Canada almost froze—here’s what saved it // Greg Caldwell

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Greg Caldwell (00:00):
The colonial age ended at the end of World War II
and Canada and North Americawould be well served to not
suggest how other countries youknow use energy and make
decisions Like we can provideadvice, obviously, but I've been
to China, I've been to India.
These countries are extremelycompetent, in some ways much
more than we are.
China's the manufacturingcenter of the world.

(00:21):
They're going to get theirenergy.
The question is do we want tobe at the table?
You know countries that tradetogether generally, prosper
together.

Stewart Muir (00:39):
Welcome to Power Struggle.
I'm Stuart Muir.
Today I'm joined by GregCaldwell, a leading voice in
Canada's energy conversation.
Greg blends deep expertise inenergy systems and finance with
a pragmatic view ofsustainability, affordability
and energy security.
He actively championsinnovative energy solutions like

(00:59):
hydrogen and renewable gas,while emphasizing the essential
role of conventional energy inmaintaining Canada's economic
and national security.
Currently, greg is Director ofPolicy and Advocacy at ATCO Gas
and Pipelines Limited.
He's based in Alberta and he'shere at the studio in Vancouver.
Let's dive in, greg Caldwell.

(01:20):
Welcome to Power Struggle.

Thank you for having me.
It's exciting to be here.

You know I appreciate the presentation you
gave recently.
I'm aware of your work, but I'dlike to dive into a certain
date in the calendar January2024.

Take us back there, because in this story
it's a very exciting time for usin our business because we
provide natural gas to themajority of Albertans, and our
system, our network, isessential in the energy system
that feeds the lifeblood of theprovince, which is, you know,

(01:55):
small business, industrialbusiness, our hospitals,
whatever you look at ourelectricity networks.

What exactly is this system?

Yeah, so it's the natural gas transmission and
distribution.

Transmission pipe.

Yeah, pipe system transmission and distribution
for most of the province and sowe have about 1.3 million
customers, about 60,000kilometers-ish of linear pipe,
so a lot of pipe.
It touches most corners of theprovince.
You know, on a day, you know,we'll talk about what happened
in January of pipe.
It touches most corners of theprovince.
You know, on a day, you know,we'll talk about what happened
in January of 2024, but you knowwe're providing the vast

(02:29):
majority of the energy to theprovince.

on those days, so the middle of winter in Alberta
I've lived in Edmonton.
It's very cold winters, butthis was exceptional.

Yes, it was.
It was exceptional.
We had about five days of minus30 or below, which even for us
is exceptional, and in NorthernAlberta we were hitting the
minus 40s, minus 42.
I'll say Calgary, edmonton, redDeer, grand Prairie, florida.

Greg, I researched it In Keg River.
It was like minus 51.5.
Whether that's with wind chillor not, I don't know.
You might be right.

I won't debate you on that, but in our major
centers-.

It's the coldest in decades, that's for sure.

Yeah, and more so that it was an extended cold.
You know it was five or sixdays without a reprieve, and so
that was a real challenge.

Yeah, that's not normal operating systems, but it
does happen.

But it is how the system's designed and the
system is designed for that.
We'll get into it, but itperformed well.

So this is an issue.
There are all these peopleheating their homes all around
Alberta your customers.

Suddenly it is 40 below for a week.
What happened in the energysystem during that time?
So those who are listening tothe podcast from Alberta will
remember there was a number ofalerts that went out specific to
the electricity grid.
We had significant challengesproviding enough electricity to
Albertans.
However, you know we at thesame time did not have any
substantial challenges on thegas grid.

(03:57):
So the two systems were able toreally work together and I want
to even commend the electricityfolks like they kept the lights
on during a very challengingtime and at the same time that
this was going on in Alberta,british Columbia you know we're
in Vancouver right now was alsovery important in keeping the
lights on in Alberta.
You know there was a lot ofelectricity going back and forth

(04:19):
.

It was warmer in British Columbia.

It was, but it was also extremely cold in
British Columbia at the sametime.

The cold's not in both places.

And we can get into here in a second yeah we'll
come back to that part of it.

So here are these people.
They've got electricity intheir homes for the lights and
some other things, but they'realso dependent on gas coming
into their homes to heat waterand run their furnaces.
Yes, and suddenly they're usingway, way more gas because it's
so cold out.

Yeah, so when, during these periods, you see
the electricity grid and I'lltry not to like get too deep
into the numbers here, but I'lljust make it really clear in
Alberta terms, the grid providesabout 12 gigawatts of power at
any one time.
That's about peak in Albertaand the as-grid was providing
between 105 and 110 gigawatts atthe same time.
That's about peak in Albertaand the Ascred was providing
between 105 and 110 gigawatts atthe same time.

(05:07):
So it's like an eight to onedifference.
And you know, obviously the twonetworks need each other, but
what was really just telling tous was that people don't
understand how important thatgas network was to keep the
lights on and also that it didit affordably and really

(05:28):
completely reliably during thatperiod.
And we can get a little furtherinto how we did that, but it
was extremely telling, you know,as our grid has changed over
the years and I'd love to getinto like why we had the grid
alerts and what role natural gasplays and renewables played and
all that and even storage.

I think people who follow the space already know
that we're talking about thefact we're in a time when
there's a lot of pressure toelectrify everything and maybe
some assumptions about how easythat is.
But January 2024 in Alberta andBC, it turns out, is kind of a
life lesson in how this couldunfold in future.

Yeah, I think the first thing we learned and it's
something that I like to talkabout when I speak is that we
have been told you know, justelectrify everything and it'll
work and you'll save money andeverything will be perfect.
You'll save money andeverything will be perfect.
The physics don't work that way.
You know, when you have a gridthat provides eight times more
energy at peak than the gridthey're saying to move to, well,

(06:30):
that's just not a practicalsuggestion.
Secondly, it does it at afraction of the cost.
And so you know, on a kilowatthour basis, in Alberta, it's
about five times more expensivefor an average homeowner to use
electricity than it is to usenatural gas.

