A Pragmatic Approach to Delivering on a Cleaner Energy Future
- Media Type
- Item Type
- November 22, 2022 A Pragmatic Approach to Delivering on a Cleaner Energy Future
- Date of Publication
- 22 Nov 2022
- Language of Item
- Copyright Statement
- The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
Views and Opinions Expressed Disclaimer: The views and opinions expressed by the speakers or panelists are those of the speakers or panelists and do not necessarily reflect or represent the official views and opinions, policy or position held by The Empire Club of Canada.
- Empire Club of CanadaEmail:firstname.lastname@example.org
Agency street/mail address:
Fairmont Royal York Hotel
100 Front Street West, Floor H
Toronto, ON, M5J 1E3
- Full Text
November 22, 2022
The Empire Club of Canada Presents
A Pragmatic Approach to Delivering on a Cleaner Energy Future
Chairman: Sal Rabbani, President, Board of Directors, Empire Club of Canada
Distinguished Guest Speakers
David G. Hutchens, President & CEO, Fortis Inc.
Richard Fridman, Partner, Davies
Robin Upshall, Partner, Davies
Head Table Guests
Jenny Alfandary, CEO, Westario Power
Lori-Ann Beausoleil, Corporate Director, Audit Committee Chair and Strategic Business Advisor, Wildeboer Dellelce LLC
Richard Fridman, Partner, Davies
Michael Kobzar, National Director of Sales, Transmission Systems, Siemens Energy Canada
Monika Manza, Partner, GTA Advisory Business Unit Leader, KPMG
Gareth Newlands, Vice President and Global Process Lead, WSP Global
Benjie Thomas, Canadian Managing Partner, Advisory, KPMG LLP
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 Sal Rabbani, President, Board of Directors, Empire Club of Canada
Good afternoon. Welcome to the 119th season of the Empire Club of Canada. To our in-person attendees joining live at the Arcadian Court in Toronto, I'm delighted to be here with you today. This incredible community of colleagues and peers is the driving force behind our mandate to engage, debate, educate, and advance the dialogue of issues of importance to Canadians. Welcome. My name is Sal Rabbani, and I'm the President of the Board of Directors of the Empire Club of Canada.
To formally begin this afternoon, I want to acknowledge that we are gathering today on the traditional and treaty lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wyandot Peoples. We encourage everyone to learn more about the traditional territory on which you work and live.
Turning to today's program, I want to recognize the Empire Club's board of directors, staff, and volunteers. Thank you for your contributions and making this event a success. The Empire Club of Canada strives to bring conversations that matter to the forefront of our programming. One of the most topical themes this year is North America's role in developing a future fuelled by clean energy. Today's keynote will give us practical perspectives on mitigating environmental impacts and navigating the paths to accessible, sustainable, and reliable energy.
The Empire Club of Canada is a not-for-profit organization, and we'd like to recognize our sponsors who generously support the club and make these events possible. Thank you to our lead event sponsor, DAVIES; thank you to our supporting sponsors, BMO, CIBC, RBC Capital Markets, ScotiaBank and Hydro One; thank you also to our season sponsor, Bruce Power
We're accepting questions; it's an interactive event from our audience for our speaker. So, there's a QR code found on your program. So, should you have a question, I encourage you to undertake to scan that QR code. It's now my pleasure to invite Richard Fridman, Partner at Davies, to introduce our guest speaker. Richard, welcome.
Opening Remarks by Richard Fridman, Partner, Davies
Thank you, Sal. Good afternoon, everyone. It's a great pleasure to be here today at this wonderful event, hosted by the Empire Club of Canada. I for one want to thank the Empire Club for facilitating real dialogue around important issues that impact all of us. It's why Davies is so proud to be a sponsor of this event. Davies has a long history of working with Fortis that goes back, dare I say, almost 35 years. And it's been an honour and a privilege to be a part of this phenomenal growth story, from a local Newfoundland-based utility to a North American powerhouse, with 10 utility operations in the United States, Canada, and the Caribbean. And I have the privilege today of introducing our speaker David Hutchens, the President and CEO of Fortis.
David's career in the energy sector spans over 25 years, having held a number of positions at electric and gas utilities in Arizona, and with Fortis. Before becoming President and CEO of Fortis, he was Chief Operating Officer of Fortis, and prior to that, the CEO of UNS Energy Corporation in Arizona. He has an undergraduate degree from the University of Arizona, where he has his Bachelor of Science in aerospace engineering and an MBA degree—so, clearly, unqualified. Among his other accomplishments, he is also a former nuclear submarine officer in the US Navy.
