioner to Canada from India commented that Canada is not yet a reliable supplier of energy. Not sure why that made such big news. It’s pretty obvious to me that we’re not that reliable. We say we’re going to build projects and pipelines and we don’t, and I know we do have LNG flowing and Trans Mountain, but in the context of India’s energy needs, it’s pretty small.
Peter Tertzakian:
I guess I was looking for the corollary question, which is what would it take for us to be a reliable partner? To me, that’s an important data point because we have been saying for a long time that we have what the world needs. It’s just that we have to make ourselves known and make ourselves a reliable trading partner. I think we can compete quite handily, but if there’s no trust in our supply chain, then that’s a big problem. That has much more to do with just cost competitiveness.
Jackie Forrest:
It does, and I mean, we certainly haven’t done a lot to give a lot of confidence. We’ve had projects for pipelines proposed and many of them not going forward. So I think on this theme today, we want to talk about the pipeline politics in Canada because it hasn’t changed at all, and I can understand his comments that here we’re sitting with the opportunity to do these nation-building projects, and BC and Alberta fighting about this pipeline, and if BC will allow a pipeline to be built through BC.
Peter Tertzakian:
Well, why don’t we phone a friend who knows all about pipeline politics? Welcome, the Honorable Jason Kenney, who has been an MP for 19 years in the federal government. He’s been the Premier of Alberta. He’s now a Senior Advisor at Bennett Jones, so we’re delighted to have you. I can’t think of anyone better to talk about these sorts of issues.
Jason Kenney:
I’m honored to be on a podcast I listen to almost every week.
Jackie Forrest:
Wow. That’s an honor, Jason, with your schedule that you’re fitting us in so well, other than listening to our podcast, which I’m sure takes a lot of your time, well, tell us what else you’re doing at Bennett Jones these days.
Jason Kenney:
Well, I’m really privileged to be a senior advisor, part of their public policy group with some other recovering politicians and senior public servants helping clients and particularly on major projects and investments. But I’m busy with a lot of different things in the private sector, including a senior advisory role at BMO, the bank, and at Teneo, an international consultancy. I’m on some boards, notably for Albertans, ATCO, great Alberta company, and do some consulting and a lot of public speaking these days. I’m keeping busy, and I like it that way, and I’m loving after 25 years in public life having freedom, privacy, and opportunity, and something more like normalcy. Having the odd weekend off is really cool.
Peter Tertzakian:
Yeah, I mean that’s the thing about public life. As I say, it’s 25 hours a day; you started out as a philosophy major. Tell us about that and how you got led into politics for 25 years.
Jason Kenney:
Well, a mentor of mine kind of directed me to a great books program at a Jesuit university in the States, University of San Francisco, which is kind of a classic old school study of the great texts of the Western canon with an emphasis on philosophy. In that case, the philosophy of Aristotle and St. Thomas Aquinas. I would just say the philosophy of reality, and I went into that college, went into that program as a big, young liberal. I don’t if you know this, but I was executive assistant to Ralph Goodale when he was living here in Saskatchewan, and I was vice president of the Young Liberals of Canada.
And I often joke that I’ve been trying to do penance ever since, but it was in my college years, partly through reading philosophy, I started to kind of get down to the first principles and realize that utopian schemes usually lead into tears, and that the right kind of approach to politics is one that has a lot of respect for human autonomy and action, but also the common good. And that, for me, manifested in conservative philosophy. So when I got back from college, I helped to start the Canadian Taxpayers Federation, spent most of my twenties doing that before I got elected.
Peter Tertzakian:
I’m just fascinated Jason with the philosophy. I mean, the philosophy of existentialism and all that is back now in a big way because of the artificial intelligence and all that sort of stuff. So people are going back to some of the great philosophers to question those sorts of things. I mean, I don’t want to get too far off topic here.
Jason Kenney:
No, but listen, when you listen to Peter Thiel on these things, very dark take on this. It’s not just philosophy. It’s very interesting. This is probably the first time religion’s been brought into your podcast, but I also became a Catholic at college, and I just wanted to note that Pope Leo, in his very first words after being elected earlier this year, he talked about the huge moral and ethical dilemmas being posed by artificial intelligence. So I think these are issues that are going to be, as you say, almost existential for the future of humanity. It’s a very interesting time to be diving into a new era of human development with artificial intelligence, the ends of which we do not yet know.
Jackie Forrest:
All right. And we know that artificial intelligence is affecting everything, but let’s talk about politics and tell us about your time in federal politics. What was your favorite ministerial portfolio? You did have quite a few of them.