So those five days we're talking about that was
sort of an aberration, becausein July you don't have that.
But let's do that comparison soyou're saying it's eight times
more gas was used for people'senergy, lives and electricity in
January 2024.
But what about an average July?

Oh, an average.

July.

What is that ratio Is it one to one In
Alberta.
It would be quite closeactually, because on a July day
there isn't a lot of natural gasdemand.

So if you wanted to plan an energy system based
on July, that would be probablypretty easy to do if we're
assuming there's no Januarycoming, when it's really cold,
because you could just supply asmuch gas energy as electricity
energy, and then you're good forJuly.

Yeah, I would say it would be easy to do for
electricity end uses.
And we have to be careful wemix these things up all the time
.
You know a typical industrialeconomy 20 to 25% of the energy
end use is electricity, 75% isnot.
So if you want to make steel,concrete, ammonia, plastics, you
can have all the free and cheapelectricity in the world.

(07:53):
You don't have thepetrochemical inputs to do that
and I mean I'll use Albertabecause that's what I understand
best.
Then you don't have an economy.
No-transcript decarbonization.

(08:31):
You know, as in as in theenergy end use, when I say 80%
of the economy.

But they're also, in some European countries,
de-industrializing because ofthe cost and availability of of
energy, are they not?

They are.
You know, I want to be carefulnot to knock these European
countries too hard, because alot of things are happening.
It's not just the transition toa lower carbon economy.
The war in Ukraine has had asignificant, significant impact,
and so when you look at energyprices in Italy, germany, the

(09:03):
United Kingdom, like residentialelectricity prices in the
United Kingdom, like residentialelectricity prices in the
United Kingdom are five to eighttimes what the average Canadian
pays.
So when you look atdeindustrialization, I mean we
can point to that.
The question would be is it thedecarbonization policy drowning
that?
Is it Vladimir Putin?
Is it some third reason thatyou know I'm probably not an

(09:24):
expert enough to point at?
I can talk to the energyreasons.
The answer is yes to all of it,but it's not just one thing.

So I just want to go back to that period.
38 all-time cold records werebroken in Alberta during that
cold spell Unreal.
You must have a control roomsomewhere where your engineers
are watching the system At anypoint, were they concerned that
there wouldn't be enough gas togo around.

There is never a concern of supply.
Supply is the easy part.
It's actually delivery ofsupply and, just like with
electricity generally, you cangenerate enough of it.
It's moving it around when Iwould say our control room and
the folks that work specificallyon storage.

(10:13):
So I haven't explained the rolestorage plays for gas and it's
not well understood.
I mean, the natural gas grid isa bunch of pipes.
Well, pipes are batteries gridis a bunch of pipes.
Well, pipes are batteries.
They just store compressedenergy.
And that's what makes pipelinesso different from power lines.
You know we do not storeelectricity broadly.

(10:34):
We store potential energy in adam or a pile of coal or
something like that, but wedon't store electricity broadly.
And so the gas grid really,where we are able, we have the
flexibility to go from.
We talked about July where wemight be using the same amount
of energy as the electricitygrid.
So, say, 12 gigawatts out ofeach system, we go to 110.
It's storage that gives us thatflexibility.

(10:55):
So we, every day the cold snapwent on, we became more and more
reliant on our storage, andthat was one of the images you
know we and I had talked aboutthat I had, and you know you can
see each day when we get moreand more reliant.
I think by the last day about50 to 55% of the natural gas
used in Alberta came fromstorage.

Right, and someone is thinking if this cold snap
goes on another five days wemight be out of gas from storage
.

I wouldn't say out of gas, but the easily
accessible storage is gettingnear its end and so we operate a
pretty significant storagefacility in the Edmonton region
and our working capacity nearthe end was getting quite low
working capacity of the gas andthe storage.
These are salt caverns, justthey're underground.

(11:45):
For listeners that may not knowhow this works, these are all
underground.
They're huge salt domes thathave been washed out and we keep
compressed natural gas in.
But after the five days we weregetting- Right Getting low.

Getting low, yeah, okay, now the electricity
supply.
I guess there's an image we'veall got in our heads, or many of
us who aren't energy nerdsmaybe that electricity is the
green alternative to natural gas.
But one question has to beasked how do you make that
electricity?

So in the Alberta context, about 75% of the
electricity delivered in Albertaon an average day let's say
average comes from natural gas.
Now we are adding more and morewind and solar all the time.
In Alberta it's been theprimary driver of new capacity
additions the last five years.
Wind and solar have done agreat job at not only providing

(12:36):
non-fossil sources ofelectricity but also reducing
our dependency, during windy andsunny times, on fossil fuels
and lowering the grid emissionsas we do that.
But on going back to the coldday, I mean you see wind and
solar capacity factors.
So that is capacity factors,the percentage of the installed

(12:57):
capacity that is available to beused.
And you said you've had spentsome time in Edmonton.

I was there actually during COVID and I had
to get out of the house, so Iwent for very long walks in
those cold, cold months and itwas bright, blue.
It was so bright.
I was always curious and I'msure you'd be able to tell me
how much, because it's in thenorth, it's wintertime, maybe
that sun isn't that strong, butit feels strong when you're
walking around.

So what's the capacity factor of solar?
So when we hit these peakperiods I'll call it minus 25
and below we see capacityfactors of wind and solar every
single time drop below 10%.
Now we can have periods,especially with wind, like
little periods where it jumps upto 20, 30, 40%, but broadly the
average is less than a 10%capacity factor.
So what you end up seeing inpractice during those peak
periods is a grid that'scompletely dependent on natural

(13:53):
gas, coal when we had it we'venow retired all of our coal
assets in Alberta andelectricity imports.
In the Alberta scenario youhave Saskatchewan, montana,
british Columbia.
Well, saskatchewan and Montanaare coal imports broadly and
some natural gas.
So you're you know we'rekidding ourselves when we say we
don't need it or we can operatewithout it.

