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- 16 February, 2022 Fueling Canada's Low-Carbon Future
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February 16, 2022
The Empire Club of Canada Presents
Fueling Canada's Low-Carbon Future
Chairman: Kelly Jackson, President, The Empire Club of Canada; Vice-President, External Affairs & Professional Learning, Humber College
Distinguished Guest Speakers
The Hon. Jonathan Wilkinson, Minister of Natural Resources, Government of Canada
Susannah Pierce, Country Chair, Shell Canada
Bob Larocque, President and CEO, Canadian Fuels Association
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau. Literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.
It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.
Welcome Address by Kelly Jackson, President, The Empire Club of Canada
Good afternoon fellow directors, past presidents, members, and guests. Welcome to the 118th season of the Empire Club of Canada. My name is Kelly Jackson. I’m the President of the Board of Directors of the Empire Club of Canada, and Vice-President External Affairs and Professional Learning at Humber College. I'm your host for today's event, “Fueling Canada's Low-Carbon Future,” part of the “Fuel for Thought” virtual event series, which is a collaboration between the Empire Club of Canada and the Canadian Fuels Association. Today we will hear about the role of transportation sector in delivering on Canada's commitment to achieve net-zero emissions by 2050.
I'd like to begin this afternoon with an acknowledgement. I am hosting this event within the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. In acknowledging Traditional Territories, I do so from a place of understanding the privilege my ancestors and I have had in this country, since they first arrived here in the 1830’s. As farmers in Southwestern Ontario, I imagine they felt a deep connection to the land, and yet likely did not recognize how that connection was built on the displacement of others. Delivering a land acknowledgement, for me, it's always an important opportunity to reflect on our human connection, and responsibility to care for the land; and to recognize that to do so, we must always respect each other, and acknowledge our histories. We encourage everyone tuning in today to learn more about the Traditional Territory on which you work and live.
The Empire Club of Canada is a non-profit organization. So, I now want to take a moment to recognize our sponsors, who generously support the Club, and make these events possible, and complimentary, for our supporters to attend. Thank you to our partner in the “Fuel for Thought” virtual event series, the Canadian Fuels Association. Thank you to our supporting sponsors, Enbridge Gas Inc, and Waste Connections of Canada. Thank you also to our season sponsors, the Canadian Bankers Association, LiUNA, Waste Connections of Canada, and Bruce Power.
Before we get started, just a few housekeeping notes. I want to remind everybody who's participating today, this is an interactive event. And so, if you're attending live, I encourage you to engage by taking advantage of the question box, by scrolling down below your on-screen video player. There is time for audience questions that's been dedicated at the end of the session. We also invite you to share your thoughts on social media, using the hashtags displayed on-screen throughout the event. If you require technical assistance, you can start a conversation with our team, using the chat button on the right-hand side of your screen. To those watching on-demand later, and to those tuning in on the podcast, welcome.
It's now my pleasure to call this virtual meeting to order. I'm delighted to welcome the Honourable Jonathan Wilkinson, and Susannah Pierce, to Empire Club of Canada's virtual stage for the first time. Jonathan Wilkinson is Canada's Minister of Natural Resources. He was first elected as the Member of Parliament for North Vancouver in 2015. He has previously served as Minister of Environment and Climate Change and Minister of Fisheries and Oceans, and the Canadian Coast Guard. Susannah Pierce is Country Chair for Shell Canada, and General Manager, Renewable Energy Solutions for Canada. In these capacities, she's responsible for integrating and co-ordinating investment and operational performance across Shell Canada’s lines of business, and identifying investment opportunity for Shell’s growth pillar, related to renewable power, carbon capture sequestration, renewable fuels, including hydrogen and nature-based systems. You can learn more about our speakers today by scrolling down your screen where you can find their full bios on the page below the video player. I now like to hand it over to Susannah to get the discussion started. Susannah, welcome, and over to you.
Susannah Pierce, Country Chair, Shell Canada
Thank you, Kelly, thank you so much for the great introduction. Let me start off myself by saying that I am calling in from the Traditional Territory of the Musqueam, Squamish, and the Tsliel-Watuth here in beautiful Vancouver. The sun hasn't come out yet today, but it's a beautiful day, and I'm in good health and good spirits, and wherever any one of you are, I hope you are too. And I have the real honour, you know, having watched the video of the Empire Club, and hearing the history, it's seriously an honour and a privilege to be here today with Minister Wilkinson, who I have known in various capacities across his various different Ministerial portfolios. And before we get into questions, I would just like to say that I don't know that there is a Minister who is as dedicated, who is as informed, who cares as much about all aspects, you know, as it relates to energy, climate, environment. His portfolios have given him that experience and that insight, but he also comes from a business background; that's the other element that I think is really important. He understands business, he understands that there are challenges that we face in business as it relates to regulation, but regulation and policy can also be enabling forces. So, again, I think we're in for a great conversation here today. Minister, welcome to the Empire Club. It's so great to be here with you today.
The Hon. Jonathan Wilkinson, Minister of Natural Resources, Government of Canada
Thank you very much. That's very kind.
All right. Well, we're going to kick off right away into some questions that we've already got loaded up. But as Kelly said, we're going to ask for your questions, too. And so, if you see me looking down, it's because I'm actually getting them on WhatsApp—and that was a free promo for WhatsApp—and I will be looking down just to see what those are, so I'll be doing some head bobbing, just in case you're wondering what I'm doing. But let's start off with what I consider to be a really good context setting-question. And, Minister, you were also referenced in this report, which came out from the International Energy Agency in January, and it gave Canada high marks for its ambitions, and potential to be a leader in low-carbon energy solutions. What were some of the key takeaways from that report for you?