So, given his vast experience in industry knowledge, and its position that the helm of one of North America's leading diversified electric and gas distribution companies, David is ideally positioned to provide an insightful perspective on mitigating environmental impacts, adapting to climate change, and how we can better navigate the road to a cleaner energy future in the midst of prevailing macroeconomic pressures, and evolving public policy. These are issues that have garnered increased attention over the past decade. And with climate change concerns and protests on the rise, the stakes have never been higher. So, with that, please join me in welcoming David Hutchens.
David G. Hutchens, President & CEO, Fortis Inc.
Thank you, Richard. It's a pleasure and an honour to be here today. I couldn't be more excited. I'm pretty sure when we came in you were playing my walk on song, which was Beautiful Day by U2. So, whoever figured that out—I know my team knows it very well, because it's my reminder alarm sound, and so they hear it quite often when we're meeting, you know, when I forget to turn that off. So, it is a beautiful day. And I think the topic that we're going to talk about today is, how do we make sure that they're all beautiful on a going-forward basis? How do we address probably the most important issue of our lifetimes? And I'm not being dramatic. I really think it is. I think climate change has to be addressed. And I'll explain to you and give you a little bit of detail of my recommendations, and then things we have to look out for as we do that.
But first, the commercial. I want to talk a little bit about Fortis, because it's got, it is such a great story. Richard said a little bit about it, but having such a diversified North American energy company that has 10 utilities, with a presence in 9 different states, 5 Canadian provinces, and 3 Caribbean countries. That's a pretty broad expanse that we have. And just right here in Ontario, we have Fortis Ontario, that serve 68,000 customers. And probably one of the neatest projects I've ever been involved with, the Wataynikaneyap—yes, I can say that; I'll say it again, the Wataynikaneyap—Transmission Project. Which is a transmission system up in Northern Ontario that will connect 17 First Nations to the grid for the very first time. An 1800-kilometer project. That is, it will completely change the lives of those communities. It will provide them with a cleaner, more reliable energy source. And of course, you know, it's right here in Ontario. And having such a great ESG story around that—I could go, I could talk the entire day about that project. But suffice it to say, it's probably one of the most impactful projects that Fortis has ever been involved in.
So, one of the other things I wanted to mention is, Fortis is primarily an energy delivery company. So, 93 percent of our assets are supporting the delivery of electricity and natural gas to our customers. In fact, our largest subsidiary that sits about, covering about seven states in the Midwest US, is ITC, which is also the largest independent transmission company in the United States. So, we know a little bit about transmission. And obviously, when we think about delivery, it's not just about transmission, but distribution, and even energy storage. So, we have a bit of a unique expertise across the entire sector. I like to say that our company, because of those 10 utilities, and how diverse they are in their in their businesses, I kind of like to say we've got our own little energy sector ourselves. So, we know about every almost every kind of generation you can think of, transmission, distribution, and storage for both electricity and natural gas. So, that gives us a little bit of a unique perspective on the space. Now, the other unique perspective comes in—which at times you might wish it wasn't quite as unique—is all those jurisdictions have different regulatory environments and politics. And that's one of the reasons, when we look at our business model—which is really an autonomous model driven by management teams in each of those jurisdictions—that's exactly how you have to have it, to manage those types of issues.
So, let's talk about the most important thing that we're going to talk about in our lives, and that's climate change and how we're going to manage it. So, let me just basically set the problem statement as this: we have to figure out how to decarbonize the economy as fast as we can, without basically balancing a bunch of competing interests. And we have to do that while we're mitigating the impacts that we know are already here and will likely get worse; the severe weather that we've seen over the past several years. That's the challenge that we have. And the utility sector is uniquely and prominently at center stage and all these conversations. So, I'm going to tell you the two roles that we have, from a utility sector perspective, in this climate change conversation. Our first and primary role is to continue cleaning up our own sector. That's important. And the utility sector has the commitment to clean up our sector as fast as we possibly can. We have the slogan, you know, "as clean and as fast as we can." That's what we want to do. That's what we're focused on. And the electricity sectors in both US and Canada have a track record. We've reduced carbon emissions in the US, since 2005, 36 percent. And so, in that same time period, Canada—you win, Canada wins—has reduced those greenhouse gas emissions 47 percent. And we know we're not done, and we know that we have to make sure that we're continuing on that path. And Canada's grid, as we sit here today, is already one of the cleanest in the world. And so, we're just trying to get even better, to make sure that we're doing everything we can from a company perspective, from a country perspective, provincial perspective, to make sure that we're doing our part to get climate change in hand.
