A special edition of Energy Examined recorded at COP 25, the UN Climate Summit held in December 2019.
Dale Friesen of ATCO guest hosts a panel discussion focused on the role Canadian natural gas and electricity can play in lowering global greenhouse gas emissions through innovation, efficiency and the displacement of higher emission energy sources like coal. Panelists include Francis Bradley, president and CEO of the Canadian Electricity Association, Tim Boston, vice-president of public policy and government relations at Enmax, and Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers.
While discussing general advantages of Canadian natural gas and electricity in terms of emissions and innovation, the panelists also explore the potential role of Article 6: a clause from the Paris Agreement that would allows the trading of carbon credits between countries. The clause is under negotiation during COP 25, and could offer Canada an opportunity to meet its Paris greenhouse gas reduction targets through credits obtained by helping to displace higher emissions energy sources like coal in Asia.
Transcript of podcast:
Tonya: Welcome and thanks for joining us for another edition of Energy Examined. I’m Tonya Zielinski and you’re listening to the podcast that talks about the latest issues facing Canada’s oil and natural gas sector with industry insiders in the know. Today we’re airing a special broadcast recorded live from COP 25 in Madrid. This week’s show features guest host Dale Friesen, vice-president of strategic initiatives, government relations and sustainability at Canadian Utilities at ATCO as he discussed the role Canadian energy can play in lowering global greenhouse gas emissions. He is joined in a roundtable discussion with Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, Francis Bradley, president and CEO of the Canadian Electricity Association and Tim Boston, vice-president of public policy and government relations from ENMAX. Let’s take a listen.
Dale: Good morning. This is Dale Friesen of ATCO. We’re here at COP 25 in Madrid, Spain. Today, we’re looking around at COP 25. We’re seeing thousands of people from around the world coming together to focus on one thing: lowering global greenhouse gas emissions. The biggest challenge is how do we achieve that goal while developing the energy required to power the world’s industries, homes and innovations? Many here are speaking about finding a balance between energy, the economy and the environment, some positioning it as a choice that we have to make. But do we have to make a choice? Tim McMillan?
Tim: You know, I think it’s false choice when people put them forward as being mutually opposed. The reality is that I think in Canada and globally, people expect to have their energy needs met and that they’re increasingly met more responsibly than they have in that past, and that’s something that as the Canadian Association of Petroleum Producers, we’re here at the COP to talk about how we think Canada can and should play a unique role in supplying oil and natural gas to countries around the world, which today are still building out coal-fired power systems. It’s the largest contribution we can make to the fight against global climate change. And we hope this year’s COP will enable that through Article 6.
Dale: Great, thank you Tim. Francis, what are your thoughts about having to make the choices?
Francis: I agree with Tim. I think it is a false choice. If we look at the electricity sector in particular, we have been able to reduce significantly our greenhouse gas emissions already in Canada on the electricity side of things. We’ve reduced GHG emissions by 30 per cent since 2005. But we’ve also been playing an important role on a North American basis as well. We’ve essentially been moving to a greener grid with Canadian electricity being non-emitting. We’ve been exporting significant amounts of clean, essentially clean Canadian electricity into the United States and that’s been offsetting coal generation in the U.S. as well. So, we’ve seen both sides of the equation moving forward from a Canadian perspective on the electricity side of things as well.
Dale: Okay, thanks Francis. Tim Boston?
Tim B: Well, I think it’s great to be here and the conversations here are very macro in their approach to climate change. I think you’re seeing from electricity companies across Canada, a real focus on how do we invest to enable people to have different choices? We’re trying to upgrade our electricity systems so that solar, for example, can be put on your homes. Well, this is a macro discussion, but when we get back into the country, we’re trying to provide people the ability on a micro or a local basis to actually invest themselves and make their own choices on what kind of power they want to consume and make sure it works in a more environmentally sustainable way.
Dale: Thanks panel for those opening remarks. For the first question, I’d like to talk about what advantages does Canada have in the energy space? Tim?
Tim M: Many. And I’m certain that the other colleagues on the panel will be able to talk about the uniqueness of the businesses that they’re involved in. On the natural gas side, we have over the last several years utilized technology, developed technology that allow us to have some of the cleanest natural gas produced anywhere in the world; that we have a methane reduction target policies put in place to get a 45 per cent reduction in oil and gas methane emissions out of the Canadian sector, which no one else in the world can start to compare to. We’re starting to electrify our upstream production, which gives us a uniquely low carbon content into our natural gas. And then the last piece, which absolutely no one else in the world is doing is the electrification of our LNG facilities. This here will allow us to have the lowest emissions LNG shipped around the world compared to any of our competitors. And maybe the one bonus that’s even above that is the fact that the latitude of the Canadian LNG facilities is further north and cooling is such a high component of our LNG – of any LNG – facility. We just have a natural advantage because of our climate here in Canada that we can, on any given day, be producing LNG at a lower emissions content than anyone else.