The Hon. Jonathan Wilkinson
Well, yeah, the IEA report was quite complimentary of Canada—and I would tell you, that's not always been the case, but it was complimentary, because it really said, Canada has developed a plan that is focused very much on reducing emissions, in line with what science tells us that we need to, but we've done it in a way that also thinks forward, in terms of seizing some of the economic opportunities that will arise through that kind of transition. We were the first country to adopt a number of the recommendations of the IEA, including reducing methane emissions in the oil and gas sector by 75%. And in addition, I guess, to the plan, and thinking about the economic elements, we also have been working on what some people call the just transition, or I prefer at times to talk about sustainable jobs, sort of the jobs of the future, and how are we going to ensure that workers and communities are actually going to participate in the economy of the future in a successful way? And I think that what Dr. Birol said—we actually did a joint news conference when he released the report—was, Canada has actually been a leader in all of these areas.
Yeah, and that was really good to see when I went through the report as well. I think we've established some pretty important policies enabling regulation and let me comment from a Shell perspective; when Shell looks at Canada, and we look at what are some of the preconditions that we need to look at, some of the lower carbon investments that we're looking at, because we have some pretty clear commitments to get to net-zero by 2050. Canada has some of those key ingredients, and enabling policy regulations present, again, some of the groundcover for us, ensuring that those policies and regulations can be predictable, there's a level of certainty is also very, very important. And so, we're at this phase where we see it, and now it's about how do we make sure that we can increase the amount of investor certainty, so that when we make some of these big investments, we can see that the economic returns will be there? Because, like many companies I'm sure, we have choices and places to invest, but I would just say right out the gate, Canada from this perspective is looking good. That doesn't, though, make the challenge of getting to these climate commitments any easier. We know they're very challenging, even though, I think, Minister, you've already stated, that we think we're on our path to getting to our climate commitment of 40-45% reductions. Can I maybe just ask you to comment a little bit on your level of confidence in that, at this point?
The Hon. Jonathan Wilkinson
Well, as you probably are aware, we are required under the net-zero legislation that we put into place last year when I was in the role of the Minister of Environment and Climate Change, we are required to bring forward a plan that provides significant visibility about where we're at, and how we believe we can achieve that target. We have to do that before the end of March, so we're in the throes of actually finishing that. I would say that we have taken enormous strides through the initial pan-Canadian framework, and then the strengthened climate plan, but there's still some work to do. And certainly, none of this is easy. It's interesting, because people often think, you know, well, Canada's target with respect to reductions is a little bit lower than what the Americans are, it's a little bit lower than what the Europeans are, but if you actually look at the costs associated with abatement, in Canada it’s much higher. We have the great luxury of actually having a largely clean electricity grid, where a lot of the tons that exist are pretty low cost. In the United States, where they depend significantly on coal-fired power, the costs of the transition are much lower. And so, we are we are working every day to figure out how to squeeze megatons from every sector of the economy. But certainly, for the purposes of this discussion, a couple of the key areas, of course, are the oil and gas sector, and the transportation sector, which collectively are about 51% of Canada's emissions.
Yeah, thanks, Minister. And then maybe let's, let's dive a bit deeper into that, because indeed, so transportation sector, there's a bit of a debate out there with respect to how much of the transportation sector can go from what it's currently based on, petroleum fuels, to electric power vehicles. And so, maybe you could comment a little on that, because I think even if we look at a lot of the credible climate scenarios, IPCC as well as IEA, they suggest that electrification is really only half of the solution; we still need depend on lower carbon fuels. Maybe you could comment just a little bit from your perspective there.
The Hon. Jonathan Wilkinson
Yeah, I think that's a really useful question. I think a lot of people see the Tesla's, and other electric vehicles out on the road, and sort of assume that the pathway is all going to be electricity. And of course, a significant chunk of the pathway will be electricity, but there are I guess, a couple things. I mean, the first is, in terms of the transition, things like biofuels are going to be really important, like the clean fuel standard that we brought into place relies on reducing the emissions intensity of fuels, and biofuels are a critical component of that as we move forward over the coming decades. But there are very difficult applications where electric electrification is probably not going to be the answer, like marine and aviation fuels, where biofuels may have a long-term role to play as we move forward, and certainly in areas like heavy duty trucking, it may well be that hydrogen is the vehicle through which we actually do this. So, you have to look at the transportation sector in a comprehensive way, each of these things are going to be tools that are going to be important. And some of them are important with respect to applications, and some of them are important with respect to geography. Think about Germany or Japan, you know, neither has an abundance of electricity, and you know, we are going to be seeing increasing demands for electricity. Neither of them has their own source of natural gas to be able to produce hydrogen either. And so, those areas are going to be areas where you're going to be looking at, perhaps different solutions that you may look at in Canada or the United States, and we need to be thoughtful and open. We need to have multiple tools that we can actually use to achieve the emissions reductions, because that's ultimately what we're trying to do.
Thank you, Minister. I think that's actually really helpful, because it is not where we are being, in other words, through policy, technology-specific, but we're giving clear signals of where we want to get to, zero-emissions vehicles mandates, but you are enabling regions and companies the flexibility and the optionality of saying, well, this is how we can get there at the lowest cost to ourselves, and then also to consumers. And I think that's the other key element of this, which may be flipping a bit from my position, and seeking your input on this. You know, for Shell, we have been looking very seriously at customer emissions, and part of the reason for that is, when we set forth our net-zero climate commitment, we talked about scope 1, 2, and 3. And for those that are not familiar with the methodology, scope 1 is really the emissions that we produce when we create energy; scope 2 are the emissions that we kind of cause to be produced, whether it's electricity or steam that we use in the production; but then scope 3 are our customers’ emissions, and the important thing about that, for us, is that our customer emissions—which essentially can be your scope 1 emissions—our customer emissions are 90% of the emissions that we have committed to address in our commitment. So, it really requires that we work with our customers back, to understand what it will take. And this is where we are in our strategy, and I find it really interesting, but also perhaps encouraging, that even over the last couple of years, we've seen the number of companies and countries increase their net-zero commitments. We're now seeing this unique relationship between customers and producers, where we can have a conversation, where we can begin to connect the dots between what they're asking for, lower carbon fuels, and what we can produce. In the past, it hasn't always been that way. And so, Minister, when you're thinking about some of these things, when you're thinking about how do we knit together the end-to-end of both production and consumption, are you thinking about that in any holistic manner, perhaps with your counterpart ministers as well, when you think about how do we produce energy, or where do we focus?
