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Peter is back from a one-week whirlwind trip to the UK where he was a guest on a government-hosted tour titled “Energy Commentators Mission.” During his visit, he met people working on the UK energy transition, including with offshore wind, hydrogen, carbon capture and storage (CCS), and refining. 

Tune in to this week’s podcast to hear about Peter’s trip and takeaways, including interviews with some of the people he met in his travels.  We hear from:   

• Andrew Rodden, Energy Transition Zone Ltd.  
• Pilar Amieva, X-Academy 
• Allan MacAskill, Flotation Energy plc 
• Jeff Richardson, Fugro 
• Kieran Morton, Port of Aberdeen 
• Thomas Nicoll,  SSEN Transmission 
• Emily Taylor, Offshore Energies UK (OEUK) 
• Jonathan Turner, British Consul General, Calgary, Canada 
• Tiffany Langford, Senior Climate Policy Advisor, British High Commission based in Calgary 
• Marla Orenstein, Canada West Foundation  

Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/  

Check us out on social media: 

X (Twitter): @arcenergyinst
LinkedIn: @ARC Energy Research Institute 

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Episode 233 transcript.

Speaker 1:

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.

Speaker 2:

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. Welcome back. Well, again, I think I’m going to welcome myself back because I was away and I’ll welcome you back, Jackie, because you were away.

Jackie Forrest:

Yeah, that’s right. But I didn’t go so far, stayed in North America. Where did you go?

Peter Tertzakian:

I went over to the UK and we want to talk about that. An energy trip.

Jackie Forrest:

Yeah, it sounds fabulous. That’s my kind of tourism, but we’ll get to that. But before we do, I want to talk about two topics. First of all, while we were both away, there was some big news in Alberta power markets last week. The Alberta government introduced some short-term measures around power, including changing some of the policies around generators that are withholding their power for economic reasons. But the bigger news was they also put out a plan for market reform. So today in Alberta we have an open market. Looks like that is going to change. They’re calling it a Restructured Energy Market. I don’t want to get into too much detail on it because we are very soon going to have a podcast. We’ve invited Blake Shaffer to come on our podcast next week to explain all of this-

Peter Tertzakian:

Great.

Jackie Forrest:

But big changes coming in Alberta power markets.

Peter Tertzakian:

Right, right.

Jackie Forrest:

The other thing I wanted to talk about was we did have some feedback on our podcast from a couple of weeks ago where we talked about contract for differences around the carbon markets, and we did want to make one clarification. We described the entropy deal as more of a financial settlement mechanism, and that’s really often when we talk about these contract for differences, that is generally what’s being discussed. But we did want to clarify that particular deal was not.

That particular deal, the Canadian Growth Fund was actually purchasing and taking custody of the tier emission credits and then they actually own that asset, and they can choose to sell it later on. So if in any one moment the price of the carbon markets isn’t justifying the $86.50 that they paid, they could wait a couple of years and sell it. So, it does minimize the risk that they’re taking because they have more optionality. So, we just wanted to clarify that and we want to thank Eric Petursson, a regular listener from Entropy, who clarified that for us. And we are going to have another podcast soon on carbon markets and get into a lot more details on this.

Peter Tertzakian:

Yeah, I think it’s a huge area that we need. We had other feedback as well and we appreciate it and I think a broader discussion on carbon markets and how they work, or in the case, they may not work, we want to have that discussion.

Jackie Forrest:

All right, well, let’s talk though about your trip to the UK and well, tell me why did you go on this trip?

Peter Tertzakian:

Well, it was organized by the UK Consul General’s Office here in Calgary by Jonathan Turner, who’s the British Consul General for Alberta, Saskatchewan, and Manitoba, and Tiffany Langford, who is a senior climate policy advisor with the British High Commission. So, thank you to both. They organized this amazing trip for a handful of us to go touring around the UK and learning about how they’re working on decarbonization and the pursuit of net zero. It was an opportunity for us to hear what the UK is doing. It was an opportunity for the people in the many meetings that we went to in the many field trips to learn about Canada and what’s going on over here, and basically to share notes. It was good. They showcased their projects, and it was really well, well done and I certainly learned a lot.

Jackie Forrest:

So, what parts of the UK did you travel to?

Peter Tertzakian:

Well, north to south actually. Pretty much the far north of Scotland, we started off in Aberdeen for a couple days and went down all the way to London, met with the government officials, went to a conference that was put on by Jason Langrish. It was a UK-Canada Energy Summit, and then we went halfway back up the East Coast, looked at the Humber Industrial site and what they’re doing there for industrial decarbonization, and then came back. It was a tremendous amount of content in a very short period of time, but it’s always good to get out of the office to see different perspectives and to see how things are being done right at ground level.

Jackie Forrest:

So, what were your main takeaways after traveling around UK and seeing all their energy projects?

Peter Tertzakian:

Well, there were so many, but there seemed to be converging themes that I got out of it, and one of them was that the approach to net zero and decarbonization in the UK is very much what I would call a team UK approach, an attitude toward getting things done, towards planning things, a unified effort between all industries, including the oil and gas industry. As you know, the UK on the North Sea is a major producer of oil and gas and they too are part of the whole decarbonization team effort. We can talk about that. It’s a sense that the UK has been an industrializing country, has gone through many transitions over the course of history. They have it all and they want to transition to the new era of energy and industrialization in a zero carbon sense. There was this repetitive theme, it didn’t matter if we were talking to academics, people in industry, industry associations, people who worked in the ports, and other places that we visited, they all seem to basically give us the same story, which we can talk about.