Jason Kenney:
Oh yeah. I was in immigration for five years. At first, I wasn’t happy to be appointed there, didn’t know a lot about the policy issues, and famously was known as the third rail in politics. There’s a reason why most immigration ministers only last about a year. You touch it, you die. It’s just impossibly difficult, and yet, Prime Minister Harper kept me there for five years. So I was the longest serving in history, actually. Longer even than Sir Clifford Sifton, who opened the West to settlement through immigration. So I was really privileged and I was able to… He gave me huge latitude, contrary to the caricature of Stephen as being hyper centralizing to prosecute a very deep policy reform agenda which involved risking and spending political capital to fix a lot of serious problems that were emerging in the system, which is why parenthetically, I feel so aggrieved to see how the Trudeau government turned the world’s model immigration system into a mess.
So, having said all of that, and it was also very human, you got to work with amazing people, see their stories, bona fide refugees, and see how Canada saved them from potentially life threatening situations. So all of that was very gratifying. But I must say that the most amazing job that I ever had, I think, was minister of national defense, perhaps partly because I came from a military family. I’ve had people serving in the uniform since all the way back to the War of 1812, and working with our men and women in uniform is a unique privilege, and I’m very happy to see that our country’s finally getting serious about our national defense.
Peter Tertzakian:
Yeah, no, me too. It seems like a distant memory, but let’s now move on to your time as premier of Alberta and the process of merging the PCs and the Wildrose to form the UCP. I think it’s important to revisit that as we try and think about where conservative politics may be going in this province, in this country. So maybe give us the thumbnail recap of that whole era that you were so intimately involved with.
Jason Kenney:
Yeah, that was hard work, and it wasn’t an obvious thing to do. So I was a minister in the Harper government. In fact, I was with Stephen Harper at a special forces base in Iraq in May of 2015, if you can believe it. When we got the news that the NDP had been elected to a majority government in Alberta, and I turned to the Prime Minister and said, “Should we just stay here in Iraq?” And we were as astonished as anyone, and then we lost the federal election. I was frankly exhausted. I mean, I had been working 90 hour weeks for years and years in the Harper Government, often with multiple portfolios and a big part of the political operation as well. And I was actually thinking about stepping out and going to the private sector and trying to get some semblance of balance in my life.
But I saw what was happening in Alberta economically and more broadly under the NDP. It was deeply concerning to me, and I came to the conclusion that if they’d had a second term, they would not just have inflicted a series of bad policies. My view has always been that you can correct bad economic policy over time, but what you can’t correct is deep structural changes to an economy, or, for example, to the education system. I was very concerned that they would undo Alberta’s successful model of choice in education and politicize the curriculum. I just thought that there would be a huge increase in, for example, unionization in the population, and just basically a change in the political culture of the province. And I thought Alberta has always been the beating heart of free enterprise values in Canada. If we lose that, it will have national implications.
So I decided this is intolerable. Then I looked at this ongoing civil war between the PCs and the Wildrose. I couldn’t actually identify a lot of serious, deep policy differences. The differences largely seem to be personal and cultural, the kind of rural agrarian vibe of Wildrose versus the more urban, somewhat elite vibe of the PCs. And I thought these people all cohabit the same federal party, and they all cohabited in the same provincial party under Lougheed and Klein. So there’s no essential reason this can’t be done again, apart from getting over all the collected grievances. So I thought somebody from the outside could step in and challenge all that, which is what I’d ultimately decided to do. It required three years of just endless hard work first to get a mandate as the new PC leader, and I’ll be honest, what was left of the establishment of that party was very hostile.
They tried to frankly rig the rules to prevent it, but we won that with 75%. Then Mr. Gene didn’t initially want to negotiate an agreement, but we kind of made it a fete accompli, got a 95% endorsement from the members, was privileged to win the UCP leadership, and then worked hard for the electoral mandate. But I just want maybe just give a shout out. I know a lot of your listeners in the oil and gas industry were big supporters of this and helped to make it happen because I mean, they had seen both the loss of investor confidence during the PC royalty review. Then you, Peter, I want to give a shout out to you, you were a critical part of bringing some balance and semblance of sanity to not only the government’s energy policy by talking them off the cliff on their royalty review. But the industry had been through some really tough times and they knew they needed to get Alberta back on track, and I think we did that.
Peter Tertzakian:
Well, that’s good context, Jason. I think it’s an understatement to say that politics today are polarized, but it’s not just left and right. There’s polarization often even within parties. Do you think that all the work you did merging the conservative factions of the province could unwind in an era of ultra-right-wing populism that’s on the rise?
Jason Kenney:
Yes, certainly could. I’ve been involved on the political right in Alberta since 1991, since I think I was 22. Okay? My entire adult life, including the pre-Internet era, if you remember that. And so I know this stuff very well, and let me share with you my take on it. Back in the early 90s, when we were starting the Taxpayers Federation, we would have people selling memberships door to door, and I’d meet them every Friday afternoon to get a finger on the pulse. And pretty much every week, one of our sales guys would come back and say, “I met some old guy in the back 40 who was ranting about the Jewish banking conspiracy, and he’s publishing this newsletter, he sends it out to people, and there would be cartoons of hooked-nose Jews, characters from Der Stürmer, and so on.” And I thought, “Boy, that’s gross.”