The Hon. Jonathan Wilkinson
Yeah, I mean, it's a broad question, but I would say, absolutely. You’ve got to look at it end-to-end. You've got to look at but what is actually going to facilitate customer adoption of the technologies that actually require the kinds of fuels that we're asking you to produce through things like the Clean Fuel Standard, and other things. And so, you know, if you think of a light-duty vehicles, which is probably the easiest one, most top of mind for people, part of it is about regulatory incentives or requirements for people to produce the lower carbon fuels, but part of it is about actually driving customers, or giving customers the ability to make the choice for a lower carbon utilization, whether that's electric, or it's lower carbon content hydrocarbons, or it's hydrogen. And so, in that context, one of the big challenges for zero-emission vehicles right now is the infrastructure, where people have this concern about actually buying a zero-emission vehicle, because they don't know if they're going to be able to actually fill it up and fill it up in a timely manner that they are used to at a gas station. And so, one of the commitments we have made is to build out an electric vehicle infrastructure across this country, at least to the point where you can make money as a private business. Like, government shouldn't be in the business of actually building out infrastructure, when you can actually get to the point where private sector should step up and be able to actually make a business case out of it; and so, that's part of it.
The second part of it is around incentives to try to buy down the capital cost difference between the cars, so that people are not expected to pay an enormous premium for zero-emission vehicles. And again, that will be time limited as manufacturing volumes ramp up, that cost difference will come down. And to be honest, if we actually get consumers thinking more about lifecycle, that cost difference is pretty minimal at this stage, because the ongoing operating costs of a zero-emission vehicle are significantly lower than for a traditional internal combustion engine. But you do need to think about this end-to-end. If you just are putting requirements on producers, but you're not actually facilitating deployment, it doesn't work.
Thank you for that Minister. And again, it's encouraging that we're seeing some of these end-to-end, because consortiums or partnerships happening, and again, we—within my company at least—have been really trying to push that forward, in particular, given our experience over in Europe, and then now my intent and my hope with the businesses in Canada is we do more here. One of the things too, that you touched on, that I think is kind of an important part of the conversation—and it wasn't pre-scripted, so I'm just going to throw it into the room—but I think it's a really important one, and I think a lot about this, and I hear this more and more, but that is end user education, or just, each one of us in Canada, do we actually understand energy? Do we actually understand how it is created? What the necessary applications are for different types of energy costs, energy efficiency—you know, one of the most important things we can do is focus on energy efficiency, because the best way to stop using energy is to be energy efficient—but how do we maybe do a better job of helping the Canadian public understand energy, and to start to build that into the decisions that they're making, to be more aware of some of these things that can actually help us achieve our climate commitments?
The Hon. Jonathan Wilkinson
Well, I certainly agree with you that I think that's an area where we haven't done enough, is to equip folks with the necessary information to make thoughtful choices. My personal belief is that the vast majority of Canadians actually want some degree of personal agency in taking their own action on addressing the climate issue, but many don't really know what they should be doing, how impactful that's going to be. If you ask, you know, 100 Canadians about what is a heat pump, and how does that work, and how can that actually improve the efficiency of your home? Probably 98 would have no idea what you're talking about at this stage. And so, I do think that there's a role for industry, for sure, but for governments—and I mean that both federal, and provincial, and municipal governments—to actually be working to try to improve the level of literacy with respect to some of these issues. I often think that we need to actually do better in terms of aligning some of the work, both on communications, and on some of the other issues between the federal and provincial governments. It's not always simple in a federation like Canada, but I do think that we do need to be doing a better job, because some of the critical issues around efficiency that exist in Atlantic Canada are quite different from the ones that exist in British Columbia. In Atlantic Canada, the critical issue is getting people off home heating oil, for example, which is not an issue at all in British Columbia. And so, I think that there is work that we can be doing more effectively, intra-governmentally, to try to actually ensure that we're doing better with respect to providing people the appropriate information, and providing them with options.
Yeah, and I would say, for my part, in the corporate world too, it's an area of interest for me, as well as to help make sure that every home understands a little bit more about their energy. And actually, you know, the distribution companies that are customer-facing, also have a role to play. So I think, again, from the corporate perspective, we do have an opportunity, because we are facing our customers, to do what we can to actually help inform how they're making their energy choices. You know, it's also something that I think the IEA referenced, and this comes into the electrification area—and then I'll go back maybe a little bit into clean fuels—but, you know, one of the challenges we have in Canada, is that we really, the provinces pretty much have the jurisdiction over electricity generation and transmission. And that is a bit of a challenge; I think the IEA calls that out. Do you see any opportunity to address that challenge in order to move green electrons from one place to another more effectively?
