A Conversation on Energy and Quebec

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This week, Yvan Cliche, Fellow at CERIUM (Center for International Studies and Research) at Université de Montreal talks about the opportunities and issues for Canadian energy, including his perspective from Quebec.

Here are some of the questions that Peter and Jackie asked Yvan: Will renewables lessen the dependence on oil and gas any time soon? Is Canada doing enough to help our allies during the Russia-Ukraine war?  Does a cap on oil and gas emissions make any sense during a period of war and energy shortages?  What do Quebecers think about oil pipelines in their province?  What about LNG exports from Quebec? Is Quebec considered energy secure now? How could that change in the future? What are some of the interesting possibilities for Quebec energy in the future?

Content referenced in this podcast:

• Yvan Cliché’s recent book titled: “Jusqu’à plus soif: Pétrole-gaz-solaire-éolien : enjeux et conflits énergétiques” – English translation: “Until no longer thirsty: Oil-gas-solar-wind power: energy issues and conflicts”.

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Episode 184 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:

I’m Peter Tertzakian. It is 2023, Jackie and I was just reflecting. We started the podcast in 2019, so we’re into the fourth year of the podcast. Isn’t that amazing?

Jackie Forrest:

It really is amazing. It has flown by and so much has happened.

Peter Tertzakian:

So much has happened, and with this podcast, our geographic reach has really expanded. We have listeners, we were checking the geography, all the way from Argentina, Qatar, Singapore, all the way around the world, so we’re very grateful to all of our listeners, and welcome to our international audience. Here in Canada, we have fairly broad representation, too. We have listeners all the way from coast to coast, and we have listeners in Québec as well, even though we’re not a French language podcast.

Jackie Forrest:

Yes and because of that, I think it’s good to talk a little bit more about what’s going on in Québec.

Peter Tertzakian:

On that note, we are delighted to have someone that I met last year at a conference with an organization called Nergica that moderated several forums, and at those forums I met Monsieur Yvan Cliche, who is our guest today. Bonjour, Yvan.

Yvan Cliche:

Bonjour.

Peter Tertzakian:

Welcome. Yvan, you’re a fellow at CERIUM, which is the Center for International Studies and Research at Université de Montréal. I hope I said that in my proper French and you’ve worked at Hydro Québec until 2018. You’ve held positions as an international project manager, a power purchase agreements contract manager, among other things, but more importantly, in 2020 you joined the Université de Montréal as a fellow and researcher in energy and written several books on international matters and energy. Welcome.

Yvan Cliche:

Yeah, thank you for having me to your program. It’s a real pleasure. I’m a regular and faithful listener to your podcast.

Jackie Forrest:

Great. One of those followers in Québec. We’re going to try to grow the Québec followers, so thanks for your support. You recently wrote a book, and it’s in French and I’m not going to even try. My French is not nearly as good as Peter.

Peter Tertzakian:

Do you want me to try? Do you want me to try?

Jackie Forrest:

Okay. All right, Peter, you could try.

Peter Tertzakian:

Yvan, you can quality control, my friend. Jusqu’à plus soif: Pétrole-gaz solaire-éolien: enjeux et conflits énergétiques.

Yvan Cliche:

That’s right.

Peter Tertzakian:

When loosely translated, by actually Google translate, into French is Until no Longer Thirsty, Oil and Gas, Solar, Wind Power Energy Issues and Conflicts.

Yvan Cliche:

Yes. I just published this book, it was published last October. I’ve written many op-eds since becoming a researcher at the Université de Montréal and I decided to in, 2021, to go for bigger projects, a book on the geopolitics of energy, oil, gas, and renewables.

Jackie Forrest:

Okay, we’re going to talk more about your book, but today we’re going to structure the discussion into three areas. We’re going to talk generally about energy, talk more about Canada, and then switch to talking about the energy situation in Québec.

Peter Tertzakian:

Yeah. Why don’t you tell us a little bit more about your background. I gave a little bit of a teaser at the beginning with our audience, but tell us about your time at Hydro Québec and what you do at CERIUM.

Yvan Cliche:

Yeah. I worked at Hydro Québec basically promoting the company’s expertise worldwide in the generation and transmission of electricity and managing services contracts between Hydro Québec and the World Bank and sisters and institutions, and also representing Hydro Québec at international energy organizations like the World Energy Council, the International Hydropower Association, and the Global Sustainable Electricity Partnership. These positions provided me with a unique opportunity for learning more about energy from an international perspective so after my career at Hydro, I joined the Université de Montréal as a fellow and researcher in the energy sector and as I’ve mentioned, I’ve started writing op-eds for various media and decided in 2021 to go for a bigger project. A book on geopolitics of energy was published in October last year.