(14:13):
It's just not practical.
And and going back to thestorage topic that we just
touched on and I didn't say itthen but I'll say it now we
actually did some math and said,okay, for this five day, if we
just eliminated gas storage andused batteries, could we do it.
And our team went back andlooked at global lithium-ion

(14:34):
battery production for electricvehicles, what's being produced
every year, and the quick mathis it's 13 years of global
lithium-ion battery storage forthe whole world to put the
batteries in place to do whatthe underground gas storage did
in Alberta for five days.
You know, no matter who you are, you hear those numbers and you
go.
Battery storage can play a partfor you know, short-term, quick

(14:56):
duration, reliability on ourelectric grid, but it is not
replacing this other system.
There's no physical way,there's no technical way and
there's no economic way to dothat.

So for that to work, suppose you can get 13
years worth of global productionand you could exclusively buy
those and the electric vehicle.
People can't get batteriesbecause Alberta's scooped them
all up and you put them into abig field and you hook them up.
In order for this to work youwould need a lot of time to
charge them up and you'd have tocharge them with energy coming

(15:28):
from the grid.
I mean, this is so theoreticalbecause you'd never be able to
do this, but as a thoughtexercise it's fascinating that
it's so monumental.
Just for how many people.
There's 4 million people inAlberta, just to five now, and
you don't even serve all of themin your network.
So in your network alone, those1.1 million people, they would
need all of the world's batteryproduction times 13 years.

Well, and it wouldn't be.
You know, if our goals areemission reduction,
sustainability, less reliance onfossil fuels, what would be
better?
A bunch of batteries sitting inAlberta not being utilized 99%
of the time.

Because you're not using them in July.
We don't need them.

You don't need them, yeah, 99% of the time,
because you're not using them inthat joy.
We don't need them.
You don't need them, yeah,broadly.
Or putting them in millions ofEVs around the world.
I'm answering my own question,but it's not a productive use of
the resource, for starters, andthen, secondly, the economic
cost of doing such, of doingthat.
I mean I talked about UK energybills being five times that of
the average Canadian energy bill.

(16:23):
Well, we could flip that on itshead if we start installing
infrastructure like that,because I didn't talk about the
cost of that, but obviously it'sstaggering and, um, you know,
it just doesn't make any sense.
So it's not going to happen.
I mean, I use it as an example.
Um, because we have been toldand there's been, you know,
politicians, politicians, I'llsay I'll point the finger at

(16:46):
politicians broadly who havesaid no, just electrify your
economy, everything will be fine, it'll all work.
And if you talk to engineers,technical folks that work in our
industry, even the electricindustry, they'll tell you, give
you a very different answer.

Right, and it doesn't even matter that much
whether the electricity iscoming from this source
renewables or from gas or coalor nuclear.
The fact it's electricity meansthat there's only so much that
you can use it in the homes theway we live now, so you can't
just have five times moreelectricity to offset.

And homes don't use most of the energy, right,
like we keep talking homes, buthomes are like I'm going to call
it the easy part when I talkabout.
In your average OECD economy,where I said, 80% of the economy
is using fossil energy still,and that's in the European
context.
You go to China, the UnitedStates, canada, you're closer to
90% of the economy is poweredby fossil energy still.

(17:44):
We should be working to reducethose numbers and we are, and
you are seeing progress aroundthe world in that.
But you know, putting a bunchof batteries in Alberta and
building a bunch of renewableenergy is not going to be the
solution.

Now we've talked about Alberta and you referenced
BC.
So at the same time, back inJanuary 2024, bc had some pretty
cold weather and it was pushed.
Bc is very different.
In its energy system.
It relies very heavily on hydrofor its electricity creation.
Also, it has phased out naturalgas to create electricity, so

(18:20):
it has fewer options than itused to.
But it uses a lot of gas, justlike Alberta does, in homes and
businesses.
So the deep freeze in Albertagets cold.
What happens next?
You've got these two provincesside by side that share
electricity to some extent.
They share gas systems.
They're a bit intertwined right.
What happens?

Let's start on the electricity answer and then
we'll move to gas.
So DC, so BC does, I think,broadly like something like 95%
of the grid is hydro.
Here it's extremely urban.
That being said, when we lookat last year, for example, 2024,
you know BC has become quitedependent on electricity imports
.
So it is correct to say thegrid here doesn't have any

(19:06):
natural gas in it.
But without electricity importsfrom other provinces that is
generated from natural gas, thegrid here would struggle during
these peak periods and it mayactually collapse without those
interconnections.
I mean, it's not.
I believe last year Hydro cameout with a report recently
saying that about 24% of theelectricity consumed in BC was

(19:27):
imported last year and that isbecause the impacts of climate
change and less rainfall thatyou're just producing less
electricity in BC than you havehistorically.
So to answer your question, yes,the grid is much lower emission
in BC than Alberta.
And yes, the grid is much loweremission in BC than Alberta but

(19:47):
it is also still totallyreliant on fossil fuels, even
though within the borders of BCyou could say you're not, but
you are.
And then the gas grid in BCduring that peak time was
producing well over double theamount of energy the electric
grid was producing in BC duringthat same January period.
So, again, to replace the gasgrid in BC with electricity,

(20:08):
you'd be looking at, you know,doubling to tripling what you
have today in the hydro assets,and we know what the last site C
cost and I just there aren'tthat many rivers left and so
you're going to be looking.
Even if you did electrify theeconomy, and whether it's
nuclear or natural gas, coal'sprobably not going to happen,
but you know you're going to belooking at a number of solutions

(20:31):
that involve fossil fuels,unfortunately.

Well, it seems as if governments are advised by
parties that are saying you canmove these gas furnaces over to
heat pumps, you can decarbonizethe vehicle fleet by having EVs,
you'll just get moreelectricity.
But you're saying that thesupply of electricity is going

(20:55):
to be a problem if you do that.

Yeah, I mean.
So I want to be very clear.
You can move to heat pumps,especially in this climate.

