February 6, 2025 • 45 mins
Are we in a Cold War where energy is the weapon?
Is energy becoming the world’s most powerful strategic asset? As governments refocus on security and affordability, global energy policy is shifting fast. What does this mean for Canada, the US, and the world?
Robert “RJ” Johnston is Senior Director of Research at the Center on Global Energy Policy at Columbia University and is on the speed dial of CEOs, policymakers, and political leaders navigating energy markets and global strategy.
In this episode, Stewart joins RJ in NYC to discuss:
- Why security and affordability are taking priority over sustainability under the Trump administration
- How the US-Canada Energy Relationship
- The Arctic, critical minerals, and why energy security isn’t just about oil and gas
- How LNG is used as a competitive advantage influencing trade relationships
- The political fate of ESG and DEI initiatives
RJ doesn’t just analyze trends, he’s been in the rooms where these decisions happen. Whether you work in energy, policy, or just want to understand how the world really works, this episode will change how you see the future of energy, economy, and your community as a whole.
Follow us and our guest on social media:
Stewart Muir on Linkedin
RJ on Linkedin
The energy conversation is polarizing. But the reality is multidimensional. Get the full story with host Stewart Muir.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stewart (00:10):
Hello and welcome to Power Struggle, where we dive
deep into the forces shaping thefuture of energy, climate and
the economy.
I'm your host, stuart Muir.
Today, we're at ColumbiaUniversity's Center on Global
Energy Policy in New York City.
It's an intriguing time to behere, just days after the US
presidential inauguration, amoment that always brings fresh
(00:32):
opportunities and challenges tothe energy world and the path
ahead, and I have the perfectperson with me to do that with
Joining me is Robert Johnston,or RJ, as he's known to so many
RJ.
It's great to be here today.
RJ (00:47):
Welcome to Columbia and New.
Stewart (00:48):
York.
Good to see you, stuart.
Thank you very much.
Good to see you.
I appreciate the time in yourbusy calendar you found for us.
Your job is your SeniorDirector of Research.
Yes, and looking at your resume, anyone would think it's a
roadmap to understanding globalenergy.
You've done so much.
You're founder.
You were managing director atthe Eurasia Group.
(01:08):
You know we were on a paneltogether, I don't know if you
remember in Quebec, inMont-Tremblant, a few years ago.
I was watching the audience.
You had a, I would say, a deepdive.
You had a lot of slides, butyou were engaging with that
audience of you know,generalists, educated people
Everyone was just wrapped.
I think you have a gift forgetting complexity across but
(01:29):
not losing your audience, so Ithink it's intriguing you've
come to academic life, becausenow you're going to be able to
share that with others.
How are you liking academiclife?
RJ (01:38):
It's great.
I mean, there's academic life.
Then there's academic life atColumbia, and Columbia is a
tremendous institution and ourfounder, jason Bordoff, built a
great research center here.
We're part of the School ofInternational and Public Affairs
, which is kind of consistentwith my own background, focused
on policy and geopolitics in anintersection between those
(01:59):
fields and business and energyand markets, and the center has
about 50 scholars dividedbetween full-time and part-time,
very interdisciplinary.
But we also have the pleasureof working with other schools
around campus our climate school, the business school,
engineering, and when you putthose pieces together it's a
very comprehensive way to lookat the energy story, the climate
(02:23):
story, the natural resourcesstory, and I really enjoyed it.
And great students here too,without a doubt, really smart 4%
acceptance rate.
So, yeah, not too many dummieson campus.
Stewart (02:35):
We're starting a new chapter in America, but the
world too, because it is Americawith a new leader.
Energy policy is at theforefront of the conversations
that are coming out of theseearly days.
From your perspective, rj, whatare the most important factors,
you see, shaping how we'removing on this landscape now
under this new administration inWashington?
RJ (02:56):
Yeah, it's a pretty dramatic change in direction from the
previous administration, whichhad really leaned into climate
change net zero.
Not that they didn't have todeal with the energy geopolitics
and the energy affordabilityconcerns with the Ukraine crisis
and crisis in the Middle Eastand, of course, the aftermath of
(03:18):
COVID.
But this administration underPresident Trump really is going
to elevate a focus on energysecurity, both at home and
abroad, a focus on affordabilityand the sustainability.
Net zero climate agenda is notgoing to disappear completely,
although it may feel that way attimes, but we'll certainly be
(03:39):
subordinate to a larger kind ofsecurity and affordability
focused approach.
I think most people in theindustry would agree that you
probably need to focus on allthree right At the same time,
the so-called tri-lend up, doyou?
Stewart (03:50):
see this as part of a global trend, or is it really
limited in time and space to oneplace on the map?
RJ (03:58):
No, I think you know Canada may see a version of the shift
right that, if the conservativeswin the next federal election
again, I think climate will bean important part of their
agenda, but there'll be probablyan elevation of energy,
economic development and moreproject approvals and a greater,
perhaps, effort to coordinatewith the US on energy security
issues.
And then, obviously, you know,pauline has made the
(04:20):
affordability agenda a big part,and that's probably what
connects countries more thananything is whether you're an
energy producer or a consumer,exporter, importer.
You know the last three or fouryears of inflation around the
world, the supply chaindisruptions with COVID, the
Ukraine war everyone's talkingabout affordability.
So I think you know Trump andPierre Palli have captured that
(04:42):
political momentum, trump allthe way to the White House, and
we'll see what happens in aCanadian election.
Stewart (04:47):
Sometimes you need a bit of time to look back on
events and figure out whetherthey were historical
inevitabilities or somethingelse.
Do you have a sense yet ofwhether the arc of history is
one or the other?
The arc of history is one orthe other.
RJ (05:03):
Well, I think it's an element of cyclicality, right
that you know we go throughperiods of intense focus on
affordability and security, andthen investments are made in
response to that, new policiesare developed in response to
that, and then, you know, thefocus on things like
sustainability starts to takeroot in innovation, and then the
(05:26):
pendulum starts to swing backdown the way.
So I've been reflecting on thisin the context of the passing
of former President Jimmy Carter.
You know, trump talked onTuesday about an energy
emergency in the US.
The last time there was apresident talking about energy
emergency was Carter, you know.
And Carter was dealing with theoil shocks in the 1970s and
that led to a very difficultperiod of focus on affordability
(05:49):
and inflation.
But also that's where weplanted the seeds for a lot of
innovation around.
Things like solar power andbiofuels and nuclear power, and
even fracking can all sort of betraced back to then.
So I tend to take a cyclicalview on these things.
Stewart (06:03):
Here we are at Columbia .
You're with a cohort ofteachers and researchers at this
highly regarded place andyou're engaging with students.
What perspectives are youseeing from young people on
where we are on energy climate?
RJ (06:20):
So our center is a center on global energy policy and I'm
from Canada, I live in the US,I've always had a strong focus
on North American energy policy.
You know, with Trump, that'sobviously a priority right now,
but we do take a very globalperspective.
Our center has people workingin Africa and Latin America and
China and so forth, but ourparent school, the School of
International and Public Affairs, even more so.
(06:41):
I mean, it's incredible howdiverse it is.
And it's incredible how diverseit is and it's a privilege to
interact with students from somany different countries and so
many different perspectives.
And it's pretty much everyelement of the spectrum you can
imagine in terms of interest inenergy, whether it's fossil
fuel-producing countries thatstudents are coming from,
whether it's students from areaslike California, where the sort
(07:04):
of green agenda is verydominant and there's a lot of
innovation coming to SiliconValley, the Teslas and all those
kind of things, and thencountries where energy poverty
is the major issue, othercountries where the energy and
natural resource sector may haveleft an environmental mess of
some kind, like in Ecuador, forexample, and everything in
between.
So you can really convene somegreat events right here in this
(07:24):
room where we have the privilegeof being able to bring in
political leaders, industryleaders, civil society leaders
and sit down with the studentsand answer questions, and I
really enjoy that becausethere's a broad diversity.
So if I were to pull some themesout of what we hear from the
students, there's no questionthat whether conservative you
(07:45):
know conservative or liberalthey're all focused on climate,
more so than previousgenerations, and that's not a
big breakthrough, but that'sstill going to be the case.
And they do take a more globalview and they're also optimistic
in terms of the role oftechnology, innovation and
entrepreneurship, but maybe lessoptimistic about the role of
government and big business.
(08:05):
So my generation is like oh,the government, if you have the
right leaders and big business,can solve all these problems.
And my daughter's 19, so I getthis from her as well A lot more
faith in the ability of thesort of entrepreneurial class,
the innovators, the socialentrepreneurs, to get things
(08:26):
done and solve the big problems,and, of course, all that's tied
together by technology.
Stewart (08:30):
I'd like to get some of your secrets on how you stay on
top of things, your dailyhabits, your trap line for
information, so that you are theguy who knows what's going on.
What do you do when you get upand you want to get tuned into?
RJ (08:42):
the world.
Inside baseball, here at VARCenter, we have a great Slack
channel which you know I'm notsure if you're a Slack user or
if your listeners are, but it'sa chat room, basically, but more
sophisticated, organized bytopic and searchable, and we
have all of our scholars aroundthe world, you know some of our
board members and partnersconnected and if you want to
(09:02):
sort of get reactions to thelatest oh, you know, biden put
sanctions on Russian oil there'sa great conversation about that
or critical minerals, or LNG,or you know.
So that's a go-to source forsure.
And again, that's since theApple technology.
Stewart (09:17):
Is that something anyone can do?
RJ (09:18):
Well, that's our own live chat, but I would say that's
like the kind of raw materialthat feeds all the research.
But I would say that's like thekind of raw material that feeds
all the research which is inthe public domain and our
website, although it's funny,you mentioned that we have
thought about if we can make apublic version of this somehow.
That could be interesting.
Sounds worth paying for, yeah,yeah, but also just being able
to sort of walk the floor hereand talk to colleagues.
I'm a big Financial Timesreader for the global coverage.
(09:39):
I definitely keep an eye onwhat's on Bloomberg and Reuters
and theglobalmailcom, so I likethe old school media as well.
But yeah, it's almost like inthis ecosystem here if I need to
know something, I can find outpretty fast from somebody.
Stewart (09:56):
Are you a podcast listener on your commutes?
Are?