Peter Tertzakian:

What do you think about the US move and the western world’s move to renewables and the aggressive attempt to lessen the dependence on oil and gas, even not withstanding the situation in Ukraine. Do you think we’re going to see a rapid decline in oil consumption, like some predict?

Yvan Cliche:

The end of oil has been predicted for a long time, so I would certainly not try to put a date to the end of all consumption. From my perspective, with any data indicating a push away from oil and gas, you’ll also see a lot of data indicating how reliant we still are on oil and gas. I’ve done some presentations over the last few weeks on my book and I reminded people that when I started working at Hydro Québec, oil and gas represented more than 80 percent of the energy mix worldwide. Three decades after my career, it still is more than 80 percent. We’re still relying on oil and gas for more than 80 percent to cover our energy needs. However, this being said, obviously since over the last 10 years, a new area has been opened in the energy sector. For ecologists, back 10 years ago, there was no real sound solutions to move away from oil and gas because the prices of wind and solar panels were way too high.

The technology was not sufficient enough, but now those people will go to politicians. They now have really concrete solutions to end over policy makers. Wind and solar panel have decreased in costs as you know, tremendously over the last 10 years so now we have solutions to move away from oil and gas, but again, this transition will be slow. I think it’s picking up, especially in Europe and in the western world. It’s slower in developing nations, but obviously the trend is there and I think the debate now is around the pace of the transition. We still don’t know yet if it’s going to be fast or it’s going to take decades to come.

Jackie Forrest:

Yeah, that is the big question, the pace. I think everyone knows the direction of travel. In your book, you talked about the trilemma of energy, that security of supply, affordability and limited environmental impact is the goal and we’ve been calling it cheap, clean, safe, and secure energy, which kind of has the same trilemma there. Today, because of what’s going on in the world, do you think that this move towards caring about security affordability is going to slow down or speed up the pace of transition?

Yvan Cliche:

I see the trilemma as a sequence. I’ve covered it in my book. At first, oil became an industry more than 150 years ago. The priority was set on securing enough supply to feed the world more and more dependent on energy, in fact, oil, twin wars and to feed a growing modern economy. 2022 was a landmark here because environmental impacts have taken the backseat with energy security back to the top. It will stay like this for a long time. All countries have taken notes about the renewability created by being too dependent on others for your energy supplies. Affordability stays central as we see in Europe where governments have already spent billions of dollars to lower the impacts of energy prices increased on industry and households, but again, energy security is back on top of the trilemma for many years to come.

Peter Tertzakian:

Your comment that energy security will effectively dominate the conversation ahead of environmental issues would lead some environmental groups to bristle, I would say. Having said that though, my review of history, we share the same passion of trying to understand the dynamics of energy in the context of geopolitics and so on, is that actually energy security drives transition faster than environmental degradation because there’s this strategic imperative to shift off of one energy paradigm onto another one that is more secure for society and in this case, that is aligned with environmental goals as well as the shift to renewables. How do you view that?

Yvan Cliche:

Yeah, I think you’re right. You’re basically right, but your renewables are local. All countries have sun, all countries have wind, so in terms of moving ahead to renewables, it will obviously be a factor playing positively in terms of securing your energy position. At the same time, as you know, the move to renewables is highly dependent on minerals. What we see is that we also are reliant on China for securing minerals. As you know, China dominates the refining sector of critical minerals for over 80 percent of worldwide supplies so this is also a major geopolitical issue that is taken up front by Western government and there has been, over the last two or three years, several initiatives taken by governments to break away from their dependence on China. Yes, we are targeting more and more energy security, but at the same time being reliant on a few countries exports for minerals is also a new issue that needs to be tackled by governments.

Jackie Forrest:

Right. Yvan, I think there’s just much more recognition of that strategic weakness that we have with some of these programs. The RA, which is going to incent more manufacturing in North America and even in Canada. The fall economic update promised some incentives to bring more manufacturing here, but you’re right, when it comes to clean energy, we’ve probably got more of an energy security issue than we do with oil because it’s more concentrated.

Peter Tertzakian:

We’ll have to see what the push to seek vital mineral resources, as Yvan said will do. There is the same environmental surface rights issues, indigenous issues and all sorts of things with things like whether it’s cobalt, nickel, you name it, and even these vital lithium, these vital minerals that are needed for the renewable revolution and the desire to push for energy security to access those minerals more domestically. We’ll have to see if the rules and regulations and all the issues are going to be relaxed as a consequence.

