Nuanced. - 269. DEBATE: Climate Regulation vs. Economic Growth

Episode Date: September 10, 2026

Energy experts Heather Exner-Pirot and Mark Jaccard join the first-ever Nuanced Debate to examine Canadian climate policy, pipelines, carbon pricing, nuclear power, affordability, energy security, adaptation and whether markets or regulation can meaningfully reduce emissions with host Aaron Pete.Heather Exner-Pirot is Director of Energy, Natural Resources and Environment at the Macdonald-Laurier Institute and a Special Advisor to the Business Council of Canada. Her work examines Canadian energy, natural-resource development, Arctic policy and Indigenous economic participation.Mark Jaccard is a Distinguished Professor in Simon Fraser University’s School of Resource and Environmental Management and Chair and CEO of the British Columbia Utilities Commission. An energy economist with more than 30 years of experience, he has researched and advised governments on climate policy, carbon pricing, energy regulation and emissions reduction.Send us Fan MailSupport the shownuancedmedia.ca

This is our first ever nuanced debate. How do you understand Canada's energy and climate challenge? And what has Canada gotten right? And what has Canada gotten wrong from your perspective? It costs money to save the planet. It's not free. Sustainability is looking in hindsight a little bit like it was a luxury. That it was something you could focus on when all the rest of your economy was doing well,

when there was surplus, when there was low inflation. Forcing people to choose more expensive, more difficult. energy is not going to work overall for the long term. So there should be a disclaimer. When you're speaking like that, that it's three to four degrees Celsius, you still didn't give me a policy. I asked you to give me a policy that would reduce emissions. And what you've really told me is that you would not do a policy to reduce emissions.

Your disclaimer should come with something that says, we want to reduce fossil fuels. And it'll come at the expense of industrial activity and energy security and a couple billion people. You know, you cannot have... You keep saying that I want to reduce fossil fuels. I want to reduce emissions because scientists have told us how devastating that will be for people not just in the developing world who will really get impacted by it, but by people in our world as well. And we're seeing it all the time now. What if you're wrong? What are the consequences from your perspective? Thank you so much for being willing to join us today. It's a privilege to have you both on the show.

I'm wondering if we can have each of you provide a brief introduction of yourself, and we'll start with you, Heather. Sure. So, yes, my name's Heather Exner-Pro. I'm the director of energy, natural resources, and environment at the McDonnelly Institute, which is a think tank based in Ottawa, although I'm based in Calgary, and also a special advisor to the Business Council of Canada. And I'm proudly from Saskatchewan, where I fell in love with potash and uranium,

and that's how come I became such a nerd with resources. Tremendous. Dr. Jacard, would you mind introducing yourself? Yes. I'm Mark Jackard. I'm a professor, a distinguished professor at Simon Fraser University. I'm an economist, energy economist in the School of Resource and Environmental Management. But I'm currently, I'm still running a lab at the university, but I'm also chair and CEO of the British Columbia Utilities Commission for the last three years, which regulates energy utilities.

mostly BC hydro and forest gas. Tremendous. Well, this is our first ever nuanced debate, so we're very excited to get into this. We'll start with you, Heather. How do you understand Canada's energy and climate challenge? And what has Canada gotten right? And what has Canada gotten wrong from your perspective? Yeah, a trillion dollar question there, Aaron. So I obviously believe that climate change is real. And you see the impacts. And I've also studied the Arctic a lot. And, you know, though they face the impacts early. It's affected infrastructure, all those things. So it's showing our climate change denier. But I, you know, really came from, from a perspective of

development, human development. I always like to say, you know, back in the 90s, if you were my age, you went into international studies and international development instead of climate change. If you're, you know, a bit of a polyana. And I see energy is so critical, energy and resources is so critical to human well-being and to getting, you know, billions of people out of poverty and having a satisfactory quality of life. And that's Aaron how I got into indigenous industry relations also is just seeing the way that resource development, energy development could really help indigenous communities get more self-determination. So I do come from the perspective that energy and resources are a key strategic tool for Canada. we're very lucky to have that competitiveness to have affordable abundant energy. And it's obviously very helpful for a foreign policy and obviously very helpful.