Jackie Forrest:

Well, it’s very different, I think. We’re far from team Canada here when it comes to climate. I’d call it more like a battle. We’re the climate battle. So it’d be interesting to see what you’ve learned.

Peter Tertzakian:

Yeah, I mean to give you a sense of this team UK approach, I’ve got a clip from Andy Rodden from Aberdeen. He’s with an organization called the Aberdeen Energy Transition Zone.

Andrew Rodden:

All the building blocks are here. The challenge is how do you make them all work and how do you make them work within a timeframe?

Jackie Forrest:

We’re talking about industrial transition, but what about the people? Are the people going to be there to support building out this new economy?

Peter Tertzakian:

Yeah, that’s a great question and that was another one of the major recurring themes is the emphasis that the UK and all the different regions and organizations are placing on transitioning people, getting people prepared because they recognize it’s not tens of thousands, but the hundreds of thousands of people they are going to need if they’re going to execute on this plan to achieve net zero by 2050. Again, I’m going to give you a clip from Andy Rodden who talks about people.

Andrew Rodden:

90, 95% of the skills are either taught or they’re already existing in the supply chain. The 5% of the things, we don’t yet know what they needed anyway. So how do we position ourselves for that and as we learn as we go? So, it’s that entrepreneurial spirit, it’s that how we approach these things is really important and that’s what the city in particular and the sector has really developed over the last five decades is how to do that.

Jackie Forrest:

It sounds great, but isn’t there resistance? I think there’s probably a lot of people who are in their existing careers that don’t want to make a change.

Peter Tertzakian:

The UK has a longstanding oil and gas industry. Prior to that, it was coal. The transition off of coal was very painful in the 1980s. The transition off of oil is not encountering the same kind of resistance, but there’s no question that there’s some skepticism and there’s some transitional resistance. I mean, to achieve 2030 and ’35 targets, the offshore wind workforce has to grow by some 75,000 people, and that was a number that was quoted from a visit to Robert Gordon University up in Aberdeen.

They’ve got a number of courses, over 30 courses that their offering to facilitate this transition, to overcome some of the resistance. Not only resistance in the sense that, “Oh, I don’t have these skills. What am I going to do?” So there’s a lot of both public, private, public/private training programs that are being undertaken to not only train new graduates and people entering the workforce, but those that are already in the workforce in industries like oil and gas to shift over because as Andy Rodden said, 95% of the skills that are in the oil and gas industry are transferable, things like large scale project management and so on.

Jackie Forrest:

Now, what about the existing oil and gas industry? Don’t they need workers as well? Is there a bit of a competition whereby training all these people and moving them into clean energy, it would leave a labor shortage for oil and gas-?

Peter Tertzakian:

Yeah, there’s no question. I mean, it’s not like the oil and gas industry is going away overnight. There’s certainly a recognition that it’s going to be around for a while. However, the North Sea’s oil production has been in decline over the last 20 years and its sort of stabilized. It’s certainly unlikely to grow by any meaningful amount. The capital being expended for exploration is just not there. Many of the fields are maturing. There’s decommissioning that’s going on of the offshore platforms. So, it’s not like the workforce is going to transition overnight either.

Jackie Forrest:

So, there’s a balance there in terms of knowing, but needing to ramp up and actually, I think, in this country, we need to really grow our workforce around renewable energy. Just think of these major procurements we have in Quebec, Ontario, BC. Where are the workers going to come from for the wind and solar projects?

Peter Tertzakian:

Yeah, I think this is something that we can learn from here because we’ve expended a lot of capital called reputational capital, talking about just transition and what have you, and it’s created animosity in the way that it was handled. We’re not really talking that much about the need for people all the way from welders, electricians, and other tradespeople that are very skilled, but even people who work in offices, in engineering and project management and on up. These people are going to be necessary, and the recognition is there in the UK. And I don’t know, what do you think? I mean, are we talking about this all that much?

Jackie Forrest:

Well, it’s certainly a topic. I don’t think there’s a lot of action, and I certainly don’t see a lot of public and private partnerships and things like that that you’re describing. Well, let’s come back to the different… it does sound pretty great what’s going on in the UK. You call it the team UK approach. And as I said earlier, I think we have more like a Canadian carbon battle going on here. So, what can we learn? What do you think that they are doing that could come here and help us get towards more of a Team Canada approach?

Peter Tertzakian:

Yeah. Well, I think from the people perspective, I think there’s quite a bit to learn. As I said that there is large scale efforts in universities like the Robert Gordon University to model out the people transitional workforces. There’s a number of people that are needed in each of the different economic sectors to achieve decarbonization goals. Then there are these public/private partnerships. There’s a company called X-Academy, which is largely a consultancy that has a lot of tacit knowledge in project management for offshore wind farms and so on. They set up a public/private partnership to basically train workers on real life to take… particularly oil and gas workers. I’m going to give you a little clip from Pilar Amieva. She is from Mexico, actually been working on the North Sea offshore fields for quite a while. She’s a drilling engineer actually, and she’s in the program. She’s also, by the way, an avid follower of our podcast. So, here’s the clip from Pilar.

Pilar Amieva:

Well, X-Academy is an energy jobs accelerator. So, the main idea is of skilling and re-skilling a wide range of abilities or jobs. For example, we have graduates, teachers, people like me that have experience in there with us.

Peter Tertzakian:

You were in drilling?

Pilar Amieva:

Yeah, I was in drilling.

Peter Tertzakian:

And now you are doing wind farm project management?