Jackie Forrest:

Right. Back to my article that I wrote at the end of last year, arguing that we have to do things a lot faster if we’re going to achieve some of these clean and green energy goals.

Let’s switch to Canada. Let’s talk about Canada’s role in terms of the security dimension. A lot of people maybe don’t appreciate that our oil production is very significant in the world and that we are about 20 percent of all of NATO countries consumption if you just look at our production. Not very often is it looked at that way, but in times of war like we are today, where you get your oil from and are those secure sources of supply becomes very important. In this world of a very tight oil market in general, even small curtailments of production can have some pretty big consequences in terms of what’s going on in Europe and Russia, but at the same time, we’ve got our federal government focused here on greenhouse gas emissions and talking about things like putting a cap on the production of oil and gas. If we don’t achieve our emissions reduction goals of something like over 40 percent by 2030, do you think that something like a cap on oil and gas makes any sense in this world?

Yvan Cliche:

I’ll start by saying that 2022 is a last opportunity for Canada in terms of supporting allies in such a huge crisis. We have key energy resources but with no “geopolitical benefits”. From my perspective, in 2022, we have seen more clearly the gap between us and the US in terms of capacities to develop our natural resources is use them externally for financial benefits and geopolitical influence. As you know, in only seven years from 2015 to 2022, the US came from zero exports of LNG to number one position as an LNG exporter.

To come back to your question, my perspective is that the interfaces from government should be on curbing demand, not supply, because doing so, companies reduce their needed investments and it creates supply shortages that contribute to higher energy prices. What I often said during my presentations is that it’s a pity we cannot build a better consensus in this country for an approach about the use of our oil and gas resources with a plan based on an assumption that oil consumption will decline in time, but for the next decades or so, Canada should take advantage of its position as a world producer financially and geopolitically. This is the approach privileged by the Norwegians, by the way, and we should be inspired by it.

Peter Tertzakian:

Yeah, I agree. The Norwegians have been able to balance the idea of managing their demand, being much more efficient with it, yet at the same time being a meaningful contributor to western supply sources of their oil and gas. On this point, you say in your book, oil has a very big drawback. It is geographically concentrated. It is not available everywhere in all countries and on one hand, that leads to the riskiness geopolitically of the vital commodity because most of the oil is concentrated in countries that have historically been outright hostile to western interests.

Yet if we flip it around and further to your point, Jackie, that Canada supplies 20 percent of NATO’s oil needs, which is hugely significant, we can turn that drawback into a positive and I think that’s what you were getting at Yvan, is that this is a missed opportunity that we can be viewed as a major construct of supplier of energy to the interests because at the end of the day, I mean we can’t be naive about this. We are in a proxy war with the Russians. Vladimir Putin has said that.

I’m a child of the Cold War, as I like to say in many of these podcasts so I remember what it was like back then and there’s no question in my mind we are in conflict with the Russians and we can’t be naive to that and we have to acknowledge that Canada is a major supplier of a vital military strategic commodity at this time because we can’t transition to alternative forms of energy at a pace that meets our needs in the here and the now.

Yvan Cliche:

Yeah, you’re totally right. As far as Alberta is concerned, two things come to my mind is lack of access to the sea enduring Alberta oil and gas industry to enjoy all the financial benefits it could drive from selling its energy to countries other than the US and for Canada, this landlock situation is also a lost opportunity for increased geopolitical influence in world affairs, especially in times of crisis such as now.

Jackie Forrest:

On that point, one of the reasons that we don’t access the tidewater is different provinces have different views on that, and Energy East was a big project that was going to enable Canadian oil to get out to the east coast. If that had happened, that would be a real benefit to the world today. Tell us, what do people in Québec really think about Alberta? I think during that debate around Energy East, the message here in the west was that Québecers are not going to ever support a pipeline for oil, especially the oils sands. What are their views on the oils sands and the potential for a pipeline?

Yvan Cliche:

Concerning Alberta, I will tell you an interesting story. I think we should differentiate between [inaudible 00:16:17] an average Québecer. A year ago, I wrote an op-ed with the following excerpt more or less, so I opened the quotes here. “Some of our political elites in Québec have scolded the dirty oil of Alberta. However, Québec imports its crude oil from Western Canada for almost half of its consumption. We wisely bet in Québec on hydro electricity because our rivers were the main natural resources that we could harness in our territory, and Albertans have done the same, ie developed the local resource. In their case, hydro carbons. This wealth has generated significant equalization transfers to Canada from which Québecers have largely benefited. They should encourage us to remain modest to appreciate the fact that geography has smiled on us greatly.”