The Hon. Jonathan Wilkinson
Yeah, I do. You're right that electricity is typically the domain of the provinces, and as you will know, in most provinces, these are provincial utilities, that are actually operating them; not in every province, but in most of them. And provinces typically guard their jurisdiction fairly closely, but I would say that I think the nature of the challenges that we're facing, with respect to both greening the grid, and significantly expanding the capacity of the grid—because if you think about all of these things that we want to use electricity for going forward, we're going to need significantly more electricity than what we have today, in the future. And so, I do think there is a role for the federal government in terms of being able to actually co-ordinate, and help to actually identify areas where we do need to strengthen. We do need to think more nationally about the grid. A good example of that is the work we're doing with the Atlantic provinces and Québec on the Atlantic loop, which is essentially trying to facilitate the phase-out of coal in New Brunswick and Nova Scotia. And that is something that we've been working on actively, but there are similar transmission issues between Manitoba and Saskatchewan, between potentially British Columbia and Alberta. So, those are conversations that we are engaging. One of the things that we have committed to do is to establish a national electricity grid council, to actually start to really focus on this issue. It needs obviously to have people that provinces are comfortable with on that council, to help us actually inform this conversation, and ensure that this is not just the federal government telling the provinces what to do, but it's an all of our interest to be thoughtful about planning, with respect to electricity across this country.
Yeah, thank you, Minister. I think it speaks also to this element of we should be, where we can, making the most of existing infrastructure, rather than building new, or trying to pull stuff out. I think the same thing goes for the fuels infrastructure that we have in Canada for liquid fuels, as well as for gaseous fuels. It is there, we should be leveraging it, we should be making sure that in some cases, if I pivot to hydrogen right now, there's a real opportunity to leverage potentially gas infrastructure, for dropping hydrogen, and in certain circumstances to decarbonize that fuel system. And if I think of hydrogen—again, pivoting maybe to this particular opportunity for cleaner fuels—you come from a bit of a hydrogen background. And so, you have been witness to the development of the sector in Canada for some time. I have also come into the development of the sector very recently, and I haven't taken on my new role, but I can tell you on the basis of what I see from our team globally, it has accelerated. The interest in hydrogen has accelerated quite a lot in the last two years alone. Maybe you could speak a little bit to hydrogen, why is that acceleration happening? What do we need to be mindful of, because we do have a Canadian hydrogen strategy, we do have hydrogen strategies at the provincial level in Alberta, BC, what do we need to be thinking about as it relates to hydrogen in Canada right now?
The Hon. Jonathan Wilkinson
Well, I mean, I think first and foremost, I would say that, you know, people hear hydrogen and they and they often are not sure exactly, well, what would you do with hydrogen? And I think it's important for folks to understand, hydrogen is an energy carrier, right? It's an energy carrier. That's what it is. And it can be used in all kinds of different ways to help us, with respect to our energy challenges, and our opportunity. And people talk about transportation, but there's also lots of opportunities in industrial applications, in home heating in some jurisdictions, in a whole range of different things. Canada is blessed in many respects, in the context of having different kinds of hydrogen opportunities across the country. So, in provinces like British Columbia and Québec, where there is an abundance of clean electricity, there is an opportunity for what people call green hydrogen—I hate the green blue label—I talk about the carbon intensity of hydrogen, I don't think it really matters, where it comes from, it's about what is the atmosphere see in terms of CO2, but there are opportunities for natural gas-derived hydrogen in Alberta, and Saskatchewan, and in other provinces. And I think in order to drive this forward, it's not really—there is work we have to do on the production side, although I would say that there is enormous progress being made with respect to the issues around production, and reducing costs, and reducing the carbon intensity. But we really need to focus on the demand side, about building demand for hydrogen in this country, such that you can actually think about this, not only in terms of domestic utilization, but you can think about this as an export opportunity where you're actually exporting hydrogen, whether that's in the form of ammonia, or methanol, or whatever. And I know this is something that Shell has been working on, the concept of these hydrogen hubs. It's certainly something we're very interested in, which is, picking a few different areas in the country, and looking at building not only production facilities and capacity, but also the demand and the load, which can actually drive then, the development of an industry that could be an important industry domestically, and a really important industry from an export perspective.
Yeah, thank you, Minister. And that's a perfect segue, because I will spend just a minute on hydrogen, from the Shell perspective, and in the Canadian context. What's great about what we're looking to do is, we're looking to leverage an existing asset, which is our Scotford Chemicals and Energy Park, which is in Alberta. And what we see is, we have the opportunity to marry an investment with our own demand. So, we actually look at it from the perspective of what can we do in order to actually drive hydrogen demand, and so we look at what we can do to with hydrogen, to decarbonize hydrogen and our actual existing assets. We would leverage carbon capture sequestration as part of that, but then the next element of that is, once we've done that, as we actually then see the opportunity for customer and product value. So, first is, let's decarbonize our own emissions, component two is, let's create lower carbon products that can decarbonize the scope 3, our customers’ emissions, but then let's also create this hub, as you say, where it's not just capturing our own emissions, it's being able to provide a service to others. So, we can actually capture some emissions from them, and actually sequester them, but then they also can create some of their own products for end use. That's pretty exciting. And again, it kind of addresses part of that challenge of where's the customer demand, well, we are it, and we can provide the fuels to us, but then we can also leverage that infrastructure and that scale, to create new businesses out of this. And that's pretty exciting. And I think the other piece for us as we think about hydrogen, again, Shell looks at the Canadian context, and the Canadian system as more advanced. We certainly think, from a CCS perspective, Canada, believe it or not, as a mature market, to the extent that we've already got the experience—even that IEA report talked about having 4 of the 26 CCS projects here in Canada. It's a huge opportunity we see for being able to capture emissions, but then also demonstrate not only how you do that from a technology perspective, how you leverage regulations and policy to actually show how you can keep the carbon emission sequester. So, I agree with you in terms of that opportunity. The other piece as we go maybe further down the value chain, and you mentioned it, the export. You know, it is exciting, I think, to see international companies like Mitsubishi Corporation in Canada saying, “we see an opportunity here to look at diversifying our supplies that we need for our own decarbonization, right here in Canada.” And that is the type of thing, again, when we think about Canada, when we think about attracting international investment, that's very encouraging, because you always, well, we recently have heard how Canada is not a place where people are coming to make investments, but we still see this happening. There's been other recent conversations, or at least announcements of investments. How do we do more of that? I mean, it from your perspective, what more do we need to do, to continue to attract these large-scale investments?