And basically what it was was the vestiges of the dark side of social credit, monetary policy conspiracies. But when I look back at that, what I realize is guys like that, if they wrote a letter to the editor, were not bad. It would never get published if they called QR 77 to spout off; they get cut off in 30 seconds. In other words, there was an edit function in our society that streamed news, and we lost the edit function with the advent of social media circa 2000, where those people find each other, develop their own silos of information, which deepen the dark thoughts. And then you get a large swath of the population, primarily on the right, who lose faith in mainstream institutional media. And I think, understandably, I think a lot of mainstream media deserves some of the blame for that. I mean, heck, I remember back in the days when Ralph Klein, with massive support, was doing incredible things to get the province’s fiscal health in order, and he was getting defamed daily on the editorial pages of the Calgary Herald, that was totally out of touch with its local constituency.
That’s an example. So anyway, alt-right media develops in that era about 20 years ago to fill the market vacuum of people who are no longer interested in legacy media. Unfortunately, both alt-right and alt-left media their business model is the monetization of anger. And I mean, I discovered this in COVID when there was a substantial portion of the population, I don’t know, 15, 20% of the population, if I got up into the news conference to say, “Hey, the hospitals are overflowing. This really sucks, but we’re going to have to bring in some restrictions.” There was a substantial portion of the province who never heard the part about the hospitals being overflowing, or they would be watching alt-right videos claiming that the hospitals were empty and the nurses were doing TikTok dances, and that COVID was fake and the vaccines were deadly.
And so this phenomenon is just on both the left and the right, and it just keeps accelerating. I really think that the whole Trump mega-phenomenon has accelerated that, and there’s been its own kind of copycat movement in Canada. They’re not talking about a huge section of the population, but a very militant and active section, as I discovered in my leadership review in 2022. So I’m not whinging about it, I’m just saying my view is that severely normal people, as Ralph Klein used to say, particularly in these times of polarization, have an even greater obligation to get involved in the process and not to be spectators in our democracy.
Jackie Forrest:
All right. Well, and here we are. We’re at a time where we seem even more divided than ever, especially between the urban and rural centers in Alberta. And at the same time, we have this Alberta Next initiative described by the Alberta government, I’ll just read from their website, to explore the ideas and policies to assert our sovereignty and constitutional rights within a United Canada. And you go on to look at the website, and it clearly says in the FAQ that it’s not about separating from Canada, but after decades of unfairness, we must stand up for our people. Is this helping this situation or making it worse? What’s your view on the timing for this initiative? And I know the panels are done, but we’re waiting for the reports still.
Jason Kenney:
A, it’s making the situation worse, and B, there is no such thing as good timing on this. I’m being framed now as a kind of sellout to Ottawa, God forbid, a federalist and everything. You just have to go do Google search on Globe and Mail editorials about my views on the Federation three or four years ago as premier, and I was like this troublemaking outlier from Alberta. I was defending provincial autonomy. I was the guy that did the successful constitutional challenge of Bill C-69. I’m the guy that coined it the no more pipelines law. I built a coalition amongst nine provinces to challenge that. I repealed the Alberta carbon tax, challenged the federal carbon tax to the court, I could go on for half an hour on this stuff. But the point is, I think my bona fides are clear in that I believe in the original vision of the 1867 Constitution, which is a fairly decentralized federation where Ottawa takes care of certain things and the provinces others, and we stay out of each other’s [inaudible]
And one of the powers of the provinces is the exclusive authority to regulate the development and production of natural resources, including oil and gas. So I think that’s what we need to focus on, continue fighting. And by the way, we Albertans, I always used to say we are big Canadians. Our grievances with Ottawa are not some kind of narrow parochial interests. Special pleading. I went down to Justin Trudeau my second day as premier and said, “Hey, if you use the federal superpowers implicit in the Constitution to create one Canadian economy and knock down all of the interprovincial trade barriers, I would be the first to support that because the whole idea of the federation is an economic union, but get out of our business on regulating energy.” By the way, Alberta is the most Canadian province if you measure it by interprovincial migration. If you go door knocking in any campaign in Alberta, you’ll see every other door is someone who was born outside the province and came to Alberta for opportunity, but they’re connected to the rest of the country.
So I think this whole separation thing is a total distraction. It’s a waste of energy and attention. If it gets to a ballot, it will be enormously divisive. It will create permanent brand damage for investor confidence. I think there’s no way it wins, but even if it gets 15, 25% of the vote embedded in that, a lot of frustrated federalists who are not actually separatists, but just trying to use that as leverage to express their frustration. So even if you get 15, 25% that will be read by investors as a warning sign of the dashboard of investor confidence. All we need to do is look at what happened in Quebec. People here say, “Oh, let’s use the Quebec knife to the throat strategy.” Well, as Quebecers, how that worked out for them? Okay, yes, they got lots of special treatment by Ottawa, but they also had 40 years of economic stagnation.