To my surprise, I must admit this opinion received a lot of support in the social media from fellow Québecers, much more than all the comments I have published so far, so I think that there’s also the fact that Albertans have not that much come to Québec to explain the financial and geopolitical advantages of selling their products abroad. There’s also another reason. As for oil and gas, the situation in Canada is very different compared to the US. In the US, there are more than 30 states that are more or less involved in the oil business compared to only a few provinces in Canada, so it is less common ground in support of the oil and gas industry among Canadians.

Jackie Forrest:

Okay. Hopefully we can, through this podcast and others, get more followers to get more common ground. I do have a question on LNG. This Énergie Saguenay Project was going to be about a 1.4 BCF per day LNG export facility in Québec, and it was rejected by Ottawa just before the invasion of Ukraine by Russia last year. Do you think that people would look differently at this project now when we know Europe needs gas and they’re making deals with Qatar and the United States?

Yvan Cliche:

The Saguenay Project was presented two years ago in a very different context compared to today. With the 2022 energy crisis, we can suspect that people in Québec would be much more aware about the importance of energy security and the opportunity provided by the crisis in Europe. However, 20 years ago there was high unemployment in Québec and Québec was striving for foreign investment, outside investments, bringing lots of good jobs, especially in regions, and there was less awareness obviously 20 years ago about climate change. The situation is the opposite today.

Québec is a sought after place for many industries looking for clean electricity. The province does not lack potential in terms of significant foreign investments, unemployment is at its lowest level and there is increased sensitivity about climate change. All this represents strong [inaudible 00:19:18] against this project gathering enough support for approval. Further more, most politicians in Québec, even pro-business ones will not dare spend political capital for a controversial project, while many others, hydrogen or so are striving to get the go ahead.

Jackie Forrest:

Yeah. You’re saying probably pretty low probability even today based on the fact that Québec is doing well economically, and you’re right, it is a political issue that politicians will definitely face controversy for if they were to support it.

Peter Tertzakian:

Yeah, I have to say I’m not overly optimistic that that project will go ahead, but let’s go back to energy security in Québec because in your book, Yvan, you talk about how Québec is vulnerable to the geopolitics of energy even though there is this feeling in Québec that you’re insulated from the geopolitics of energy because of Hydro Québec and the electricity that it provides. I think 99 percent of the electricity comes from Hydro Québec, but that there is vulnerability in mobility because of course we have to move around goods in diesel powered trucks and so on. Talk about the vulnerabilities of Québec that you talk about in your book and how people think about it there.

Yvan Cliche:

In 2023, if we see things from the “French Shore ring angle”, a new popular concept, we are in a good place with Canada and the US being our suppliers for oil and gas. A few years ago we were reliant on countries like Venezuela, but the situation has completely changed over the last five, six years and we are fully reliant on all resources for electricity. I think that like many Canadian provinces, we’re in a good place in terms of energy security now in 2023 and it’s trilemma index, the World Energy Council places Canada in the top spot in terms of energy security. This index measures a country’s ability to meet current and future energy demand, its ability to withstand supply shocks, so many countries in Europe will envy our privileged position.

Peter Tertzakian:

We’ve talked about it on this program. I’m a little bit surprised by that trilemma index because so much of our oil even to get to Québec has to transit through the United States and come back and we never really know, in my opinion at least, what the United States is thinking.

Yvan Cliche:

Yeah, you’re right, and we’ve seen it with the Trump administration. We were under the assumption in Canada that our position was secure in terms of trading with the US when we’ve seen what we went through having to renegotiate the trade agreements with the US and also with line five. I remember one of your podcasts you mentioned that there was a decision to go to the US and we would be very much fortunate today if we had taken a different decision at the time to have line five go only through Canadian territory. I also agree with the fact that we’re never totally secure. It will be probably much more in a secure position as we were to be provided from Canada for oil and gas needs. At the same time, if you compare circumstances with other countries like Venezuela, it’s obviously more secure for Québecers to get their oil and gas from Canada and the US compared to countries like Saudi Arabia or Latin American countries.