The Hon. Jonathan Wilkinson
Well, I mean, I think you really need to—I mean, you will know this better than I, Susannah—but I mean, you need to be able to identify those areas of the world where there are some significant energy requirements going forward. And it's not just tomorrow, but it's actually 10, 15, 20 years down the road. You know, Japan is certainly one of those that's going to be struggling with respect to how to fit all of what it needs to do from an energy perspective, given the lack of domestic resources, and some of the decisions that they seem to have made with respect to nuclear energy. But countries like Germany as well, I mean, Germany has an enormously ambitious hydrogen strategy, and yet they are struggling with the domestic production of electricity, where they're actually buying in electricity from many of the jurisdictions around them, again, because of some of the decisions they've made with respect to the phase-out of coal and the phase-out of nuclear energy. And at the same time, they have no domestic supplies, or no significant domestic supplies of natural gas. And so, that's an area where a country like Canada can actually potentially fill a huge void for them going forward, in a manner that actually provide stability and security from an energy perspective that they do not have right now, as everybody knows, with respect to some of the supplies that they get of natural gas from Russia.
QUESTION & ANSWER
Thank you, Minister. And again, I am a proponent of making sure that we do find opportunities to increase our exports, while also doing our part in meeting our own climate commitments. So, that's very encouraging to hear. I am now looking at my phone, just so you know, I'm not actually texting and talking at the same time, but I do have some questions here for you. All right. It's from Mark. For transportation, what do you see as the future energy mix? Hydrocarbons, biofuels, electrification, hydrogen, will there be transitions or regional drivers and regulations?
The Hon. Jonathan Wilkinson
That's a pretty broad question, but I would say that I think, as I noted at the beginning, I think the answers may be a little bit different depending on the geography, and the nature of the resources that are available. But I actually think that you are going to see the utilization of all of those tools on a go forward basis. I mean, biofuels, for example, is an integral part of us actually making the emissions reductions, and emissions intensity reductions that we need to make over the coming decades, when many of the vehicles on the road are going to continue to use gasoline and diesel fuel. And certainly, we've seen some really good moves in that direction, with respect to building the capacity, and the production capacity in this country. We had Federated Co-ops making a big announcement in Saskatchewan recently, we had the Entercam announcement that I think Shell and Suncor were involved in in Québec. Electrification, obviously, is going to be an answer in many jurisdictions, particularly for light-duty vehicles And hydrogen certainly has a role to play in a number of different areas, but I think most particularly in things like heavy duty trucking. I should tell you; I drive a fuel cell car. I gas up with hydrogen at my local hydrogen station. British Columbia is a bit unique in that regard, because we actually have a network of hydrogen stations, but there are different areas where the tools are going to be different, and I think that we should be focused on ensuring that they're all available, and that the market adopts the ones that actually make the most sense within the circumstances that exist in that jurisdiction.
I agree with you, Minister. I think it is, again, from our perspective, very much the same. There are different applications for different end uses, and so, we do see EV’s as great for light-duty vehicles, we do see the opportunity for low-carbon fuels, and even hydrogen and medium- and heavy-duty trucking. And a lot of it will really come down to, again, making sure that each part of that value chain or ecosystem is working well. Truckers are not going to want to buy hydrogen trucks until they know that the infrastructure is there, and that the cost of hydrogen is at least equivalent to what they would otherwise pay. So, being able to work together to build out that infrastructure is it's hugely important. I would just add again, that, you know, our experience, even just south of the border in California, has shown that, if you can start to work in tandem by building out the infrastructure—there we have a partnership with Kenilworth and Toyota where we’re rebuilding the heavy duty fueling infrastructure for hydrogen—you can then begin to expand the market. It is about, for some of these newer fuels, about creating the market, because, in and of itself, particularly as we're looking to achieve our climate targets, it will not happen on their own, unless we have the right types of partnerships with government, the private sector, and others, to make sure that these things will happen. And, you know, I'll throw in the Indigenous communities as well, and the opportunity that we have, again, for working with them as we look at how we can work together to build lower carbon energy. All right, I do have another question, which I'll pick up my phone to take a look at. What is the Government of Canada doing to ensure that incentives provided to biofuels do not shift the problem from GHG emissions to land use change, and biodiversity loss? Good question.
The Hon. Jonathan Wilkinson
It is a good question. And it is certainly a question that there's been lots of conversation around, the whole land use change regulations have been the subject of a whole range of not only conversations, but some evolution as we've worked through that. Our intent in the clean fuel standard is to ensure that what is done with respect to biofuels production, that there are appropriate constraints on the impacts that could spill over with respect to biodiversity loss. And so, that is an area where, obviously, we need to be working with the provinces, who often have the tools that relate to land use, but it is certainly something that we're not only cognizant of, but they're working actively to try to ensure that we actually get in front of that, before it becomes an issue.
Thanks Minister. The next question I have here, from Dr. Andy Picard. He asks, “do you really think that Canada and the developed world can really reach zero carbon dioxide emissions, without all people reducing their consumption of resources and energy significantly?”
The Hon. Jonathan Wilkinson
Well, I would say no, and yes. So, no, in the sense that I actually think tha,t as Susannah said earlier, energy efficiency is part of the equation here; it's about finding ways to actually better utilize the energy resources that we have right now, on a go forward basis. And so, that's part of essentially reducing our footprint is actually being a lot more thoughtful with respect to consumption. But I do think that there are pathways through which we actually can, very significantly, reduce emissions on a pathway to net-zero. And let me be clear: net-zero means net, it doesn't mean zero. It means that you're actually offsetting with sinks any of the residual emissions that exist. You need to get close to zero, but there are things like nature-based solutions where you're planting trees or restoring wetlands and grasslands, there are negative emissions technologies like what Carbon Engineering here in Squamish is working on, but at the end of the day, I do believe that we can, and I think if you look at each of the areas, each of the sort of slices of our economy, you can think about the pathways to get there. Eighty-plus percent, maybe 90 plus percent of the technologies that we require exists today. Some of them require further refinement, but it's not like we're looking for enormous moonshots all over the place in order to make this feasible. Yes, we need to continue to invest in research and development, but, you know, zero-emission vehicles are here; hydrogen vehicles are here; electric arc furnaces for steel plants are here; there's a steel plant running on hydrogen in Sweden; it's here. So, there is work that we need to do, but I do believe that there are pathways to get there. And I do believe it is really a realistic goal.
