A Conversation with the Honourable Jonathan Wilkinson
This week our guest is the Honourable Jonathan Wilkinson, Minister of Natural Resources.
The Canadian federal government has recently released some important energy and climate policy, including the 2030 Emissions Reduction Plan and the Canadian Federal Budget 2022.
Here are some of the questions Peter and Jackie asked Minister Wilkinson: How achievable is Canada’s greenhouse gas reduction goal of a 40 to 45 percent reduction by 2030? What has been the response to the plan from corporate Canada? What is the reaction to the CCS tax credit and what are the remaining barriers for projects moving ahead? With Russia’s invasion of Ukraine and the resulting energy price shock, is Canada prepared to increase hydrocarbon supplies? It takes a long time to build large energy projects in Canada, how can we move faster? What is the future of critical minerals and hydrogen in Canada?
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Episode 150 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.
Female Announcer:
This is the ARC Energy Ideas podcast with Peter Tertzakian and Jackie Forrest. Exploring trends that influence the energy business.
Jackie:
Welcome to the ARC Energy Ideas podcast. I’m Jackie Forrest.
Peter:
And I’m Peter Tertzakian. Welcome back. Well, Jackie, I don’t know about you, but every second person I know seems to have COVID again.
Jackie:
Yeah, it is a little crazy.
Peter:
Yeah-
Jackie:
Makes you a little scared to go out actually.
Peter:
Yeah. I’m getting to be the same way. I don’t know what wave we’re on. We’re on the fifth or sixth. I think people have lost track and stopped counting. But you know what? Everything is a wave. Things come and go, history repeats itself and there’s episodes and so on, even pandemics arguably as larger a wave. But I’m going to talk about a wave and we have a special guest today. Waves of interest and development of clean tech, renewable energy, the whole transition thing. And I diarized my career as starting in the Cleantech side of things 20 years ago when weather there was a big wave of interest and things like the hydrogen economy.
Peter:
And I met lots of people. And being in the finance business, I followed and analyzed the makers of hydrogen equipment for the hydrogen economy. And in that capacity, I met lots of really interesting people, including our guest. And so here we are again. There’s a new wave, arguably a much more sustainable wave for things like hydrogen and the new economy; the new energy clean and economy. And now our special guest is involved in making policy. And, Jackie, you and I are involved in analyzing policy and talking about policy. So you’re probably wondering who that guest is and I’m delighted and honored to have with us the honorable Jonathan Wilkinson, Minister of Natural Resources, Canada. And Minister Wilkinson, welcome.
Hon. Jonathan Wilkinson:
Thank you very much.
Peter:
Well, you and I were in that hydrogen economy 20 years ago when we first met and there’s so much proverbial water under the bridge. And now here we are again. You are minister of natural resources. You were minister of environment climate change Canada. And so, boy, we’ve got a lot to talk about given so much that’s gone on. So, well, why don’t we get out. Jackie, I’ll turn it over to you, and we should have a really interesting conversation.
Jackie:
Yeah, before we get started, our audience always wants to know a bit about the background. So you have your roots in Saskatchewan. Maybe just tell us a bit about yourself and why you decided to enter federal politics.
Hon. Jonathan Wilkinson:
Yeah. I grew up in Saskatchewan and actually started my career as a public servant working on constitutional affairs for former [Premier Romano 00:02:58]. But I left for the business community, worked in Toronto for a number of years, and then was in the Cleantech community where I met Peter. Involved with a number of Cleantech companies and was CEO of a couple of them. Focusing on how do you actually use technology to address emissions, reductions in a manner that actually is compatible with the strong economy. And I got into politics.
Hon. Jonathan Wilkinson:
I would say it was my wife’s happiest day of her life when I came home and I said, maybe I should think about doing this, but it was largely driven by my concern about climate change. As many people who have children, I worry a great deal about the future that we are going to be handing to them. And I was a good person to talk about all the things that I thought should be done. And a friend of mine finally said to me, well, if you feel so strongly about it, what are you going to do about it? And that was kind of what got me into this.
Peter:
Wow. Well, that’s great. There’s so many armchair quarterbacks out there that opine, but few that actually dedicate their lives and significant portion of their lives to public service. And I don’t think a lot of people understand. Certainly I’ve known many ministers of many different political stripes over the years. And I know that you’re some of the hardest working people I know, and we really appreciate your public service. Give us a sense, give our audience a sense of sort of like your daily routine and what you do as a minister.