RJ (10:00):
you a reader?
Are you a worker?
Well, we have a really goodpodcast here at Columbia Global
Energy Exchange at Jason Bordoff, so I listened to that and he's
got some great guests on that,and there are a few others I
listened to as well.
It's a good when you're stuckon the tarmac or on the subway,
it's a really great way to orthe treadmill even worse.
It's nice to have some goodcontent to listen to, but this
(10:22):
time of year I'm usuallylistening to NFL playoff podcast
too.
Stewart (10:25):
Yes, that's the dominant thread for a few more
days.
As an energy expert, youcirculate with lots of different
people, not just on campus.
Is there one misconception?
You just run across all thetime and do you always want to
correct it if you hear it?
RJ (10:40):
Well, I think I would be remiss if I didn't say that, as
a Canadian living in the US anddual citizen, I think a lot of
times I know Canadians feel likeour energy contributions to the
US economy are not fullyrecognized.
Now it's sort of almost theopposite problem that it's right
in the spotlight with Trump andhis proposed tariffs which we
could talk about.
(11:01):
But yeah, I think, as a Canadian, not that many people realize
that we're kind of a top fiveoil and gas producer and that we
have all the innovation that wehave and we're a leader in
sectors like nuclear and hydro,and that's something that is
maybe I don't know if it's amisperception, but it does catch
my attention.
And I also think the other thingis that I don't think the
average person understands thetrue complexity of the energy
(11:22):
system and the different layers,the length of the supply chains
where the vulnerabilities are,the steps an industry should
take to sort of mitigate thosevulnerabilities and how much it
takes to keep it all flowing ata time when demand continues to
grow and there's there's aginginfrastructure and there's
(11:42):
political instability andthere's volatile capital markets
and it's a lot of differentpieces to manage.
So that's what's alwaysintellectually attracted me is
that it's such a complex systemit does require different
disciplines to understand.
My side of it is the sort ofabove ground side.
I look at government policy,geopolitics, markets, et cetera.
But obviously the below groundpieces is the foundation of it,
(12:03):
the actual literal resources,energy resources that we're
producing.
That has its own complexity aswell.
Stewart (12:11):
I had a guest recently who, in trying to explain how
the North American energy systemworks because there's, as you
say, this interplay used ananalogy that stuck with me,
which was that the US and Canadaare like conjoined twins when
it comes to energy especiallyand woe betide the surgeon who
gets the task of separating them, because it turns out they're
(12:33):
linked through all kinds ofphysical ways.
Do you agree with that analogy?
RJ (12:39):
Partially.
I think that when it comes tooil, I think that's right.
I think there's almost like wehold our own right.
The US is producing more right.
The US is producing 13 millionbarrels a day.
We're producing, you know, fourand a half, five million
barrels a day, but we're a veryimportant input, the largest
importer, you know, keyfeedstock for a lot of refiners,
(13:00):
et cetera.
But I think where I woulddisagree a little bit is that
the phrase that's come to mindrecently is that it's an
asymmetric relationship for bothCanada and Mexico and many
countries with the US.
The US has one real rival aroundthe world, which is China, and
(13:21):
when Trump goes to negotiatewith them, it's going to be an
intense kind of meaning ofequals for Canada and Mexico and
other countries.
I mean, we have 80% of our tradewith the US, but their exports
to us are a much smallerpercentage for them and
obviously they have the militarymight and the global reach and,
you know, economy that's 10times bigger population, all
those things.
So it's not that we don't haveadvantages that we bring to the
(13:42):
table as well, but it is anasymmetric relationship.
So that's the sort of metaphorI've been thinking about is, you
know, in an asymmetric kind oftrade negotiation, political
negotiation, like what kind oftactics makes the most sense for
us to be successful?
Is it to kind of confront themand escalate them and threaten
retaliation, or is it to findareas of cooperation and
(14:03):
strength and collaboration wherewe can really demonstrate how
vital we are to the system hereI just get a little worried when
I hear talk about retaliationand escalation that in an
asymmetric relationship that canbe a dangerous proposition.
Stewart (14:16):
You know, I'm a Canadian.
My grandmother came fromIreland and went to Winnipeg,
but one of her brothers went toBoston, another came here to New
York.
You know, we're kind of afamily on this continent and
that story is common to manymillions of people.
So it feels a littledistressing when we have got you
know this maybe a little sensethat these countries are moving
(14:38):
apart.
Are they moving apart?
Is it just the sudden?
You know, events of recenttimes are leaving us uncertain
about what we thought we knew.
RJ (14:48):
Uncertainty for sure, and what I've been thinking about is
the US and UK are oftendescribed as a special
relationship, Right, and I thinkthe transatlantic partnership.
Canada has our own version ofthat, Right.
The long list, undefendedborder, all those things.
I think the question Canadiansshould ask themselves is are we
still special, or are we justanother country on a list of
(15:10):
countries that Trump wants a neweconomic and political
framework with?
I feel like it's the latter,but I'm hoping it's the former
still, that there's still some,that it still means something
that we fought together in WorldWar II and that we had that
border and we had such economicintegration and the cultural
integration.
You know that, and the familyintegration you mentioned with
your own family and mine, right,I mean married an American and
(15:31):
have an American daughter, andyou know that's all stuff I
think about too.
But I worry that we're not asspecial as we used to be and
it's looked at from an AmericaFirst perspective of not neither
a friend nor foe, but just likewe want a better deal and we're
prepared to push very hard toget that on the US side and
that's different than maybe whatwe've seen in the past.
Stewart (15:52):
Yeah, I'm worried.
We're having this discussionabout that threat, yeah, but
we'll have to see how it unfolds.
On a more positive note, rj,what are some ways we can
strengthen the relationshipbetween Canada and the US?
And, hey, the US and Mexico,let's not leave them out, but
I'm thinking more about Canadaand more collaboration.
That will be at least acounterweight to some of these
(16:15):
other factors.
RJ (16:17):
I'm a very simple person in the sense that I first of all
start by saying there's a lot ofnoise and chaos and headlines
and Twitter.
There's a lot of noise andchaos and headlines and Twitter,
and I try to tune those thingsout for the most part and focus
on the kind of core principlesand core data points.
So it's basically a two-prongedstrategy.
Very simply.
(16:37):
The first prong is elevate andcommunicate what's working well
today right, the economiccooperation that's in place
today economic integration,obviously energy and critical
minerals and agriculture andautos there's multiple examples
and the second piece is identifythe problems and offer
solutions.
And I think the pain point inthe relationship with trying to
(17:02):
actually trade and security withmass coast to border and I
think for us it's defense thatif Trump has a legitimate
grievance with candidates, thesort of underinvestment we made
in defense and burden sharing,and that's a solvable problem
and I think it's a fiscalstrategy that Canada needs to
develop figure out how to funddefense on a more rapid basis.
(17:23):
Whether or not we should havedone it 10 years ago doesn't
matter.
It's what we do the next 10years, probably even the next 10
weeks, that matters 10 months.
And then I think adjacent tothat is the question of Arctic
security and energy security.
Energy security we have a greatnarrator right now that we can
build on.
Arctic security, I think I'm notsure there's.
(17:51):
It's not my area of expertisenecessarily, but I don't really
see a compelling narrative orstrategy around that.
So there's some work to dothere as well.
So you know, emphasize theexisting economic strengths
which our political leaders aredoing and business leaders are
doing, and then you know kind ofown up to the challenge that
they're on the relationship andkind of take aggressive action
to to address them.
Some will be easier than others, but I think that's what,
especially in the defense, andcan't take aggressive action to
address them.
Some will be easier than others, but I think that's what,
especially in the defensivesecurity side.
I think that's where the realtest is going to come.
Stewart (18:12):
I wonder if we could pause on Arctic security and
maybe imagine there's a beingfrom Mars that could understand
our language but didn'tunderstand Arctic security at
all.
What's at play there?
I mean, it's the top of theplanet.
It's a place that mostCanadians never go in their
whole lives north of 60.
(18:33):
But there's somethinggeopolitically extremely
significant there.
What is it?
RJ (18:38):
Yeah, that word geopolitics is so interesting, right, the
geography and politics comingtogether.
And the map that most of ushave on our wall doesn't really
show that polar perspectivewhere you see kind of Russia,
alaska and Canada all converging.
But we think about it in thoseterms and historically there was
a lot of ice kind of separatingeverybody, and now the ice is
(18:59):
not there as much as it used tobe, if it's there at all, so
there's more ability to move.
You know, naval traffic or evencommercial maritime traffic
through there.
There's different climateconditions which is affecting
life up there as well.
But I think the main issuereally is the maritime issues.
That during the Cold Warobviously there was a lot of
(19:22):
joint US-Cant efforts to securethat.
At the end of the Cold War thatkind of went away, although not
completely.
But now with the conflict inUkraine and Putin's kind of
expansions to foreign policy,there's a lot more concern that
maybe we are back to kind ofquasi-Cold War conditions and
you know, whether it's missilesor submarines or whatever else,
(19:43):
that's something that needs tobe revisited urgently.
Then there's a minerals aspectas well, right, that, whether
it's oil or, you know, aluminumand iron ore and all kinds of
resource up there.
That is something that plays arole as well, but I think it's
more the question of thegeopolitical confrontation
(20:05):
between the US and Russiaheating up again.
Stewart (20:08):
Is there a connection between actions that remove
economic activity, includingenergy activity like drilling or
mining, from remote locationsthat have geopolitical
significance?
Is there a consequence when theland, so to speak, is?
RJ (20:24):
vacated.
Yes, I think that there's a lotof oil in the market right now.
We've brought on new resourceslike the US shale.
So before the US shale camealong, 20 years ago or 15 years
ago, there was a lot of talkabout drilling in Alaska and
drilling the Beaufort Sea andplaces like that.
That kind of slowed down on theUS and Canadian side but the
Russians kind of kept going.
So they still are veryinterested in moving liquefied
(20:52):
natural gas out of theirnorthern ports and developing
offshore oil up there.
It's been difficult for them todeal with the sanctions that
have been put in place, but soonthey're looking at remote
locations and the Chinese also,which are not immediately
adjacent to the Arctic but havethe economic reach and the
diplomatic relationships withthe Russians in particular, to
think about the maritime energyand mineral resource up there or
something that's gettingattention in Washington as well.