You know, kind of so we navigate these geopolitical times. So although, you know, we do produce a lot of fossil fuels, the world consumes a lot of fossil fuels. I don't think they would consume less if can or produce less. And I think we should, I think it's very important that a good democratic country produces satisfactory fossil fuels and we don't just leave it to authoritarian countries of the world. Mark, how do you understand the problem and where would your approach differ? Maybe we'll find out if it differs further down the road here, but I didn't hear a lot to disagree with from Heather right there.

I think the way I would approach your opening, though, in my own case, is to emphasize the frustration I've had in working in this file for 30 odd years more than that, is trying to get people to hold two thoughts in their mind at the same time. It's kind of like walking and chew gum at the same time. One, fossil fuels are cheap, and they have brought enormous benefits to humanity. And I say that over and over again. I've written books about that. This is the future of fossil fuels. And on the other, as Heather said, we have to stop emitting greenhouse gases. And we're going way too slow on that. And that's why we're getting all the environmental effects we are now. And it's going to get a lot worse. This is what scientists told me 30 years ago. Everything is happening ding, ding, ding, just as they said it would. And so for me, the question is, can we get industrial leaders, politicians, people from think tanks to be able to do both things at the same time? In other words, when you tell me that Canada should expand fossil fuel production.

And I tend to don't see anything wrong with that, actually, because I agree with Heather's last point, that it's about consumption and the emission. It's not about who produces the fossil fuels. They'll be produced somewhere. But if we can get, you know, business leaders and I have some good examples and political leaders who can do both things, who can say, I've got a plan where we're actually making serious,

is greenhouse gas reductions, doing stuff that other countries have done, while at the same time, not having to demonize fossil fuels. And so I'm always looking for somebody that is working on that sweet spot. And, you know, we can talk more about that. I have corporate leaders that I look up to, someone named Susanna Pierce that I've been up with a fair bit. It was at Shell Canada. Her and I've done a lot of stuff together.

I'm trying to find, but too often I'll hear someone like Pierre Puellev say, I'm going to get rid of this climate policy and that climate policy and that climate policy. And then you ask him, well, so what happens to our emissions and how do we contribute to this global challenge? And he doesn't have an answer. He'll say technology, like some, but technology doesn't happen. When fossil fuels are so cheap, the low emission technology just won't happen. I'll stop there. But anyway, that, hopefully that gives you a gist of this, these two conflicting things that I try to, I feel like I'm caught in the middle. Environmentalists don't like me because I tell them about the wonders of fossil fuels.

And then it's really hard to get politicians. Well, there are politicians who have really tried to do good things and I've helped them as well. Heather, do you have any reflections on that? When I just think about the circumstances we're in, they are placed at odds with each other, the idea that we can go towards a green economy. I see a lot of conservatives rolling their eyes when they hear about environmentalism and trying to act in the best interest of the environment because they're so focused on the real conditions of human beings.

What are your thoughts on what Mark just shared? Yeah, well, I think it's very unfortunate that climate change became so ideological, that people on the right, you know, felt that it was in opposition to their interests and kind of dismissed the whole thing and lost trust in all of the science because maybe there was a portion of it that maybe was alarmist. And so you see that it's become kind of a pendulum and a very polarized idea. And I think 30 years ago, I mean, and still today, like most people want a healthy environment. Most, you know, people to the right, you know, for me in Alberta are hunters or have ranches or farmers. My cousins are farmers. They have to care deeply about the environment because that directly impacts our livelihood. And so I don't think people on the right, I don't think conservatives are against the environment. I think they think the climate change. issue was blown up, was maybe became an agenda and have lost faith in the policies that went behind it. And I will say there is some justification to that. That, you know, when we talk about

the shudor government and liberals and the policies they put forward, that there were some policies that were very expensive that didn't seem to have much impact on emissions. And that some people didn't seem to care about the impact on emissions. They cared more about stopping fossil fuels or capitalism or things like that. So I think at some point, point, it did lose an evidence base. I think also that, you know, in some cases we've pushed, the goal has just been to have more renewables, not even to necessarily reduce emissions. Like, so the goals have been, I think, you know, separated, I think, from our overall goals or just wanting to see Canadian emissions go down and not caring about the context of global

emissions. So I think everyone could look back and say there had been some mistakes in policy and you did lose some of the public along the way. And there needs to be recalibration of finding that made me more middle, more pragmatic path. And I had to say, I think Carney is on that path of, of, you know, it wasn't just true that every green policy was going to create more jobs and more growth and that every energy, you know, fossil field policy was going to be more expensive and was going to be a stranded asset. And people were told that. And so I think they're skeptical about what they're being told on everything. Dr. Jakart, I'm just curious, do you agree that perhaps there were excesses from the liberal government in regards to some of their steps on environmental policy?