Dale: That’s great. Those are significant advantages for Canada. Thanks for that Tim. So, Francis, what advantages does Canada have in the energy space from the electricity sector?
Francis: Well, Dale, I’m sure you won’t be surprised that it’s always music to my ears when I hear Tim and others talk about the importance of electrification. But, I mean, I think it’s an excellent point from the perspective of CAPP because, as Tim noted, it’s playing a significant role in certain specific areas. That’s our future. Regardless of where you happen to land in any of these broad discussions about the future of GHG emissions reductions, the speed with which it’s going, the technologies that will be used, the one fundamental thing that is common to everybody’s conversations about the future, is that electricity is going to play a key, central role in our GHG-reduced, constrained future. And, again, we have advantages, certainly in Canada, where we’re moving fairly quickly now with increased electrification in the places where it makes a lot of sense to do so. Transportation is the next biggest block that we’re going to be seeing moving forward. And, I think we’re putting in place the kinds of infrastructure that’s going to be required for that. We need certainly some policy frameworks that are going to move us more quickly in that direction. But, listen, with the resources that we have, with the strong non-emitting electricity resources that we have, I think there’s plenty we can do in Canada, in a North American context, but also, taking some of those technologies and the approaches that we’re developing here in Canada and looking at opportunities to move them abroad as well.
Dale: Great. Thank you, Francis. So, in terms of the electrification, Francis, could you just dig into that a little bit further? Is there any areas that lend themselves more to electrification than others? Are they all equal or some, maybe a lowering hanging fruit for…?
Francis: Excellent question Dale. There’s some obvious low-hanging fruit. And that is when we’re talking about transportation, about passenger vehicles in particular. If you take a look at what’s occurred in Scandinavian countries, in Norway in particular, and see the significant market penetration of electric vehicles, and how that has transformed their economy, and we look at where electricity – we look at where energy is currently being used in Canada, the biggest, largest block of GHG emissions in Canada right now comes from vehicles, comes from transportation, so, that is the low-hanging fruit and I think where we need to go first, where we need to address this first-off. And, you know, the opportunities are enormous. But, it also gives us opportunities to use our current infrastructure more efficiently. There’s a lot of talk about the additional electricity that will be required if we fully electrify everything by 2050 and those numbers are very daunting. But, at the outset, when we’re talking about transportation and about charging vehicles afterhours, when demand is low, this actually helps the system. To be able to use that baseload power in a more efficient way over time makes for a far more efficient electricity system.
Dale: Great. Thanks Francis. Next question. Canada makes up about one and a half per cent of global emissions. We can make a much bigger difference acting globally than thinking strictly within our Canadian borders. What is the opportunity for Canada? What innovations have taken place in Canada to lower GHGs that could be applied internationally? So, for both of those, Tim McMillan.
Tim M: And I think there’s kind-of two angles to your question, Dale. The first is, Canada’s uniquely positioned to innovate and we’ve seen the successes and benefits of those innovations here at home for several years. Those same innovations must be applied to other countries that don’t have the same university structure or innovation capacity we have. With the benefits that we’re seeing on greenhouse gas emissions in our production, that needs to be leveraged elsewhere. The second part of your questions is, even though we make up such a small percentage of global emissions – one point five per cent – we can, and I think we should aspire to taking a leadership role. That Canadian resources produced the Canadian way can offset higher emission sources of energy in growing and developing nations like China and India. The sad truth is that we’re seeing about one coal-fired power plant coming online in the world every week. If we could displace that build-out of coal-fired power plants with natural gas fired power plants powered by Canadian LNG, we could have a very meaningful global reduction, net reduction, that Canada could be proud of. And I think that we’re asking policy-makers here at COP, as we have for the last several years at home, to work to get a policy environment that enables Canada to take this leadership role and to play this much larger role and responsibility on a global stage.
Dale: Great. Thanks Tim. Francis?
Francis: Carbon. Carbon capture and storage. Carbon capture and utilization. Canadians have been at the forefront of some of these technologies. And while the world – because of the price of different energy forms, haven’t as rapidly moved forward with carbon capture and storage as we thought they may have a decade ago. Nonetheless, the first commercial scale carbon capture facility was built in Canada by SaskPower at Boundary Dam. It’s one of those things I like to tout, that the first-ever, anywhere in the world was in Estevan, Saskatchewan, which may not be the first place you think of when you want to think of innovation, but they did it there first and before anybody else. But, I think the future’s also gonna be in the area of, what do you do with the carbon? And, we see Capital Power and other partners that are moving forward with demonstration projects on carbon capture and utilization of that carbon. They’re – I think they’ve just greenlighted a new project to look at creating and essentially manufacturing carbon nanotubes and so, this will be a product that will come out of the carbon stream. So, you know, the degree to which we can develop new technologies in this space, and these are technologies that would be certainly of interest in jurisdictions all around the world. Again, it’s, as I say, it’s awesome to see innovation taking place in Estevan and Edmonton and Calgary.