Pilar Amieva:

At the moment, I’m focusing on wind farms and CCUS.

Jackie Forrest:

That’s great and great that you actually found a podcast listener there in the North Sea and someone who’s trained to get into clean energy, which actually I often find… I ask people why they listen to the podcast and it’s because they are in one segment of energy industry but want to learn about other areas. So that’s interesting to see. Let’s go back to some other themes. I mean, there are offshore winds big in the UK. What are some of the other themes and things you saw?

Peter Tertzakian:

Yeah, some of the other themes are that the pursuit of net zero is now not a one-dimensional pursuit, that it is very tightly wound with energy security. And I know we talk about that a lot here, but over there, of course… there’s the whole European situation with the Russian invasion of Ukraine, the realization that they do not want to be beholden to Russian energy. And so, for Europe and the UK, the pursuit of things like electrification and the substitution of natural gas for power generation and moving to large scale offshore wind is an energy security issue. And actually, it’s energy security first and net zero second. And I say that because the department that is responsible for all this in the UK federal government now is called the Department of Energy Security and Net Zero.

And I was intrigued a little bit, and I didn’t dive into it too much, but it’s not called the Department of Net Zero and Energy Security. And I think that is the priority. And I think the interesting thing is under this holistic plan, basically the two work together, and I think that one of the takeaways is that it’s harmonized much more in terms of wrapping together this idea of net zero and energy security. Now, they didn’t throw in the third thing that we talk about a lot, which is affordability, which is presumably under the Department of Finance or Economic Growth or something.

Jackie Forrest:

Do you remember when we had Lord Callanan, the UK’s Parliamentary Under-Secretary?

Peter Tertzakian:

Yeah.

Jackie Forrest:

He was part of the Department for Energy Security and Net Zero and we talked about that. But it’s true that a lot of the clean energy, maybe if we’re importing the equipment from China then it’s not really energy security at that moment, but the minute you get it in your country, unless the wind stops blowing or the sun stops shining, no one can turn that off. So there is definitely a big element of energy security when it comes to clean energy, I think.

Peter Tertzakian:

Yeah, and I think energy security is a very broad term because energy security can mean security from a military context and security of territorial borders, as is the case in Europe. Or it can be energy security in the sense of I need reliability, I need the electricity to come on and my heat to come on when it’s minus 30. That’s energy security too. And so every region has its own energy security and de-carbonization plans. The UK’s and Europe is definitely motivated by energy security from the perspective of continental border security.

Jackie Forrest:

All right, well let’s talk about a big part of how they’re going to get their energy security is these massive offshore wind farms. And I think I was reading that something like 30% of UK’s total power in 2023 came from wind. So it’s already a big contributor. I know you got to visit an actual site. So tell us how that was and what your impressions were after seeing those big wind turbines.

Peter Tertzakian:

Yeah, the offshore wind is a dominant, dominant theme because it’s a windy country. It’s an island with a lot of offshore. And by the way, what I learned was that the offshore shelf is actually quite shallow, which is very conducive to platform based big wind turbines. And we did get to go on a boat and visit one of the farms outside of Aberdeen, and it was really impressive. I mean, it’s awe-inspiring when you actually go underneath one of these things and it’s spinning around and you’re bobbing up and down in the boat. The conditions were relatively calm, but there was just this big swells that come in and out and it was really cool. Well, I’ll post a picture.

Jackie Forrest:

And these are attached right to the bottom of the ocean because the sea is very shallow there on the shelf.

Peter Tertzakian:

That’s right. Yeah.

Jackie Forrest:

But more and more they’re starting to say they want to develop some of the areas where the sea is much deeper and you can’t attach the wind turbine to the ground, right?

Peter Tertzakian:

That’s right. That’s right. That’s called floating offshore wind turbines. And that is the next frontier, literally the next frontier, because then you go deeper and you’re not constrained by the depth of the… interestingly, the technology for floating wind turbines was pioneered and is still being pioneered by an ex-oil and gas executive. Allan MacAskill, who worked for Talisman Energy out of Calgary in the 1990s, his engineering challenge was to power the North Sea Beatrice Oil Field, and he suggested building two, floating offshore wind as a power plant. It’s effectively a floating power plant for this oil field. And so engineered in the late-1990s, early-2000s operational by ’06, ’07, he actually went on to start his own offshore wind company once he had successfully done that for Talisman.

So we visited his company, Flotation Energy, and he recently sold the company actually to the giant Japanese power utility TEPCO. But we were fortunate enough to have a meeting with him. And so it’s just fascinating the transfer of engineering knowledge from offshore oil and gas platforms to offshore wind facilities, not only in the engineering of how to position these things very precisely, but as I’ll talk about in a few minutes also how to service them because that’s a big deal as well. But before we get to servicing of them, let’s listen to a clip of Allan.

Allan MacAskill:

A key issue that we’ve got is this work that we’re doing to try and decarbonize the oil and gas fields, taking what we did at Beatrice with two turbines, and we’re now working with Buzzard and other players in the North Sea, and then with the Greenville Project and then also with the Cenos project, trying to get a multiplicity of fields, four or five fields, all connected up to one large wind farm. Which is good for the oil business and good for the wind business. Because we have an offshore market, fixed price for power for them, and then one day they help us build an infrastructure, and that infrastructure one day will power the UK national grid.

Jackie Forrest:

Well, it’s so exciting to see a Canadian contributing to offshore wind, and it makes a lot of sense to me why his skills would be so relevant. What about the cost of offshore wind? A lot of stuff in the news recently about it being too expensive. Is there ways to drive down the cost still?

