Ivison: The future is nuclear but we need pipelines too

National Post

18 hours ago

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This week, John Ivison discussed the Carney government's plans for nation-building projects with Dr. Heather Exner-Pirot, a senior advisor for the Business Council of Canada.
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Ivison asked whether asking premiers to submit projects deemed to be in the national interest will mean we are at risk of pursuing white elephants that are not feasible or uneconomic.
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'The tone has markedly improved from the last Liberal government, so there is some optimism,' she said. 'There is a sense that the federal government will be a partner in building things, where, for a long time, we thought they were blocking our ability to build things. So it's a great start but there's only so long that you can have a honeymoon period before things have to happen. We actually have to see some action. And we know that Liberal governments are very good at rhetoric and not so great at implementation.'
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She said her concern is that projects are being submitted by governments and then projects deemed 'nation-building' are being selected by the federal government.
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'The direction it's going is a little concerning, in that they want to have a short list of nation-building projects and they will determine if it's nation building and use the public purse to fund them in cases where the private sector will not step up.
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'There may be a handful where that's justified. There's obviously a role for governments to build infrastructure. But the low-hanging fruit is obviously to improve our regulatory competitiveness. We have very restrictive, very burdensome regulatory processes. There are a lot of projects that proponents want to do on their own, without government help, if the regulation was better, if we had better tax competitiveness with our competitors. And so I will tolerate a handful of these nation building projects, if they make sense from a business side. But at the end of the day, we're going to need to see the regulations improved and streamlined.'
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Exner-Pirot said that Mark Carney's goal of a two-year approval process is a 'great target'
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'(But) we should walk before we run. For some of these things, three years also look pretty good. Two years is certainly feasible if we have good processes and good relations with Indigenous partners. The Conservatives were talking about a six months (approval process) and that just didn't seem feasible to me – that you would never be able to fulfill your duty to consult and accommodate in such a timeline. So two years is ambitious, but doable and we should reach for it.'
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She pointed out that Canada has to be regulatory and tax competitive with jurisdictions like Texas.
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'We would like to bring some of that capital back home. But at the end of the day, investors are going to make those decisions based on the return that they get. Let's make sure that our tax system is competitive so that capital actually wants to choose Canada.
One sector where Exner-Pirot is extremely bullish is nuclear power generation using small modular nuclear reactors.
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This is the one area where I just think: 'Yes, this is a nation building project'. We should lead on SMRs. And there's so many strategic reasons for Canada. One is that we have the uranium source. (We are) the world's number two exporter and number two producer of uranium. We have phenomenal deposits in northern Saskatchewan and in Nunavut. We could dominate the supply chain and the technology. We are building the first SMR in the G7. It has taken some public money to get there. But being the first mover really does accord you some benefits as you try to sell these models in the future. So where can we go next? Nuclear really has the potential if you get the cost curve down. It's a baseload clean energy that needs very little land and very little material inputs. In 100 years, do I think we'll be doing mostly nuclear? Yes, I honestly do.'
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On specific projects, Ivison asked if a bitumen pipeline should be a priority.
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'(Alberta premier) Danielle Smith has said it, and my analysis suggests it's absolutely true: There is nothing that will change the economic growth, the GDP, the productivity per capita in this country as much as a bitumen pipeline. We finally added Trans Mountain about a year ago. That's at 90 per cent utilization right now in one year. Our producers filled it fast, so there's clearly demand. We're seeing most of that demand come from Asia, so there is strong demand in global markets for Canadian heavy oil. But it is concerning that we have added this pipeline and we're already running out of egress. So there is an urgency from the producers that we need to start thinking about the next pipeline. And I don't think we're going to get Northern Gateway in two years. If everything went well, probably four years. And that's why we have to start planning for (the next one) now,' she said.
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Exner-Pirot said whichever pipeline plan comes forward will require the B.C. government to revisit its opposition to tanker traffic on the West Coast.