So, I do want to mention quickly that Fortis has goals around this as well. As we sit here today—and I mentioned 93 percent of our assets are related to delivering energy. Well, the other seven percent is generation, two percent is renewables, and five percent is fossil generation, the vast majority of that is in Arizona. So, even though it's only five percent of our portfolio, even though we're starting with a very small environmental footprint when you think of the size of our company, we're extremely focused on squeezing out the emissions out of that last five percent. And we're doing it, and we've made a commitment to do it. From a Fortis-wide perspective, we've made a commitment to reduce our greenhouse gases 75 percent by 2035. We just made that commitment in 2020, based on a 2019 tester. So, when you think about that kind of a goal and the statement that that makes, the first thing you should say is, well, that's aggressive, can you achieve it? And I'll say, yes, we can because we actually have a plan. We have an integrated resource plan that will exactly address those emissions, reduce them by that amount, without using anything fancy. I mean, I'd like to claim—because this was when I was CEO down at UNS—I'd like to claim this was a super complicated plan that took a lot of, you know, handwringing, and, you know, thinking. But here's the plan: shut down the remaining coal plants and build renewables and storage instead. That's it, that's easy. And that gets us to 75 percent greenhouse gas reductions by the time we get to 2035. So, I also want to mention that we can do that without offsets. That is something that, when you hear some of these longer-term goals, and you hear net zero goals, if you hear the word net zero, you typically will think offsets. I'll cover that a little bit later, and how I think those play an important role. So, in the first two years of that goal, we reduced our greenhouse gas emissions already by 20 percent, which gave us the confidence to set a 2050 ScopeOne net zero goal. So, we started it right. We made sure that we announced a goal that we knew we could meet. And then, when you have to think about some things that are a little bit longer term and maybe a skosh aspirational, then you have the credibility to set those goals.
So, our second and parallel goal of the utility sectors is to clean up everybody else's sector. We have to figure out how to get cleaner fuels and electricity to power, to supply the energy to the other sectors, industrial, transportation, et cetera. Industrial's the largest emitting sector and Canada, transportation's the largest emitting sector in the United States. We have to figure out how we can do that. It's through cost-effective electrification across the board, no matter what sector that you're in. Transportation, there's plenty of great options as we sit here today, from electric vehicles—which, obviously, are really growing across North America, and frankly, across the world. But there's also the other things that you have to think about, too. Ones that are a little bit harder to electrify, and harder to decarbonize. Some of those other sectors, some of those applications, are going to need things like LNG for large transportation, or hydrogen for some of the process, heat, and fuel that is needed across so many of the different sectors. So, we've got aways to go. But that's it. Two parallel paths that we have to go down. And you have to do both of them at the same time.
So, now the balancing act. This is where it gets difficult. Now, that sounds really easy. Well, let's just do that, and let's just do it as fast as we can. And so, there's a little asterisk next to, "as fast as we can." And here's the asterisk that we have to make sure that we're focused on, and that's, you have to make sure these three things are met. The first is affordability. We have to provide clean energy that our customers can afford. If you don't, then you will quickly lose the support for going towards a clean energy future. This means that we have to think about how we are developing new technology, what's the right time to, you know, to deploy some of that technology. That's really, really the key. But one of the other key things that I think folks forget about, and if you think about a clean energy future, the first thing you think about is probably renewables, wind and solar; that kind of conjures that view. But one of the most important things that we have to focus on, before we think about the supply side needs of what our energy resources should be, is the demand side. It's energy conservation, and it's energy efficiency. Those have to be the two first things out of everybody's mouth when they talk about a clean energy future. Because you've got to reduce the amount of energy you use before you make it clean. It just makes sense. Because everything that you do from a supply side is going to have a footprint of one sort or another. So, I'll leave you with this little phrase to remember to always bring up that clean energy, or the energy efficiency topic. And that's that the cleanest kilowatt hour or BTU is the one that's never produced. And we have to make sure that we're investing in the infrastructure, the equipment, the systems, to provide more efficient use of the energy resources that we do have.