Hon. Jonathan Wilkinson:
The first thing I would say is there’s pretty much no daily routine. Every day is crazy. Every day is booked in 15 minute, or if you’re really lucky, 30 minute increments. There are a range of stakeholder meetings that you take. There are obviously, for those of us privileged to be in the federal cabinet, there are cabinet meetings and cabinet committee meetings. There’s traveling around the country to actually ensure that you’re hearing from Canadians about their perspectives. There’s international travel associated with many of the things that we do on a collaborative basis with our international counterparts.
Hon. Jonathan Wilkinson:
There’s obviously you got to take care of your writing. You are still first and foremost an MP, even if you are a minister, and there’s many things that you have to do in that regard. And so typically we are from the west coast. We are leaving to go back to Ottawa on Sunday morning. It is a full day either there or in some other place in this country or elsewhere in the world. Typically, we get to be home at best, a few days at the end of the month. So up to five or six days. And normally I’m home either late Thursday night or late Friday night and I leave again Sunday morning. So it’s a bit of a lonely existence for my partner, so.
Peter:
Yeah. Yeah. Well, it’s hard on families. I know. And it’s a really difficult, difficult lifestyle. So, again, thanks very much. Why don’t we talk about Canadian energy and environment policy from a domestic lens first of all. We’ve got a lot of people in Canada who have aspirations for the future like you in terms of decarbonization, in terms of transition, but also have aspirations to live in a freedom loving democracy. So energy security is a big issue. Can you talk a little bit about maybe how you and your fellow ministers are feeling about our country’s ability to achieve the targets that are being set out over the course of the next two, three decades?
Hon. Jonathan Wilkinson:
Yeah. A lot of folks will probably know that just two or three weeks ago, the government released its emissions reduction plan, which built on the previous climate plan that I had the fortune of leading the development of. And basically it looks at how do you actually reduce emissions in every sector of the economy focusing on achieving the 2030 target, which is 40 to 45% reduction relative to the… where we were at in 2005. And everybody’s focused on 2030, because it’s essentially the step that you need to take, if you really are going to be thinking about net zero by 2050 as a reality. You can’t say, well, we’re going basically be flat all the way through to 2030, but we’re still going to achieve net zero by 2050. And so the plan that we put together is ambitious. There is no question that it is ambitious in every sector of the economy.
Hon. Jonathan Wilkinson:
We’re saying in the transportation sector, that 60% of the cars that are sold in this country by 2030 are going to be zero emission vehicles. That’s not simple. That requires a whole bunch of work, not just by the auto manufacturers, but building out infrastructure and everything else. But it provides a pathway in each of the sectors as to how you can actually make the reductions that are reasonable to assume that we can make. And so every sector has a different projected target, some much higher than others, because it is more reasonable to see how the pathway is to how you get there by 2030. I think we are quite comfortable that this plan is a reasonable plan. I would not say that it’s easy. It is a stretch to stretch everywhere. We are all going to have to pitch in and push hard, but it’s not dissimilar to running a business, Peter.
Hon. Jonathan Wilkinson:
At the beginning of the year, when you’re setting your budget, if you went around, you’re the CEO, and you went around the business at the table and you said to everybody, are you really comfortable that we’re going to be able to achieve our goal? And everybody said, yes. You probably haven’t set the ambition high enough. And so this is ambitious, but it’s ambitious that shows us a path to get to where we, from a science perspective, need to go. I always say, this whole discussion around climate change, it’s a science issue. It shouldn’t be a political issue. It definitely shouldn’t be a partisan issue. Science is telling us what we need to achieve. The discussion needs to be about how do we do that? How do we work together to do that?
Jackie:
So Minister the missions reductions plan, I’m sure you’ve had a chance to hear quite a bit about how people think about it. So we’re just interested if you could share some of those responses from corporate Canada, oil and gas or other sectors that have talked to you about it.
Hon. Jonathan Wilkinson:
Yeah. Certainly we’ve heard a lot from a whole range of folks. And with respect to the oil and gas sector in particular, I spent some time just before the emissions reduction plan was released in talking to a number of people in the sector. And then I came to Calgary immediately afterwards to have a number of meetings. And I would say that overwhelmingly the response from the sector was it’s ambitious. It’s not going to be easy, but we want to work together. We want to collaborate and figure out how we can make progress towards those objectives. I often say, well, the pathways folks led because they were the first ones that committed to net zero by 2050. And they said, work with us and collaborate with us. But I’m hearing it from a whole range of people, including the Canadian Association of Petroleum Producers. Let’s collaborate and let’s actually work together to figure out how we do that.