Yeah, thank you, Minister. And I believe there are pathways to get there, too. I also agree with you that I think the technology, most of it is here. I mean, there's definitely things that we need to continue to work towards doing, and that can actually even help us, mostly, actually, from the end use perspective. The other element that I'll bring into the conversation, because I know this is on people's minds, is the speed by which we shift from the legacy or the incumbent energy system, to the new energy system or the lower carbon energy system. And I'll just share with you, from Shell's perspective, we're walking that tightrope as well, because you know us as providing petroleum products, you know us around the world as upstream oil and gas. We're shifting into what we call the transition business, which is chemicals, and LNG or integrated gas, which is then helping us to get into the renewables and energy solutions business, as was described earlier. But, we can't move too fast, because if we move too fast, we're trying to invest in businesses that maybe aren't economic, haven't reached scale, because the customer demand isn't there, and so, that is not a good way to actually sustain a business and provide the revenues to your investors, which, by the way, I tend to remind people, are like you and me. When we give money to a company, we expect there to be some form of a return, and so, we can't turn that off and otherwise and kill the business. So, I think one of the things that we look at is how quickly can we do that? And it would be great if we could flip a light switch and tomorrow be at net-zero. It's not going to happen like that. So, one of the things that comes up quite frequently, and we've seen some of the challenges that have been happening in Europe, how are we going to be mindful of that, Minister, as we think about how quickly we need to move. How do we ensure that we do have the reliability, as well as, I would say, the affordability for consumers as we think about this transition?
The Hon. Jonathan Wilkinson
So, I mean, that's, that's the critical question. And certainly, you have to be thoughtful about how fast you can go, that if you try to go so much faster than is that is possible, you are only going to set yourself up for stranded assets, and business failure, but you're also going to set yourself up for a situation in which you just, as a government, you collectively miss your targets on an ongoing basis, and you erode the confidence that people have that you can actually get to where you need to be. On the other hand, you can't be in a situation where you're ever waiting for people to actually move, and people are always continually pushing the timeline out. I mean, at the end of the day, we're facing something that is a scientific issue, it's not a political issue is not a partisan issue, but the net-zero by 2050 is based on what happens if we do not actually achieve that. What happens to the environment, and what happens to the nature of the planet in which our children are going to live. And so, I think we're in this position where we have to be thoughtful; we have to make clear that this is a transition over the coming 30 years, that it's going to take time, that we have to make steps. There are lots of folks in this country who would like us to go faster, who would like tomorrow to have every electron generated by wind and solar energy, and I think we have to be careful that we're actually explaining to the Canadian public about we need to make these steps, we need to be serious about actually achieving these targets, but we need to do it in a manner that is actually going to work from an economic perspective, and actually, is just going to work from a from an overall making the emissions reduction perspective. So, that's not simple, and it is something that we all need to reflect on, how we can actually engage that conversation in a thoughtful way.
Yeah, thank you, Minister, and I am 100%, our company is 100%, and I'm sure other folks and companies in the energy sector are as well, because again, we recognize, I think, pretty much most of us recognize the importance of addressing climate. And that's, again, why you've seen so much of a move towards these net-zero commitments, decarbonization, and the importance of making sure we're doing everything we can. And I think that is, you know, it's upon us in the private sector to identify these challenges, because that is where I think we find the opportunity to really be surgical with some of the solutions, to create the markets, to mitigate the disruption that might come from some of these significant transformations of the system that we need to make.
The Hon. Jonathan Wilkinson
Yeah, I think that's exactly right. And I think one of the things that actually will help us in that regard is, if you look at public opinion polling, in terms of people's views about this transition, 10-15 years ago, you would say to people, should we fight climate change? They would say yes. And then you would ask them, do you think that will be good or bad for the economy? And the vast majority would say, bad. These days, when you ask the same questions, the vast majority of Canadians say they think that fighting climate change will actually be good for the economy. That's helpful in terms of actually being able to make bolder steps going forward, but it's also the case that we actually have to create the pathways, and we have to be able to show people the pathways, that their families will be able to sustain their level of income, or their standard of living. on a go forward basis. If we are saying to people, you're going to take a 50% reduction in your standard of living in order to fight climate change, it's a much more challenging conversation with Canadians. And I don't think that's the reality, but we just need to be thoughtful about how we actually do this in a manner that can work from an environmental perspective, but also will work from an economic perspective.
Thank you, Minister. I'm going to go back to my phone for a minute here. I've got a question from Tanya. Tanya Leach asks, “a sustainable net-zero future is not feasible by focusing on sectoral transitions alone. How does our energy policy need to evolve to encourage and enable greater energy system integration?”
The Hon. Jonathan Wilkinson
So, I guess you could sort of think through that question in a number of different ways. I agree with you that you can't look at it just sector by sector—although I do think you do need to look at it sector by sector in some respects, particularly around technology—but certainly, there is a need to think more holistic around energy systems. And it goes back to some of the things we were talking about with respect to the grid, for example, where a lot of this is going to be enabled by the fact that you actually have enough electrons that are produced by clean energy, in order to actually service the demand that's going to come, as you look to electrify home heating, or light-duty vehicles. And so, there is a need to be thinking at a systems level, but there is also a need to be thinking at a sectoral, and to be honest, at a regional level. Because as I said before, what are going to be the challenges in Alberta, and the opportunities in Alberta, are going to be very different from the challenges and opportunity in Nova Scotia, or Ontario.