A model climate.

Yeah, when I say this climate, I'm referring to
Vancouver specifically.
Broadly, it will work.
The technology works.
You can move to EVs.
I'm not anti-EV or anti-heatpump.
What I'm anti is politicaldecisions driving bad
engineering outcomes, and theoutcome of electrifying all the

(21:24):
heat in BC would be for fivedays a year.
Bc rate payers would need topay for triple the amount of
infrastructure to supply it.
And in what world does theaverage BC rate payer go?
That's good for me, likethere's other ways to reduce
emissions and other ways toachieve the broader

(21:44):
environmental goals that aren'tthat.

And somehow we've come to a point, especially in
British Columbia, where it'salmost like you're not allowed
to talk about those other thingsthat you could do to achieve
what is hopefully the goal here,which is to have an impact on
emissions.

You know, I think people are well-meaning when
they talk about this and theytalk about, say, banning natural
gas from a municipality orbanning it from, you know,
banning energy exports, banningoil exports.
I understand that the core ofall is we have an emissions
problem, we have a climatechange problem, like an
ecological issue.
There is an ecological issue.
I don't deny that at all.

(22:23):
I don't deny that at all.
I don't deny the science.
I actually totally accept it.
You know, when we've talkedbefore, what I push back on
pretty hard is that banningnatural gas, whether it's in
Edmonton or there's actually acommunity in Edmonton it's
banned from, believe it or notor in Vancouver, that that is
the solution.
I'll tell a quick story here.
So I was in India in early 2020.

(22:45):
I went with a group of friendsand we did a trip drove from,
effectively, the Pakistaniborder all the way down to
Southern India, 3,000 kilometers.
We drove it was 23 days,something like that and I got to
just see in that country justwhat the lack of access to
energy means in real life tojust regular Indians.

(23:09):
Because I'm dropping amotorcycle or a tuk-tuk,
depending where we are, and I'mprivileged I can afford to buy
gas, and gas in India isactually more expensive than gas
in Canada at the time, whichwas surprising.
And just to bring this fullcircle, I did some research when
I got home and the averageIndian uses one to one and a
half barrels of oil a year ofenergy.

(23:33):
The average Canadian uses 20.
The average American uses 20.
The average Japanese individualuses 15.
The average Chinese uses fourbarrels.
And so what I would say topeople who are banning them?
This will all make sense herein a second.
So if you're going to go ban afuel or ban an LNG export

(23:56):
project in Canada for climatechange or emission reduction
reasons, what I would say to youis the people in India 20 years
from now are not going to beusing one or one and a half
barrels per person per day.
And a half barrels per personper day it will go up, but
they're going to be the onesthat actually decide broadly for
the world people in India,china, africa.
They're going to be the onesthat decide what the carbon

(24:19):
outcomes are, because they'regoing to be the ones with all
the growth.

It won't be Canada saying we don't want to send
LNG to you because we think youshouldn't be able to use a
fossil fuel.
That won't cause Indians todecide to not advance their
journey out of energy poverty,will it?

It won't even hit the radar.
You know.
Again, you look at, you know.
Go back to China and India,because to me you have 3 billion
people, the two primary driversof economic growth, probably
for the next 20 years.
China's importing 12 millionbarrels of oil every day today.
India is much less.
I think India is around 5million barrels, something like
that.
But even if the Indians wentfrom one barrel a year per

(25:00):
person to 10, that's an extra 45million barrels of oil per day
in world.
That's a 50% increase.
So we produce around a hundredmillion barrels a day.
And so what Canada must be doingis not focusing on oh, I'm
going to ban this or I'm goingto regulate that.
You know, we can get into thatin a second.

(25:21):
What Canada should be doing isis reaching out to them and
saying well, how can we get youthe lowest carbon energy, which
I would argue LNG would be agood start how can we help you
with nuclear in your country?
How can we help you withhydrogen?
How can we help you?
I mean, broadly, it'll probablybe China that'll help them with
solar and batteries andwindmills.
But like, how do you help themso that those numbers instead of

(25:42):
going to 45 million barrels aday.
Maybe they go to 10 millionbarrels a day.
That would do magnitudes moreto reduce emissions around the
world than carbon taxingCanadians and banning gas
services and banning projects inCanada.

Well, I'm just running the numbers on that.
If India is using 5 million aday, that's about a Canada worth
of exports.
That's how much Canada exports.
I think a little more, maybe.
So one Canada today servesIndia.
If they go to the number youcite, that's nine Canadas worth
of oil.
Or Canada would have toincrease its production ninefold

(26:22):
in order to continue to servethe equivalent of India's needs.
That would be wildly optimistic, even in Calgary.
I don't think there's anyonepredicting that, but there's
those saying it could besignificantly more.
But that's just an illustration.
Your point here, greg, andlet's go back over it because I
think it's so important for acountry whose leaders over the

(26:43):
last few years have told Greeceand Poland and Germany and who
else, what other countries,japan I think came asking for
liquefied natural gas.
Please can you send us that?
We want to decarbonize oureconomy, will you help us to
lower our emissions?
And the Canadian answer was no,go away.
We're not interested in sellingyou gas because we think you

(27:05):
wouldn't know how to use itresponsibly.

Basically, the United States in the last 10
years has added 18 billion cubicfeet of LNG export to their
shores.
18 billion cubic feet is whatCanada produces in natural gas
per day.
So that's what they've added.
They've added a whole Canadaand just started exporting it.
So not only is there a businesscase, the business case is

(27:29):
exceptionally good.
That is partially what's driventhe US economy to just
outperform most of the world'seconomies over the last decade.
And regardless of who thepresident's been, what the
policies have been, and we'vegone from Republican to Democrat
back to Republican there hasn'tbeen broadly a change in this.

And over the past decade, canada's relative wealth
has fallen greatly compared tothe US.
A lot of people are asking why,meanwhile, the US has prospered
.
You're drawing a connectionbetween their LNG exports and
their prosperity.
Do you think that if Canada wasdoing what the US was doing, we
wouldn't be Alabama, would beCalifornia or New York State?