Hon. Jonathan Wilkinson:
And as you know, part of that is on the sector and part of it’s on government. And in the aftermath of that in the budget, we came forward with the carbon capture and sequestration tax credit, which is an enormous enabler for some of those emissions reductions. I think across most of the other sectors, it’s been by and large the same response, with the one caveat that some of the financial actors in this country. The banks in particular are saying, fine, we actually understand the need to do this. We actually understand the ambitious in doing it, but we want to see more in terms of what the economic strategy for the country is going forward. And that is something that I’m going to have a lot more to say about over the next few weeks.
Jackie:
We’re going to come to that, the CCS tax credit, because that’s fairly new news, and I’m sure you’ve had lots of feedback on that, but let’s talk a little bit about some of the other areas in the missions reduction plan. Let’s talk about that EV car sales by 60% by 2030 and 20% by 2025 as a mandate. How have the automakers responded? And we had a podcast on this a few weeks ago talking about, we felt like the infrastructure was the real barrier here and a lot more money than what was put forward in that plan might be needed to actually realize these goals.
Hon. Jonathan Wilkinson:
So the auto manufacturer, that’s certainly one of the points that they make is in order to see broad based deployment, you need to see much more work done on the infrastructure, and I think that’s fair. And I think what we have don is work to build out the infrastructure starting initially in some of the more concentrated markets. Where you see the most progress on EV infrastructure, not coincidentally, is where provincial governments have also made a priority. So in British Columbia, there’s almost nowhere that you go that you can’t charge up your EV. That’s not true in most other provinces. Same thing is increasingly true in Quebec, because both Quebec and British Columbia have spent money in working alongside the federal government to build out the infrastructure. We had a bunch more money that was in the emissions reduction plan to continue the work, to build out another 50,000 chargers in this country.
Hon. Jonathan Wilkinson:
And what I would say is we think that that is largely going to be sufficient, but certainly if we need more resourcing, we will certainly look at deploying more resourcing. One of the reasons why we actually think that it will likely be sufficient is at the end of the day, the government is not intending to be in the electric vehicle infrastructure business in the long term. We need to get to the point where there is enough load, enough cars on the road in particular markets where it actually makes economic sense for people to make an investment in EV charging and make money off of actually running those stations.
Hon. Jonathan Wilkinson:
We are almost there in some urban markets and certainly like places like Vancouver, we’re pretty much there, where the federal government is not going to need to spend much more money on electrical vehicle infrastructure. But certainly in smaller communities in rural Canada, there’s a lot more work that we’re going to need to do. And building a business case is going to take a lot longer. And so that’s what essentially the money that was in this submissions reduction plan and then in the budget is intended to do. So, yes, we need to build out the EV infrastructure, but we are in the process of doing that. And we’re very optimistic we’re going to get to the point where those sales targets are going to be able to be met.
Peter:
And what about the automakers themselves? Because they have to tool up and we have to get the EVs for people. There’s of course with the supply chain issues right now, and those complications, there’s waiting lists for a year, year and a half, some longer. What are the automaker management and executives telling you in terms of their ability to create the supply?
Hon. Jonathan Wilkinson:
Well, what they’re saying is, certainly they feel it’s ambitious. I’m not going to lie, but I think that perhaps there’s greater comfort than there might have been five years ago or certainly 10 years ago for a couple of reasons. Probably most importantly is that most of the automakers are actually ramping up many different models of cars. You’re going to actually… Right now, there are only a relatively small number of models of electric vehicles that are out there. You are going to see a plethora of new models coming forward from many of the auto manufacturers within the next few years. And so I think that gives them greater confidence that they’re going to be able to provide the supply that is going to be required. So, A, that. B, it’s important that we have carrots in terms of actually building the volumes and buying down the price difference that exists right now that will come down as we start to see larger volumes being manufactured.
Hon. Jonathan Wilkinson:
But there’s also important to actually have regulatory mechanisms that actually require automakers to try to move faster. And that’s what a supply mandate is about; is about hiring them to have a certain proportion of correspond the lots. Both BC and Quebec have supply mandates. And both of those have seen far higher levels of EV deployment. I think it’s got to be an integrated strategy. I think the auto manufacturers understand that. I think they are increasingly of the view that they are going to be part of the solution to finding this out. But is it ambitious? Would they say it’s ambitious? Of course they would. Just like the oil gas sector would say the targets there are ambitious too.
