How the Energy Sector Is Helping Canada Achieve Its Decarbonization Goals
How the Energy Sector Is Helping Canada Achieve Its Decarbonization Goals
Vice Chair, BMO Financial Group
David Jacobson became Vice Chair, BMO Financial Group in October 2013. In this role he is responsible for driving business across all lines, including Capital Marke…
David Jacobson became Vice Chair, BMO Financial Group in October 2013. In this role he is responsible for driving business across all lines, including Capital Marke…
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The Canadian energy sector is willing to invest more to lower its emissions, but it says the government needs to provide more support if there is any hope of achieving its 2050 climate action plan. That was the main takeaway from a wide-ranging conversation between David Jacobson, Vice Chair of BMO Financial Group, and Alex Pourbaix, Executive Chair of the Cenovus Board of Directors, and the energy company’s former President and CEO, at the 2023 International Economic Forum of the Americas (IEFA) Toronto Economic Global Forum.
The fireside chat at a private luncheon touched on various topics, including the energy transition, the role of renewables, nuclear power and Indigenous relations. To kick off the conversation, David Jacobson asked Alex Pourbaix for his take on how effective the various levels of government in Canada and the United States have been in helping facilitate the energy transition.
On the Energy Transition
Canada and the U.S. are still figuring out what policies they want to introduce to support the transition, responded Pourbaix. “We’re living in this laboratory where the two federal governments are going at it in significantly different ways,” he said.
In the U.S., the Inflation Reduction Act (IRA), which includes that country’s plan to reduce emissions, is by far the most ambitious, explained Pourbaix. “I give the U.S. a huge amount of credit,” he said. “I think that the government decided that they wanted to be a global leader in clean tech, and they wanted all of the patents, the I.P. – everything – because that was what was going to ultimately bring the benefits to the U.S. economy.”
While Pourbaix acknowledged it’s harder for Canada to match the scale of the U.S. initiatives, he said the government is more focused on sticks than carrots to reduce carbon emissions. The Canadian oil and gas sector has a goal of reducing emissions by 42% by 2030, but “that is patently impossible,” he said, given the time it takes to get permits and build these projects. At the same time, you have a federal government with emission reduction ambitions, running into a provincial government with ambitions about its economy, tax base and royalty base, which can further slow projects down, he added.
How can the industry and government work together more, asked Jacobson?
Ottawa would like all industries to decarbonize much faster than Pourbaix thinks is possible – at least on their own. “We need policies that are resilient and will help with the very significant cost of decarbonizing.”
On Renewables and Nuclear
Jacobson noted that many renewable projects still require a lot of government support. He asked the former Cenovus CEO what role he thinks renewables play in the energy transition and if there may be a time when help is no longer needed.
“I don’t like the word transition because I think we’re going to be using oil and gas for many, many years,” responded Pourbaix, who also helped co-found the Pathways Alliance in 2021, a group of six major Canadian energy companies that are jointly looking for ways to innovate and implementing new technologies to lower carbon emissions in the energy sector. While he’s supportive of renewables, he said they still can’t provide the reliable energy at all hours of the day that the economy needs.
Where does nuclear power fit in, and what role does the government have in financing some of the emerging technologies, wondered Jacobson, noting there is a tremendous amount of discussion about the potential for small modular reactors (SMRs) and nuclear fusion.
“We’ve made incredible strides, whether it’s the production of conventional energy, whether it’s improving the technology behind renewable technology, but governments have a huge role to play,” said Pourbaix.
Although much of the talk about decarbonization in the oil and gas sector has centred on carbon sequestration, Pourbaix said the sector has a vested interest in seeing the innovations in nuclear power generation. While SMRs are still in the developmental stage, they could help the oil and gas sector reduce its natural gas consumption.
“The Achilles heel of the oil sands business, at least the steam assisted gravity drainage, is that we burn natural gas to produce steam, which we inject down the wellbore in order to mobilize the oil,” explained Pourbaix. “Small modular reactors have this incredible ability to produce that high-quality steam that the industry needs, while also being able to operate in a co-gen mode where they are producing power, which we are going to need to use if we have aspirations to decarbonize the production of power.”
On Working With Indigenous Communities
One of the issues that still needs to be addressed across North America is reconciliation with Indigenous communities. Jacobson asked, what policies need to be in place to ensure those groups can participate in the energy transition?
Cenovus is already one of the largest employers of Indigenous people in the country and a major supporter of Indigenous-owned and run companies in the region, Pourbaix said, but more still needs to be done with these communities if Cenovus is going to meet its decarbonization goals.
“We’re going to require a massive build-out of new generating facilities, massive build-out of transmission distribution systems, all of those are going to run directly into traditional Indigenous lands in our country and in the U.S.,” he said. “We have a plan to bring those communities in early.” For those communities to participate in the energy transition, they will need capital, he added.
To wrap up the conversation, Jacobson asked what Pourbaix thinks will be the next big thing in the energy transition.
“Very few people understand all the challenges of attempting to take our present energy, how we produce energy, how we consume energy, which is largely done right now with fossil fuels, and turn that into non-emitting sources,” said Pourbaix. He added that everyone – consumers, politicians and the industry – needs to be realistic about how long and costly this effort will be.
“We’re going in the right direction,” he said. “We have to do it at a pace that doesn’t destroy the economy and doesn’t destroy affordability for people.”
Toronto Global Forum 2023
PART 1
Q&A: How to Turn Economic Challenges Into Opportunities
Honourable Brian V Tobin, P.C., O.C. October 16, 2023
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