They had tens of billions of dollars of capital that left the province, hundreds of thousands of people. So I don’t know why when we are the most prosperous province, while we’re winning on issues like C-69, and by the way, we are winning politically right now, we need to take yes for an answer. You’ve got super majority support in every poll for coastal pipelines, east, west, and south in every province, including British Columbia and Quebec. I was just in Quebec, where all the business leaders are talking about how can we work with you to get gas developed here and maybe an oil pipeline through the province. So I just think there’s a moment of opportunity. We need to be those big Canadians. We need to not be distracted by the hardcore separatist movement is animated by a minuscule share of the population, and I don’t think they should be able to drive the bus for the other 95%.
Peter Tertzakian:
Yeah, I mean, there are loud voices and these sorts of legacy grievances or current grievances, depending on your perspective, from an investor perspective, are damaging. I always put it akin to thinking about, let’s say we’re hosting a dinner party in a home and investors are coming up to join the dinner and they walk halfway up the sidewalk to the house and they hear a whole bunch of people yelling and screaming and fighting inside and say, “You know what? I think it’s not the time to go for dinner,” and then they leave because there’s just all this noise coming out of the house that they don’t want to be part of.
Jason Kenney:
Peter, I was in a major investor conference in New York for one of my clients recently. The only question I was asked about Alberta wasn’t what are the investment opportunities, but how serious is separation of threat?
Peter Tertzakian:
Yeah.
Jackie Forrest:
Yeah. And by the way, that Angus Reid poll, we’ll put it in, it was the most recent one. It was something like 59% of Canadians support pipelines, and even in BC 56%. So we’ll put a link to that in the show notes.
Jason Kenney:
We’re winning, we’re winning. Let’s take that and that momentum, which Trump helped to create, and push it forward.
Peter Tertzakian:
So we have a new Prime Minister, Mark Carney, and he’s definitely trying to bring together a one Canadian economy and further things with the Major Projects Office, Bill C-5, et cetera. So how do you think he’s doing in the first five or six months?
Jason Kenney:
Let me quote show and lie, when Henry Kissinger asked him to assess the French Revolution, he said, “It’s too early to say,” but we don’t know. There’s so many unanswered questions. The change from Trudeau, hugely positive obviously, and a number of policy changes. You and I might disagree on this, but I think the repeal of the retail carbon tax being one of those, the focus on knocking down interprovincial trade barriers, moving on a number of different issues. So it’s a materially better government than the Trudeau administration.
Peter Tertzakian:
So people are snapping their fingers and saying, “Okay, come on, show me results. Six months. Where are they?” Do you think that’s unfair?
Jason Kenney:
No, that was my caveat. I was going to add, which is, well, I want to take the positives. He has set sky-high expectations, particularly on major projects, and where’s the beef? I don’t know why, if he’s really serious about this, see this stuff really is existential, if we cannot fix the Trump threat except by addressing our own internal domestic policy problems, then what we need is a paradigm shift in terms of regulation. And that means not fiddling around with the margins of C-69, the Impact Assessment Act, which is the single biggest regulatory block for major projects, but repealing the damn thing, and by the way, they have Supreme Court mandate to do so, which I helped to obtain. Repeal the tanker ban, don’t fiddle around on it, and the majority of British Columbians are on side with that. Repeal the emissions cap. It is utterly pointless unless you want to hand production to some of the world’s worst regimes and diminish our largest export industry.
These things are not actually complicated, and what it requires is political energy and it’s courage to some extent because I know on the left of his coalition, he’s got to manage that. But Jean Chrétien managed the left of the Liberal Party’s coalition very handily in the 1990s when he cut government spending by 15%. So I think this requires that level of leadership, ambition, and action resolve those things could be done very quickly, to leveraging the largest industry in Canada, by far the largest source of export revenues, and revenues in jobs, which is the energy sector.
Jackie Forrest:
Right. And of course, we do need to grow our economy. So what’s your thought then, based on that? Do you think there’s any chance we’re going to get this one million barrel a day oil pipeline to the West Coast? Not only do we have the opposition from BC, but we have all these policies you just listed off that any investor that comes to the dinner party comes to the door, sees all of these problems, people fighting in the dinner party, like, are we going to get this pipeline done considering all that baggage?
Jason Kenney:
I don’t know. I think the premier is right to pursue it. I think the government of Alberta does need to step into the breach, given investor wariness, to help create a pathway for it. And I don’t think we should allow the hard left faction of one provincial political party in BC to deter a nation-building project of that scale. I shared publicly recently something that John Horgan shared with me when after he lost at the Supreme Court of Canada on the effort to block the Trans Mountain expansion. He came to me and said, “Jason, I’m downing tools. We are going to permit this project. If there’s any problems, let me know, but beware that there is in my party the BC New Democrats,” and what he called a mud hut wing who are [inaudible] any development like this. And I took the inference that he was also talking about David Eby. And so I don’t think we should allow hard-left activists from the center of Vancouver to block the national economy and our largest industry. It’s ridiculous.