Peter:
Okay. Hey, fun fact, you’re the only person I know that drives a hydrogen vehicle. Tell us about that and the Vancouver infrastructure. Where do you fuel up?
Hon. Jonathan Wilkinson:
So, BC is the only place probably in Canada where you could drive a hydrogen fuel cell car because we have a number of hydrogen fueling stations and a number of others, I had that are just in the process of being built. That will be valuable going forward, irrespective of how many light duty vehicles there are, because there will be other applications, transportation applications that I think are going to require hydrogen. But I am very fortunate. The hydrogen station that I typically use is actually only a kilometer from where I live. And my hydrogen car is a Hyundai. So, Hyundai and Toyota both have models. It is something that as you know very well, Peter, probably will have geographic application. I think battery technology probably has won the day in North America by and large, but there is probably some space still for hydrogen.
Hon. Jonathan Wilkinson:
And if you go to Korea and Japan, hydrogen is actually perhaps the leading option. So, it’s very interesting. And I bought the car largely nostalgically because when I was running a hydrogen purification company, as you know, we did a lot of work with Ballard and Ford and Daimler, Chrysler on an impending launch at that point of a very large number of fuel cell vehicles. That was back in 2006. At a time when the technology was not quite ready for prime time. It is ready for prime time now. This car is a beautiful car.
Peter:
Yeah. Yeah.
Jackie:
Okay. Well, Minister Wilkinson, let’s switch back to the CCS tax credit. So, the budget announced potential for a 50% tax credit for the capture equipment, a little bit less for some of the storage or transportation equipment, as long as you spend the money before 2030. We wanted to talk a little bit about how that’s been received. Are there other barriers holding back a large investment in CCS in Western Canada in your view?
Hon. Jonathan Wilkinson:
Well, I think there are other barriers. But I would say that the reception of the tax credit actually was very positive, at least from the feedback that I’ve received. And I saw in The Globe and Mail this weekend an interview with Derek Evans of MEG Energy, where he talked about it being an important step forward. So, I think it is. I think there will be folks in the sector that are going to be looking for the province to step up and be part of this conversation as well. But I think that the tax credit itself was very well received. The other part that has been an ongoing conversation with the sector is getting certainty around the price on pollution. In order to enable and unlock the private sector capital that we need to see to deploy carbon capture and sequestration solutions, which are critical for us to achieve our 2030 target.
Hon. Jonathan Wilkinson:
There is a desire, I think, on the part of many in the sector to see more certainty around the price. And of course, not being partisan here, but there is an ongoing debate within the Conservative Party of Canada about whether pollution pricing should be on the table or not. That will obviously get resolved one way or the other in the context of their leadership campaign. But it does create a lot of uncertainty for businesses that are thinking about actually deploying capital. And so, one of the things that we noted that we would be doing in the budget that will require a bit more work over the next few months is essentially looking at mechanisms. Some call them contracts for differences that essentially lock in the price contractually, so that business can have certainty about where the price is going over the next little while. And I think that will be an incredibly important piece of unlocking the private sector investment.
Jackie:
Yeah. I agree with you. I know even it’s great that you’re going to get a tax credit representing half of the capital cost, but you still need to return on the remainder, and you’re going to have to have a price on carbon that is certain, I think, to see big multi-billion-dollar investments.
Peter:
Yeah. Longevity of policy, certainty, whether it’s carbon taxes, clean fuel standards, CCS, this is the number one key issue because these big infrastructural projects cost billions of dollars and they’re amortized over several decades. So, you can’t have policy uncertainty.
Hon. Jonathan Wilkinson:
And I think that’s a really important point. We unfortunately have not gotten to the level of political maturity in this country where we’ve gotten past that conversation. The Europeans have. I tried to explain this to the UK minister about what the situation was in Canada. It’s a conservative government in the United Kingdom. I tried to explain this to them. It bewildered him as to why it would be that the conservative party in a country would actually not be interested in certainty for business, would not be in favor of a market mechanism like pricing pollution that actually gets you out of regulation and making specific investments because that’s normally a conservative approach.
Hon. Jonathan Wilkinson:
So, I totally get it. And the sector has been very clear with us. They need certainty. And so, we’re trying to come up with mechanisms in the short term. I would prefer in the long term that we get to the point where we actually have general agreement on some of these fundamental issues around certainty. And then you can debate some of the specifics about how you actually get to your targets and those kinds of things. But we’re not there in Canada right now.