So, the second part on affordability is, we've got a lot of systems out there. We got a lot of transmission distribution, gas pipelines, et cetera. We have a lot of infrastructure that our customers have paid us to build for decades, and decades, and decades. We have to figure out how to extract as much value, on our customers behalf, out of those resources. Because that will help us keep the total energy package affordable. So, a lot of times we think of the ability to deliver clean electrons via transmission. But you also have to recognize that you can deliver clean molecules via the gas system. So, whether it's renewable natural gas or hydrogen, we have to think about how we can use that system and get that value out for our customers. So, the other part is all about reliability. We're going to electrify more, which means there's more demand on the system, which means people are going to be even more fussy when the power goes out. It's going to be a higher, a much higher focus on reliability as we go forward. Now, add in to that the weather extremes that we have seen and will continue to see going forward. It means we have to do things differently. It's, we're going to have to design our systems differently, we're gonna have to prepare and respond differently. We'll do all that. But the reliability is now paramount. I mean it's, in fact, a safety issue, when you lose power for a long period of time. And now you have more of the economy dependent on that grid, you have to make sure you're focused on the reliability.
Now let me add another little bit of a, an issue in there. I mentioned probably the first thing you think about for clean energy is wind and solar. You think about that. Why? Because there's going to be a lot of wind and solar as part of the clean energy transition and the solution. Which, is that great? Yeah, it's great. It's nice, carbon-free energy. And then it's not so great. You can't control wind and solar. You can't ramp it up when you need it. It doesn't have what we in the in the utility lingo like to call capacity or dispatch ability. It. you can't control it. So, what we need—the term capacity just simply means the ability to get energy when you need it. And that's incredibly important. That has to be a view in the back of our minds every time we think about reliability is, can we manage all of these variable resources on our system? Which means, yeah, yeah, we can. But we're going to need some technology breakthroughs in things like, you know, storage, and other dispatchable clean energy sources, so that we can have that reliable system. You don't want your customers to flip on that switch and just say, you just have to wait a few minutes, the wind isn't blowing quite yet. I was gonna make a solar joke, but if you turn it on the switch, it's probably night. And we know, we know for sure, when solar doesn't work.
So, one of the things that you also have to pay attention to as well when you talk about renewables—particularly wind and solar—is they're not always where you need them. Where they where they're produced the best and the cheapest is usually, especially wind, quite distant from where the people who need the energy are. So, that means we need a lot of transmission. We need transmission to be built, not just to deliver those electrons, but we need transmission to be built to connect markets. Connecting markets allows us to integrate more renewables. The bigger the market, the better. The bigger the market, the flatter the load curve, the flatter all the renewables balance out. And you can get a heck of a lot cheaper end result for your customers by spreading out those renewables across a broader footprint. And it also allows you to dip into resources and reserves to backup your reliability from region to region as well. So, transmission is incredibly important. I have a whole side topic on transmission is also tough to build, and it's tough to site and permit—and I'm talking from a US perspective. And it's states, it's federal, there's all of these overlapping processes. It's the same up here in Canada. And we have to figure out a way—if we have any chance of getting to a true net zero future or even close, we have to figure out how to develop the resources that we have, and how to permit things like transmission.
So, lastly, the thing to balance is security. Which probably wasn't a topic of the conversations maybe a year ago. And by security, I mean energy security. So, this is quite a bit heightened due to, you know, geopolitical events. And I want to just, I want to tell you one phrase that I heard probably five or six, maybe seven years ago down in the US. And the phrase goes like this, "you need energy security in order to have national security, and you need national security in order to have economic security." And this was a whole conversation around the importance of, obviously, having energy security and being able to both produce and use the resources within the footprints that you live. That is incredibly important and has really come to light recently with the Russia-Ukraine conflict. And I think what's really knocked us over the head is we've realized that, wait, we're not, all of a sudden, a whole world of homogeneous partners, trade partners, that are politically and economically like-minded? Yeah, no, we're not. And we have to rethink the way that we do the entire supply chain picture. Not just from an energy perspective, we also learned this during COVID. So, we've had a lot of lessons learned in the past three years about what we need to make a more resilient supply scenario for the most important things that we need, and energy is obviously one of those.
So, what we're seeing now as we're rethinking supply chain—you know, you can think of onshoring, reshoring, friendshoring, all the different terms that folks are throwing out there—but it really is all about getting resiliency in your supply. And it's really a different, from looking at the least cost global supply model with just in time kind of inventory, to what I like to call more of a resilient just in case inventory. So, that's really where we're shifting from that perspective.