Stewart (21:12):
I know you pay a lot of attention to LNG.
You were at the LNG 2023conference in Vancouver.
I saw you there and I think youspoke at the diplomatic forum.
There's been a very heavyresponse to Russian Arctic LNG,
including by the Bidenadministration.
I mean, they kind of shut thatdown for the reasons related to
(21:35):
Ukraine, and the opportunitythere is a vast one.
Do you think that LNG is goingto be not only an economic
opportunity for those who canlegitimately stay in the market,
but also a climate solution?
RJ (21:50):
Yeah, and that kind of goes to the earlier conversation with
the conservatives and theirview on, or Republicans who
prefer their view on, climate.
On the security side, I thinksince the Russia-Ukraine
conflict, us LNG has been anincredibly important factor in
replacing Russian gas to Europeand to Japan and Korea, canada
(22:11):
perhaps indirectly providing gassupply to the US, which can be
free up resources to export itsLNG from the US.
As Canada adds its own LNGcapacity, with LNG Canada
starting up and maybe some otherprojects after that, we'll
probably be part of thatconversation and there'll be an
opportunity to work with the US.
Our gas is very well alignedwith the Pacific, given the
(22:34):
location of British Columbia.
The US gas in the Gulf ofMexico or Gulf of America,
pardon me, is very well alignedto send across the Atlantic to
Europe or to the Mediterraneanmarket, latin America.
So as we develop our own LNGresources, that will be an
opportunity.
On the climate side, it's acontroversial question and one
that gets a lot of discussionhere on campus about the role of
natural gas in transition.
(22:55):
It's probably fair to say thatin the US and Canada a lot of
our climate goals have beenachieved by retiring coal plants
and bringing on natural gas or,in some cases, like in Ontario,
nuclear power to displace, youknow, those more
carbon-intensive fuels.
Asia has a version of that aswell.
Right that if they bring in LNGto displace coal, that does
(23:16):
help from a climate perspective.
The obvious caveat is that itcan't be just any LNG.
It has to be LNG that isn'tassociated with a lot of, you
know, future emissions and highmethane intensity, because
methane's an importantgreenhouse gas, as we know.
So, yes, there is anopportunity there, and that is
something that I think the Trumpadministration and his energy
team were really deep intosaying.
(23:36):
Hey, it's not that we don'thave a climate strategy, we just
think that natural gas shouldbe central to it Less methane,
fugitive emissions, flaring andmore coal-to-gas fuel switching
and things like nuclear andgeothermal and carbon capture as
well.
But gas, at least from a USperspective, will be central to
that.
At the same time, I was in Bakuat the COP29 and climate
(23:57):
conference and everyone therewas protesting the role of gas
in the climate conversation.
So it's obviously acontroversial idea.
Stewart (24:04):
So here's one of the big questions I'm hearing.
A lot People are asking meforms of this question Net zero
2050.
Is it possible?
Was it ever possible?
RJ (24:15):
So I've always felt that we've, over the last several
years, moved to more certaintyon the technological pathway.
I mean we know that we haveelectric vehicles and solar and
clean hydrogen and nuclear andother pathways to get to net
zero energy efficiency, amongothers.
What we don't necessarily knowis the policy pathway and the
(24:38):
financial pathway.
I think, in the sort ofdeveloping economies, the
financial question of who paysfor all this, the sort of
developing economies, thefinancial question of who pays
for all this, africa, parts ofSouth Asia, parts of Latin
America, that negotiationbetween the global north and the
global south over climateassistance and finances
contentious.
And you know, again in Bakuthere was a significant increase
(25:00):
in the commitment to fundclimate action in the global
south and developing countries,but well short of what the
global south was hoping for.
And then the policy question,especially in the north, that
we're seeing have played outhere in the US and will play out
in Canada, is that things likecarbon taxes aren't very popular
, not in Canada, not in the US.
We've never had a carbon taxhere.
I mean we've had California, acouple of other places, european
(25:26):
carbon tax.
They're now creating thiscarbon border adjustment
mechanism to kind of likeprotect their own industry from
the effects of their own policy.
Right so that you know, importsof steel and cement will have
to pay a carbon tax before theend of the European market.
So yeah, these are very toughin democratic countries.
Very tough policies to sellbecause they come with cost and
maybe at times the green jobsangle has been a little bit
oversold.
Not that there aren't greenjobs, but are they in the same
(25:49):
places where the fossil fuelsare, the same pay, the same
skillset?
Not always.
So that just transitionquestion, which I know is a
phrase you don't like to use inCanada anymore, at least in
Alberta, but it's dope wise.
Stewart (26:00):
Yeah, I mean, I find myself wondering sometimes when
I hear phrases, whether I'mhearing an aspiration.
If we just say this, it willbring people along and that will
get to where we want to go, dowe know it's going to actually
work?
Well, maybe we can't prove it,but we want to aspire to it.
And that's what this is about,because it links to another
(26:27):
question.
RJ (26:27):
I have for you, which is is there an energy transition
underway or is something elsegoing on?
That's two terms that I didn'tthink were controversial or
suddenly very controversial.
One is the phrase natural gas.
Right, because now here oncampus and elsewhere people talk
about abated gas and unabatedgas and fracked gas and all
these things.
But on energy transition,that's also including with our
president, our newadministration not a very
(26:50):
well-accepted term because Ithink the oil and gas industry
doesn't like the idea oftransitioning away from
something.
So you get this debate aboutenergy addition instead of
energy transition, which I thinkis a bit of a distraction,
honestly.
I mean, the system has beentransitioning for centuries from
wood and biomass to coal, tooil, to gas, to renewables,
(27:13):
electricity, and people arestill burning biomass all over
the world and it hasn'tdisappeared completely and
obviously we're still using morecoal than we've ever used.
So I think in a world whereenergy demand is growing and
population is growing, economyis growing, a population is
growing, the economy is growing.
Transition doesn't necessarilymean away from something, but
it's become, unfortunately, likeESG and DEI in the very
(27:34):
political term.
I would still say an energytransition is happening, but I
don't believe that we're on apathway where demand for fossil
fuels is going to disappear.
It may plateau, it may shiftand it may see political and
consumer preferences over timeshift towards lower carbon
intensity and more carboncapture and things like that.
(27:57):
But I don't think thetransition should be viewed as
the end of the oil and gas age,at least not yet or anytime soon
.
Stewart (28:04):
The moment ago you put ESG and DEI into a sort of a
basket.
I haven't really heard too manypeople just state it.
So what's in that?
Let's zero in on this.
These are two very differentthings.
Dei's social, and ESG isenvironmental, energy, economic.
Do they have the same rootsystem, cause for why they're
(28:28):
manifesting the way they are now, and is there some assumption
that they're being treated thesame way and we'll see?
You know, kind of a conjoinedthere's that word again
trajectory for these writings.
RJ (28:41):
I think they are connected because the S and ESG does take
you in the direction ofdiversity, right.
The environment, society, yeah,and the environment, government
, environment, social andgovernance is the ESG.
And on the social side, I thinkup until this day, but
certainly recently, certaininvestment funds have been
looking at providing data totheir customers about the
(29:03):
diversity of boards andcorporate management from a
racial or gender perspective,along with their carbon
intensity or their you knowsupply chains and you know their
labor practices, and that'sbecome politically controversial
.
Maybe some people feel likethat was an overreach in certain
areas or distracted from thecore mission of profit making.
I think that's unfortunate,right, because these are
(29:25):
important values that mostpeople agree on.
But it become very political onall the ES and G.
So that's too bad.
But I think probably what willhappen is much like natural gas
regardless of what we call it,we're still going to be using it
in some form.
It's still an importantresource.
It still has challenges, and Ithink that's true with ESG as
(29:45):
well.
Right, that this big wave ofESG we saw over the last five or
six years has sort of crestedand is declining.
But to my comments aboutcyclicality earlier, I think
you'll see new forms of ESGemerge and new funds and new
strategies that can try to meetthe goal of providing both
environmentally and sociallyresponsible investments while
(30:07):
also generating the returns thatinvestors expect on their
capital.
And that's the beauty of themarket, right?
We'll keep innovating until wefind the right solution.
Stewart (30:14):
Just a little sidebar on the term natural gas, Because
of some research I did, Idiscovered that natural gas I've
noticed a lot of fossil fuelactivists are saying that's a
marketing term from a gasindustry to make their product
seem, you know, natural, whichkind of makes sense when you
(30:36):
hear it.
But actually what my researchshowed me is that natural gas
was a term that was used todistinguish a certain product
from another one, that beingtown gas, which was manufactured
gas, versus natural gas.
So that's actually why we havethese different terms.
RJ (30:53):
That's why I used to hear, like in the 19th century in the
UK, the idea of the gas plant,like we're manufacturing gas
over here in this facility andthe dirt and the pollution and
smog and everything.
Well, that was because theywere making gas from coal.
Stewart (31:08):
Essentially Right pretty nice as far as the role
of still doing that Pretty dirty, yeah.
And then you could have thisnice natural stuff you pipe in
from somewhere.
RJ (31:18):
So that's a long time ago and it's probably an archaic
term.
But I think the students oncampus here not all of them, but
some of them when they hearnatural gas they almost see the
opposite, kind of like wherecoal was 200 years ago.
They're saying, well, you'retrying to cover it up and saying
that methane, which is thispollutant and you know heating
atmosphere, it's leaking out ofoil wells and gas wells around
the world, shouldn't be callednatural, and so you have to do
(31:40):
that after, revisit the historyand then.
But the language changes, rightyeah.
Stewart (31:44):
And it's going to go the way it goes.
But it's one of those littlefootnotes.
You know we were talking aboutconservative approaches to
climate and energy, and therehas been for a long time in
Canada, I think, in Europe,maybe in the US this belief that
if you put a price on carbon asa conservative doctrine, you
(32:06):
are going to be able toencourage the activities you
want in order to react to thatprice certain kinds of
innovations.
So you will find a biofueldeveloper or someone investing
in a refinery that produces lessemissions will say well, I'm
doing this because it's anopportunity created by this
carbon tax, or it's a penalty Imust bear, created by the carbon
(32:27):
tax, and it will result insomething that's not bad for my
business.
I can make money on this.