Peter:
Yeah. Yeah. So, certainty of policy is one thing. Certainty of supply is another thing. And the invasion of Ukraine by Russia has really upended our four-decade long sense of security since the last oil price shocks and geopolitical issues back in the 1970s. And so now we have a spike in oil prices, other supply chain issues that are causing inflation across the board. The ability to access cheap, clean, safe, secure energy is being challenged, especially in Europe, which is part of, I’ll call it the free market democratic block of the world, that we are a part of as well. So given these recent events, which are only a handful of weeks old, how is the federal government thinking about energy policy now, considering the events of the last I’ll call it a couple of months?
Hon. Jonathan Wilkinson:
Well, the issues that have come to the fore in Ukraine, and let’s be clear, it is a brutal, awful, terrible thing that is happening in Ukraine. Have certainly caused the world to reflect a little bit more than perhaps we had in the last decade on energy security issues, energy affordability issues. And I think it’s incumbent on governments in Canada and the United States and elsewhere to ensure that we are reflecting seriously on that. I would say though that there are two polls in this country in terms of some of the reaction that I think probably have both got it wrong. One is, well, energy security is so important that we just need to forget about climate change and deal with energy security in any way that we can. The other is the folks that actually say, well, climate change is such an enormously impending and critical issue that we just can’t afford to address the energy security issues that are facing Europe and other countries.
Hon. Jonathan Wilkinson:
And so, effectively, Europe you’re on your own. And I actually think they both have it wrong. And to be honest with you, I think both of them represent an abdication of thoughtful leadership. At the end of the day, Canadians, I think expect that we can walk and chew gum at the same time, that we can be thoughtful about how we think about reconciling those in a manner that actually allows us to make progress towards both energy security and effective climate policy. In that regard, the biggest energy security issues that are facing the world are facing Europe, which is heavily dependent on Russian oil and gas. Europe has made the decision that they are going to look to displace as much as they can, the oil and gas that they secure right now from Russia, but that is going to be a long-term process.
Hon. Jonathan Wilkinson:
You can’t go from where Germany is and essentially turn off the taps to Germany and to Russia in six months, which is not going to happen. So, they are looking for alternative sources, but they’re also looking to really accelerate the work that they have been doing to transition towards renewables and hydrogen. And in that context, Canada has a role to play. The Europeans have asked us to help them. We, I think as you know, indicated and worked with the sector and with the pipeline companies to bring forward production that was already essentially baked in, that we was baked into the climate plan, that was baked into production forecasts, but we look to bring it forward such that we could put more supply on the market to try to stabilize pricing and to provide more supply that could be available to Europe. And we announced that we would be moving 300,000 barrels a day by the end of the year is what we’re focused on.
Hon. Jonathan Wilkinson:
We’re also talking to Europe about LNG on the east coast. Not simple, because we don’t have facilities there, but there are a couple of projects that are possible. But those would need to be done in a manner that actually mitigate some of the domestic emissions, so they can fit within our climate plan. And it would need to be done with Europe and in a manner that actually enables the transition to hydrogen. But Europe’s a great counterparty in that regard, because they want to enable that. They want to actually ensure that they can move beyond natural gas. So, we’re looking at that and we’re looking at how do you actually help our friends who are… Let’s be clear, this isn’t just about high gas prices in Europe. This is about, will we have enough fuel to deliver groceries to our grocery stores?
Hon. Jonathan Wilkinson:
Will we have enough natural gas in the fall to be able to heat our homes? This is truly a crisis. And so our view is, yes, of course, we have to address the needs of our friends, but we also have to do it in a manner which is consistent with our continuing focus on addressing the existential issue that is climate change. And I don’t think it’s that difficult to do both.
Jackie:
Well, let me hit on some of that, the idea of maybe expanding our east coast LNG, and of course, the minister [Guilbeault 00:24:34] also announced the approval of that offshore Newfoundland oil production project. How is the notion of drilling for oil maybe increasing our production aligned with your climate goals? Can you foresee a real growth in hydrocarbon production and still make those climate goals?