I'm not sure. I mean, I do agree with much of what Heather said. I guess what I was hoping Heather would do is talk also about the delusion on the other side. I've had, I mean, I've been on panels 30 years ago or 20 years ago when auto industry executives told me that Elon Musk was a nut, you know, and that the, we could never have electric vehicles. And this would be unaffordable for everyone. Like it's, it couldn't be a mass product. I, similar, I remember even when Denmark said, you know what, it's going to cost a bit, but we're going to stop burning coal. They were an 80%, 85% coal generation electricity system. And they

they switched off completely over a 25-year period. And it had costs. And now today someone say to me, well, we can't do anything in electricity because we'll make it unaffordable. Well, the average price in Canada, Alberta, Ontario, a little higher, but the average price is around 14, 15 cents. And in places per kilowatt hour, in place like British Columbia, lower than that, Denmark is now 40 cents a kilowatt hour.

And yet the Danes don't say that electricity is unaffordable because they made sure they took care of the lower income people. And people like me and Heather could afford 40 cent electricity. Now, I'm wondering a bit here because if I go back to what were the things that the Trudeau government tried to do? They tried to have a rising carbon tax, which is what economists and business leaders told them to do, that that's the most economically efficient way to reduce greenhouse gas emissions. Wasn't going up too fast. Were there enough other mechanisms? Perhaps that's true. I mean, I did a lot of economic analysis, not necessarily. You know, the carbon tax actually made lower income people better off almost entirely. But then there were the other policies, some of which I would are, yeah, I would be willing to agree some of them were not as economically efficient or went too fast. But a lot of them were things like flex regs, and maybe we can talk about that later. But they are ways where you can make it so that the vehicle stock is switching towards low emission.

And so they put in that the car regulation. There were some problems with it. It didn't need to go to 100% zero emission by 2035. And I argued against that. But actually a policy like that causes auto sellers to cross-subsidize lower-income auto buyers with higher prices on higher, on more expensive cars. So there's a whole bunch of elements and then similar things with the electricity policy. You know, a lot of people were upset about the electricity policy. And I was involved in simulations both with independent people at the university and also

examining government's analysis. And in fact, in Alberta, Blake Schaefer and Andrew Leach looked at this and said, actually the electricity policy of the Trudeau government, you know, would have the following effect in Alberta, and it was really quite small. And our carbon pricing in the industrial sector, which is the other big thing that the Trudeau government brought in, the Canadian Climate Institute, in fact, I've seen so many independent people, including ones that I know or have trained, who've shown that the cost per barrel of oil thus far of the carbon price in industry, what do they call it a tin bid? It's a very cheap price per barrel. So there's been a lot of exaggeration about those policies, in my view. So I'll jump in here.

Heather, dive in. And back and forth is good. And some of it I agree with. But you made the point that Denmark, you know, their electricity is basically triple the cost of electricity in Canada. And they just accepted it and took care of affordability and all those things. For me, I'm looking at. Europe and their competitiveness, you know, on industrial level. And it's absolutely true that high

energy costs has meant that they've had to offshore a lot of their manufacturing, that China has taken a lot of that portion. It's been very damaging for Germany, which put in billions, you know, tens of billions of dollars into solar. And now you have Europe in a place where they are stagnant, where they don't have the same, you know, foreign policy influence as they had, where they are dependent on China for many of these things. They don't have. the same defense industrial base because an industrial base is a defense industrial base. And so you can see looking at things holistically that emissions and having emissions as your only or your main goal in a society is very narrow and that there are other goals and other,

you know, objectives that societies need to have, that states need to have. And we lost the plot on some of that. And now we're paying some of the price. And you saw it in Canada too. There's a lot of reasons we had a lost decade. But a lot of it is that so much of our money and our investment and our focus went into just trying to reduce emissions and it did not go into being competitive or having a suitable, you know, defense sector and all these other things. And there's many ways where we just lost money, EVs, you know, again, you know, putting all the government, you know, call of our eggs in the basket into EVs and that far exceeded the pace at which Canadians actually wanted to buy EVs, far exceeded the pace for which there was a market.