Jackie Forrest:

I want to come back to this idea that Québecers are very energy secure because of their large and abundant source of hydropower, and I think that’s true today, but we know things are changing. We know that the demand for electricity is going to go up significantly if we electrify transportation and heating. I know a lot of heating is electrified in Québec, but if we even electrify more, and we did learn that Hydro Québec is actually looking to secure some renewable energy, wind and solar. They put out some procurements for that. Do you think that Québec can continue to meet all its own needs when you consider the ramp up of demand that we’re going to be seeing over the coming decades?

Yvan Cliche:

Interesting question. There are new paradigms for energy and hydro power in Québec. Ottawa Québec needs to develop additional capacity of 100 terawatt power of electricity until 2050 to decarbonize Québec’s economy from a current generation of 200 terawatt power so it’s 50 percent more clean energy. For hydro power, we will need to secure support from local communities, including natives, and we all know that this is a much more difficult endeavor today compared to the past. Hydro projects will also come at higher costs, which is normal, by the way, since least costly projects have already been developed.

The province also has ambitions to sell electricity to neighboring provinces in US states in support of their de-carbonization objectives. On top, as mentioned, many industries strive for an extra presence or presence in Québec because of our clean and reliable electricity, but hydro projects take a very long time to be commissioned, so all of this must be carefully balanced to develop capacity that makes sense economically while taking long-term environmental concerns into account.

Jackie Forrest:

Do you think it’s possible that they can grow their production considering all that? I will add another thing. Climate change, is that going to somehow affect the amount of hydro electricity that can be generated? We’ve seen that in other parts of North America this year where drought has resulted in less hydropower production.

Yvan Cliche:

Yeah, and because of that, now they’re stuck in Québec that we must save our electricity as much as possible. The fact that the prices are low is a factor in the efficiency of use of our electricity, so there will be discussions years ahead in Québec about the prices of electricity, the use of electricity. This is really a recent change, we all know now that clean electricity will come more sparsely and that we will need to use it much more intelligently than in the past.

Peter Tertzakian:

Yeah, that’s interesting because definitely low energy prices in a jurisdiction is a competitive advantage for many companies, and that’s huge. Talk about the push to export electricity to the east coast of the United States into Massachusetts and the problems that there has been blockades of those sorts of hydro projects.

Yvan Cliche:

What we have seen in the US, Hydro Québec experts US, is one interesting example are how the transition can become really complicated. We all know that the energy transition is a transition to clean electricity, and we all know that it will require more mining as mentioned because the energy transition is highly dependent on minerals. Also, we’ll need more lines Hydro Québec projects is to bring more clean electricity to one line to Massachusetts, and it’s going through major obstacles. This is an indication that even if we have high ambitions in terms of transiting to clean energy, it’s not an easy story. It does not seem to be a straight line from one point to the other.

This project in Massachusetts has been stalled for over a year now, and we still don’t know if it’s going to move ahead, so this is again, a clear indication that if we want to transit, it will require major changes in our landscapes, be it more mining in our territories, more lines, et cetera and I think that people should be more aware of that. I’ve also written about this, that government should prepare people for these changes coming in our territories.

Peter Tertzakian:

We’re coming to the end of the podcast, Yvan, and I will maybe get you to offer some thoughts from a final passage I want to read from your book. The energy sector is called upon to experience major transformations and these point to interesting possibilities important for Québec. Talk about those interesting possibilities.

Yvan Cliche:

The energy transition is a transition to clean electricity, as I’ve mentioned with more generation capacities and more lines in our landscapes and the transition is heavily reliant on minerals for wind stations, electric vehicles, et cetera. Québec already has a fully operational clean electricity system with low rates, strong mining capacities, a position in batteries technologies, high voltage transmission expertise. With its reservoirs, it can play the role as the battery of the northeast in support for the penetration of intermittent power, solar and wind and its generating stations can be operational very fast in five minutes if solar or wind stops providing energy in other jurisdictions. It is well positioned to be a major player for the energy transition in the North American context. It has strong cards in its hands.

Peter Tertzakian:

Great. I think it’s time to say, merci beaucoup, Yvan, thank you for joining our program. It’s really wonderful to get your perspectives and your thoughts about oil, gas, renewables, geography, Québec, geopolitics, you name it. Thank you again for joining us and thank you to our audience around the world for listening.

Jackie Forrest:

Yeah. Thank you, Yvan.

Yvan Cliche:

Thank you for the opportunity. Appreciate it.

Jackie Forrest:

To our listeners, if you enjoyed this podcast, please rate us on the app that you listen to and tell someone else about us.

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