Timothy Egan, President and CEO, of the Canadian Gas Association had an opportunity to speak with the Premier of Alberta, Danielle Smith to discuss avenues which will allow governments and the industry to work together and deliver a secure energy future.
The interview has been slightly edited for conciseness and clarity.
Tim: It’s a cool day here in Edmonton and we like to say it’s a great day for natural gas when it’s like this. Alberta natural gas helps us across the country, especially on cold days, and for that we are grateful, Premier Smith. But reflecting on that brings to mind several things in the global and domestic energy conversation, and we appreciate your time to discuss them today.
Recent world events have demonstrated more clearly than ever the importance of energy security, and I think that’s effecting a change in the conversation about energy around the world. I wondered if you might give us your thoughts on what that means for Canada, and what that means for Alberta?
Premier Smith: Well, I think one of the things that it does do is it allows us to create a broader conversation. I think for a long time the conversation just focused around emissions reduction, which is important. Part of the reason we put forward a plan to be carbon neutral by 2050 is we want to show the world that, yeah, we want to take leadership on the environment too.
But you also can do the other things that we need to do, which is provide energy security and energy affordability. And all three of those things are vitally important. So I think that the fact that we now have instability around the world, particularly in Europe, is that it has caused people to broaden their view of what constitutes green energy. I think the paradigm used to be wind, solar and batteries, and now we have begun to see with green bonds in Europe that include nuclear and natural gas.
And there’s good reason for that, because natural gas does have a lower emissions profile than a lot of the fuels that it would be displacing. So I think that by taking the approach that natural gas is part of the future energy mix we can reduce global emissions by displacing coal and wood and other higher emitting products. I think that’s a very positive message that now finally people are beginning to see is genuine.
Tim: Just expand a bit on what you’re saying about natural gas. Natural gas has come front and center in that global energy conversation. After the Russian invasion of Ukraine, there was a desperate concern across Europe about a shortage of gas supply. And we had Europeans knocking on our doors here in Canada talking about what more we could do with natural gas.
The world seems to want natural gas from Canada. What more do we need to do to get our gas offshore?
Premier Smith: Well, we need to tell those who need it that there is a business case for it. And I’ll be meeting with the representative from Germany because I think they were given the wrong impression when they first came to Canada. We’re actively talking with the partners in LNG Canada – countries like Japan and Korea and Malaysia – about their understanding of how important natural gas is going to be to their future economies.
I’ve spoken as well with the members of different LNG business alliances around the world who are very worried that if Canada doesn’t do its part to get a clean, secure supply of natural gas to the world, they’re going to have to expand coal, which goes in the opposite direction of where we’re trying to head. So I think that the Canadian story is a really important one, and it’s my job to make sure people understand that we’re here and we’re ready to help.
I’m delighted to see Coastal Gaslink is finished. It is being filled as we speak. LNG Canada will come on stream, as I understand it, in 2025. They’re working towards making a final investment decision. There’s additional support that can be made for a couple of other Indigenous-led projects in British Columbia. And as long as we can work to help make the case that reducing emissions abroad is a way that we can achieve global goals, I think that will get British Columbians, Albertans and Canadians alike, understanding that this is an important part of the future energy mix.
Tim: What more can we do within industry and how can we work better with government? Historically, there seems to have been an almost confrontational approach, often between industry and government on energy, particularly at the federal level. Do you have any advice for what more we can do together to improve the situation and seize those opportunities you’re talking about?
Premier Smith: Well, I have to tell you, I think ironically, Michael Moore and his Planet of the Humans film of a few years ago really blew apart the paradigm that the federal government had been operating on. There’s a lot of environmentalists who took a position that wind, solar and batteries were the solution. And what that documentary showed is that part of the reason why wind and solar have been able to expand is because natural gas has been the backup.
So when the wind isn’t blowing or the sun isn’t shining, gas-powered plants are there to come on. But in addition to that, you can’t make a solar panel out of a solar panel, and you can’t make a wind turbine out of a wind turbine. All of that requires enormous energy involving heavy equipment and the industrial processes that require the use of hydrocarbon fuels – I think realization of these things has begun to change the approach.