But then you have this otherstrain of conservatism.
I'm testing this idea If I'mwrong I know you'll tell me but
where it's a little more likewhat's happened in the US, where
the carbon pricing was not thefactor that pushed coal out of
(32:47):
generation.
I don't think it was naturalgas that became a better, faster
, cheaper way to provide energy.
Oh and, by the way, it's waycleaner.
So both of these things areconservatism and I'm thinking
there's a conservativegovernment in America.
Is it going to go one way orthe other?
I don't think it will.
(33:08):
It's obviously not going intocarbon pricing.
So will there be a kind ofrobust sense of how the market
is going to drive thedecarbonization that's still
needed?
RJ (33:18):
Yeah, there's some really interesting layers to that
question.
One thing I would say is that Iagree that natural gas was the
predominant factor in driving acoal, but the acid rain and the
sulfur credits, that were sortof, in some ways, a model for
later debates over cap and trade.
And you know, carbon marketsfor greenhouse gas emissions did
play some role, especially inthe East Coast here.
(33:40):
The second point is that whenwe use the term conservative we
used to associate that with freemarkets, the Reagan kind of
Republican era, stephen Harperkind of Preston Manning era in
Canada.
Now it's.
You know, the conservativepolitical movement is not as
free market oriented as it usedto be, as we see with Trump, and
(34:02):
has sort of more America first,protectionist kind of populist
instincts, the sort of oldorthodoxies of sort of free
market approach to carbon policywhere you have buying and
selling of credits.
That's not necessarily the caseanymore.
Right that maybe that voice ofkind of free markets is not as
influential as it once was.
But I would agree that, youknow, when economists talk about
(34:28):
carbon policy, they see, youknow, carbon pricing as the best
mechanism to manage thischallenge.
And we know in Canada there'sbeen a lot of studies showing
that the cost of regulation, theinefficiency of regulation, but
governments particularly Canada, european Union have really
leaned into regulation that'sbeen harder to get Not just
(34:48):
carbon prices but likemeaningful carbon prices that
would actually change behaviorand change investment flows in
place and the US.
It just hasn't really happenedat all.
I mean, the last real push forcarbon pricing here was the wax
and markey legislation in 2009,obama's first term.
So that's a long time going on.
It's 15 years, and there hasn'tbeen a serious consideration
since then.
(35:08):
And remember that in Clinton'sfirst term, I think in 94, they
had something called the BTU taxright, that was Al Gore's sort
of shadow carbon tax idea thatwe're going to put like I don't
know, it's like five or 10 centsa gallon, maybe less than maybe
a couple cents a gallon, andthat basically cost Clinton his
House majority, the Democrats,because it's so unpopular.
(35:30):
And since then and then waxfrom market there's been very
little political upside on asort of free market approach to
carbon pricing.
So we'll see, but so far thepolitics and economics have not
come together on that one inmany countries, including the US
.
Stewart (35:47):
RJ, you've talked about your Canadian connections.
Here you are in the US.
Your career's flourishing.
You've got a rare degree ofinsight into the cross-border
relationship.
Right now there's a lot ofpolitical leaders, industry
leaders, labor, who are askingthe same question, the question
being how to advocate, what'sadvice you would give to someone
(36:09):
who's in one of theseorganizations that would apply
kind of equally to all in somesense to be influential in
Washington and in the US, tostand up for what they believe
in.
RJ (36:22):
Yeah, I think, probably spending serious time thinking
about Trump's agenda and whathis policy priorities are.
Policy priorities are so if hewants, you know, jobs and
economic growth in America, howare we contributing to that?
If he wants sort of areimagined global security
architecture where, you know,regimes like the Iranians or the
(36:43):
Chinese are playing a lesserrole, how do we contribute to
that?
If he wants to innovate youknow the growth of artificial
intelligence, or you knowadvanced nuclear power how can
we be a partner?
I think that's always the beststrategy to sort of look across
the table like what's theobjectives of the person I'm
working with here, and then kindof put your own problems aside
(37:05):
for a minute and try to see itfrom another person's
perspective, and then you knowwhere's the common ground.
And that's something thatCanadians think we should be
pretty good at, especially whenit comes to the US, given that
asymmetric dynamic that Imentioned earlier.
So I think that's the mostimportant consideration is that
you know Trump denumbers from avacuum.
It's not a, you know,fictitional character that
someone made up.
This is very real and it's.
He won the election by a prettyhealthy margin and he's a
(37:29):
response to a lot of changesthat happened in the US over the
last 25, 30 years, influencingfactors, understanding the
solutions he's trying to get to,and then where Canada can
contribute and, conversely,where do we have red lines with
(38:00):
something that we can't agree to?
I'm not sure what that is atthis point.
I have maybe a few ideas, butmost of the areas I think are
areas where we can work together.
And, like I said, on defense,it's not easy when I talk to
people not a lot about defense,like oh, we can't afford it and
you know how are we possibly payfor we don't have fiscal
capacity, like really, I mean,come on, let's take a whole,
(38:21):
look at the whole bot, zero basebudgeting, right, let's look at
revenue.
I mean, god forbid.
I mean sometimes when you're ina war, you have to raise
revenue.
This is not a but it's a tradewar and it's an important
political conflict and I thinkthere's probably a solution
there somewhere fiscally of howwe pay for it.
But I think we're going to haveto figure that out.
Stewart (38:40):
Do you think 2% of GDP will be sufficient?
I know that the president ofPoland came out to Canada last
year and I believe he wasadvocating for a higher number.
It might've been 4%, which is abig lift.
RJ (38:51):
Well, that's kind of what we were getting at earlier.
Right that, the geopolitics,right.
So the geography of Poland.
You know their history withGermany and Russia, the Baltics,
and it's not surprising that,given how acute the security
threat was historically and howacute it is currently presently
(39:11):
with Ukraine, that they'd bespending a significant share on
defense.
Canada's had that sort ofgeographical blessing of being
isolated, notwithstanding themelting ice in the north, but
also being friends with theworld's most powerful country
and being separated by twooceans from China and Russia and
the Middle East or anythingelse.
Well, those times are changingright.
(39:32):
The threats are now, you know,the Russians have the hypersonic
missiles, there are cyberthreats, there's all kinds of
things that terrorism.
They can reach us and ourallies as well.
So, no, I think it's quitepossible we'll see pressure to
go well beyond 2%.
I mean, I hope not, but one canimagine geopolitical scenarios
(39:53):
where we would need to mobilizevery quickly.
Stewart (39:57):
And do you see, we were talking about critical minerals
earlier, the defense mineralsthat are needed for
manufacturing weaponryammunition.
Do those maybe go toward that2% or higher side of a ledger,
like, okay, you're gettingpoints doing that.
RJ (40:17):
I think so.
Yeah, I've floated that idea bya few well-cliented people in
Washington and I think, yes, Imean that's just a few people's
informed opinion, but that is aplausible path to explore.
And if Trump's metric is thingsthat can be done quickly,
relatively quickly, you know, aagain as I said earlier, kind of
reinforcing what we're alreadydoing, but also looking at the
(40:38):
potential to bring on additionalprojects, additional supply to
support the defense sector, alsothe high-tech sector, right.
And this kind of rebranding ofcritical minerals is an enabler
of the green transition, whichis still hasn't gone away.
But the political priority inWashington now is more about,
(40:58):
you know, do we have thecritical minerals we need to
compete with China on the techside with things like computer
chips?
And do we have the criticalminerals we need to maintain a
defense industrial base that isnot only now about the US, but
also maintaining support forIsrael or Ukraine or other
Taiwan, right.
So it's unfortunately a timewhen that defense industrial
(41:20):
base is really being called uponand it starts with the minerals
.
I didn't realize until recentlythat NATO has its own critical
minerals list.
Not just Canada and USgovernments but NATO as an
organization put together acritical minerals list.
It looks like things that wehave in Canada in many cases.
Stewart (41:37):
RJ, I'd like to close out because we're the Power
Struggle podcast.
We look at struggles that areexternal and sometimes internal
struggles to achieve what'sneeded.
Is there something you'rereally proud of in your career?
Some initiative, something youdid that you think made a big
impact, but you had to struggleto get that you could maybe
(41:58):
share with us.
RJ (41:59):
So I think probably the most consistent thing in my career
has been certainly since I wentto Eurasia Group in 2006 that as
a Canadian you know I've beenable to help government and
industry in Canada and civilsociety and the First Nations
and many others investors, mediathink about Canada's role in
the world and as an outsider italways struck me it's like, wow,
(42:23):
there's so much debate andrancor in Canada over our
domestic issues and how weapprove pipelines or how we do
indigenous consultation or inafederal, provincial, and I
always say that those things areincredibly important.
But when it comes to energy,it's a global commodity and a
(42:44):
lot of the outcomes that we getare determined by things that
are happening in the Middle Eastor in the US or in China.
And even when we do everythingperfectly on our side, if the
Chinese economy slows down andthere's no demand for copper,
then you know, so you can't losesight of that.
And if we're kind of a line ofall of our ducks in a row to get
more oil sands projects goingand the Saudis decide to
increase production, then it'sall that effort Right.
(43:06):
So I think I've been successfulin trying to keep that
connection, that side of theconversation in place, saying,
hey, what's Canada's place inthe world really when it comes
to energy and what are theopportunities and risks that
come with that?
And that's how we met in thatconversation around LNG.
Okay, canada's out looking atLNG.
What else is going on in thatworld and who are we competing
(43:29):
with?
And what are the forces thatshape LNG demand?
Like you mentioned, coalretirements and things like that
.
So that's probably one thingthat I'm really enjoyed and been
proud that, even though myadvice hasn't always been
perfect and sometimes you knowwhen it's a crystal ball, it's
been something I've reallyenjoyed and engaging on.
Stewart (43:48):
Well, there's been real progress there and I think
that's a topical thing toconsider, and thanks for sharing
that.
We're pretty much out of time.
I just got one last question.
You went to school in Canada.
You're from Canada.
Do you miss any part ofCanadian?
RJ (44:07):
life down here, immensely, immensely, yeah, and I think the
other side of it is that I'vebeen able to travel extensively
in Canada.
In my work, I think, at EurasiaGroup I had about 35 Canadian
clients, so I've really beenable to travel a lot Went to
Nunavut, you know, went toYellowknife, you know,
everywhere and anywhere.