Hon. Jonathan Wilkinson:
Well, again, it depends a little bit on how you do it. You referenced the Bay du Nord project off of Newfoundland. It is one of the lowest emissions intensity projects in the world. The absolute emissions from that project are about 0.2 megatons a year. There are an enormous number of industrial facilities in this country that are not oil and gas that emit far more than that. It is required to be net zero by 2050. It will have to fit within the overall oil and gas cap that is still under development. And I would say to you, that’s exactly the model that we want to see for the sector generally, which is driving emissions down such that we can actually say that these are some of the lowest production emission barrels that can be produced anywhere in the world.
Hon. Jonathan Wilkinson:
At the end of the day, we are going through a transition. We are not going to see a decline, a significant decline. Well, you guys will know this better than me, but a significant decline in oil production before 2030, before we start to see broad based deployment of zero emission vehicles, where we will start to see some demand destruction, and then we are going to go through this transition.
Hon. Jonathan Wilkinson:
But even at the end of this transition, at the point at which you actually have almost fully deployed zero emission technology, at least in the developed world, you’re still going to be using significant quantities of hydrocarbon. I think this is one of the misnomers that perhaps governments have not communicated very effectively in the past, but if you look at the international energy agencies, 1.5-degree scenario, what that says to you is you achieve net zero by 2050, there’s still a quarter of the barrels that are being used today, still being used. Now they’re not being combusted, they’re not being burned.
Hon. Jonathan Wilkinson:
So, the CO2 is not being emitted into the atmosphere they’re being used for petrochemicals or solvents or lubricants for a range of applications that are not CO2 harmful or climate harmful. For some, they seem to think that in 2050, every hydrocarbon is gone, that’s just not true. The enemy in terms of climate change is carbon emissions, and we are going to be focused on moving down that pathway. And the barrels of oil that come with almost zero production emissions, are the ones that are actually going to be the valuable ones in 2050.
Peter:
So, building on that, the Canadian industry, whether it’s Bay du Nord or here with oil sounds and conventional are committed to reducing upstream emissions. They’ve, as you say, received the policies of the investment tax credit for CCS and things like that well, and so everybody’s working hard on figuring out how to achieve those goals. So, under the assumption that upstream oil and gas in Canada can achieve, I’ll call it the highest level of ESG friendliness, not just the E but the S and the G in this notion of a multi-polar world, where we have also barrels of oil that are favorable because of the jurisdiction in which they’re produced as democratic and upholds those principles. How do you think if all that has achieved the E, the S and the G on Canadian barrels, by the end of the decade, attitudes in Canada could change, or maybe rhetorically ask, would attitudes change in Canada towards Canadian oil? Because we’re very polarized right now.
Hon. Jonathan Wilkinson:
Yeah. Well, look, I think that there is an opportunity for attitudes to change, but it has to start with the commitment to reducing emissions, to the point where Canada actually is a leader from an emissions perspective. It’s not going to be sufficient to simply say, as some have said, that while Canada respects human rights and therefore we should get a pass effectively on the climate issue, nobody’s getting a pass on the climate issue. So, we have to see the kinds of productions that we’re talking about to get to the point where Canada is a world leader from an emissions perspective. I remember having a conversation probably a year or so ago in Calgary, where somebody said to me, well, we’ve done so much to reduce emissions intensity. And so, Canadians and Americans don’t recognize that we should get credit for that.
Hon. Jonathan Wilkinson:
And my point back to this person was well, until you actually see a beginning in the reduction of absolute emissions and an ability to show emissions intensity that is fundamentally significantly lower than other heavy oil producers, that’s a very difficult conversation to win. But I think that as you see this come into play, it’s a much different conversation. And right now, if you look at heavy oils and again, you folks know this better than I do, but the most recent thing I looked at was I think a 2018 study by somebody in Stanford, they looked at the emissions intensity of heavy oils from various jurisdictions. And Canada’s not the worst, but it’s not the best. And ultimately we need to be the best.
Jackie:
So minister Wilkinson, let’s say we do change that. And we, with thanks to the tax credit and other supportive policies, really deliver on that. And we are in the position where people want more of our hydrocarbon supplies to help with the energy transition and their cleaner than other alternatives. One of the areas I see, and actually it’s not just for oil and gas, but also major new development projects in Canada around clean energy is that we’re very slow in developing big projects. To give you a couple of examples, which I know you know well, the TMX expansion and LNG Canada are both about 10 years old and not complete yet. And when you go to the US, you see projects happening in half the time. What we do to enable ourselves both for oil and gas, but also for clean energy to be able to build these projects faster?