“So when the wind isn’t blowing or the sun isn’t shining, gas-powered plants are there to come on.”
And it’s very important that we get through to people on this because the federal government is proceeding on a paradigm that still goes back to that, that very old thinking. And it’s the reason why they think everything can be electrified. They talk about electricity being expanded for future growth, but also all of our home heating on electrical. This is why they’re so obsessed with heat pumps, whether they work or not, in -25°.
And they’re also talking about transportation all being on the electricity grid. Well, we just have a story today in Edmonton that there are electric buses are broken down and they the company that sold them to them is probably going bankrupt because they just don’t work very well in -30 weather. So we have to inject a dose of reality in this.
In our province, we have always had parallel systems. We’ve had an electrical grid and we’ve had a natural gas grid. And our electrical grid is also fed principally by natural gas. And so we have understood that having that kind of backup so that you can both systems is something that does provide the energy security. So we are we’re fighting very hard against the federal government, against this paradigm that they have because we think it will lead to instability in the grid, it will lead to lack of reliability, it will lead to unaffordability, and it’s just not going to achieve the global goals.
So I think that there’s a lot of work that we need to do in presenting natural gas as a part of the emissions reduction paradigm. I don’t think that we’ve fully succeeded because the voices of the extremists on this issue, unfortunately, have carried the day for a number of years. But what I’m beginning to see is that there’s more and more reason being injected into the debate, whether it’s Bjorn Lomborg or whether it’s Michael Shellenberger or whether it’s other environmentalists who are quite concerned about emissions, but nonetheless understand that everything needs to be done in balance.
Tim: Last question Premier: one group of Canadians who are very concerned about the environmental issues is the Indigenous community. You made reference to the fact that several the LNG projects now have an Indigenous element. Do you want to just comment on the on the economic reconciliation opportunity as represented by that and what it means for Alberta?
Premier Smith: My Indigenous Relations Minister Rick Wilson calls it “reconcili-action” because while there have been a lot of words spoken – and words are important – if we’re going to make a meaningful difference in the lives of First Nations, they need their own source of revenue. They need to be able to have a long-term secure revenue stream that allows them to spend money on their priorities, to build out their communities on all of the key infrastructure they need, but also to provide good paying jobs and an instruction to people who want to start businesses and work in those businesses.
The nature of the ownership structure in First Nations doesn’t allow them to go to the bank and be able to take out a loan to make a major investment in a project. And so the simple solution was, well, let’s be the entity that provides the loan guarantee.
So we created a $1 billion loan guarantee fund that allows us to indemnify on the purchase of some of these projects. And the process that we go through is very rigorous. So I anticipate very, very low incidence of default, but it allows for them to create long term revenue streams. So we already have, I think, seven projects, a couple more coming on stream next year, which will generate 23 million a year in revenues for over 30 indigenous nations.
And over the lifetime of those projects alone, $1.2 billion revenues. For them. It is game changing. And we were so excited about the enthusiasm for these projects. We kept on getting suggestions about what else we could do. So we’ve increased the loan guarantee amount to 2 billion this year. It’ll go up to 3 billion next year.
And my view is I would love to see every major infrastructure project, whether it’s an oil pipeline or a gas pipeline or a power plant – all of those should have some indigenous equity ownership in it so those communities can enjoy the long term revenue stream associated with the development. So that I think is being led by First Nations leadership, which I love to see.
Look at the LNG projects in British Columbia being led by First Nations, having their own environmental approval processes and being advocates at various LNG conferences. That to me is so exciting that we have those who care deeply about the environment, care deeply about their people and the affordability question, but also understand that these kinds of investments offer a solution without having to compromise on either of those.
And we’re going to continue to support that kind of action.
Tim: Well, we think that’s a solution. That’s a good news story for all Canadians, just as natural gas is. So, we thank you for your time today and thank you and your fellow Albertans for that natural gas. This Ontarian uses it to heat my home and I appreciate it very much.
Premier Smith: I’m so glad that you do. We’re happy to keep you warm.
Tim: Thanks again Premier Smith.