And I think that's because Ihave been homesick and I've
enjoyed not just the analyticaland intellectual side of the
(44:29):
work and commercial side of it,but just being able to reconnect
with Canadians and also be ableto host games.
They come to Washington or nowthe last three years here in New
York, when they come toColumbia.
So glad to be able to host youand hopefully we can continue to
keep in touch.
Stewart (44:43):
Yes, well, this is still a new chapter for you.
Good luck with it, thank you.
You're clearly making adifference and thanks so much
for today.
My pleasure, nice to meet you.
Hello and welcome to Power Struggle, where we dive
deep into the forces shaping thefuture of energy, climate and
the economy.
I'm your host, stuart Muir.
Today, we're at ColumbiaUniversity's Center on Global
Energy Policy in New York City.
It's an intriguing time to behere, just days after the US
presidential inauguration, amoment that always brings fresh
(00:32):
opportunities and challenges tothe energy world and the path
ahead, and I have the perfectperson with me to do that with
Joining me is Robert Johnston,or RJ, as he's known to so many
RJ.
It's great to be here today.
RJ (00:47):
Welcome to Columbia and New.
Stewart (00:48):
York.
Good to see you, stuart.
Thank you very much.
Good to see you.
I appreciate the time in yourbusy calendar you found for us.
Your job is your SeniorDirector of Research.
Yes, and looking at your resume, anyone would think it's a
roadmap to understanding globalenergy.
You've done so much.
You're founder.
You were managing director atthe Eurasia Group.
(01:08):
You know we were on a paneltogether, I don't know if you
remember in Quebec, inMont-Tremblant, a few years ago.
I was watching the audience.
You had a, I would say, a deepdive.
You had a lot of slides, butyou were engaging with that
audience of you know,generalists, educated people
Everyone was just wrapped.
I think you have a gift forgetting complexity across but
(01:29):
not losing your audience, so Ithink it's intriguing you've
come to academic life, becausenow you're going to be able to
share that with others.
How are you liking academiclife?
RJ (01:38):
It's great.
I mean, there's academic life.
Then there's academic life atColumbia, and Columbia is a
tremendous institution and ourfounder, jason Bordoff, built a
great research center here.
We're part of the School ofInternational and Public Affairs
, which is kind of consistentwith my own background, focused
on policy and geopolitics in anintersection between those
(01:59):
fields and business and energyand markets, and the center has
about 50 scholars dividedbetween full-time and part-time,
very interdisciplinary.
But we also have the pleasureof working with other schools
around campus our climate school, the business school,
engineering, and when you putthose pieces together it's a
very comprehensive way to lookat the energy story, the climate
(02:23):
story, the natural resourcesstory, and I really enjoyed it.
And great students here too,without a doubt, really smart 4%
acceptance rate.
So, yeah, not too many dummieson campus.
Stewart (02:35):
We're starting a new chapter in America, but the
world too, because it is Americawith a new leader.
Energy policy is at theforefront of the conversations
that are coming out of theseearly days.
From your perspective, rj, whatare the most important factors,
you see, shaping how we'removing on this landscape now
under this new administration inWashington?
RJ (02:56):
Yeah, it's a pretty dramatic change in direction from the
previous administration, whichhad really leaned into climate
change net zero.
Not that they didn't have todeal with the energy geopolitics
and the energy affordabilityconcerns with the Ukraine crisis
and crisis in the Middle Eastand, of course, the aftermath of
(03:18):
COVID.
But this administration underPresident Trump really is going
to elevate a focus on energysecurity, both at home and
abroad, a focus on affordabilityand the sustainability.
Net zero climate agenda is notgoing to disappear completely,
although it may feel that way attimes, but we'll certainly be
(03:39):
subordinate to a larger kind ofsecurity and affordability
focused approach.
I think most people in theindustry would agree that you
probably need to focus on allthree right At the same time,
the so-called tri-lend up, doyou?
Stewart (03:50):
see this as part of a global trend, or is it really
limited in time and space to oneplace on the map?
RJ (03:58):
No, I think you know Canada may see a version of the shift
right that, if the conservativeswin the next federal election
again, I think climate will bean important part of their
agenda, but there'll be probablyan elevation of energy,
economic development and moreproject approvals and a greater,
perhaps, effort to coordinatewith the US on energy security
issues.
And then, obviously, you know,pauline has made the
(04:20):
affordability agenda a big part,and that's probably what
connects countries more thananything is whether you're an
energy producer or a consumer,exporter, importer.
You know the last three or fouryears of inflation around the
world, the supply chaindisruptions with COVID, the
Ukraine war everyone's talkingabout affordability.
So I think you know Trump andPierre Palli have captured that
(04:42):
political momentum, trump allthe way to the White House, and
we'll see what happens in aCanadian election.
Stewart (04:47):
Sometimes you need a bit of time to look back on
events and figure out whetherthey were historical
inevitabilities or somethingelse.
Do you have a sense yet ofwhether the arc of history is
one or the other?
The arc of history is one orthe other.
RJ (05:03):
Well, I think it's an element of cyclicality, right
that you know we go throughperiods of intense focus on
affordability and security, andthen investments are made in
response to that, new policiesare developed in response to
that, and then, you know, thefocus on things like
sustainability starts to takeroot in innovation, and then the
(05:26):
pendulum starts to swing backdown the way.
So I've been reflecting on thisin the context of the passing
of former President Jimmy Carter.
You know, trump talked onTuesday about an energy
emergency in the US.
The last time there was apresident talking about energy
emergency was Carter, you know.
And Carter was dealing with theoil shocks in the 1970s and
that led to a very difficultperiod of focus on affordability
(05:49):
and inflation.
But also that's where weplanted the seeds for a lot of
innovation around.
Things like solar power andbiofuels and nuclear power, and
even fracking can all sort of betraced back to then.
So I tend to take a cyclicalview on these things.
Stewart (06:03):
Here we are at Columbia .
You're with a cohort ofteachers and researchers at this
highly regarded place andyou're engaging with students.
What perspectives are youseeing from young people on
where we are on energy climate?
RJ (06:20):
So our center is a center on global energy policy and I'm
from Canada, I live in the US,I've always had a strong focus
on North American energy policy.
You know, with Trump, that'sobviously a priority right now,
but we do take a very globalperspective.
Our center has people workingin Africa and Latin America and
China and so forth, but ourparent school, the School of
International and Public Affairs, even more so.
(06:41):
I mean, it's incredible howdiverse it is.
And it's incredible how diverseit is and it's a privilege to
interact with students from somany different countries and so
many different perspectives.
And it's pretty much everyelement of the spectrum you can
imagine in terms of interest inenergy, whether it's fossil
fuel-producing countries thatstudents are coming from,
whether it's students from areaslike California, where the sort
(07:04):
of green agenda is verydominant and there's a lot of
innovation coming to SiliconValley, the Teslas and all those
kind of things, and thencountries where energy poverty
is the major issue, othercountries where the energy and
natural resource sector may haveleft an environmental mess of
some kind, like in Ecuador, forexample, and everything in
between.
So you can really convene somegreat events right here in this
(07:24):
room where we have the privilegeof being able to bring in
political leaders, industryleaders, civil society leaders
and sit down with the studentsand answer questions, and I
really enjoy that becausethere's a broad diversity.
So if I were to pull some themesout of what we hear from the
students, there's no questionthat whether conservative you
(07:45):
know conservative or liberalthey're all focused on climate,
more so than previousgenerations, and that's not a
big breakthrough, but that'sstill going to be the case.
And they do take a more globalview and they're also optimistic
in terms of the role oftechnology, innovation and
entrepreneurship, but maybe lessoptimistic about the role of
government and big business.
(08:05):
So my generation is like oh,the government, if you have the
right leaders and big business,can solve all these problems.
And my daughter's 19, so I getthis from her as well A lot more
faith in the ability of thesort of entrepreneurial class,
the innovators, the socialentrepreneurs, to get things
(08:26):
done and solve the big problems,and, of course, all that's tied
together by technology.
Stewart (08:30):
I'd like to get some of your secrets on how you stay on
top of things, your dailyhabits, your trap line for
information, so that you are theguy who knows what's going on.
What do you do when you get upand you want to get tuned into?
RJ (08:42):
the world.
Inside baseball, here at VARCenter, we have a great Slack
channel which you know I'm notsure if you're a Slack user or
if your listeners are, but it'sa chat room, basically, but more
sophisticated, organized bytopic and searchable, and we
have all of our scholars aroundthe world, you know some of our
board members and partnersconnected and if you want to
(09:02):
sort of get reactions to thelatest oh, you know, biden put
sanctions on Russian oil there'sa great conversation about that
or critical minerals, or LNG,or you know.
So that's a go-to source forsure.
And again, that's since theApple technology.
Stewart (09:17):
Is that something anyone can do?
RJ (09:18):
Well, that's our own live chat, but I would say that's
like the kind of raw materialthat feeds all the research.
But I would say that's like thekind of raw material that feeds
all the research which is inthe public domain and our
website, although it's funny,you mentioned that we have
thought about if we can make apublic version of this somehow.
That could be interesting.
Sounds worth paying for, yeah,yeah, but also just being able
to sort of walk the floor hereand talk to colleagues.
I'm a big Financial Timesreader for the global coverage.
(09:39):
I definitely keep an eye onwhat's on Bloomberg and Reuters
and theglobalmailcom, so I likethe old school media as well.
But yeah, it's almost like inthis ecosystem here if I need to
know something, I can find outpretty fast from somebody.
Stewart (09:56):
Are you a podcast listener on your commutes?
Are?
RJ (10:00):
you a reader?
Are you a worker?
Well, we have a really goodpodcast here at Columbia Global
Energy Exchange at Jason Bordoff, so I listened to that and he's
got some great guests on that,and there are a few others I
listened to as well.
It's a good when you're stuckon the tarmac or on the subway,
it's a really great way to orthe treadmill even worse.
It's nice to have some goodcontent to listen to, but this
(10:22):
time of year I'm usuallylistening to NFL playoff podcast
too.
Stewart (10:25):
Yes, that's the dominant thread for a few more
days.
As an energy expert, youcirculate with lots of different
people, not just on campus.