Peter Tertzakian:
In that regard, it takes leadership, right? And you chastised the Federal Minister of Energy, Tim Hodgson, on X for not being a leader in this Smith-Eby dispute with a tweet talking about the mud hut wing. I’ll just quote it: “You were not elected to give the mud hut wing of the BC NDP an unconstitutional veto over nation-building infrastructure.” So that was targeted towards Federal Minister of Energy, Tim Hodgson.
Jason Kenney:
Yeah, because he said we’re going to play a constructive role in promoting interprovincial dialogue or some BS like this. That’s not what they were elected to do. They were elected to act facing the US threat, to get this national economy rolling, and that doesn’t mean effectively granting Quebec and BC a veto, which they do not have in the Constitution.
Jackie Forrest:
Well, maybe explain that because I think that’s a question. Can BC stop this pipeline if they don’t support it?
Jason Kenney:
No, just as they could not stop TMX, and by the way, Eby’s using all sorts of specious argument like Indigenous communities, what we saw as affirmed by the BC Court of Appeal and the Supreme Court of Canada on the TMX case, that they affirmed a court finding that 111 of the 119 Indigenous communities who had a putative interest in the Trans Mountain Expansion were either in favor of it or not opposed to it. Only a handful were opposed, and by the time it was done, I think we were down to three out of the 119. The Supreme Court ruled to put it in plain English that a tiny minority of communities don’t get to block it for everyone else. Here’s my point. I mean, and also we got Coastal GasLink done right despite the spurious opposition of one small unelected faction of one small First Nation.
So the point is, if you have leadership, and by the way, if you start the process with Indigenous consultation and you layer into it the opportunity of equity participation, which I’m very proud to have started with the Alberta Indigenous Opportunities Corporation, that allows First Nations to be co-owners in these projects. If you do those things, they can get done. I’ll give you an example. Former Chief Councillor of the Haisla First Nation at Kitimat, Ellis Ross, now MP for Skeena. He was originally for the LNG, but opposed to any oil pipelines; he now says he made a mistake. So people change their minds when they get more information. We have had a paradigm shift in the approach of most Western Canadian First Nations to responsible resource development. Again, let’s take that momentum and move forward.
Peter Tertzakian:
Let’s get back to this idea of the minority. I’m going to tap back into your philosophical mind and the philosophy of democracy because one of the principles of democracy is majority rules, yet we have seemingly sort of receded to having a very small minority rule, whether actually say it’s the loud voices in the ultra right wing faction of the conservative party or the ultra left wing or a very small minority of people can scare the majority and the rulers of said majority. Where do you think this all is going?
Jason Kenney:
If you look at the debates about the development of democratic institutions during the Enlightenment, for example, around both the US Constitution but also Canadian Confederation. If you go and read the original Confederation debates, they were concerned about that, those issues. You know why? Those were well-educated men; they were all men in those days, sorry. But they were well educated in the original development of Athenian democracy, and they were very realistic about human nature. And so they all tried to embed in the democratic institutions ways of avoiding the kind of movements of extremism from having disproportionate influence, for example, why they have a very powerful Senate in the United States. It’s why we have a Senate in Canada.
It’s why we have to have kind of a check and a balance. It’s why we have a division of powers, and they’re not all concentrated in one unitary government. So structurally, the founders of what we would call modern democracy were very alive to those concerns. But at the end of the day, as I say, if people with broadly mainstream values don’t actively get involved in the process and just sit on the sidelines, they’re going to hand more and more influence to people with more marginal views.
Peter Tertzakian:
Yeah, I mean, the way I see it is that if we progressively try and satisfy, I’ll use the mathematical term, the lowest common denominators, then you can’t satisfy anyone. Then you just get into sort of paralysis. And I mean, this is where I feel like we’re at, is we’re paralyzed in making any major decisions.
Jason Kenney:
Look, as a society, we’ve tied ourselves in knots. I forget the author, a book about 20 years ago called The Problems of Complex Societies, where modern societies just become particularly through regulation impossibly complex and end up destroying the creative energy, which led to the prosperity of market economies. Just cast our mind back what created Canada, in part, was a huge interprovincial infrastructure project. The CPR, they had to overcome unthinkable barriers to get that done. It required bold, audacious nation-building leadership. The Trans-Canada Energy Pipeline, the original one, 1959. It went from proposal to completion and commissioning in less than two years, from Edmonton to Sarnia across the Northern Shield. Can you imagine?
Peter Tertzakian:
Well, actually, the oil pipeline in the same era of the 1950s was completed in six months. Did you know that? It’s even less time.
