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Canada's sustainable fossil fuel conundrum

Globe 2020 conference discusses energy transition, while protests rage over pipelines
Discussing Canada's energy transition at Globe 2020, from left: Martha Hall Findlay, Suncor, Andy Chisholm, RBC, Leah Lawrence, SDTC. | Nelson Bennett Photo

The Globe 2020 conference on sustainability and innovation opened this week with a number of fossil fuel projects dominating headlines in Canada, and a clash of cultures and beliefs – indigenous versus non-indigenous, capitalism versus socialism, youth versus boomers – tearing at the Canadian social fabric.

The “elephant in the room” at a panel discussion on Canada’s energy transition is that there are “divergent and competing views” about what Canada’s energy future should look like, said Chad Park, chief innovation office of The Natural Step, which advises business and government on sustainability.

Will the #ShutDownCanada protests succeed in halting the $6.6 billion Coastal GasLink pipeline? Will the Trudeau government reject the $20 billion Frontier oil sands project later this month? Is Canada really moving towards reconciliation with indigenous people or heading for a collision?

Those are some of the background questions to the discussions taking place this week, especially with respect to energy, at the biennial Globe conference, which focuses on sustainability, innovation and finance.

Concerns about climate change has created an either-or view of energy, with increasing pressure to leave fossil fuels in the ground as the way to address Canada’s own emissions profile.

But that just means more business and economic prosperity for oil producing nations that don’t have indigenous rights issues to deal with or strong climate change policies. The global demand for fossil fuels is not expected to peak for decades yet.

“The world demand for energy just keeps going up,” said Martha Hall Findlay, former CEO of the Canada West Foundation, and now chief sustainability officer for Suncor Energy (TSX:SU). “Energy is going way up, and it’s going to continue to go up, and we have to get emissions down big time, really fast.”

She acknowledged that companies like Suncor, a large oil sands company, are “a really big part of the problem.”

But she said companies like Suncor have the deep pockets to invest in technology solutions to reduce emissions.

“Given that we’re such a big part of the problem, in terms of our overall GHG emission footprint, we’re pretty well positioned to be a hell of a big part of the solution,” she said.

But Canada is at a crossroads, when it comes to trying to reconcile its commitments to reduce greenhouse gas emissions while continuing to build oil pipelines and allow oil sands development.

At an opening plenary session, David Wallace-Wells, an American writer and author of The Uninhabitable Earth, criticized the Trudeau government for “climate hypocrisy…where we declare a climate emergency, as Canada did, and the very next day approve the oil pipeline,” -- a reference to the expansion of the Trans Mountain pipeline.

Later this month, federal Environment Minister Jonathan Wilkinson is expected to make a recommendation on whether to approve or reject the Teck Resources (TSX:TECK.B) $20 billion Frontier oil sands project.

Wilkinson, who spoke at the plenary session, gave no hint as to which way he is leaning on the Frontier project. He said Canada needs to find an additional 77 megatonnes, over and above the 200 megatonnes already identified, just to meet its 2030 reduction target. 

"That is equivalent of halting all emissions in Quebec," Wilkinson said.

"Canada needs to be the cleanest source of resources as we transition to a low-carbon future," Wilkinson said. "We have the innovative spirit and the know-how to provide the world with the most environmentally responsible resources.

"Any oil and gas projects should have the lowest greenhouse gas emissions per unit of production, should develop a path to net-zero, and should have the lowest possible impact on biodiversity."

The Frontier project would add 4 megatonnes annually to Canada’s carbon budget, and would disturb close to 300 square kilometers of wetlands and boreal forest.

Federal cabinet is said to be divided on whether the project should go ahead, or mark the end of oil sands expansion and the beginning of a major transition to Canada’s energy economy.

Calgary Mayor Naheed Nenshi told Business in Vancouver that the Frontier project, like Trans Mountain, has become “symbolic way beyond the project itself.”

And we warned of the division that will result if the Trudeau government rejects the project.

“The consequences of a rejection would be far reaching,” Nenshi said. “There would be consequences for national unity, there would be real consequences for the provincial-federal relationships across the country.

“But also there’s real consequences to investor confidence. You’ve got investors around the world that’s saying, ‘Here’s a company that invested $1 billion, ten years, jumped through all the hoops, got a positive environmental assessment and then at the end were told no.’

“Fundamentally, saying no to something like this says, to a lot of investors, ‘Look, don’t bother investing in Canada.’”

Canada already has a problem when it comes to accessing capital, and the dearth of risk capital has squelched Canada’s technology and clean-tech sectors.

“Right now in the capital markets, we are falling behind,” said Andy Chrisholm, a member of the panel on sustainable finance for the Royal Bank of Canada.

In part, because of Canada’s green electrical grid, Christholm said Canada has the potential to be “the country with the cleanest resources, most environmentally responsible, most socially responsible.

“And that starts with oil and gas. Some of those experts are also going to become experts in hydrogen, in carbon capture…biofuels. And we must recognize that expertise and that potential resides within the existing energy complex to a degree.”

But while Canada has been a great incubator of innovative clean technology, it has done a poor job of helping clean-tech companies scale up and commercialize in Canada.

Leah Lawrence, president of Sustainable Development Technology Canada (SDTC), pointed to Brazil Biofuels as an example. It was a Canadian company, Iogen Corp., that developed the ethanol production technology now commercialized by Brazil Biofuels.

“That was a Canadian company that got to the point where it needed to scale up, and nobody in Canada wanted to fund it, so it had to go to Brazil to be able to do it," Lawrence said.

“There are so many Canadian examples that have been around for 20 years and we choose not to commercialize them in Canada. General Fusion’s going to have it happen to them, quantum computing is going have it happen to it, AI’s going to have it happen to it. It’s time to start talking about it and start to pick some of those things that we know are smart and get moving.”

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