And so, what does all this mean, these balancing parts, here? Does it mean we're gonna go faster or slower in our transition to a clean energy future? And the answer is, yes. So, we're gonna go, I think, slower first, as we as we address energy security, and supply chain, and affordability issues, that are right now staring us right squarely in the face. And then if, once that clears—because these are short term issues, they are going to clear—and when they clear, we better have our foot on the gas pedal. Because, you know, you can't be fooled twice. If you look at one of the lessons learned from an energy security perspective, is make sure you're not relying too far afield. That you've got that supply chain within your friendly network. So—and the government's here to help. This is words that you should actually cheer. That there are people from the government, and they're here to help. And in the US, it's called the Inflation Reduction Act. Hundreds of millions of—hundreds of billions—of dollars of investment to help with the clean energy transition, to help with that balance, to help not only accelerate the transition to clean energy, but to also look at the demand side, and increase the amount of electrification that we can do across the entire sectors. And that, you probably all know about the Inflation Reduction Act, and it's a whole bunch of money raining down into the clean energy sector. And this will help. This will help affordability, because that means those tax credits and things like rebates will help our customers out. So, that's great. It will help on the reliability, because there's a bunch of money in there for research and development. It's a great package that I think will really keep us on the path. Without it, I would have said we were just going to slow down and then figure out what we're going to do a few years from now. But once that came out, I have full confidence that the US isn't going to be slowing down one iota, and will speed up as fast as a supply chain will allow them. Now, of course, those are great carrots. And there's also the same story here in Canada, with the fall economic statement. It's a It's basically the Canadian version of the Inflation Reduction Act. It focuses on those same things. This makes sure that North America is aligned to find, you know, and to focus on the manufacturing and jobs in North America that are needed for the clean energy transition. Let's keep those jobs here.
So, now comes the pragmatic approach, the practical approach to managing all of these different balancing acts you have to do. So, the first thing we have to recognize is targets and goals don't do anything. You need plans, and you need actions to execute, and you need those as soon as you can, in your planning horizon. So, setting a net zero goal in 2050, without having a plan to get there, what does that mean? It could mean that you're just hoping for a miracle in 2049. You have to look behind the scenes, and make sure that action plans are being done in the short term as best we can, and meet those affordable, reliable, and secure criteria.
So, the appropriate timeframes, is the key component here. So, my first recommendation, as we develop plans—and by we, I mean everybody—climate change impacts every sector, it's a government, it's a business, it's everybody's conversation. If you don't, if you aren't attached to a climate plan somewhere, whether it's within your, you know, jurisdiction that you live in, within your company, or your business, or you personally, you've got to check and see where—or, let me just put it down and put it back to you: I hope that you do. I hope that you get involved in those conversations. Because we have to play the long game. And that might sound, contrary to what I just said, is we need actions right up front. We do need actions right up front. But we have to be cognizant of balancing speed, and affordability, and reliability. And I'll tell you my, what makes me most nervous about the transition to clean energy, is that if we misstep early, if we either jeopardize affordability or reliability early on, we will lose public support. And it will take forever to get it back. So, we have to make sure it's like, okay, well, maybe it is okay to slow down a little, knowing that we're going to speed up. Because at the end of the day, that's what you have to do. We might have to go a little slower at first to go much further later. We might have to pause, wait for some of those technologies, wait for some of the prices to come down, then you put your foot on the gas and make sure that make sure that you execute. But at the end of the day, it's the area under the curve that matters, right? It's the total amount of emissions. So, if you slow down in the beginning, you better figure out how you're going to make up for that longer term.
The next recommendation is to keep all the paths open. I think we often hear, you know, ultimatums about all of this or none of that. We have to make sure as we sit here today that we don't pick winners too soon. Because, frankly, I have no idea what ones they're going to be—if you do, please let me know, and then tell me where I invest. Because we need the right mix of supply to make sure that we can provide that affordability and reliability. And we can't sit here today with a straight face and pretend we know what the economics or technology are going to be 10, 15, 20 years from now. And so, we should make sure that we can, that we're spending the time to be very thoughtful about our approach. Because I can tell you, whether it's storage, or hydrogen, or nuclear, or carbon capture of one sort or another, any single one of those, a technology breakthrough in any single one of those, will completely change the outcome. So, don't throw out infrastructure early. Make sure that you keep all of those options open on the table until we figured out.