Is there one misconception?
You just run across all thetime and do you always want to
correct it if you hear it?
RJ (10:40):
Well, I think I would be remiss if I didn't say that, as
a Canadian living in the US anddual citizen, I think a lot of
times I know Canadians feel likeour energy contributions to the
US economy are not fullyrecognized.
Now it's sort of almost theopposite problem that it's right
in the spotlight with Trump andhis proposed tariffs which we
could talk about.
(11:01):
But yeah, I think, as a Canadian, not that many people realize
that we're kind of a top fiveoil and gas producer and that we
have all the innovation that wehave and we're a leader in
sectors like nuclear and hydro,and that's something that is
maybe I don't know if it's amisperception, but it does catch
my attention.
And I also think the other thingis that I don't think the
average person understands thetrue complexity of the energy
(11:22):
system and the different layers,the length of the supply chains
where the vulnerabilities are,the steps an industry should
take to sort of mitigate thosevulnerabilities and how much it
takes to keep it all flowing ata time when demand continues to
grow and there's there's aginginfrastructure and there's
(11:42):
political instability andthere's volatile capital markets
and it's a lot of differentpieces to manage.
So that's what's alwaysintellectually attracted me is
that it's such a complex systemit does require different
disciplines to understand.
My side of it is the sort ofabove ground side.
I look at government policy,geopolitics, markets, et cetera.
But obviously the below groundpieces is the foundation of it,
(12:03):
the actual literal resources,energy resources that we're
producing.
That has its own complexity aswell.
Stewart (12:11):
I had a guest recently who, in trying to explain how
the North American energy systemworks because there's, as you
say, this interplay used ananalogy that stuck with me,
which was that the US and Canadaare like conjoined twins when
it comes to energy especiallyand woe betide the surgeon who
gets the task of separating them, because it turns out they're
(12:33):
linked through all kinds ofphysical ways.
Do you agree with that analogy?
RJ (12:39):
Partially.
I think that when it comes tooil, I think that's right.
I think there's almost like wehold our own right.
The US is producing more right.
The US is producing 13 millionbarrels a day.
We're producing, you know, fourand a half, five million
barrels a day, but we're a veryimportant input, the largest
importer, you know, keyfeedstock for a lot of refiners,
(13:00):
et cetera.
But I think where I woulddisagree a little bit is that
the phrase that's come to mindrecently is that it's an
asymmetric relationship for bothCanada and Mexico and many
countries with the US.
The US has one real rival aroundthe world, which is China, and
(13:21):
when Trump goes to negotiatewith them, it's going to be an
intense kind of meaning ofequals for Canada and Mexico and
other countries.
I mean, we have 80% of our tradewith the US, but their exports
to us are a much smallerpercentage for them and
obviously they have the militarymight and the global reach and,
you know, economy that's 10times bigger population, all
those things.
So it's not that we don't haveadvantages that we bring to the
(13:42):
table as well, but it is anasymmetric relationship.
So that's the sort of metaphorI've been thinking about is, you
know, in an asymmetric kind oftrade negotiation, political
negotiation, like what kind oftactics makes the most sense for
us to be successful?
Is it to kind of confront themand escalate them and threaten
retaliation, or is it to findareas of cooperation and
(14:03):
strength and collaboration wherewe can really demonstrate how
vital we are to the system hereI just get a little worried when
I hear talk about retaliationand escalation that in an
asymmetric relationship that canbe a dangerous proposition.
Stewart (14:16):
You know, I'm a Canadian.
My grandmother came fromIreland and went to Winnipeg,
but one of her brothers went toBoston, another came here to New
York.
You know, we're kind of afamily on this continent and
that story is common to manymillions of people.
So it feels a littledistressing when we have got you
know this maybe a little sensethat these countries are moving
(14:38):
apart.
Are they moving apart?
Is it just the sudden?
You know, events of recenttimes are leaving us uncertain
about what we thought we knew.
RJ (14:48):
Uncertainty for sure, and what I've been thinking about is
the US and UK are oftendescribed as a special
relationship, Right, and I thinkthe transatlantic partnership.
Canada has our own version ofthat, Right.
The long list, undefendedborder, all those things.
I think the question Canadiansshould ask themselves is are we
still special, or are we justanother country on a list of
(15:10):
countries that Trump wants a neweconomic and political
framework with?
I feel like it's the latter,but I'm hoping it's the former
still, that there's still some,that it still means something
that we fought together in WorldWar II and that we had that
border and we had such economicintegration and the cultural
integration.
You know that, and the familyintegration you mentioned with
your own family and mine, right,I mean married an American and
(15:31):
have an American daughter, andyou know that's all stuff I
think about too.
But I worry that we're not asspecial as we used to be and
it's looked at from an AmericaFirst perspective of not neither
a friend nor foe, but just likewe want a better deal and we're
prepared to push very hard toget that on the US side and
that's different than maybe whatwe've seen in the past.
Stewart (15:52):
Yeah, I'm worried.
We're having this discussionabout that threat, yeah, but
we'll have to see how it unfolds.
On a more positive note, rj,what are some ways we can
strengthen the relationshipbetween Canada and the US?
And, hey, the US and Mexico,let's not leave them out, but
I'm thinking more about Canadaand more collaboration.
That will be at least acounterweight to some of these
(16:15):
other factors.
RJ (16:17):
I'm a very simple person in the sense that I first of all
start by saying there's a lot ofnoise and chaos and headlines
and Twitter.
There's a lot of noise andchaos and headlines and Twitter,
and I try to tune those thingsout for the most part and focus
on the kind of core principlesand core data points.
So it's basically a two-prongedstrategy.
Very simply.
(16:37):
The first prong is elevate andcommunicate what's working well
today right, the economiccooperation that's in place
today economic integration,obviously energy and critical
minerals and agriculture andautos there's multiple examples
and the second piece is identifythe problems and offer
solutions.
And I think the pain point inthe relationship with trying to
(17:02):
actually trade and security withmass coast to border and I
think for us it's defense thatif Trump has a legitimate
grievance with candidates, thesort of underinvestment we made
in defense and burden sharing,and that's a solvable problem
and I think it's a fiscalstrategy that Canada needs to
develop figure out how to funddefense on a more rapid basis.
(17:23):
Whether or not we should havedone it 10 years ago doesn't
matter.
It's what we do the next 10years, probably even the next 10
weeks, that matters 10 months.
And then I think adjacent tothat is the question of Arctic
security and energy security.
Energy security we have a greatnarrator right now that we can
build on.
Arctic security, I think I'm notsure there's.
(17:51):
It's not my area of expertisenecessarily, but I don't really
see a compelling narrative orstrategy around that.
So there's some work to dothere as well.
So you know, emphasize theexisting economic strengths
which our political leaders aredoing and business leaders are
doing, and then you know kind ofown up to the challenge that
they're on the relationship andkind of take aggressive action
to to address them.
Some will be easier than others, but I think that's what,
especially in the defense, andcan't take aggressive action to
address them.
Some will be easier than others, but I think that's what,
especially in the defensivesecurity side.
I think that's where the realtest is going to come.
Stewart (18:12):
I wonder if we could pause on Arctic security and
maybe imagine there's a beingfrom Mars that could understand
our language but didn'tunderstand Arctic security at
all.
What's at play there?
I mean, it's the top of theplanet.
It's a place that mostCanadians never go in their
whole lives north of 60.
(18:33):
But there's somethinggeopolitically extremely
significant there.
What is it?
RJ (18:38):
Yeah, that word geopolitics is so interesting, right, the
geography and politics comingtogether.
And the map that most of ushave on our wall doesn't really
show that polar perspectivewhere you see kind of Russia,
alaska and Canada all converging.
But we think about it in thoseterms and historically there was
a lot of ice kind of separatingeverybody, and now the ice is
(18:59):
not there as much as it used tobe, if it's there at all, so
there's more ability to move.
You know, naval traffic or evencommercial maritime traffic
through there.
There's different climateconditions which is affecting
life up there as well.
But I think the main issuereally is the maritime issues.
That during the Cold Warobviously there was a lot of
(19:22):
joint US-Cant efforts to securethat.
At the end of the Cold War thatkind of went away, although not
completely.
But now with the conflict inUkraine and Putin's kind of
expansions to foreign policy,there's a lot more concern that
maybe we are back to kind ofquasi-Cold War conditions and
you know, whether it's missilesor submarines or whatever else,
(19:43):
that's something that needs tobe revisited urgently.
Then there's a minerals aspectas well, right, that, whether
it's oil or, you know, aluminumand iron ore and all kinds of
resource up there.
That is something that plays arole as well, but I think it's
more the question of thegeopolitical confrontation
(20:05):
between the US and Russiaheating up again.
Stewart (20:08):
Is there a connection between actions that remove
economic activity, includingenergy activity like drilling or
mining, from remote locationsthat have geopolitical
significance?
Is there a consequence when theland, so to speak, is?
RJ (20:24):
vacated.
Yes, I think that there's a lotof oil in the market right now.
We've brought on new resourceslike the US shale.
So before the US shale camealong, 20 years ago or 15 years
ago, there was a lot of talkabout drilling in Alaska and
drilling the Beaufort Sea andplaces like that.
That kind of slowed down on theUS and Canadian side but the
Russians kind of kept going.
So they still are veryinterested in moving liquefied
(20:52):
natural gas out of theirnorthern ports and developing
offshore oil up there.
It's been difficult for them todeal with the sanctions that
have been put in place, but soonthey're looking at remote
locations and the Chinese also,which are not immediately
adjacent to the Arctic but havethe economic reach and the
diplomatic relationships withthe Russians in particular, to
think about the maritime energyand mineral resource up there or
something that's gettingattention in Washington as well.
Stewart (21:12):
I know you pay a lot of attention to LNG.
You were at the LNG 2023conference in Vancouver.
I saw you there and I think youspoke at the diplomatic forum.
There's been a very heavyresponse to Russian Arctic LNG,
including by the Bidenadministration.
I mean, they kind of shut thatdown for the reasons related to
(21:35):
Ukraine, and the opportunitythere is a vast one.
Do you think that LNG is goingto be not only an economic
opportunity for those who canlegitimately stay in the market,
but also a climate solution?