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'I'm finding this hard to understand because B.C. has actually done some constructive and progressive things on the economic development side since Trump was inaugurated. (Premier Dave) Eby has almost been the most vocal about wanting the elbows up. He said in February that if we don't sell Canadian oil and gas, they will just get it from places like Venezuela. I thought: 'Wow, this guy has had a light bulb moment'. To hear (his support for the tanker ban) two and a half months later is quite disappointing. Now a lot of this is federal jurisdiction, so while we want the feds to get out of the way, (it is different) on inter-provincial pipelines, because that is clearly federal jurisdiction. We know from Trans Mountain when B.C., if you recall, said: 'We will use every tool in the toolbox to stop this project'. And they did. But it wasn't their right. The feds can overturn the oil tanker ban. That's their jurisdiction. But what proponent really wants to step into a situation where a provincial government is going to use every tool in the toolbox to stop your project? It's obviously not bullish for investment to have this kind of political disagreement on the ground.'
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Ivison asked if the idea of a 'grand bargain' between Alberta and Ottawa on decarbonizing bitumen before it is transported to the West Coast by pipeline is a viable option.
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'It is feasible. The industry itself has proposed carbon capture and also using some solvents to reduce emissions. In the last 11 years, they have actually reduced carbon intensity emissions per barrel by 30 per cent. So they are doing the work. A lot of the carbon comes from natural gas input to heat the bitumen. That's an expense. There's every reason why they would rather not have to pay that kind of money.
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'Right now, the oil sands, on a life cycle basis, is only about 1-3 per cent higher emissions than the global average barrel, the average crude. But if we did this carbon capture, if we did some of the solvent innovations that they're using, it would actually be below the global average on a life cycle basis. So there is a grand bargain to be had. The industry itself has been advocating it. We're very competitive on an economic basis. We want to be competitive on a carbon basis.
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'What Danielle Smith is saying is: 'Where's the money going to come from to spend probably $20 billion on these (carbon capture) technologies? If you know you're going to get another pipeline and you can increase your production and fill it with a million barrels a day, well, now there's more revenue coming in and there's a justification. (But) if all your profits have to be driven into carbon capture, you're just not going to get any investment. All of this is cost, none of this is profit and they still have to have a certain level of return from the investors or the investors will just take off.'
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Moving east across Canada,, Exner-Pirot has been skeptical about Arctic ports being commercially viable. She noted that the feds and the province of Manitoba have spent more than half a billion dollars on the port of Churchill and it's still not attracting shippers and investors, while the Northwest Territories is trying to push the idea of an 'Arctic Security Corridor' that runs between Alberta and Gray's Bay in Nunavut, via Yellowknife. Both ports are impacted by a short shipping season because of sea ice.
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'It's a terrible idea for oil and a very bad idea for liquefied natural gas,' she said. 'You will never get a return on your investment. We do want northern development. We do want those regions to prosper at a local level. (But) this is not the thing that's going to grow our GDP. This is not the thing that's going to help Canada diversify its exports away.
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'A port in Churchill and a port in Gray's Bay can be useful for helping local mining development happen. That's important for jobs, for taxes, for royalties, for those communities' economic health. So there's a reason it's a public good to provide some basic infrastructure, basic transportation access for the people that live there.
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Critical minerals are a very different thing from oil. You can mine, you can produce all year and stockpile it, and then in that short shipping season you can ship it out. It's not very expensive just to have it sitting there while the shipping season is closed.'
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Exner-Pirot said the signs are positive that Canada will finally get its act together and overcome the barriers to economic development because the alternative is stagnation.
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'If we return to our complacency after what we've seen and what we've gone through, then God help this country. The conversation right now, again, is focusing on a few projects. I'll be tolerant of this, maybe for a handful of projects and for a handful of months. But (we must) improve our regulatory systems, especially at the federal level. That is where we need to see movement. You can't bring in new people at the rate we bring in new people, and you can't be dependent on China at the rate that we're dependent on China. That cannot keep going on,' she said.
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