So, now I'm gonna I'm gonna blow your minds. Are you sitting down? Until clean energy technology's advanced further, fossil fuels are going to be a key part of the portfolio, to keep affordability and reliability that we need. So, I hope that this didn't disappoint you, if you were one of the "no fossil fuels." This is the pragmatic approach. You have to use them. You have to use them because, for one, we're not talking about—I'm talking about a path, here, to net zero, not a cliff. So, if you have a measured path, fossil fuels can play an important role. Now, I'm gonna throw some shade on different fossil fuels, because not all fossil fuels are equal. Natural gas is by far the cleanest fossil fuel. So, we should be focused on what role can that play? And again, thinking about the path, natural gas can replace oil in shipping, in bunkering fuel, can replace that and provide a greenhouse gas reduction, cost savings, all of the above. And if you're doing anything to reduce greenhouse gas emissions early on, do that. Don't wait for the perfect, you know, solution, out 10, 15 years ago, if you can make an informed decision and have a path to have that makes sense longer term. Because making sense longer term is exactly what natural gas can do. Because it's clean now, but we can make it cleaner. Remember I said we can transmit clean molecules, renewable natural gas, hydrogen can be a part of that blend as well. Renewable natural gas, we've been doing that since 2011, in British Columbia at Fortis BC; 2011. Since then, we've given our customers an option to buy renewable natural gas. And right now, as we look forward and look at our portfolio, we have 19 PJ's, 19 petajoules, which is about the same at BCF—if I have any American folks in the crowd who want me to throw out some other units—that's a lot of natural gas. That is more energy than Site C expansion will provide, and that will be online for us in 2025. Same kind of clean energy, quite a bit cheaper, and provides another reliable pathway for us to make sure we're staying affordable and reliable.
So, I hope that didn't offend anybody, that we're going to have fossil fuels for a good long time. But I want you to also know, that whatever you're replacing them with isn't some sort of fairy dust. Everything that creates energy has an environmental footprint. And things like critical minerals, which are going to be so important to the clean energy transition, they don't grow on trees. They come from places with very big economic, well, I'll say environmental impacts, and probably some political ramifications as well. So, we have to figure all that out as we go.
So, let me wrap it up with two other pieces that we have to focus on from a pragmatic perspective. And the first one is, like politics, all climate plans are local. Because each area, whether it's geography—think of province, state, country—everyone has their own different energy mix down to the very, very local community level. Which means, you have to do things that make sense there. Resource needs and options are different. So, we're building a lot of solar in Arizona, because the resource is there. How much solar do you think we're doing in Newfoundland? Yeah, zero. So, that's, you have to make sure that you're focused on the options that you have. And everyone will have a different blend of resources based on that. And it really takes the collaboration of those local stakeholders to figure that out. And that's where that collaboration has to happen. You can't come up with really high level one-size-fits-all programs that you think you can push down across an entire country, or even an entire province, in some cases.
So, the last thing that I'll mention is, even though you have to really be thinking locally from a climate plan perspective, we also have to think quite a bit more globally from a broader perspective. Because I think what happens is, we get into this sort of echo chamber of wanting to reduce emissions in our own neck of the woods. And that might not be the most cost-effective way to reduce emissions. You need to look globally. You need to look at other options. It's the same atmosphere. If you emit greenhouse gas, a ton in British Columbia, Newfoundland, Arizona, it doesn't matter. It's all going to the same place. It all has the same impact. So, where can we spend our time and our money to get the most CO2 reduction per dollar? And that brings things to mind like, boy, wouldn't that be great if we had, you know, tradable credits, you know, a good honest, you know, way of trading either greenhouse gas credits or offsets, so that we can make sure that we're spending our dollars in the spot where they're most impactful.
So, the last thing that I will leave you with is this. It's also important to look globally from an adaptation perspective. That one is super local, about as local as you can get. Meaning, you're always thinking about how we protect our own systems, from a weather perspective, that whole reliability conversation I just had. Yes, that's true. But you also have to make sure that you're looking out for other countries, those developing countries, and making sure that, you know, we're pitching in and helping them as well. This Loss and Damage Fund that's coming out of COP27 is something that people, and groups, and the Canadian delegation, has been focused on for years, is finally coming to fruition. That's important, because we have to know that we're not the only ones feeling the impact of climate change. So, that's where I'm going to leave it. I really think it's up to you, as individuals, in whatever your role is in your company, or in your community. This is an ongoing conversation. We need to make sure we have people getting involved as stakeholders in these processes and help setting policy around climate change. Because climate change itself impacts everyone, but so does IT solutions. So, if you're not at the table, if you're not there helping explain this conversation, if you're not there trying to—we need rallying cries around climate. We don't need gloom and doom. We need to make sure that everybody in this room, and everybody in every business, and everybody in every, you know, congregation that you get with, understands that climate change comes with risks. But it also comes with incredible opportunities. And some people will respond to the risks, and some people will respond the opportunities. But you've got to sell to your audience. So, that, I'll leave it, and we'll open up for questions.