It would be a guess to know where our GDP per
person would be if we had donethat.
But what I can say is thatCanada has chosen to forego
these opportunities.
And going back to my pointabout we won't solve climate and
emissions here.
What we can do is build stuffand be part of the solution and

(28:31):
figuring out what that future is.
But the hierarchy of needs forour energy consumers and we
haven't talked about this todayis always going to be price and
availability.
And availability is parallelwith reliability.
If we look at Germany, when theRussians invaded Ukraine and

(28:51):
obviously Nord Stream got blownup and all this, all that
mattered was availability ofenergy.
Price didn't even matter for awhile.
Price matters now greatly, butit didn't matter for a while.
Like availability is everything.
And there wasn't anyone goingoh, what's the emission factor
of this LNG from the UnitedStates?
You know, if you don't haveenergy, nothing else matters.

(29:13):
And so you know, to the nobusiness case comment to that we
should leave it in the ground.
Well, we can, but the rest ofthe world will just pick up the
pieces, whether it's Russianexports, qatari exports,
american exports or Australian,even those are the kind of the
big four in the LNG world andCanadians to your point about

(29:34):
our economic performance since2015,.
We've seen our GDP per personeffectively flatline.
We've seen our productivitygrowth go negative, which is the
first time since World War IICanadian productivity growth.
There was a little blip when Iwas born in like 1981.
I don't know what was going onthen.
You might remember I don't.

But it was me getting some wide-legged.
You were probably yeah.

Alec Riders, probably in elementary school or
something.
Yes, slightly further, but yeah.
But it's like we've gotten tothe point where productivity I
say productivity growth has gonenegative.
Gdp per person is flat for adecade.
Foreign direct investment likecapital outflows.
When you look at foreign directinvestment into the country and
Canadian investment outside ofit, it's gone negative.

(30:20):
So that means more dollars aregoing out of the country than
staying in, and so you're seeingthis capital shallowing across.
This is across Canadianindustry, not energy.
Capital shallowing of cross.
This is cross Canadian industry, not energy.
And really what we need to do isbe honest with ourselves that
we must invest in theseindustries because they are the
most productive industries inthe country.
And to my point about theIndians, the Chinese, your point

(30:46):
about the Europeans people needthis energy, so we have an
obligation I would argue, amoral obligation as holders of
this energy, to provide it tocountries that need it to thrive
.
The final thing I'll say, justto round that out, is that we
have a lot of challenges withinCanada.
Right, we have to.

(31:07):
Your point about our GDP is low.
We've got communities that areeconomically underserved.
We can really help people, andI say this you know, parts of
Alberta are some of thewealthiest parts of the country.
I'm not talking about justhelping Albertans.
I'm talking about helpingpeople along these corridors
along the way to have economicopportunity, because we might be
exporting the energy from NewBrunswick or Northern British

(31:29):
Columbia or even Manitoba.
You know this is not just aboutone province or one industry
and all the industries thatsupport it along the way.
I just see it as like such anopportunity to strengthen the
country and make Canadians proudof you know what they're doing

(31:51):
you know what they're doing.

Right now.
We're a few weeks away from LNGCanada beginning to export
natural gas to the other side ofthe Pacific, probably because
it's countries there that haveinvested in this to be able to
get the gas.
What are they going to do withthat LNG when they get it, and
what will Canada, being able toprovide it, do for the Canadian
economy?

So LNG Canada, which is, like I think it's
still the largest singleinvestment ever made in Canada,
will export somewhere betweenone to two BCF of gas today.
So just taking back from my pastcomments, that's a billion
cubic feet, except it's cooledso they could pour it onto a
ship, chill it to like a minus160-ish and put it in a ship so

(32:30):
it's really dense, and send itoff to.
I mean, the largest consumersof LNG are broadly the Asian
countries.
Japan is the number oneconsumer of LNG in the world.
I don't know where LNG Canadacargos will go.

Some of it will go to Japan.
Is there an investor?

You can assume, japan, malaysia, south Korea,
like that region, even Chinavery possibly, but broadly, the
natural gas that goes to thoseregions are used for all the
things we talked about, whetherit's producing ammonia so you
can grow food, or generatingelectricity, heating homes,
cooking even natural gasvehicles.
I mean the Chinese have beenmaking massive investments into

(33:08):
LNG-powered vehicles in Chinaand we're starting to see oil
demand.
I'm not going to say slowing orflat in China, but it's slowing
, and a big reason is becauseeven LNG on an energy-equivalent
basis can be cheaper thandiesel.
When you said you know folks inCanada are saying, well, they
can't be trusted, what I wouldsay is the colonial age ended at

(33:30):
the end of World War II andCanada and North America would
be well served to not suggesthow other countries you know use
energy and make decisions Likewe can provide advice, obviously
, but you know, I've been toChina, I've been to India.
These countries are extremelycompetent, in some ways much
more than we are.
You know that China is themanufacturing center of the

(33:52):
world.
They're going to get theirenergy and they're going to
figure out how to use it.
And the question is, do we wantto be at the table or not, and
so I think not only can they betrusted to use the energy well,
but it's essential they have it.
So we have a world that'sprosperous and stable and we're

(34:13):
all working together.
I mean, I think trade hasgenerally been the way countries
meet in the middle on many,many issues.
I don't want to get into what'sgoing on right now around trade
, but you know, countries thattrade together generally prosper
together, and I think thatthere's that's been lost
probably in some of the back andforth going on right now.
But I think Canada has a realopportunity and I talked about

(34:35):
how optimistic I am to go.
You know we're going to be thatcountry for you, that trusted
partner, and we have just I mean, we've talked about oil and gas
here, but we have minerals, wehave agricultural products, we
have wood.
You know I could go on it.