Jason Kenney:
My point is, people before us with much less technology and much fewer resources got these big damn things done. The St. Lawrence Seaway Project they got these big things done, nation-building things done that have had decades of benefits. So I just think we need to get back to some of that spirit of just… You know what we Albertans have… Part of our culture is just get ‘er done. We need to persuade, I think, our fellow Canadians. So the virtue of that,
Jackie Forrest:
All those examples, by the way, Jason had a lot of federal leadership, right? I know the railway story, the prime minister put his political capital on the line and his capital on the line to support that project. So by the way, I’m enjoying your X account now that you’re in private life. It’s pretty entertaining.
Jason Kenney:
I post rarely, but spicely.
Jackie Forrest:
Yeah. So I definitely recommend everyone checks it out. But you had also talked on your ex-account about this Hodgson comment. His actual quote was, he would be able to be a participant in a three-way discussion, basically kind of implying that we’re all equals here. So do we need a lot more leadership? If Mark Carney really wants us to be the fastest growing economy in the G7, we talked at the very start of this podcast about being a… India doesn’t think we’re a very reliable energy supplier. Don’t we need more federal leadership here?
Jason Kenney:
Yes, in the areas for which the federal government is responsible, which includes interprovincial infrastructure and pipelines, and this is not debatable. The decision on the Trans Mountain expansion struck down the BC law seeking to prevent it unanimously at the BC Court of Appeal, unanimously at the Supreme Court of Canada. And as I told you, Premier Horgan came to me and just admitted it. Now he’s been succeeded by a guy who is trying to impose his own narrow political ideology on the Federation against, by the way, somebody on the right… I have a special grievance. Every time a conservative gets out of bed in the morning, they’re accused of committing a charter violation. But here you’ve got a BC Premier who is in flagrant violation of the Constitution, as recently affirmed by the Supreme Court of Canada on exclusive federal authority over interprovincial infrastructure embedded in Section 9210 of the Constitution Act.
And we just treat it like it’s normal. This guy should be marginalized. By the way, in the current context, may I add something about Mr. Eby? Perhaps the most important first ministers’ meeting since 1982 happened this June around internal free trade. He was the only premier not to show up. Instead, he was shooting a video in a Tokyo convenience store about BC snacks for sale. So we need federal leadership that overcomes that kind of narrow parochial regionalism and ideological approach. Can I say something about India? You’ve raised it. In 2008, I met Chief Minister Narendra Modi as he then was. Chief Minister of the Indian State of Gujarat. And the first thing he said to me was, “I’m about to open an LNG import terminal in Gujarat. We have contracts only for Qatari gas. When can we get your LNG?” Because he said, “The Qataris fund terrorist elements in Afghanistan and Pakistan, which constitute a national security threat to India. We would rather buy our gas from our friends than our enemies. When can you get us your gas?” And that was coming on… So 2000…
Jackie Forrest:
It’s almost 20 years ago.
Jason Kenney:
That was coming on 20 years ago. And we haven’t moved. Well, only now we’re moving molecules. But here’s the good news: I understand that the very first shipment out of the expanded Trans Mountain Project ended up filling up super tankers in the US. So the Aframax tankers came out of Port of Vancouver, went to the US, and loaded a super tanker that actually took that to the Reliance refinery in Gujarat. So we’re finally starting to get there. As I say, let’s press forward that momentum.
Peter Tertzakian:
Keystone XL. Where do you think that’s headed? You built the pipe as a premier on behalf of the people of Alberta to the border. Is it going to cross the border and go in? What’s your view?
Jason Kenney:
I really think that while the premier is right to create optionality on a West Coast pipeline, I really think that politically and economically, let’s call it Keystone XL 2.0, is much more realistic, partly because it’s partly done. You’re right. I stepped in when TC Energy approached me as premier to say, “Look, we’ve got the approvals, but we’re unable to capitalize the completion of the project, which is going to cost about five, $6 billion because of the threat of change of administration and veto of the project.” So we stepped in with loan guarantees and a billion dollars of equity, and a lot of work was done, including the 450 clicks of pipe that was strung between Hardisty and the Montana Saskatchewan border, and Trump wants it. Here’s my view on that. We need to find ways for Trump to win by increasing imports from Canada. I call it a judo move.
He says he doesn’t want anything from us, but then he says he wants KXL. So let’s give him that in order to increase our leverage and have him buy into an increase in what is our single largest export to the United States, which is our crude oil. And you could increase egress by upwards of a million barrels a day, or the right project. We could learn from the mistakes made on KXL 1.0, where TC chose the wrong route through the aquifer in Nebraska, and all of that, avoid the federal court area that was harassing the project. You could choose the right route on the US side; you’ve got the Canadian side built already. So that obviates the regulatory and Indigenous issues here. And I think you could get that done for a few billion dollars in 18 months, especially if Trump declared it a priority under the US Defense Procurement Act.
So you give him something he wants, he buys more into the Canadian economy, and you get additional leverage over the United States, and you generate 20 to $30 billion of additional revenue for Canada when it’s done. You also give a green light to the upstream guys to begin substantially increasing production. So I think it’s much faster, it’s much simpler, it’s much cheaper. How would you finance it? You probably need some government backstop initially, project finance it, put it out for tender amongst midstreamers. If the US government is guaranteeing it with us, you get ‘er done. You create facts that are irreversible by a change of administration.