Peter Tertzakian:

Yeah, well, there’s two components. One component is on the capital side, in other words, building and positioning and putting them into place. But then there’s the additional cost once they’re operating, then you have to go and maintain them. You have to check the cables, you have to check the foundations, et cetera, et cetera. In that regard, we had a very cool visit to Fugro, which is a global geomatics company. This was just an amazing visit and one that was close to my heart because I started out my career in geophysics and geomatics. And so the company has all the facilities and the technology not only to do the placement of the offshore wind turbines and the seabed surveys to make sure that they’re going to be placed in the appropriate place, but the coolest thing was the way that they’re actually going to go out and service them. Your notions of sea captains going out with their cap on, bobbing up and down and checking these things.

Jackie Forrest:

Climbing up those big ladders to get to the top.

Peter Tertzakian:

Yeah, yeah. Well, they may still climb up the ladders occasionally. But in terms of checking the subsurface, they now have these very large vessels that are completely un-crewed, there is no people on them, and they are completely piloted by a captain. The captain still has their job. It’s just that they show up for work into this dimly lit room with screens all over the place and a joystick, and they pilot the vessel-

Jackie Forrest:

Do all the below water maintenance.

Peter Tertzakian:

Then they go home for dinner in the evening and somebody else comes and takes over. But that’s not all. Inside the vessels are the remote operating vehicles, in other words the submersibles that actually come out with a click of a few mouse keys, I guess, I don’t know. Then there’s video cameras everywhere, live links through satellite back to shore, and then somebody else pilots the remote vehicle into the sub-sea, takes photos of the cables and pipes. By the way, they still use this in the oil and gas industry as well to check the integrity of the pipes. So, the whole notion of how labor works is changing dramatically, and the ability to do it remotely is a game changer. And I’m going to give you a clip from Jeff Richardson who talks about the technology.

Jeff Richardson:

We’ve seen that sort of dominance, if you like, of the oil and gas sector for this type of data, now moving into renewables. The adoption of these technologies and this data within the renewable sector is becoming critical. So, we really see Fugro being able to supply that information as sort of the path to creating a safe and livable world.

Jackie Forrest:

Well, that’s the servicing, but what about building them from the beginning? I mean, these are massive towers. How do they bring them out and get them-

Peter Tertzakian:

Massive towers, massive blades, and a massive effort to build out 50 gigawatts? What is that?

Jackie Forrest:

By 2030, that’s not that long away.

Peter Tertzakian:

I mean, it’s the equivalent of, what, 40 to 50 nuclear power plants of average size.

Jackie Forrest:

Yeah, the capacity number.

Peter Tertzakian:

The capacity is really astounding. And so, it’s not like you can just show up with these big blades and things at a port, put them on a boat and take them away at a pace to do this build out. So as I said, in terms of the holistic approach to all this, the supply chains are being thought through very carefully. We visited the Port of Aberdeen, which by the way is one of the oldest ports in the world. I think it was established in 1136, the oldest established business on record in the UK.

So, the other intriguing thing about the Port of Aberdeen is that they want to be net zero as a port, but not just scope one net zero. It’s actually scope three, net zero. So all of the ships that come in are going to have to basically plug into the electrical grid rather than keeping their diesel engines running for the power to keep the lights on and cook food for the crew, et cetera, et cetera.

So well, let’s listen to a clip from Kieran Morton from the Port of Aberdeen.

Kieran Morton:

Yeah. So, we are the only port in Europe currently to include Scope 3 in our 2040 net-zero strategy. And what that really means is all the vessels that are here will have to comply to a carbon negative output while they within our jurisdiction. So that’s quite an ambitious project to get there by 2040. 97% of our emissions come from vessels using the diesel engines while they’re in our port. So, we’re having to invest a lot of money and we’re having to partner with the vessel owners themselves and government to get us there by 2040.

Jackie Forrest:

Are they going to achieve this through electric technology? Do they see sort of electric ships as the solution.

Peter Tertzakian:

Well, no, it’s not electric ships. The ships will come in, it’s not net zero for the ship that comes in, but as soon as it enters the harbor and docks, it can’t have its diesel engines running.

Jackie Forrest:

I see.

Peter Tertzakian:

So, they have to put in all these, I guess, massive electrical cable plugs to plug the giant ship in that will be powered. So, this is what he’s talking about is that it sort of needs a collaboration with the ships and the shipbuilders, but there is precedent for it. I think it’s in Norway that they’re already working on this.

Jackie Forrest:

Well, it is true when you go to these big shipyards and some of these big ships, they just run the engines constantly. So, I can see the advantage even for air quality.

Well, this all sounds great. Maybe a little bit rosy though. Is there a pushback? I mean, some of this stuff must be expensive. Is there pushback to clean energy? Did you notice any of that on your trip?

Peter Tertzakian:

Yes. Well, it all sounds very good and rosy, and everybody is singing from the same song sheet. But no, there is a tacit acknowledgement that this is not going to be easy. And much like in Canada, there are issues or points of resistance, particularly on the social side. And for that, it was great to meet with the Scottish utilities, Scottish Southern Electricity, the owners of the grid, the operators of the grid, and getting a sense that this massive build-out is going to require a lot of grid interconnects. The building of new transmission lines that cuts across the landscape and the challenges in doing that, because not everybody’s on board, as we know, from Alberta with the viewshed, in other words, disturbing the view and disturbing the peace because a lot of people come up to Scotland because of its sparse population density to look at the natural beauty. And the people who are up there are not necessarily crazy about letting all of this happen.