We're so lucky.
Well, let's run with theoptimism, because I think in a
lot of these energy debates itcan leave you feeling that
you're kind of polarized, thatyou're into you're having to
argue a point when what we allwant to be doing is innovating
and improving things and leavingthe world better than we found
it, as challenging as that ideacan feel at sometimes.

(35:11):
You've been talking about thedifferent utilization of
hydrogen in homes and I justwonder if you could kind of draw
us a picture of what'shappening in that space.

Yeah.
So I've been really lucky overthe last four or five years to
work on a number ofdecarbonization programs,
projects that our business hasbeen actively investing in, and
so we've got a hydrogen blendingproject where we blend hydrogen
into the natural gas system.
We've done some pure hydrogenbuildings, done some renewable

(35:44):
gas projects, some carboncapture like small scale, like
think on your building where youdo some small scale right at
the furnace, at the furnace,yeah you know, just trying to um
figure out how.
you know, how are we gonna workin a world with where you have,
you know, you have a price oncarbon, you've got customer

(36:04):
expectation around emissionreduction and and you also have
the practical realities ofenergy.
You know, when I talked earlierabout you're just not going to
electrify everything.
I mean people and I'm sure thesecond.
I talk about hydrogen and ifpeople watch this there'll be
some comments like hydrogen'sstupid, hydrogen's crazy, it

(36:25):
doesn't work.
And the reality is we actuallydon't know what the best
solutions are to get off of ouraddiction to fossil fuels.
But without trying these things, we just don't know.
And so, yeah, the hydrogenproject has been really exciting
because we've proven that youcan safely, reliably provide

(36:49):
that energy in a home heatingsolution, which means you can
also provide it in a vehicle.
You can provide it to do powergeneration, whatever your end
use is the challenge, and I'lljust be transparent the
challenge around hydrogen andthere's only one is cost.
That is, the challenge aroundhydrogen is that even in the
Alberta context, where you'reproducing a hydrogen molecule

(37:10):
with carbon capture, it can be90 to 95% lower carbon intensity
than natural gas, but it'squite a bit more expensive, and
so how does that work?
I mean, renewable gas issimilar, where you have this
effectively decarbonizedmolecule, but again it's quite a
bit more expensive than naturalgas.

(37:30):
And yeah, so that's been the.
It's been really exciting, butalso really challenging.
And with the current what do youwant to call it?
The politics of carbon, wherewe're seeing the individual
carbon tax is dead in thiscountry, it'll be interesting to
see where these initiatives andprojects go, because they are
largely driven and I think it'simportant to say like, without
an industrial carbon tax, it'shard to justify making

(37:52):
low-carbon products.
We don't believe.
At least there's naturalhydrogen in the ground.

We know of some very I met Alaskans who insisted
that there's a bounty of.
There may be Actually hydrogenin the ground that we can
extract and it's frozen.

There may be, but we and my background is
petroleum engineering I'll saywe don't know of where it is.
But so, assuming we don't havenatural hydrogen and we need to,
it's like electricity you needto make it and you know we're
Bake it till you make it.
No, that's a different thing,exactly.
But yes, you're making hydrogen, either from natural gas or,

(38:29):
you know, using electricity andsplitting water there's a few
different ways or pyrolysis ofthe natural gas molecule.
I would say it can becomecheaper.
But to say it will be as cheapor as affordable as natural gas,
probably not Like, that's justprobably off the table, unless
someone invents a process thatdoesn't exist today.
But could it be affordable fora number of energy end uses?

(38:51):
That's the question.
So can it be as affordable asdiesel?
Can it be affordable as propanein certain situations?
That's the question we have toask ourselves.
And the answer is yes.
You look around the world, thereare examples of that.
And then what are the policies?
Again, is there a carbon tax?

(39:12):
Is there a renewable fuelstandard?
Those things drive, at least inour market drive adoption of
those technologies.
But I do want to go back to whatI said earlier about India and
China and the Asian Pacificregion.
The driver of decarbonizationis not going to be carbon policy
, and this is something that Ithink almost no one in Canada

(39:34):
understands.
The driver of decarbonizationis going to be energy security.
So my example of India saying,well, if they want to get to 10
barrels a day of individualenergy use, they need 45 million
barrels a day of oil youbrought up.
You were like that's nine,canada's Probably not going to
happen and it's actually aresource constraint.

(39:57):
45 million barrels of extraproduction would probably send
the price of oil to $300 or $400a barrel.
So, whether it's India, china,sub-saharan Africa, even South
America, all these regions thatare growing, the driver of DCARB
is going to be energy security,and so Canada can be there with

(40:18):
them, first to provide oil, lng, but also to provide all those
other things.
Like, we have a great nuclearindustry.
You know the Canada technology.

And we have uranium.

Yes, and as you incentivize growth and
incentivize things gettingbetter flourishing of those
countries, the demands from thelocal population for these
solutions will also increase.
And you see this around theworld the world, the countries
with the highest GDP, with thehighest standards of living.
You know Singapore, parts ofEurope, parts of North America.

(40:53):
They're the countries evenparts of China now that are
doing all this.

And you can see blue sky in those places.
Correct and clean water.

Correct, exactly.
And so in Canada, like we caneither be like Norway, where
we're, you know, unabashedlyproducing our energy resources
and reinvesting in our owncountry and around the world in
these solutions, or we can, youknow, continue what we've done,
which is saying, well, we won'tdo it here and hope the rest of
the world follows along.
And we already know the answers.
And they aren't following along.
And with the recent politicalchanges around the world we're

(41:29):
seeing, not only are they notfollowing, some countries are
unfortunately doing a 180 evenon some of these policies, which
I think in hindsight won'tnecessarily be the most prudent
choices.
But we can't control othercountries, right?

Well, I was at a conference in New Delhi a few
years ago and I discovered thatIndia has a minister of coal
just coal.
I don't know any other countrythat is so specialized and I
actually met the minister, cameto this mining conference and
made it very clear that India isgoing to develop its coal
resources if it has to and if ithas an alternative that it can

(42:06):
afford that is cleaner, it'sgoing to do that.
So it certainly confirms my ownexperience, what you've
observed in terms of the factthat those in the world who want
more energy will find a way toget it, because that's what
humans do.
We always have.