QUESTION & ANSWER
That's excellent. We've got some of the questions coming in, so thank you to those that have submitted this. We've got a couple of devices in hand. First question, you know, we've seen strong hurricanes hit Canada, and I think that impacted some of your service territory. And I think it was devastating, of course, in terms of an impact. I mean, this is going to increase, and the frequency I think, will stay as it is. You know, how much of a concern is this for the electricity industry, and how are you addressing it?
David G. Hutchens
Yeah, it's a, it's a big concern. And it's obviously getting more concerning. When you think about our footprint across North America, you're not usually thinking about three of your subsidiaries that are miles and miles apart, getting hit by a single hurricane. It went through Turks and Caicos—which is, which is one of our Caribbean utilities—and then hit both Newfoundland and Labrador, as well as Prince Edward Island. Those are, those are things we weren't expecting. You're, they're not supposed to, they're not supposed to be that strong when they got up into Atlantic Canada. So, this is, this was a bit of a wake-up call. And we are extremely focused, not just internally, we have what we call our Fortis Operating Group, that gets all of the operating executives together from across all of our subsidiaries to, basically, try to figure out some of these bigger issues, and climate adaptation is one of them. Now, of course, that's extremely different, depending on where you are; hurricanes in the Caribbean, heat in Arizona, you know, hurricanes, again, now in Atlantic Canada, ice loading. All of those things are the things that we need to focus on, from our own reliability perspective. We do that internally. But we also reach out to the broader industry, and participate in things like EPRI—that's the Electric Power and Research Institute—has a program that's called "READi," which stands for "Resiliency and Adaptation Initiative," that is focused on this kind of, this exact kind of issue, so that we develop those standards that we need, based on the climate zones that we're in, so that we can make sure that we're, we try to get ahead of it, and that we can predict how this weather is going to impact each one of our subsidiaries. And that same thing goes for every utility across North America and the world, frankly,
Thank you. Thanks for sharing. Here's a question that, you know, it's something that I focus on my day-to-day in terms of productivity, innovation. How much of a role is technology and innovation playing in accelerating the transition to a clean energy future? And, you know, what advancements does your sector need in order to be net zero by 2050?
David G. Hutchens
All we need is a carbon-free, dispatchable resource. And I don't care what it is. If it just falls out of the sky, that would be great. No, we do have to, we have to make sure we're making all the right steps in every single one of the pathways, which is the conversation around hydrogen, which we have to—now, hydrogen will be inexpensive to our customers, because of big rebates that we can get in the US, say. But, and some of those rebates may be coming in Canada as well, we're not quite sure. But it's still costly before those rebates and incentives. So, we have to have some breakthroughs in hydrogen, we have to have some break. Because hydrogen gives you a perfect fuel for a dispatchable clean energy resource. The, basically the generators that we currently have that run on natural gas, you can convert those to just burn in hydrogen instead, and now you have a one hundred percent, you know, clean energy source that is fully dispatchable. So, that's one of the places that we need to see technology development. Storage of every kind, battery storage is usually the one that's mentioned the most. But there's also some other ways of storing bulk electricity. Those are the kinds of breakthroughs that we need. And then we also need, from a reliability perspective, more technology in the grid, so that we can see the grid better and respond better to, you know, outages and severe weather.
Thank you. You know, in your remarks, you offered a few calls to action. And if you look at kind of the world today, there's no shortage of geopolitical issues that are confronting leaders here at home and around the world, you know, in addition to, of course, the climate crisis. What advice do you have for leaders, and where should they be placing their focus? And if you think of it with maybe a short-term view and a long-term view, if you're able to give some comments,
David G. Hutchens
Yeah, so I think probably, you know, from a political leader perspective, it's all about casting a wide net to get the input from stakeholders, so that they understand the issues more completely. And from a leader perspective of businesses across any sector that you can imagine, it's our job to also jump in there, and provide that input when we can. But it's not, you can't take your eye off the ball. Set the, you know, whatever your net zero goal is. Pick your 2050 net zero goal, and don't lose sight that that has to still happen. Even if you're making decisions that may seem contrary in the short run. If you need to invest in, you know, natural gas reserves and development, et cetera, to help out our allies across the pond, then we should be doing that. And we just need to do that with eyes wide open. That that just changes what we need to do in the later years. You've got to make sure that you can withstand the short-term kind of perturbations in the market, or the economies, or on the globe, and that you don't lose sight. It just changes the mix of what you do next. And it may make—well, it should make—the focus on hitting that gas pedal again later on all that much more important.