So it’s not a question, as I’ve always said, of achieving net zero with science and technology being and engineering being the limiting factors. It’s actually the behavioral science that’s a limiting factor. Let’s listen to Thomas Nicoll, he’s with SSEN, which is the Scottish Southern Electricity Networks.

Thomas Nicoll:

We own and operate the transmission network in the north of Scotland. So, at the moment, we’re going through a massive overhaul of that network. There’s a lot of potential for renewable power in the north of Scotland and the surrounding seas. And our job is really to bring that on shore, connect it up. North of Scotland’s world-renowned beautiful place, but quite sparsely populated. So we need to get that power to where it’s going to be used, which is this kind of central belt of Scotland and south, which is some of the bigger cities that we’ll be familiar with.

Peter Tertzakian:

Birmingham, Manchester

Thomas Nicoll:

Exactly. Liverpool, even down to London as well. So yeah, massive, massive potential for renewable power in the north of Scotland and not the people necessarily to use it. So, we need to build this grid as quickly as we can.

Peter Tertzakian:

I think it was something like we heard this morning, 17 gigawatts just in offshore projects off of Aberdeen alone, but up in the north there’s even more. Now to bring that power, once the farms are built, you have to build the grid, the high-tension power lines. And that’s the point of contention or one of the points of contention in terms of the viewscape.

Thomas Nicoll:

Exactly that. Yeah. So with infrastructure like this, there’s obviously a significant visual impact. A lot of people move up to the north of Scotland to retire and to enjoy the beautiful landscape that is there. So we need to obviously work very carefully with communities to make sure that the infrastructure that we build takes that into account as much as possible. So there’s a combination of onshore infrastructure as well as massive, significant sub-sea projects that take power from north of Scotland down to England.

Jackie Forrest:

So is it mainly the transmission lines, just how they look, and people don’t want them in their view? Is that the main issue?

Peter Tertzakian:

Yeah, I think it’s just wires and equipment and the disturbance to the landscape and everything. It’s just a very peaceful place. Those of you who have been to Scotland will know that. And it’s very much like the ranchers in Southern Alberta, the people down there that just don’t want the view disturbed, and the peace disturbed with all this sort of industrialization and electrification activity.

Jackie Forrest:

Right. Yeah. We’re going to need a lot more transmission lines and maybe they’ll even need onshore wind at some point.

Peter Tertzakian:

And I think that there is sort of the territorialism, if that’s the right word, where the people up there would say, “Well, wait a minute. You’re just disturbing my landscape and my peace.” And it’s all for people in urban centers way in the south of England where the population density is and the industrialization is like, “Why am I sacrificing for your benefit?” And I think they’re having, as Thomas Nichols said, they’re having conversations and it’s not all easy to get to net zero by any stretch of the imagination, that there’s serious social and pushback issues.

Jackie Forrest:

And there’s a lot of wind resource in the north that you do need the big transmission lines to bring that power to the south where the people are. So it’s going to grow. I know you looked at other types of big projects. What about carbon capture storage? What’s the situation in the UK when it comes to CCS?

Peter Tertzakian:

Well, carbon capture is a big push because as a country that championed the Industrial Revolution, they have a lot of industrial emissions. What they’ve done is they have created six industrial zones or industrial clusters or hubs as we might call them. And we actually visited one of them in the Humber estuary region. I’m going to come back to that because prior to that, we got a full half day lecture on carbon capture at Imperial College in London, which was really fascinating. There they have a fully operational forest or a high carbon capture facility where they can stimulate all sorts of different chemistries and different conditions in the pursuit of optimizing carbon capture, finding new ways of driving costs down, improving the efficiency which drives costs down. So it was a really fascinating insight into what goes on there and Imperial College is one of the leading centers for carbon capture.

Jackie Forrest:

Like they’re storing CO₂ like a pilot scale, but right in London, they’re storing that.

Peter Tertzakian:

No, no, no. The storage side, the S out of the CCUS is not there, nor is the U. It’s the CC. The carbon capture.

Jackie Forrest:

So they don’t actually, think about Canada, we have, I think four operating sites now. So, it sounds like we’re way ahead if they’ve just got a pilot on capture at a university.

Peter Tertzakian:

Well, we are, and this is something that I don’t think comes out very clearly, even to our own population here in Canada. This is something that I don’t feel we give ourselves enough credit for because over there, even at Imperial College, and then subsequent visit to the Humber estuary industrial zone, everybody’s talking about the boundary dam carbon in Saskatchewan, the Shell Quest project, and the fact that those are up and running and capturing and sequestering serious volumes of carbon. And they look to those projects to learn and understand what they can do better.

Jackie Forrest:

And I think you see what’s going on in the US right now, they have this very advantaged policy around the 45 queue, but they’re still not getting projects going. And it’s because it’s a lot more than just the economic framework. You’ve got to understand the regulatory environment for storing the CO₂, building the infrastructure. We have one of the world’s largest CO₂ pipelines we’ve seen in the Midwest. There’s been a couple of CO₂ pipelines that have not made it through the regulatory process because of stakeholder concerns around these projects. So, in Canada, I think we got all the pieces. We’ve got the below ground, we’ve got the infrastructure, we’ve got the experience, we’ve got the people, we’ve got the ability to store it. We just don’t have the financial framework. But I think we should be really proud of what we have. And UK talks a lot about these hubs, but it was surprising to me that we were further along, actually.