And if Indians develop their own coal you're
making my point.
For me, Is that energy security?

Well, it's going to be secure for them.

Exactly.
They're not reliant on a shipwith LNG, a ship with oil, to
bring the energy to them.
So it might not even be thelowest cost solution, but it's
the most secure solution.
And that's you see in Chinagoing on right now.
Chinese coal demand for thelast 20 years has grown
effectively every year, andChina is the leading producer of

(42:48):
wind and solar solutions.
China is the leading adder ofhydro resources in the last 20
years, more so than any othercountry in the world, and is, I
will argue, the leader innuclear technology.
Now, well, why are they addingcoal?
Well, the number one reason isenergy security because they're
so dependent on imports of oil,of natural gas Most of their

(43:12):
natural gas comes from Russia orLNG.
They don't want to be moredependent and so they're using
that coal resource.
Coal also pairs very well withwind and solar because you just
have that base load, you can runit, and a huge part of the
Chinese advantage is they havesome of the world's lowest
electricity prices.
We can pull our hair out herearound these policies, around

(43:36):
industrial carbon taxes,individual carbon taxes, and
think we're we're changing theoutcomes around us, but we're
not, and and I think that's abig message I wanted to get out
today is that we actually needto double down on what we're
good at.
What we're really good at isthis resource stuff and you know
, by engaging with thesecountries we can have influence

(43:58):
and we can suggest solutions andall that.
But if we're not at the table,you know whether the Germans or
Japanese, whoever comes hereasking for our energy if we're
not at the table, we're just notpart of that solution.

It sometimes feels like there's a binary that's
driving the political discoursehere in Canada.
Fossil fuel's bad, renewable'sgood.
We need to go from here tothere, and it's just a matter of
wishing to do it.
We have to be thinking right,and then we'll be able to get
there.
Is that how it works?

Yeah, I'm going to jump back to.
So one of the people I reallyenjoy listening to and I say and
he's not around anymore isMilton Friedman.
And he says one of the greatmistakes we make is judging a
policy by its intent policyDesired outcome.
Desired outcome versus itsactual outcome.
And you know, what we keepdoing here is looking at our

(44:54):
policies and say, well, theintent is to reduce carbon.
You know the intent is to, youknow, respond to climate change,
and so I respect that outcome.
I think that's a positiveoutcome.
We want a clean environment, wewant an environment we leave
our children children that isbetter than the one we have
today.
But the reality is and I'lljust go back to the facts as we

(45:16):
know them, we've seen a 54megaton reduction in carbon
emissions in Canada since 2005.

We're going in the right direction.

We are, so that's a 7% reduction.
We are, so that's a 7%reduction.
So 54 megatons is do you careto guess how many minutes of
Chinese emissions?

I don't know, it's 36 minutes 36 minutes.

Yes, so we've pulled our hair out and I have
none left.
Neither do you over thesepolicies, for you know, I'd say
a decade since 2015.
It's when we really started toget aggressive on these policies
.
And while we've done that, theAmericans have built 18 BCF of
LNG export right.

(45:59):
World oil demand continues toincrease.
Emissions continue to increase.
The reality is, we need to behonest with ourselves and look
at these policies and go.
They're not having the outcomewe thought so.
We need to be honest withourselves and look at these
policies and go.
They're not having the outcomewe thought so.
We need to change with theworld and that change has to be,
you know, unleashing what wehave on the world and really

(46:20):
being competitive.
And you know, I promised myselfI wouldn't get political here.
But you know, for us to be thisnation that's strong and can
push back on people that try toinfringe on us, well, the number
one way to be strong is have areally strong economy, even
stronger energy security andhave allies that rely on us for

(46:41):
energy, because if there's abunch of countries that rely on
us for energy, they're not goingto put up with someone else
threatening our sovereignty oranything like that, like good to
have friends in a dangerousworld.

Well, that's an interesting point because right
now, in terms of oil and gas,only one country depends on us,
and that country is not a verygood friend right now to us.
I'm talking about the UnitedStates.

Yes, 90% of our crude oil exports go to the US
and 99% of our natural gasimports go to the US.
And 99% of our natural gasimports go to the US.

So maybe if they were concerned that 90% could go
to another country instead ofto them, they would treat us
with a little more consideration.

It couldn't hurt.
That would be my.

We would have options in this cold, cruel
world.

Yeah, and also this comes back to when I talk
about optimism here.
It's like well, what's thefuture for Canadians If also we
can export to other countries?
We get higher prices, we canchoose who we export to.
We sell our natural gas at ahuge discount to NIMEX price or
Henry Hub price, which are theAmerican hubs for natural gas.

(47:44):
It's usually half the price ofthose hubs.
Part of that's transportation,because it does cost some money
to move it down to those hubs,but most of it is because
there's no market.
Lng Canada will start to fixthat but it by no means will
completely eliminate thedifferential.
And so those are Canadians ownthat resource.
I mean people in BritishColumbia.

(48:05):
Constitutionally the provincesown those resources.
But I want to say Canadians ownthose resources and Canadians
get the benefits of the incometaxes, the royalties, the wealth
that's created from thosecompanies.

The jobs, yeah, the regional development, first
Nations, participation in theeconomy.
I mean it goes on and on.

Yeah, it's a staggering impact to our economy
.
So even if you could get anextra 20% on that impact to our
economy, so even if you couldget an extra 20% on that, you
know, whether it's you want tobuild affordable housing or
build more hospitals or, to yourpoint, bring clean drinking
water to Indigenous communities,that should have it by now, we
have the funds to do it and youknow.

(48:44):
I just think that that's beenlost and our industry has
probably done a bad job atexplaining that to Canadians.
I don't want to blame Canadians.
I think our industry that'spart of the reason I'm here is
we really need to talk aboutthat and explain to them.
If you live on a farm inManitoba, why should you care
about what I have to say?