Thank you. As is always the case, great conversations. And we're coming up to time, but I want to leave with this question. How confident are you that Fortis will reach its greenhouse gas emission reduction targets?
David G. Hutchens
I'm sitting here, next to—this is the team that put this goal together. And I can tell you that every one of them is going to shake their head in the same direction, which is, we're not sweating this. I mean, we've got to 75 percent greenhouse gas reduction, you know, goal. We've got our, we're laser focused on it. We know how to get there. Even, let's just say we've got to add more gas generation for whatever reason, and it changes that, 2035 is a long time away. And it sure won't change our net zero focus in 2050. Because as we add that, the first thing, well, that everyone should ask us is, okay, great, you've got to do that, it's affordable, reliable, what are you going to do to make it clean later? Well, I can tell you any gas generation that we install on a going forward basis will be able to blend hydrogen, and hopefully, you know, have the ability to get modified to burn a hundred percent hydrogen. So, we've got the track record. We know how to do it. And we're not going to lose focus on it. And it's not one of those, this is not one of those goals that you just set because it's outside your time horizon, right? I mean, that seemed like a lot of these ambitious or aspirational net zero goals were coming out, and it's, you know, what are you going to do now? We'll get there. It's still too early. No, no, what are you going to do now? What are you going to do? Set those interim targets and hit them. And I am confident that we're going to hit those interim targets, and confident that will be net zero. And it may be through technology, I would bet it's going to be through some technology, that none of us sitting here today are even thinking of.
Well, that's perfect. I really enjoyed the conversation. And we'll have to have you back, and we'll see where you end up as it relates to some of these things.
David G. Hutchens
In 2050, absolutely. As a club of record, among other things. Thank you very much. I just now would like to invite Robin upshall, partner at Davies, to deliver the appreciation remarks. Thank you.
Note of Appreciation by Robin Upshall, Partner, Davies
Thank you. Good afternoon, everyone. I want to thank the Empire Club of Canada for providing a public forum for important conversations like this one, about issues which are, and will continue to be, important to our country, and our society, in the years to come and today as well. I'd like to thank David for highlighting the significant and necessary work that Fortis is doing today to get ready for and to lead us into a cleaner energy future. David's insights underscore how North America's utilities will play a critical role in the greening of our economy at the nexus of business, industry, and individual consumers coming together. Thoughtful leadership in this area from our utilities will be a vital part of moving all segments of our economy forward in our collective efforts to address the important issues of climate change in our society. More than a few years ago, now—I was born and raised in Fortis' service territory, in the beautiful province of Newfoundland and Labrador. That was a long time before we ever imagined that hurricanes would ever make their way into the cold waters of the North Atlantic. It's been a pleasure to be here today, to hear from David on this important and timely topic. And I thank you all for joining us. Have a great rest of your day. Sal, I'll welcome you back to the podium now, to close today's meeting. Thanks very much.
Concluding Remarks by Sal Rabbani
Well, this was great. We've had people from near and far, and I really appreciate everyone taking the time to join us today in person. Thanks, Robin. And thanks again to Davies, and all our sponsors for their support, and to Dave Hutchens, and everyone joining us today. As a club of record, the Empire Club of Canada events are available to watch and listen to on demand and on our website. The recording of this event will be available shortly, and everyone registered will receive a link.
Our next event is being held this evening at the Arcadian Court Studio. Join us to hear from current and former municipal leaders, as they debate the role of municipalities in the broader public service landscape, and their influence on public discussion. On Tuesday, December the 6th, join us virtually for a panel discussion, "Rethinking the Citizen Experience Online," aimed at exploring the challenges of navigating a new digital age, and providing a government online service experience that is both accessible and secure. On Tuesday, December 13th, join us in person for a highly anticipated conversation with a special guest at Achim Steiner, the administrator for the UNDP. We'll review some of the setbacks and achievements of 2022 and discuss the status of the 2030 Agenda for Sustainable Development Goals.
Thanks again for joining us today. And actually, I did have one logistical item today. There is a gift basket—and we like to support local entrepreneurs—from NB Distillers. And I guess there was some random selection undertaken, and there's a name. And so, I'd like to call upon Kevin Mill, if you're in the room, of Robert Half. And if not, there's a beautiful basket here for a man from Niagara, Ontario, Canada. Thanks again for joining us today. We invite you to stay join us in the lobby for continued networking. Have a great afternoon. This meeting is now adjourned.