Hon. Jonathan Wilkinson:
Well, I do think we are going to have to look at how we can build projects faster. Although I think the two that you’ve chosen, I’d be a little cautious about those. LNG Canada actually was approved in 2014. It just took a long time to get to the point where they actually made a final investment decision, right? And TMX became a lot more complicated with some of the court decisions, with respect to the government needing to fully discharge its consultation obligations, which I think actually helped to clarify what those obligations are from a legal perspective, which I think will help going forward. And I know that in Alberta that there have been some, including the premier that have taken a different view on this, but the whole revision to the environmental assessment process was intended to actually try to find ways to expedite the process, putting definitive timelines around things, putting a front end period where you really are trying to highlight the big issues and ensure that you are starting to engage for example, with indigenous communities about some of these issues very early on.
Hon. Jonathan Wilkinson:
Such that it’s not two years into the process and all of a sudden you’re starting to deal with some of the big issues that should have been dealt with right at the beginning. So and that process has only been in place now for a pretty short period of time. So we will have to see whether it actually it works to expedite, but I would also say that as we move forward, there certainly are some areas where we are going to need to see an ability to move faster. And one area in particular, I would actually point out is the area of critical minerals, right? Where in order to grow the EV deployment, you’ve got to actually have access to a whole bunch of different mineral to make the batteries and to make some elements of the cars.
Hon. Jonathan Wilkinson:
And Canada has an abundance of potential resources, but it can take 10 years for us to develop a new mine. And so one of the things that I will be looking at launching within the next month or two is essentially a series of regional tables, so a province by province approach to actually looking at some of the major economic opportunities that can be enabled through the low carbon transition. Those opportunities are going to be different in Alberta than they are in Quebec, than they are in Nova Scotia. And trying to work with each of the provinces and with industry and labor, and of course, with indigenous communities to try to look at how do we align resources? How do we identify additional resources that we might need? How do we actually look at aligning regulatory and permitting processes so we can expedite some of these things?
Hon. Jonathan Wilkinson:
And of course, how can we engage most effectively with indigenous peoples to ensure that they actually have some ability to help us shape the projects, but to ensure that there’s economic benefits flowing from the project such that they actually want to be part of moving these things forward rather than getting into adversarial relationships that both consume time, but also are not always very productive for either side. And so that is exactly the conversation that we want to be having to try to ensure that we’re doing this better across provincial and federal boundaries and in some cases, municipal. We have to figure out ways to do things more efficiently than we have in the past. We just have to.
Peter:
Yeah. Yeah. I get the build on that, because it’s so important. And by the way, you are minister of NRCan or natural resources Canada, so that all these critical minerals are under your purview as well. So building on, I would say the broader theme of de-globalization as a consequence of the pandemic, tensions with China and now of course the situation in Russia, Ukraine, that there is this broad de-globalization of supply chain trends, whether it’s medical equipment or other things, including energy and critical minerals. So it’s not just in my mind about natural resources, but it’s about building out a whole industrial strategy. So for example, we don’t just mine nickel send it to some other country for processing and bring it back and then send it again to build a battery and bring it back, which is the whole globalization model. Can you talk about Canada, as in your government’s efforts in terms of a holistic industrial strategy, so we can actually do the whole thing ourselves from beginning to end from raw mineral to vehicle?
Hon. Jonathan Wilkinson:
It’s a really important point. And yes. The area of critical minerals is probably the easiest one in that regard. And I would say that there’s both an economic imperative and a geopolitical imperative on this. So, Canada, as I said, has an abundance of these types of minerals that are going to be required by almost every jurisdiction around the world basis. But we have typically not been particularly good at actually ensuring that we have the processing nor the downstream manufacturing. And that is something that I think we need to change. We are working on a strategy that is really about securing the processing mandates and processing and refining mandates, but also actually locking in battery suppliers, some of whom are looking to actually backward integrate, right, in terms of the minerals to try to ensure security of supply. And you’ve seen even recently some announcements by my colleague minister Champagne in that regard and using the battery mandates to try to lock in electric vehicle mandates.
Hon. Jonathan Wilkinson:
So we are working very much on that already. We will be actually announcing or bringing forward a critical mineral strategy for Canada, which will actually speak to a range of these issues within the next few months. And of course, in the budget that was just brought forward a couple weeks ago, there was $4 billion to essentially advance elements of this strategy even before the strategy is fully announced. So yes, because we think that’s an enormous economic opportunity for us, and it’s not just about building new minds. It is about industrial processing jobs. It is about developing and building batteries, but it’s also geopolitically critically important. Like if you look at critical minerals around the world, a significant portion of some of them are produced in China. And even for those that are not, most of the processing takes place right now in China.