Peter Tertzakian:

Well, yeah, I mean, we show very well. For example, at the UK Canada Energy Summit on Wednesday afternoon, we had several Canadian companies presenting. We even had one of our previous podcast guests, Beth Valiaho from the International CCS Knowledge Center based out of Regina. She spoke, we had Entropy whom we talked about at the beginning of the program. And so, we show very well. I can tell you that notwithstanding the non-team Canada approach versus the team UK kind of approach that we talked about earlier, I can tell you that the Canadian companies represented there are listened to, they show very well. So, when it comes to technology collaboration, there’s a lot of that going on. And that was highlighted again when I did go up and visit the Humber region, which is halfway up the East Coast in the Humber estuary, which has been populated since the time of the Vikings and had commerce going in and out.

It’s in Lincolnshire where there’s historically been a lot of coal and a lot of the coal trade came in and out of that port that went into demise. But now they’re seeing this as another opportunity to re-industrialize. And the industries there that are emitting, even the refineries and other industries all have a holistic plan within the hub to decarbonize. And by the way, they do have a pipeline. They do have a pipeline that goes out to one of the North Sea reservoirs. It’s a repurposed pipe that used to transport, I believe it’s natural gas, and then repurposing it for CO₂ for the actual S in the CCS.

So they’ve got to get the project built. But what I learned was that there is not only projects that are on the go, for example, visited the Phillips 66 refinery, that was super cool. They are looking to break ground on their CCS facility, potentially have an up and running, I think it’s going to be somewhat toward the end of the decade, but it takes a long time to engineer and build these things out. But there’s a holistic effort, and again, if I can say it, it’s about the people, even in that region they talk about the people that are needed and visited a facility called Catch, which is a private public type organization that trains, largely trades people, welders and others to come to the back to the region to be able to get trained up on facilities that look like CCS facilities and others, and then be prepared to go out and execute. So it’s really actually-

Jackie Forrest:

They are actually ahead of it. They don’t have any operating projects and they’re already worrying about training.

Peter Tertzakian:

It’s kind of the reverse. And I think this is where we can learn from each other is because we have gone through a lot of the growing pains in the post financing development. We’ve actually built these things and have a lot of knowledge to share, I think more on what not to do, so that their transition into this decarbonization can be smoother than ours, but we can learn a lot from them about a more collaborative and holistic approach on the things we have yet to do.

Jackie Forrest:

And is there any controversy around carbon capture storage? I mean, I think maybe not so much in Canada, but there are groups that are against CCS because they feel like it just sort of allows us to have a longer runway for hydrocarbons. And did you sense any of that concern?

Peter Tertzakian:

Yeah, I asked that question. I asked it at the Phillips 66 refinery tour where they’ve got a big push on, as I mentioned, for that, I asked other people about the resistance because our whole small delegation that we went over with was saying, “Okay, this story sounds really great. Where are the holes in this story? Where’s the resistance?” And I think there’s sort of an acknowledgement that, yeah, it’s not all rosy, but that they’ve thought these things through and there’s conversations going on. And I didn’t get the sense that the resistance to it was as big as it is here. And by the way, another interesting thing on the hydrogen side, which we can talk about is that they have dispensed with the colorization of hydrogen, this whole green versus blue versus gray, teal, pink, whatever. They’ve basically dispensed with it. And they’re basically calling it low carbon hydrogen, which I think is the way to go, because look, ultimately the goal is to reduce emissions and achieve the net-zero targets by 2050 regardless of where that comes from.

Jackie Forrest:

With blue hydrogen, I know people don’t like the colors, but one of the concerns is it does have a higher carbon footprint, so it still has to be recognized potentially as a higher carbon footprint. So I’d still want to come back to that CCUS and that it seems like that that’s a solution that they’re really pushing forward with more than maybe other countries. Am I right about that?

Peter Tertzakian:

Well, yeah, and I think what you’re asking, Jackie, is, okay, is there pushback against CCUS and blue hydrogen because it prolongs the life of the fossil fuel industry, the oil and gas industry. And I tried to understand why there did not seem to be as much resistance, at least superficially from the short time that I spent there to this. But the one meeting that I had, which was really sort of a little bit of an aha moment was with an organization called OEUK.org. And we’ll post the link. And what we did there in the meeting was understand better something called the North Sea Transition Deal. And it was a deal that was struck between North Sea oil and gas producers and the federal government. And basically, it was a commitment with both sides that there will be plenty of collaboration to achieve industrial decarbonization.

So, there was a lot of discussions that went on several years ago that led to the North Sea Transition Deal where there was a commitment for the oil and gas industry to work with the federal government. And that’s quite different from here where it’s very guarded. There’s a lot of skepticism on each side. And I asked, “Is this deal something that instilled trust? Was this the foundations of a trust that was built between the two groups?” And the answer was basically, “Yes.” Well, let’s listen to a clip from Emily Taylor, a couple of clips from Emily Taylor. She is part of the North Sea Transition Deal.

Emily Taylor:

The North Sea Transition Deal, it was launched three years ago, 2021, and it was the first of its kind, a deal between the whole sector, the whole energy sector and the government in a quid pro quo way to say, “Well, what are we going to do and what’s the government going to do to deliver on our net-zero ambitions?” And we identified five key commitments to do it within. Three of which are much more technically orientated, three of which focus on the what, so the hydrogen, the carbon capture and storage, and the supply decarbonization, and how we’re going to get that energy mix into more renewable focus. And then the other two commitments are focused on how do we transform the supply chain from providing the oil and gas sector equipment to providing the renewable sector equipment and finally people and the skills.