RJ (21:50):
Yeah, and that kind of goes to the earlier conversation with
the conservatives and theirview on, or Republicans who
prefer their view on, climate.
On the security side, I thinksince the Russia-Ukraine
conflict, us LNG has been anincredibly important factor in
replacing Russian gas to Europeand to Japan and Korea, canada
(22:11):
perhaps indirectly providing gassupply to the US, which can be
free up resources to export itsLNG from the US.
As Canada adds its own LNGcapacity, with LNG Canada
starting up and maybe some otherprojects after that, we'll
probably be part of thatconversation and there'll be an
opportunity to work with the US.
Our gas is very well alignedwith the Pacific, given the
(22:34):
location of British Columbia.
The US gas in the Gulf ofMexico or Gulf of America,
pardon me, is very well alignedto send across the Atlantic to
Europe or to the Mediterraneanmarket, latin America.
So as we develop our own LNGresources, that will be an
opportunity.
On the climate side, it's acontroversial question and one
that gets a lot of discussionhere on campus about the role of
natural gas in transition.
(22:55):
It's probably fair to say thatin the US and Canada a lot of
our climate goals have beenachieved by retiring coal plants
and bringing on natural gas or,in some cases, like in Ontario,
nuclear power to displace, youknow, those more
carbon-intensive fuels.
Asia has a version of that aswell.
Right that if they bring in LNGto displace coal, that does
(23:16):
help from a climate perspective.
The obvious caveat is that itcan't be just any LNG.
It has to be LNG that isn'tassociated with a lot of, you
know, future emissions and highmethane intensity, because
methane's an importantgreenhouse gas, as we know.
So, yes, there is anopportunity there, and that is
something that I think the Trumpadministration and his energy
team were really deep intosaying.
(23:36):
Hey, it's not that we don'thave a climate strategy, we just
think that natural gas shouldbe central to it Less methane,
fugitive emissions, flaring andmore coal-to-gas fuel switching
and things like nuclear andgeothermal and carbon capture as
well.
But gas, at least from a USperspective, will be central to
that.
At the same time, I was in Bakuat the COP29 and climate
(23:57):
conference and everyone therewas protesting the role of gas
in the climate conversation.
So it's obviously acontroversial idea.
Stewart (24:04):
So here's one of the big questions I'm hearing.
A lot People are asking meforms of this question Net zero
2050.
Is it possible?
Was it ever possible?
RJ (24:15):
So I've always felt that we've, over the last several
years, moved to more certaintyon the technological pathway.
I mean we know that we haveelectric vehicles and solar and
clean hydrogen and nuclear andother pathways to get to net
zero energy efficiency, amongothers.
What we don't necessarily knowis the policy pathway and the
(24:38):
financial pathway.
I think, in the sort ofdeveloping economies, the
financial question of who paysfor all this, the sort of
developing economies, thefinancial question of who pays
for all this, africa, parts ofSouth Asia, parts of Latin
America, that negotiationbetween the global north and the
global south over climateassistance and finances
contentious.
And you know, again in Bakuthere was a significant increase
(25:00):
in the commitment to fundclimate action in the global
south and developing countries,but well short of what the
global south was hoping for.
And then the policy question,especially in the north, that
we're seeing have played outhere in the US and will play out
in Canada, is that things likecarbon taxes aren't very popular
, not in Canada, not in the US.
We've never had a carbon taxhere.
I mean we've had California, acouple of other places, european
(25:26):
carbon tax.
They're now creating thiscarbon border adjustment
mechanism to kind of likeprotect their own industry from
the effects of their own policy.
Right so that you know, importsof steel and cement will have
to pay a carbon tax before theend of the European market.
So yeah, these are very toughin democratic countries.
Very tough policies to sellbecause they come with cost and
maybe at times the green jobsangle has been a little bit
oversold.
Not that there aren't greenjobs, but are they in the same
(25:49):
places where the fossil fuelsare, the same pay, the same
skillset?
Not always.
So that just transitionquestion, which I know is a
phrase you don't like to use inCanada anymore, at least in
Alberta, but it's dope wise.
Stewart (26:00):
Yeah, I mean, I find myself wondering sometimes when
I hear phrases, whether I'mhearing an aspiration.
If we just say this, it willbring people along and that will
get to where we want to go, dowe know it's going to actually
work?
Well, maybe we can't prove it,but we want to aspire to it.
And that's what this is about,because it links to another
(26:27):
question.
RJ (26:27):
I have for you, which is is there an energy transition
underway or is something elsegoing on?
That's two terms that I didn'tthink were controversial or
suddenly very controversial.
One is the phrase natural gas.
Right, because now here oncampus and elsewhere people talk
about abated gas and unabatedgas and fracked gas and all
these things.
But on energy transition,that's also including with our
president, our newadministration not a very
(26:50):
well-accepted term because Ithink the oil and gas industry
doesn't like the idea oftransitioning away from
something.
So you get this debate aboutenergy addition instead of
energy transition, which I thinkis a bit of a distraction,
honestly.
I mean, the system has beentransitioning for centuries from
wood and biomass to coal, tooil, to gas, to renewables,
(27:13):
electricity, and people arestill burning biomass all over
the world and it hasn'tdisappeared completely and
obviously we're still using morecoal than we've ever used.
So I think in a world whereenergy demand is growing and
population is growing, economyis growing, a population is
growing, the economy is growing.
Transition doesn't necessarilymean away from something, but
it's become, unfortunately, likeESG and DEI in the very
(27:34):
political term.
I would still say an energytransition is happening, but I
don't believe that we're on apathway where demand for fossil
fuels is going to disappear.
It may plateau, it may shiftand it may see political and
consumer preferences over timeshift towards lower carbon
intensity and more carboncapture and things like that.
(27:57):
But I don't think thetransition should be viewed as
the end of the oil and gas age,at least not yet or anytime soon
.
Stewart (28:04):
The moment ago you put ESG and DEI into a sort of a
basket.
I haven't really heard too manypeople just state it.
So what's in that?
Let's zero in on this.
These are two very differentthings.
Dei's social, and ESG isenvironmental, energy, economic.
Do they have the same rootsystem, cause for why they're
(28:28):
manifesting the way they are now, and is there some assumption
that they're being treated thesame way and we'll see?
You know, kind of a conjoinedthere's that word again
trajectory for these writings.
RJ (28:41):
I think they are connected because the S and ESG does take
you in the direction ofdiversity, right.
The environment, society, yeah,and the environment, government
, environment, social andgovernance is the ESG.
And on the social side, I thinkup until this day, but
certainly recently, certaininvestment funds have been
looking at providing data totheir customers about the
(29:03):
diversity of boards andcorporate management from a
racial or gender perspective,along with their carbon
intensity or their you knowsupply chains and you know their
labor practices, and that'sbecome politically controversial
.
Maybe some people feel likethat was an overreach in certain
areas or distracted from thecore mission of profit making.
I think that's unfortunate,right, because these are
(29:25):
important values that mostpeople agree on.
But it become very political onall the ES and G.
So that's too bad.
But I think probably what willhappen is much like natural gas
regardless of what we call it,we're still going to be using it
in some form.
It's still an importantresource.
It still has challenges, and Ithink that's true with ESG as
(29:45):
well.
Right, that this big wave ofESG we saw over the last five or
six years has sort of crestedand is declining.
But to my comments aboutcyclicality earlier, I think
you'll see new forms of ESGemerge and new funds and new
strategies that can try to meetthe goal of providing both
environmentally and sociallyresponsible investments while
(30:07):
also generating the returns thatinvestors expect on their
capital.
And that's the beauty of themarket, right?
We'll keep innovating until wefind the right solution.
Stewart (30:14):
Just a little sidebar on the term natural gas, Because
of some research I did, Idiscovered that natural gas I've
noticed a lot of fossil fuelactivists are saying that's a
marketing term from a gasindustry to make their product
seem, you know, natural, whichkind of makes sense when you
(30:36):
hear it.
But actually what my researchshowed me is that natural gas
was a term that was used todistinguish a certain product
from another one, that beingtown gas, which was manufactured
gas, versus natural gas.
So that's actually why we havethese different terms.
RJ (30:53):
That's why I used to hear, like in the 19th century in the
UK, the idea of the gas plant,like we're manufacturing gas
over here in this facility andthe dirt and the pollution and
smog and everything.
Well, that was because theywere making gas from coal.
Stewart (31:08):
Essentially Right pretty nice as far as the role
of still doing that Pretty dirty, yeah.
And then you could have thisnice natural stuff you pipe in
from somewhere.
RJ (31:18):
So that's a long time ago and it's probably an archaic
term.
But I think the students oncampus here not all of them, but
some of them when they hearnatural gas they almost see the
opposite, kind of like wherecoal was 200 years ago.
They're saying, well, you'retrying to cover it up and saying
that methane, which is thispollutant and you know heating
atmosphere, it's leaking out ofoil wells and gas wells around
the world, shouldn't be callednatural, and so you have to do
(31:40):
that after, revisit the historyand then.
But the language changes, rightyeah.
Stewart (31:44):
And it's going to go the way it goes.
But it's one of those littlefootnotes.
You know we were talking aboutconservative approaches to
climate and energy, and therehas been for a long time in
Canada, I think, in Europe,maybe in the US this belief that
if you put a price on carbon asa conservative doctrine, you
(32:06):
are going to be able toencourage the activities you
want in order to react to thatprice certain kinds of
innovations.
So you will find a biofueldeveloper or someone investing
in a refinery that produces lessemissions will say well, I'm
doing this because it's anopportunity created by this
carbon tax, or it's a penalty Imust bear, created by the carbon
(32:27):
tax, and it will result insomething that's not bad for my
business.
I can make money on this.
But then you have this otherstrain of conservatism.
I'm testing this idea If I'mwrong I know you'll tell me but
where it's a little more likewhat's happened in the US, where
the carbon pricing was not thefactor that pushed coal out of
(32:47):
generation.
I don't think it was naturalgas that became a better, faster
, cheaper way to provide energy.
Oh and, by the way, it's waycleaner.
So both of these things areconservatism and I'm thinking
there's a conservativegovernment in America.
Is it going to go one way orthe other?
I don't think it will.
(33:08):
It's obviously not going intocarbon pricing.
So will there be a kind ofrobust sense of how the market
is going to drive thedecarbonization that's still
needed?