I think that’s—and I can illustrate that point even further, perhaps. And the way I put it is—and I like the question simply because, if we take sector by sector in silos themselves, it doesn't work, to your point, just like that. So, I think about, for example, the oil and gas sector, and the power sector. At Scotford Chemicals and Energy Park, going back to that, we've made commitments to procure renewable power from a solar farm that Silicon Ranch is building from a PPA and wind-power agreement that we've entered into, but our ability to actually decarbonize what is known as our scope 2, is limited by our ability to access renewable power. So, we are dependent upon this other sector in order to help us decarbonize our oil and gas sector, so it's a great example of where the integration is really important in order to help us achieve our goals. So, that is where I also see that that's a crucial part of the conversation. So, it is very much a systemic discussion. Back to the phone—let me see here. From Dawn, “with CO2 lifecycle cost of EV’s considered, battery disposal, rare earth metals, copper, electricity upgrades, are EV’s going to make a meaningful difference in reducing overall scope 1, 2 and 3. That’s a challenging question, but, what do you think, Minister?.
The Hon. Jonathan Wilkinson
It is, but it gets back a little bit to the to the lifecycle in the in the energy system question. So, if you're going to manufacture EV’s in West Virginia, and you're going to do it using coal-fired power plants, then the answer is probably no. But if you actually are manufacturing EV’s, and you are recycling the batteries, and you are ensuring that the mining operations that are being done for critical minerals are using some form of renewable technologies, then the absolute answer is absolutely, yes. So, you need to think about the overall system, and you need to be targeting all of those. It's an appropriate question, because for Canada, we actually do see, from an economic perspective, the issues around critical minerals, battery manufacturing, and ultimately, EV manufacturing, as being an enormous potential opportunity for Canada. We have all of the critical minerals that are required for not just batteries, but for solar panels; and for wind turbines. We have the capacity and the capability to do a whole bunch of the battery-related work, including the recycling, where you can recycle very large amounts of the materials that actually exist in these batteries, and we have auto manufacturing, in Ontario in particular, that we're looking to transition towards electric vehicles. And we are thinking about exactly that, which is, you get to the point where you're producing electric vehicles that are produced, essentially, with zero emissions.
Yeah, and beyond. You know, you touched on wind and solar, you know, indeed. I think we need to be thinking about this, it gets into border adjustments with respect to the carbon intensity, the products we're bringing in or out, our current account and trade deficits. We need to be very thoughtful about how we are procuring those materials, those pieces of infrastructure that we need to build out our lower carbon energy system. And so, yes, the extent to which we can attract that investment to Canada—which by the way, we also have this fantastic, pretty clean grid—it's also a little bit of, again, as our friend Greg D’Avignon from BCBC would say, a double- or triple-word score.
The Hon. Jonathan Wilkinson
Absolutely. And I actually think this is one of the areas where we see strategic advantage from actually helping to reduce the carbon content of lots of fuels, and I know BCBC, and Greg, have done a bunch of work on this. But, if you can think about the work we're doing on aluminium in Québec, and in British Columbia right now, where you're looking to get to zero-carbon aluminium, and we're working on reducing the carbon intensity of steel to get to the point where you've got virtually zero-carbon steel, all of a sudden, that creates an enormous marketing advantage in the world, where you can actually market to people who are looking to reduce the carbon intensity of their inputs, that this is actually the best in class that exists anywhere in the world.
Thank you, Minister. It's very exciting to think about that. I mean, it's also something that we're going to have to really focus on as a country to get done, so really making sure that—I'm going to address another question in here—really making sure that, probably, we're looking at leveraging each department at the federal, as well as the appropriate provincial level, departments to make this opportunity real. I'm going to pivot to a question a little bit about that integration across the federal departments that we can really focus on, some of these very significant and important investments, and then also the relationship with the provinces. Because as I stand back, and I think about policies, regulation, investments, it does require a much greater co-ordination, integration, across all levels of government. And there's various things that have been holding that back, but maybe you could speak to some of the things that are working, and maybe some of the things that you would hope to see maybe change, so that we can attract investments, we can be more co-ordinated from a policy perspective to realize some of these big ambitions.
The Hon. Jonathan Wilkinson
Yeah, those are both important issues, but in terms of actually ensuring that there is appropriate co-ordination between federal departments. As you will know, federal departments are very large, and often operate in silos, and so, forcing collaboration amongst them is not always simple. Similarly, Canada is a very complicated country in terms of jurisdiction, and finding ways to ensure that we are appropriately engaging with each other on some of these issues is not always simple. I think that the positive thing with respect to this conversation, and with respect to the climate conversation, is that it is of such importance at this point in time, that I think that it’s got the attention of everyone. I was fortunate enough to be in part responsible for the development of Canada's strengthened climate plan. That only got done because we had absolute alignment amongst all of the implicated departments, and that was driven both by Environment Canada, but also by the Centre, by Privy Council Office. And the strengthened climate plan was perhaps the most comprehensive climate plan Canada's ever seen, in part because it had that kind of integration. And so, I'm looking to take that, and actually move it on to the other side of this, which is around the economic opportunity and the investment side of it. And so, we are starting a process internally within the government to essentially align the relevant departments.