Hon. Jonathan Wilkinson:
Well, we’re looking at Europe right now in terms of the dependence that Europe has allowed itself to develop on Russian oil and gas and the costs right now of those decisions that were taken some time ago. We cannot get into the same situation with China on the critical mineral side of things, where we are dependent. And we are essentially in a position where we are not free to make our own decisions. And so there is an enormous geopolitical issue here for Canada and for North America. And of course I am talking with secretary Granholm at the department of energy about this quite frequently, so…
Jackie:
Minister, we heard that hydrogen is close to your heart and Canada does have some goals and plans around hydrogen. Can you just tell us about what you think the near term opportunities are for clean hydrogen and using it more domestically and the potential to become maybe an exporter as you talked about maybe even towards Europe?
Hon. Jonathan Wilkinson:
Yeah. Hydrogen is, I think going to be very important domestically and as an export product, as an energy care or a clean fuel that can actually be exported around the world. And the beauty of hydrogen is, Canada is blessed with an abundance of resources to make hydrogen in different ways, in different parts of this country. So provinces that have a lot of hydro power like Newfoundland and Quebec, Manitoba, British Columbia, are primarily focused on the production of hydrogen from electrolysis. Some people call it green hydrogen. I will tell you, I hate the colors. I just think that leads you into conversations that are nonsensical. What you really should be talking about is the carbon intensity of the hydrogen. Other parts of the country, Alberta, Saskatchewan, to a certain extent British Columbia with an abundance of natural gas have the opportunity to create hydrogen in a manner that is ultra-low carbon.
Hon. Jonathan Wilkinson:
So long as they actually are implementing state of the art technology and continuing to push that technology. So there is an air products’ new version of what’s called an autothermal reformer, which should get about 95% capture off of that system. That’s a very, very, very significant amount of capture. Obviously, as we move forward, we’d like to push that even farther, but we can move down this pathway in a manner that we can actually create economic opportunity for many of the provinces in this country. And we need to think about it both in terms of building domestic load and equipping ourselves to be export capable. And so looking at different applications, obviously there are existing applications, industrial applications for hydrogen, but there are many other industrial applications that folks are either developing or looking to develop, including things like steel manufacturing.
Hon. Jonathan Wilkinson:
There’s a steel plant now in Sweden, it’s running on hydrogen. So there’s industrial applications, but there’s also things like heavy duty trucking where the trials that are going on in Alberta for hydrogen fuel cell powered trucks, I think are very interesting because I think there are limitations for battery technology. And that hydrogen is probably going to be one of the roots that we look at for long haul trucking. There are certainly some that are looking at it for the purpose of power generation. There are some that are looking at it even for home heating, although that depends a lot on the infrastructure. So there are some European countries that are probably set up to do that more easily than we are at least at present in Canada. Heartland in Edmonton is one of the first hydrogen hubs looking to build out domestic load.
Hon. Jonathan Wilkinson:
But there is also a project that Shell is leading here in British Columbia that is looking to do the same thing and we are going to be looking to do that. Replicate some of those discussions across the country, building out domestic load for hydrogen production and positioning ourselves to be an exporter of the world. There was an interview that was done with the German ambassador to Canada just recently. And she said that Germany looks to Canada as an emerging hydrogen superpower. That puts it in pretty stark terms. But I do think that there is an enormous opportunity for Canada to actually be the supplier of choice to Europe as it transitions to hydrogen, as it plans to transition.
Peter:
Well, that’s great. I think we are a superpower, whether it comes to oil, gas, critical minerals, hydrogen, you name it, we’ve got it all here and we’re privileged to be part of this great country. We’re also privileged to have you minister Wilkinson, and I’m going to call you Jonathan because after 20 years, I think you can take that liberty of doing that. So Jonathan, thank you so much for your time. You said it gets parceled up in 15 minute increments. I think we’ve taken three increments which is very generous. And we look forward to talking with you again, as Canada’s exciting energy story evolves. Thanks for your service and your time.
Hon. Jonathan Wilkinson:
Thank you very much.
Jackie:
Thank you. And thanks to our listeners. If you enjoyed this podcast, please write us on the app that you listened to and tell someone else about us.
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