Speaker 5:

Can you talk about the trust at the table between the government and the oil and gas industry?

Emily Taylor:

Sure. So, trust has earned, I suppose, and the deal has earned its stripes, so to speak, because it has proven to deliver. We’re on track to meet our emissions reduction in targets. We are on track to create these new sectors. Hydrogen, for example, is brand new. The government is fully behind creating this new hydrogen sector. So, the trust is unfolding before us because we’re seeing it in action. And the deal hasn’t just turned into a tick box that companies have to satisfy to put in a tender or to pledge their commitment. It’s turned into business as usual. It’s in companies’ strategies. It’s the backbone of plans for the next 10, 15 years. So, the trust is very much earned because we have delivered on almost everything that we can deliver so far.

Jackie Forrest:

We talked about the team UK versus battle Canada. We have things like oil and gas emissions caps rather than collaboration. Do you think it’s possible that we could transition to something like this in Canada?

Peter Tertzakian:

Well, I would like to hope that we can, but let’s be also understanding of our own situation. We’re a federation of provinces and that it’s not only a two-way deal, but actually there’s sort of a three-way deal between industry, provincial government, federal government, and there’s all these layers and interwoven complexities of the federation. I think that actually screams out more for a deal that we should be thinking about. I don’t think it’s all lost. I think there’s much we could learn from this North Sea Transition Deal. But I would also say that the, and I pressed them on this, the idea that, okay, things are going well.

You seem to be on target, the decarbonization emission reduction targets. But a lot of the stuff that has been done is through things like offshore wind where there is a lot of tacit knowledge. The easy low-hanging fruit of carbon abatement, the difficult stuff is yet to come. And as you pointed out, they haven’t built the CCS plants yet. There’s no hydrogen facilities of industrial scale yet. So, what will happen when targets potentially start being missed? And I think that’s the key where we may actually also be ahead, is that in some ways we have encountered the realities of what happens when targets don’t seem to be on track. And it’s not clear to me that that type of reality has yet manifested itself in the UK situation.

Jackie Forrest:

And I mean, they actually have done a great job meeting their historical targets due to the phase-out of coal. So, they look like they’ve been doing better. But we never had that opportunity here in Canada because we didn’t have a lot of coal.

Peter Tertzakian:

But unplugging power plants and plugging in new offshore wind where wind is a button of plentiful is relatively easy compared to the cost and expense of carbon capture facilities, big hydrogen plants, all the infrastructure in between-

Jackie Forrest:

Moving of natural gas hydrogen.

Peter Tertzakian:

… building out the grid, encountering social resistance, et cetera, et cetera. So, I think a trip back there in a couple of years will be very interesting to see the progression.

Jackie Forrest:

Right. Now, as you say, it sounds great, but there’s been some backtracking like just last during your trip, Shell announced they’re dialing back their goals that they set for reducing their emissions for 2030. So, they have reduced their goal for 2030. They say they’re going to grow their LNG business now to 2030. They’re no longer committed to reducing emissions 45% in terms of intensity by 2035. And then the UK government has also backtracked. There’s been a change in the plan to ban the sale of petroleum cars from 2030 to 2035. I think there’s been some changes in their natural gas policy. Like any acknowledgement or concerns about… is that seen as a good thing and that hey, reality is setting in, or are people concerned that some of these targets are going to get pushed out further in the future and some of these projects may not go forward at the timelines that have been communicated?

Peter Tertzakian:

Yes, and there was another one. There was a walk back on the unabated natural gas power generation. I did ask one of the people in the meetings about that and their comment was it was unhelpful because it creates uncertainty in the trajectory for financing these projects. And I get that but at the same time, I think that there is a reality potentially setting in that it’s not only a UK thing, it’s around the world, certainly in Europe as well, is that the targets that have been set are incredibly aggressive on a short timescale.

I think increasingly, it’s not just in the UK, it’s going to be here, it’s going to be in the US, it’s going to be in Europe. There’s going to be the question, okay, how doable are these targets? I think in the UK it was interesting that they were able to, I wouldn’t call it backtrack, but maybe change course with the targets a bit. I think they’re probably going to have to do it more, and that’s when the test is going to come. By the way, they have an election coming up later this year, and so that’s going to have sway in terms of how these targets are thought of.

Jackie Forrest:

Yeah, I actually think back to Shell and BP around before them had a little bit softening of the targets. I think you’re going to see more and more of this. I think a lot of these targets were made a couple of years ago coming out of COVID. The timelines are getting short, and I think a lot of corporations and countries are going to be renouncing that some of these targets are going to be pushed back.

Peter Tertzakian:

Yeah, I would argue that the companies like Shell and others are global companies. I think from the perspective of companies that dominantly operate in the UK, I didn’t really hear much backtracking or complaining, but again, my experience for one week was fairly limited, so I was only able to get more or less of maybe a bit of a superficial view of how people really think.

Jackie Forrest:

Well, let’s talk a little bit more about your visit to Humber. Is that where the Phillips 66 refinery was?

Peter Tertzakian:

Yeah.

Jackie Forrest:

And it processes, I think, 225,000 barrels a day of oil. Tell us about that. The refineries are an opportunity to reduce emissions, but there’s also concerns around how much you should invest in them if we’re going to be moving off petrol cars. So, what did you learn from visiting the refinery?