Dale: Great. Thanks Francis. Innovation, key word. Tim, your thoughts, Tim Boston?
Tim B: Actually, the project – the nanotubes piece – it’s actually happening at ENMAX’s Shepard facility in Calgary. And there are other projects there that are all part of the COSIA XPRIZE piece, so there are Canadians absolutely running to figure out the next technology piece. But, I think it’s important to remember, there is no silver bullet to this piece. It’s going to take coordination of many different types of technology to move us forward. And in the electricity space, you’re seeing many companies, including mine, working hard to bring together battery technology, solar, wind, hydro – all these different pieces together, non-emitting and low-emitting generation, but trying to find ways to make them work together so we have a more resilient grid that better meets people’s needs. That work’s happening in Canada. Those pilot projects will lead the way to smarter use of all the different choices we have to make the world a greener place.
Dale: Great. Thanks Tim. Article 6, Internationally Transferred Mitigation Outcomes or ITMOs. Meeting Canada’s lofty goals will require well-functioning emission-trading rules under the Paris Agreement. The focus of this year’s COP is for parties to address the final rules and modalities under Article 6 of the agreement, which would facilitate emission credit trading between the parties. Work on this article includes internationally transferrable mitigation outcomes, a market mechanism and non-market approaches. However, given the history behind international rules around emissions trading and internationally transferred mitigation outcomes, there is growing pressure to ensure that Article 6 leads to scaling up of 2030 climate targets as opposed to enabling least-cost compliance credits. If you were standing in front of the 197 parties that make up the treaty, what would be your number one recommendation pertaining to the final rules for Article 6? Tim?
Tim M: You know, I think that this is what COP 25 hinges on, is getting Article 6 defined in a way that can enable governments and industry to do the important work of starting to lower emissions, to use better fuels and I think in the early days of this COP, the first week now behind us, we have seen some frustrating moments where it looks like there’s an intent to stall Article 6. I hope that the second week brings forward a real push as the ministers step forward. Six point two is the piece of the Paris Agreement which enables countries to have direct government to government relationships to trade credits back and forth. This is what would be most important for Canada and where we know that gas from Canada could be running power facilities in China. Until it’s enabled through this legal mechanism, it won’t happen. And it’s going to take leadership. It’s going to take some strong efforts by the Canadian delegation, and we’ll be watching for that in the coming days to see if they can get this across the goal line. Ultimately, I think this is the test of success here at this COP.
Dale: Thanks Tim. It’s a critical juncture. Francis?
Francis: Yeah, I would agree, certainly from what I’ve heard up until now here at COP 25 that this seems to be clearly the sticking point, those three sections in Article 6 that seem to be contentious. I’m told there’s a half dozen issues that need to be sorted out, that need to be addressed. From a strictly, a purely electricity standpoint, I think there certainly is a desire for clear rules in this area because we are significant traders already with respect to electricity. But, the other side of it is, a number of our members are also in multiple businesses. And so, quite a few of our members are in the electricity business, but they’re also in the natural gas business. And they’re looking for opportunities to see how these rules can apply and can facilitate some of the work that they’ll be planning to do in the future.
Dale: Great. Thanks Francis. Last question. Why would countries like China, India or the United States want to share emissions credits if Canada’s getting an economic benefit from selling its energy to those markets? Tim?
Tim M: You know, I think it’s a benefit to both the country that is supplying the energy as well as the country that’s using it. And, as we’ve seen on many cap and trade systems around the world on many different commodities, that enabling this sort of trading allows the economics of putting in facilities like natural gas power plants in China. It enables those economics to work and I think, we’re not asking the governments here at COP nor our government in Canada to enable the economics, just enable the trading and let the business people get down to work and start making better decisions that actually lower emissions globally.
Dale: Great. Thanks Tim. Francis, last word.
Francis: Fundamentally, if the objective is to seek reductions in GHG emissions, this is the approach, the appropriate approach to take.
Dale: Great. Thanks Francis.
Francis: Great. Thank you.
Dale: And that ends our podcast.
Tonya: Thanks for listening to another edition of Energy Examined. Join us when Energy Examined co-host Tracy Larson sits down with Marcius Extavour, the energy and climate lead for the NRG COSIA XPRIZE. The two will talk about ways to turn CO2 emissions into useful materials like concrete or vodka. It’s definitely worth checking out.