(49:04):
Or you're a fisherman in NewBrunswick or Newfoundland, why
should you care?

Well, I'd like to close this out on an optimistic
note, if it's possible to dothat.
So imagine January, a coldJanuary, but in the future let's
arbitrarily choose 2050.
If you're an energy optimist,what does that look like?
What does the cold snap ofJanuary 2050 look like, when a
whole bunch of things have gonewell because we've done the

(49:30):
right things, Greg?

So I think when you look at an ideal energy
system and I'm an engineer, soI'm going to answer this a
little bit as an engineer Firstoff, you want a whole bunch of
different technologies workingtogether.
So I see a future where we dohave homes.
Some of them are electrified,some of them have EVs in them
that are potentially evenputting energy back into the

(49:53):
house.
They're bi-directional.
The natural gas is keeping atleast the baseload of the power
grid going in many, manyprovinces.
But you also have nuclear.
You do have wind and solar.
You have hydro working where itcan during those periods, solar
, you have hydro working whereit can during those periods.

(50:13):
But broadly, we are utilizingeverything we can to make the
system as resilient andaffordable as possible so that
what we aren't using you knowwe're not wasting natural gas or
wasting oil, that we could usea better technology.
You can export that to a markettop dollar for it and use all
those funds not only create jobshere but create a better like

(50:35):
social safety net in thiscountry.
So, um, I think that would bethe the ideal.
This is, you know, veryoptimistic, but it's you want to
see an energy system that youknow we don't want to go back in
time and just oil and gas andnothing else.
No, canadians will haveelectric vehicles.
I think 2050 was your timelineso many of us will have electric

(50:57):
vehicles.
Many of us will have storage inour homes, solar panels on the
roof, whatever that looks like.
It'll be different in each partof the country, but we're not
so dependent on one thing andeven the Alberta example that I
gave you, we're really dependenton natural gas.
If Alberta had some nuclearplants or had some new hydro or

(51:21):
even and I hope I didn't comeacross as anti-solar and wind,
because I'm not I'm just honestabout what they can and can't do
Some solar and wind withbattery storage that you know
it's paired up where it actslike a baseload plant on that
minus 35 day.
All like the economics willdrive what those solutions are
ultimately, um, but that wouldbe the system that I think

(51:46):
canadians would be happy with.
But I do want to go back toresiliency and affordability
have to be the core drivers ofthat solution.
It can't just be.
You know, my ideology is thisand I want to see that solution,
which I think has driven someunfortunate outcomes in the last
decade.

Well, as an engineer, would you say that
there is maybe some chance thata solution that we haven't even
heard of might come along before2050 that will solve all of
these problems and we can livelong and prosper.
Maybe it's dilithium crystals,star Trek or fusion.
Is there something that's goingto come along?

(52:26):
Deus ex machina?
Is that what they say intheater?
It'll just sort of come in andsave the day.

You know it's possible.
I think that's a bad plan.
I think we you know, going backto my comment earlier, that you
know only 20% of our energy,the energy we use in our economy
, is electricity.
So let's just say someone couldinvent some, some box that's
free electricity for everyone.
We'd solve the 20%, but we'dstill be left with the other 80.

(52:58):
And and I think that's what'slost on people is is that you
know we really need to thinkbeyond electricity, and I think
it's unlikely we're going tofind that.
But we should be using thebenefits we get from exploiting
our resources to figure that out, because ultimately, like

(53:18):
fossil fuels are not, we're notgoing to run out of them anytime
soon.
We're going to run out of cheapones, and that's what's lost on
folks that don't understandpetroleum geology is we broadly
have really cheap energy andit's never been cheaper.
The natural gas that we producetoday is much, much cheaper
than going back to my commentabout 1980.

(53:39):
Yes, it is very affordable, butit won't be that way forever if
we exhaust the resource.
And so you know the reasons towork on these things and the
reasons to create that energysystem that you talked about is
so that we can optimize theresources, and it's the same
reason we should have energyefficiency programs and that EVs

(53:59):
are good.
You know like very differentworld by 2050 and how we use
energy, but the idea that wewon't use traditional natural
gas, lng oil, coal, et cetera isjust completely flawed.

Well, last question, and then it's time to
go.
You're prime minister.
What's the first thing you doon energy policy on day one?

The very first thing, the very first thing you
do on energy policy on day one,the very first thing, the very
first thing.
I think that the industryrequires policy certainty to
invest in Canada and there hasbeen so much uncertainty and you
know you put forward a project,you don't know if it'll get
approved.
You don't know even if it getsapproved, you might end up in

(54:51):
court for five years.
We need an extremely clear,transparent and auditable system
of project approvals, and sosome of the candidates both
candidates actually have talkedabout this to some extent.
But I think you need to knowthat if you put, if you want to
put in a piece of infrastructurethis goes way beyond oil and

(55:13):
gas, by the way.
Okay, like I'm talking aboutelectricity, roads, railroads,
like I could go on you need toknow that it'll get approved
within six to nine months andyou need to know that, once it's
approved, that you can build it.
And our competitors are solvingthose problems and are making

(55:35):
it easy.
You know Atco operates inAustralia.
We operate in the United States.
Not all countries are like thisand it's really really
important Canadians solve this,because if they don't, you'll
just continue to see investmentleave the country and we won't
solve those productivity and GDPissues that I think most

(55:56):
Canadians.
When you talk about cost ofthings and cost of housing,
they're feeling it becauseincomes have stagnated and
incomes have stagnated becausewe're not growing.
It's all interconnected.
I'm Stuart Muir.
This has been Power Struggle.
Our guest today, greg.

Caldwell from ATCO in Alberta.
It's all interconnected.
I'm Stuart Muir.
This has been Power StruggleOur guest today, Greg Caldwell
from ATCO in Alberta.
Thanks for tuning in.
Be sure to like, subscribe andshare, Thank you.

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