Peter Tertzakian:

Well, the refinery is one of five major refineries in the UK. I believe that’s the number. And there is a recognition that the UK’s oil production and consumption is going to go down over time. It’s not going to be tomorrow; it’s not going to be in five or 10 years. So, the refinery, which is one of the dominant employers in the region, is going to remain operating and viable and the people at Phillips 66 basically said of the five, we are going to be one of the ones that are the last remaining ones. And why? Because they are taking the CCS very seriously as well as another intriguing thing, which is the pivot to using the coke, in other words, the bottom of the barrel.

Jackie Forrest:

It’s almost like coal that comes out of the process.

Peter Tertzakian:

Basically, it’s coal. In fact, driving around the refinery, we actually did see the big mounds of coke that were piled up on the side, but they’re actually taking that and with proprietary technologies, process chemistries, they’re converting that into graphite, which is effectively carbon, and they are supplying the major battery makers with synthetic graphite for batteries for electric vehicles. So, this is the thing is that too often we equate refineries with producing only fossil fuels, but a large part of a barrel is still used for other industrial purposes, petrochemicals for all sorts of materials,

Jackie Forrest:

Asphalt.

Peter Tertzakian:

Asphalts for the roads, rubber for the tires and the vehicles and so on and so forth. So, producing the very complex and precise chemistry for the graphite in batteries is something that they have undertaken, and they are selling that product as well.

Jackie Forrest:

We have this Beyond Bitumen project here that Alberta Innovates is leading, but it’s similar and it’s trying to find other uses for… there’s many, many uses for long chains of hydrocarbons, and it’s not just burning them. Right?

Peter Tertzakian:

That’s right.

Jackie Forrest:

So, it’s interesting to see they’re already doing that. Now is that like a mini scale or is that at a commercial scale?

Peter Tertzakian:

Yeah, I don’t exactly know what the scale is yet, but they’re doing it and they’re going to do more of it, and I think we’ll probably see other refineries potentially do more of it. They also have a business where there are tanker trucks that go around all the restaurants and the UK gather up the used cooking oil and they bring it into the refinery, and they toss it into the hopper and-

Jackie Forrest:

Right, co-process it.

Peter Tertzakian:

Co-process it and use it, and it feeds into the sustainable fuels mix.

Jackie Forrest:

Now all of this stuff costs money, and one of the big problems here in Canada is getting to the final investment decisions, which usually needs policy that gives you the economic certainty that you can make money doing this. It does sound like there’s a lot of things here, but not as many final investment decisions. Is policy an issue there or is policy sort of clear for people and that’s not a barrier for these projects to move forward?

Peter Tertzakian:

Okay, I’ll come to the policy in a sec. But in terms of the FIDs, you have to distinguish what we’re talking about. Certainly on the offshore wind and even the offshore floating wind, there’s a lot of capital that’s flowing into that. There’s lots of commitments, lots of projects moving in the queue because offshore wind can compete and make sense. It’s more the policy and the capital availability for the industrial decarbonization like CCS and hydrogen, which are not up on their feet as economically viable projects without economic assistance. So in that regard, the UK policy is very carrot oriented in that whole carrot and stick analogy that there are a lot of carrots, there is a lot of team thinking, holistic thinking to make sure it goes forward. But as you pointed out, we’re not quite at the stage where big FIDs are being announced on a routine basis like with offshore wind.

And so the test is going to come, I would say, in the next couple of years as to the type of momentum that’s really going to be gotten. And so this is going to be interesting because if the targets are not being met, it then turns into a behavioral science issue, as I like to call it. How will people behave? What government will be in power? How will they behave if they see that these aggressive targets are not being met? Because we know how Canada has behaved, looking out to 2030 and ’35 with the emissions problems, particularly in our oil and gas sector where it’s very much stick oriented.

Jackie Forrest:

Were there other Canadians on the trip with you, Peter?

Peter Tertzakian:

Well, there were. There was Emma Graney from The Globe and Mail. She’s a reporter and she’ll probably be following up with some stories, so watch for that in The Globe. And there was also Marla Orenstein from the Canada West Foundation. In fact, here’s a couple of parting words from her as well.

Marla Orenstein:

I found this really interesting because like you, Peter, I spend most of my time working in Western Canada on energy issues. And it’s really good to just be able to pull yourself out of the stream that you’re living in most of the time and look around and try to figure out what is a challenge, because it’s hard and it’s difficult and what is just situational to where you are. I really think that’s what this week gave me. As Jonathan alluded to this or you alluded to, there’s this real sense of collaboration and alignment, and I think we spent a lot of the week picking apart why that is and what we can learn and maybe apply back home and what we can’t.

Jackie Forrest:

Well, it sounds like a great trip, Peter.

Peter Tertzakian:

It was. It was a great trip and I again want to thank Jonathan Turner and for organizing it, for inviting me. Maybe it would be appropriate to have a couple of closing sound bites from each of them.

Jonathan Turner:

I think it’s been a good overall tour of all the different bits of work that the UK is doing towards our net zero strategy. So, looking at how we’re deploying renewable energy to decarbonizing our heavily polluting sectors, as well as looking at how we can fill the skills gap that we need to reach our ambitions of net zero by 2050.

Tiffany Langford:

It’s been quite a challenge pulling it all together, but it’s been really fun and enjoyable. I think the key takeaways for me is just how much the UK is doing and particularly how much everybody seems to be on board with the message. And yeah, I guess everybody’s kind of aligned with the net-zero goals that the UK has in place.

Jackie Forrest:

Well, that is a wrap. We hope you enjoyed this podcast. If you liked it, please rate us on the app that you listened to and tell someone else about us.

Speaker 2:

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