RJ (33:18):
Yeah, there's some really interesting layers to that
question.
One thing I would say is that Iagree that natural gas was the
predominant factor in driving acoal, but the acid rain and the
sulfur credits, that were sortof, in some ways, a model for
later debates over cap and trade.
And you know, carbon marketsfor greenhouse gas emissions did
play some role, especially inthe East Coast here.
(33:40):
The second point is that whenwe use the term conservative we
used to associate that with freemarkets, the Reagan kind of
Republican era, stephen Harperkind of Preston Manning era in
Canada.
Now it's.
You know, the conservativepolitical movement is not as
free market oriented as it usedto be, as we see with Trump, and
(34:02):
has sort of more America first,protectionist kind of populist
instincts, the sort of oldorthodoxies of sort of free
market approach to carbon policywhere you have buying and
selling of credits.
That's not necessarily the caseanymore.
Right that maybe that voice ofkind of free markets is not as
influential as it once was.
But I would agree that, youknow, when economists talk about
(34:28):
carbon policy, they see, youknow, carbon pricing as the best
mechanism to manage thischallenge.
And we know in Canada there'sbeen a lot of studies showing
that the cost of regulation, theinefficiency of regulation, but
governments particularly Canada, european Union have really
leaned into regulation that'sbeen harder to get Not just
(34:48):
carbon prices but likemeaningful carbon prices that
would actually change behaviorand change investment flows in
place and the US.
It just hasn't really happenedat all.
I mean, the last real push forcarbon pricing here was the wax
and markey legislation in 2009,obama's first term.
So that's a long time going on.
It's 15 years, and there hasn'tbeen a serious consideration
since then.
(35:08):
And remember that in Clinton'sfirst term, I think in 94, they
had something called the BTU taxright, that was Al Gore's sort
of shadow carbon tax idea thatwe're going to put like I don't
know, it's like five or 10 centsa gallon, maybe less than maybe
a couple cents a gallon, andthat basically cost Clinton his
House majority, the Democrats,because it's so unpopular.
(35:30):
And since then and then waxfrom market there's been very
little political upside on asort of free market approach to
carbon pricing.
So we'll see, but so far thepolitics and economics have not
come together on that one inmany countries, including the US
.
Stewart (35:47):
RJ, you've talked about your Canadian connections.
Here you are in the US.
Your career's flourishing.
You've got a rare degree ofinsight into the cross-border
relationship.
Right now there's a lot ofpolitical leaders, industry
leaders, labor, who are askingthe same question, the question
being how to advocate, what'sadvice you would give to someone
(36:09):
who's in one of theseorganizations that would apply
kind of equally to all in somesense to be influential in
Washington and in the US, tostand up for what they believe
in.
RJ (36:22):
Yeah, I think, probably spending serious time thinking
about Trump's agenda and whathis policy priorities are.
Policy priorities are so if hewants, you know, jobs and
economic growth in America, howare we contributing to that?
If he wants sort of areimagined global security
architecture where, you know,regimes like the Iranians or the
(36:43):
Chinese are playing a lesserrole, how do we contribute to
that?
If he wants to innovate youknow the growth of artificial
intelligence, or you knowadvanced nuclear power how can
we be a partner?
I think that's always the beststrategy to sort of look across
the table like what's theobjectives of the person I'm
working with here, and then kindof put your own problems aside
(37:05):
for a minute and try to see itfrom another person's
perspective, and then you knowwhere's the common ground.
And that's something thatCanadians think we should be
pretty good at, especially whenit comes to the US, given that
asymmetric dynamic that Imentioned earlier.
So I think that's the mostimportant consideration is that
you know Trump denumbers from avacuum.
It's not a, you know,fictitional character that
someone made up.
This is very real and it's.
He won the election by a prettyhealthy margin and he's a
(37:29):
response to a lot of changesthat happened in the US over the
last 25, 30 years, influencingfactors, understanding the
solutions he's trying to get to,and then where Canada can
contribute and, conversely,where do we have red lines with
(38:00):
something that we can't agree to?
I'm not sure what that is atthis point.
I have maybe a few ideas, butmost of the areas I think are
areas where we can work together.
And, like I said, on defense,it's not easy when I talk to
people not a lot about defense,like oh, we can't afford it and
you know how are we possibly payfor we don't have fiscal
capacity, like really, I mean,come on, let's take a whole,
(38:21):
look at the whole bot, zero basebudgeting, right, let's look at
revenue.
I mean, god forbid.
I mean sometimes when you're ina war, you have to raise
revenue.
This is not a but it's a tradewar and it's an important
political conflict and I thinkthere's probably a solution
there somewhere fiscally of howwe pay for it.
But I think we're going to haveto figure that out.
Stewart (38:40):
Do you think 2% of GDP will be sufficient?
I know that the president ofPoland came out to Canada last
year and I believe he wasadvocating for a higher number.
It might've been 4%, which is abig lift.
RJ (38:51):
Well, that's kind of what we were getting at earlier.
Right that, the geopolitics,right.
So the geography of Poland.
You know their history withGermany and Russia, the Baltics,
and it's not surprising that,given how acute the security
threat was historically and howacute it is currently presently
(39:11):
with Ukraine, that they'd bespending a significant share on
defense.
Canada's had that sort ofgeographical blessing of being
isolated, notwithstanding themelting ice in the north, but
also being friends with theworld's most powerful country
and being separated by twooceans from China and Russia and
the Middle East or anythingelse.
Well, those times are changingright.
(39:32):
The threats are now, you know,the Russians have the hypersonic
missiles, there are cyberthreats, there's all kinds of
things that terrorism.
They can reach us and ourallies as well.
So, no, I think it's quitepossible we'll see pressure to
go well beyond 2%.
I mean, I hope not, but one canimagine geopolitical scenarios
(39:53):
where we would need to mobilizevery quickly.
Stewart (39:57):
And do you see, we were talking about critical minerals
earlier, the defense mineralsthat are needed for
manufacturing weaponryammunition.
Do those maybe go toward that2% or higher side of a ledger,
like, okay, you're gettingpoints doing that.
RJ (40:17):
I think so.
Yeah, I've floated that idea bya few well-cliented people in
Washington and I think, yes, Imean that's just a few people's
informed opinion, but that is aplausible path to explore.
And if Trump's metric is thingsthat can be done quickly,
relatively quickly, you know, aagain as I said earlier, kind of
reinforcing what we're alreadydoing, but also looking at the
(40:38):
potential to bring on additionalprojects, additional supply to
support the defense sector, alsothe high-tech sector, right.
And this kind of rebranding ofcritical minerals is an enabler
of the green transition, whichis still hasn't gone away.
But the political priority inWashington now is more about,
(40:58):
you know, do we have thecritical minerals we need to
compete with China on the techside with things like computer
chips?
And do we have the criticalminerals we need to maintain a
defense industrial base that isnot only now about the US, but
also maintaining support forIsrael or Ukraine or other
Taiwan, right.
So it's unfortunately a timewhen that defense industrial
(41:20):
base is really being called uponand it starts with the minerals
.
I didn't realize until recentlythat NATO has its own critical
minerals list.
Not just Canada and USgovernments but NATO as an
organization put together acritical minerals list.
It looks like things that wehave in Canada in many cases.
Stewart (41:37):
RJ, I'd like to close out because we're the Power
Struggle podcast.
We look at struggles that areexternal and sometimes internal
struggles to achieve what'sneeded.
Is there something you'rereally proud of in your career?
Some initiative, something youdid that you think made a big
impact, but you had to struggleto get that you could maybe
(41:58):
share with us.
RJ (41:59):
So I think probably the most consistent thing in my career
has been certainly since I wentto Eurasia Group in 2006 that as
a Canadian you know I've beenable to help government and
industry in Canada and civilsociety and the First Nations
and many others investors, mediathink about Canada's role in
the world and as an outsider italways struck me it's like, wow,
(42:23):
there's so much debate andrancor in Canada over our
domestic issues and how weapprove pipelines or how we do
indigenous consultation or inafederal, provincial, and I
always say that those things areincredibly important.
But when it comes to energy,it's a global commodity and a
(42:44):
lot of the outcomes that we getare determined by things that
are happening in the Middle Eastor in the US or in China.
And even when we do everythingperfectly on our side, if the
Chinese economy slows down andthere's no demand for copper,
then you know, so you can't losesight of that.
And if we're kind of a line ofall of our ducks in a row to get
more oil sands projects goingand the Saudis decide to
increase production, then it'sall that effort Right.
(43:06):
So I think I've been successfulin trying to keep that
connection, that side of theconversation in place, saying,
hey, what's Canada's place inthe world really when it comes
to energy and what are theopportunities and risks that
come with that?
And that's how we met in thatconversation around LNG.
Okay, canada's out looking atLNG.
What else is going on in thatworld and who are we competing
(43:29):
with?
And what are the forces thatshape LNG demand?
Like you mentioned, coalretirements and things like that
.
So that's probably one thingthat I'm really enjoyed and been
proud that, even though myadvice hasn't always been
perfect and sometimes you knowwhen it's a crystal ball, it's
been something I've reallyenjoyed and engaging on.
Stewart (43:48):
Well, there's been real progress there and I think
that's a topical thing toconsider, and thanks for sharing
that.
We're pretty much out of time.
I just got one last question.
You went to school in Canada.
You're from Canada.
Do you miss any part ofCanadian?
RJ (44:07):
life down here, immensely, immensely, yeah, and I think the
other side of it is that I'vebeen able to travel extensively
in Canada.
In my work, I think, at EurasiaGroup I had about 35 Canadian
clients, so I've really beenable to travel a lot Went to
Nunavut, you know, went toYellowknife, you know,
everywhere and anywhere.
And I think that's because Ihave been homesick and I've
enjoyed not just the analyticaland intellectual side of the
(44:29):
work and commercial side of it,but just being able to reconnect
with Canadians and also be ableto host games.
They come to Washington or nowthe last three years here in New
York, when they come toColumbia.
So glad to be able to host youand hopefully we can continue to
keep in touch.
Stewart (44:43):
Yes, well, this is still a new chapter for you.
Good luck with it, thank you.
You're clearly making adifference and thanks so much
for today.
My pleasure, nice to meet you.
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