Jackie Forrest:
Now, Jason, by the way, there’s a few objections I have to having it. You answered a few of them, like the cost, if you think you could do it that cheap, and the political risk, if you think you could get it done before, the potential for a change in government in the US, which I think is three years away, and typically pipelines have taken a lot longer to build than that. A few billion dollars and 18 months that gets rid of some of those objections. But I come back to we really only have the ability, I think to build… If we’re talking million-barrel-day pipelines, you can’t really build three or four of them, right? The industry only has so much supply to provide backing for these pipelines. And if we go forward with the KXL, it to me really reduces the chances of the West Coast pipeline.
And the thing that makes me angry about Canada is that we always do the easy thing. Why is it easier to build a pipeline through what 10 states across a continent than through one province? And at this time, when the Americans are threatening us, there’s so many strategic reasons why we should have more of our products going to the West Coast, supplying India, creating more customers, getting a better price for our oil because the Americans know we have alternatives. Does it seem like doing the easy thing is always what we do, but it’s in the big picture, maybe the wrong thing to do? We should really focus on getting the West Coast pipeline.
Jason Kenney:
Well, look, I largely agree with your assessment. Problem is often we don’t even do the easy things, right? I think you make a compelling point, and yes, the optimal project would be a West Coast project. It helps to further reduce the differential. It’s entirely domestic, by the way, and just the build is billions of dollars, tens of billions of investment in building the pipeline on the Canadian side. And our First Nations would benefit from that. They would have a permanent spinoff on revenues like a win, win, win, win, win. And it also helps us to shift away from our over-dependence on the US export market. So I love it for all of those reasons, but I just think we need to pursue an all of the above strategy. And while we should pursue as the premier is the optionality on West Coast, we should also read the room.
TMX cost, and that was only half a million incremental barrels a day. It cost 32 billion to go through the mountains with all the delays. So you would be talking on a West Coast pipeline about tens of billions of dollars. On a US Gulf Coast pipeline, with a third of it already done, you’d be talking about a few billion dollars, and you’ll be dealing with regs on the US side with a favorable US administration. I just think in the realm of reality, it has a higher prospect of getting done. And ultimately, I think we should be ambitious here and we shouldn’t be limiting ourselves. Talk about easy things. A TMX optimization could add and dredging the Vancouver Harbor so that they can fill the Aframax tankers more closer to the top, could add quarter of a million barrels a day. As you know, Enbridge optimization of their system in the US could add an equivalent amount, and we always have crew by rail as a swing at the right price point. So there is additional egress that can come on stream here. That should be a positive sign to the upstream guys.
Peter Tertzakian:
Well, I’m going to side with Jackie, actually. I remain to be convinced that that’s the right way to go. There’s a lot of pros and cons for either side. I will say, though, that we have to stop measuring things from a solely dollars and cents perspective because whether it’s 10 billion, 20, or 30 billion, the reality is these are small numbers when you think about a 30 or 40-year project and the potential prosperity that accrues over the long period. But further to that, it’s not just about dollars and cents now. We are very much in a world that is defined as we’ve discussed, Jackie, you and me, on this podcast about economic coercion, about trade wars.
And it’s not just with the United States, it’s with China and when we talk about leadership, and we talked about the lack of leadership at the national level here, my mind certainly goes to China where we have the other end of the spectrum, and we also have the rising amount of, not just in China, but called state capitalism, where you have strategic industries in a country aligned with the state to achieve not only financial objectives, but also geopolitical and national security and other types of objectives.
So to achieve that, I’ve said for a long time, it’s not about nationalizing our industries, but it’s about alignment. And so alignment requires federal government, provincial government, and industries, and it’s not just oil and gas, critical minerals, even agriculture, and others, to be much more aligned in playing this game and play it internationally in the diversification of our markets. What’s your take on, I guess, what I just said? It’s got to be more than just about dollars and cents, and what’s the cheapest alternative and the easiest alternative. We’ve got to think long-term for the next several generations in this country, otherwise we’re just going to become completely marginalized.
Jason Kenney:
Yeah, I couldn’t agree more. I mean, let me be explicit about that marginalization. We have been on a 30-year-plus decline in productivity, in competitiveness, but we have been on a multi-year decline in per capita GDP. We now have the equivalent per capita GDP of Mississippi, the poorest of the 50 United States. We have seen tens of billions of dollars of capital continue to flow outside of Canada. Mark Carney went to tell Donald Trump, we’re going to double Canadian investment in the US, and we are becoming poorer as a nation, and that will continue. And in the context of an aging population, that means we will not be able to afford the kind of healthcare and social services, and pensions that we’ve promised ourselves. This is very bloody serious, and I would’ve hoped that, given the crisis provoked by President Trump, that a man like Mark Carney could help to explain this to Canadians.