But we're also looking to have a process in place over the coming months—and this is something that we're still in the process of developing—which is essentially working province by province, and in some cases regionally, at tables that include industry and labour, to align on what are the big opportunity areas, and the big challenges in Alberta? What are the big opportunity areas and the challenges in Québec? And how do we actually align the resources that provincial and federal governments are putting into this? How do we align the regulatory and permitting processes? How do we ensure that we are thinking through how to how to best work with stakeholders, but also with Indigenous communities, particularly in areas like critical minerals and those kinds of things? And I think that is something that I see as being able to help us to both ensure we're doing this thoughtfully, but also to accelerate the work that is being done going forward. So, that has not yet launched, it is still something that's in formation, but I'm quite optimistic. And I also would say that, you know, people are kind of tired of the bickering around climate change. I would say that this part of it, which is really about economic opportunities, is a much more fertile ground for federal, provincial collaboration. Like, look at Alberta, where we've had differences with respect to how to reduce emissions. They have a critical mineral strategy, so do we; they have hydrogen strategy, so do we; they have a CCS strategy, so do we. I mean, at the end of the day, we have very similar views about what some of the opportunities are, and it is incumbent on us to ensure that we are doing the best for Canadians that live in every province and territory in this country, to enable them to actually have a successful future in a low-carbon environment.
Thank you, Minister. And again, I know that I'm not alone in terms of my other corporate colleagues, and their interest of trying to make sure that collaboration works, because we do need to be all in this together to actually have the success and meet some of these very important ambitions. Kelly, I see you've appeared like an angel, and I'm wondering whether or not, do we have time for one more question, or should we start to wrap?
I think you're good for one more question.
Okay. Well, I know that Peter has been waiting in my inbox. So, Peter, let me find your question here. I think Peter’s question was, Canada, especially Alberta, going back to that great province, is a pioneer in CCS. In addition to improving the economy and a lower current fashion, what initiatives are there to export this technology, and associated services? I can also speak to that, but Minister, your view?
The Hon. Jonathan Wilkinson
Yeah, Susannah, you probably know even more about this than I do. But I mean, look, one of the potential advantages to being early in this, in terms of deployment—and this is not just true of CCS, this is true of almost all of technology—is that enables you to get to a point where you have something that the rest of the world needs, and it enables significant export opportunities. I spent 20 years running, or being a senior executive in cleantech companies looking to do exactly that. Canada is not always the easiest place to deploy first time, but I think the Canadian industry is becoming a little bit more accepting of the fact that it's something that needs to be done. But CCUS is one of those technologies, for sure, and there's interesting stuff going on that different companies are developing, and different modes of implementation; that's all to the good. To be honest with you, I had a conversation with my counterpart at the time, when I was in environment, in Alberta, about methane technologies. I mean, initially, there was some concern in parts of the sector around the implementation of regulations that required reductions in methane technologies. And when I talked to him about it after this had been implemented for all, he said, “you know, I see this kind of as a competitive advantage, because there's technologies that have come out of this that we think we can export around the world.” So, that's exactly the way we should be thinking about this.
I think that's a great way to end it, simply because I also believe that, given the experience that we've gotten, CCS, and some of the other technologies, the experience we have in the regulation of how these technologies can work, gives us the opportunity to not only share and export the technology, but also the supporting and enabling legislation and regulation. And I think that that's a really important part of what is going to be, I hope, a great trade strategy, working with Minister Wilkinson and others. How do we make sure that, again, we're not only addressing our climate changes, challenges in Canada, but we're looking to how we can actually export that experience, technology, and resource to other parts of the world. So, thank you, Minister; thank you for this great discussion. And thanks to everybody who had a chance to submit a question—if I didn't get to all of them, it's not personal, I just did my best to get to my phone as fast as I could.
Thanks, Susannah, and thank you, Minister Wilkinson. Yeah, no doubt, we probably could have spent another hour listening to this conversation, because it is so important, and there's been so much interest and audience engagement. Thank you, again, for joining us. We really appreciate it. I'd like to now welcome Bob Larocque, who is the President and CEO of the Canadian Fuels Association, and our partner in delivering today's conversation. And, Bob, I would just like to invite you to maybe make some observations on the conversation, and I know you wanted to deliver some appreciation remarks.
Note of Appreciation by Bob Larocque, President and CEO, Canadian Fuels Association
Thank you so much, Kelly. It was a great great hour today. I would like to say a very special thank you to Susannah and Minister Wilkinson, and also to all of you who joined us today. Initially, the intent of our “Fuel for Thought” speaker series is to focus on an open discussion about issues that are important, not only to the transportation sector, but to all Canadians. It is critical that we hear from different perspectives, so we can broaden our conversation and be more knowledgeable. And today's discussion did just that. We heard about the importance of biofuels as a pathway to net-zero, the need to focus on the demand side for hydrogen, changes in investments needed for the increased adoption of EV’s, as well as the role of today's fuel infrastructure in a low-carbon future. The opportunities and challenges of Canada's transportation to get to net-zero is something that we'll be hearing about more and more in the future, and we're all better informed after today's event. Minister and Susannah, I want to thank you for your contribution today to this discussion. It has been extremely insightful, and I look forward to continued collaboration on emissions reductions, accelerating the market demand for all low-carbon fuels, providing more information to Canadians on options available, while at the same time ensuring a reliable transportation energy system. I'm looking forward to more collaboration with the Empire Club, and just a little event, stay tuned, the next one will be this spring, and I'm looking forward for all of you to attend again. Kelly back to you to close out the session.
Concluding Remarks by Kelly Jackson
Thanks, Bob. And thanks again to the Canadian Fuels Association, and to all of our sponsors for your support. Thanks as well to our guests, and everybody who was able to join today, and to those who will be watching this later on-demand. Our next virtual event is going to take place on February 23rd, at noon Eastern Time. Join us for a panel discussion on “How Toronto's Waterfront Can Reach Its Full Potential.” We're going to hear about how improving transit, housing, and access to green space, all have a part to play in the future of Toronto's waterfront, an area where there are opportunities for major economic, and social development. More details, and complimentary registration are available at empireclubofcanada.com. This meeting is now adjourned. I wish you a great afternoon. Take care and stay safe.