That’s what leadership would be, which is we need a paradigm shift here to get back to that Canada, we were talking that, let’s call it the Canada of the [inaudible], that could build major national pipelines in a few months. And I agree with you, Peter. I would a hundred percent support a West Coast project or two of them. I would support an East Coast project, even though I think it might not economically be feasible. I’d support all of the above approach, but I am concerned about something if we don’t get a material increase in egress, I am concerned that the upstream players are just going to keep basically grinding down their current assets, sitting dormant on the leases they have from Alberta for Greenfield, buying back shares and paying down debt and being cash machines for their current boards and shareholders.
And 10 years from now, we will find with a lack of capital investment in the upstream, if we haven’t built the required egress, that we have a diminishing basin in the face of relative stability and global oil demand. And so we will be turning down the only real significant wealth producer in our country, which would be even more problematic for paying the bills that are going to come due. So you’re right, we need to think 10 and 20 years out, and right now we have leadership at the federal level that doesn’t appear to be doing that.
Peter Tertzakian:
Yeah, yeah. I mean, it drives me up the wall when people say, “Oh my God, the price of oil is going to 50 bucks,” but it’s not enough, and so on and so forth. We’ve got to think long-term. The Chinese don’t think twice if the price of lithium is down or copper is down, or whatever. It’s a long-term play here that is for positioning yourselves, positioning your country.
Jason Kenney:
Mental exercise: imagine that in some remote region of China, they had something called the oil sands with 175 billion barrels of proven and probable reserves. They would be by far the number one producer of oil in the world, wouldn’t they?
Peter Tertzakian:
They would, and they would be even more of a powerhouse than they already are.
Jackie Forrest:
And they’d certainly be building pipelines to the coast, not just sending it to their nearest…
Jason Kenney:
They’d be building pipelines in every direction.
Jackie Forrest:
Well, Jason, this has been a fascinating conversation. One other question, as we wrap up our time, is we’re coming up to COP30. We hear news that Canada’s going to unveil some sort of climate policy at the federal level competitive climate policy, we understand. What do you think is the future here in terms of we want to build these projects, which ultimately mean we’re going to probably increase our production of oil and gas and our emissions. How does the federal government deal with that in context of COP30 and their climate goals?
Jason Kenney:
Well, first of all, I think we need some realism on the climate goals. But what I’m concerned about is that the Carney government is going to continue to push this idea that any incremental energy production in Canada has to be tied to net zero and decarbonization. And they’re trying to work out this modus vivendi, of course, with the industry on pathways plus levels of capital investment in CCUS plus their $170 targeted price on the industrial carbon tax. You add those things together, and our industry will just become economic. So my message to the Carney government is pick a lane. Do you want to hamper permanently the largest moneymaker in Canada, the oil and gas sector, while China’s annual increases in emissions equal almost the entire Canadian output, or should the world get serious about it, putting pressure on the real climate villains, starting with primarily China?
And by the way, other countries have woken up and they’ve smelled the coffee, and it hasn’t yet happened in the Labor government, but in the UK, many other European countries, you see and amongst companies like BP and Shell, a move away from the kind of extreme unrealistic views on climate policy that were predominant four or five years ago. So I think it’s time for the Carney government to catch up. In fact, his own global finance coalition on climate has fallen apart because they’ve been mugged by reality. So I would hope Mr. Carney would reflect on that.
Jackie Forrest:
And I think your point there about the size of our emissions, I think the Canadian population maybe has been somewhat misled by our media that somehow if we don’t make these changes, that it will really impact climate change. And I think we’re one and a half percent of global emissions. We could shut our entire economy down, and we still would have the problem of climate change.
Jason Kenney:
You could shut it down at one to 1.5%, and China will add over 1% next year. So it’s almost like a suicidal impulse that certain people in certain Western democracies have, which is, let’s shut ourselves down, make it impossible to pay the bills of an aging population with hugely debt-encumbered states, in order to hand huge emissions growth to countries like China. I just don’t understand in any world how that’d make sense.
Peter Tertzakian:
Wow. Well, thank you, Jason. I mean, we started out, Jackie, by saying we’re going to phone a friend, and it’s turned into an hour-long salon discussion that the only thing missing is a bottle of scotch. It’s been great to talk to you about philosophy, an unvarnished discussion I would say about provincial and federal politics, pipelines, the economy, and now carbon policy. Thanks so much for your candid views. It’s really refreshing, and we hope to have you back, Jason. It’s just great to get your perspectives.
Jason Kenney:
And thanks both for being one of, I think the most thoughtful forum for discussion in energy policy in Canada. Keep it up.
Jackie Forrest:
Thank you. And thanks to our listeners. If you enjoyed this podcast, please rate us on the app that you listened to and tell someone else about us.
Announcer:
For more ideas and insights, visit ARCenergyinstitute.com.