And just people did not buy into that as much. on the Canadian electricity regulations. You mentioned the electricity regulations. That prevented Alberta from joining into this data center boom until Carney removed the CR and said we could have natural gas generation again only a few months ago. That is the thing that is driving American GDP the most. That accounted for the most capital expenditure for any sector in the world last year. And Canada largely messed out on that until now because we had these regulations.

So there are these other impacts, you know, that trickle down, made us less competitive in the oil sector for sure. And now you see the benefits of unwinding and going back to a more pragmatic approach. You're seeing those in the numbers already. If I could just come back. Actually, their income went higher than ours per capita over that 30-year period. They're wealthier than we are per capita while their emissions plummeted. And they're the lowest, the poorest people in their country are doing way better than ours.

And industrially, they're doing way better. So I just wanted to be careful with that example. So Heather and Aaron, I don't want us to plant you. But I would love to ask Heather. You've talked about, you know, if you try to reduce greenhouse gas emissions, there are costs. And I agree with you. And so now you have this problem, though, we have. So one of the big lines is we shouldn't do anything because of the rest of the world.

So remember, the two big problems with the climate threat are, A, we have no global government. So individual countries are going to have to do things like I just gave Denmark example. And also, though, the Europeans trying to put a tax on imports, carbon emissions. What I'd like to know is what Heather would do. Like, what would you do to reduce greenhouse gases at a reasonable time where British Columbia won't burn up or Fort McMurray or wherever? Because we'd have to go pretty fast. I just don't know. I don't know why I don't hear.

people like yourself, and maybe I haven't been listening, talking about the specific policies you support. So you didn't like the Chernow policies. What would you have done? Well, I mean, I do have some ideas, but let me say, first of all, and I'm sure you'll agree, there's nothing Canada could do that would not have, you know, more wildfires in Canada, that those emissions are largely coming from outside of our borders and there's not much we can do. So then you think, well, what can we do? What goes beyond? It's a global problem. Every country can say that. Our emissions are higher per capita than the Chinese. They're almost double. So the Chinese are actually spending way more than we are per capita to get their emissions down.

So you need action by individual countries. And every country, Lichtenstein, can say, we can't do anything until Canada acts. Canada can say we don't do anything until China acts. What would Canada do? Well, we were all acting. So we did act under Trudeau. You just described it all. You just described how Europe has acted. You had just described how much money China has put into it. and yet we are still increasing fossil fuel production. So despite all those costs that we absorb, that was not enough. I'll say, so for me, a little bit pragmatically, I just think people will not stop burning fossil fuels. People, humans and human civilizations use as much energy as they can afford.

That is the path for literally thousands of years. And until our population plateaus, which it will, by the way, we will start having less humans in a couple of decades. that I think may be the point at which our energy use starts to go down. But for me, the answer is nuclear and Canada can play an immense role in nuclear. And you could see a future in 50 or 80 years where nuclear is much more cost, competitive with fossil fuels and it provides the baseload energy. And people adopt it simply because it's a better source of energy. And so I think it's an uphill battle to compete with fossil fuels, you know, on the merits.

And if you don't find something that's just better, that's just a better source of energy, I just don't think you will get to where you want to go. So forcing people to choose more expensive, more difficult energy is not going to work overall for the long term. So there should be a disclaimer. When you're speaking like that, that it's three to four degrees Celsius is what you're talking about. You're saying wait until, I don't know, we run out of fossil fuels or nuclear plants are so cheap that we, they still doesn't solve the car problem and all the other industry problems. But the disclaimer for what you're saying, you're not going to get, you still didn't give me a policy.

I asked you to give me a policy that would reduce emissions. And what you've really told me is that you would not do a policy to reduce emissions. So it's good that you should come with something that says, we want to reduce fossil fuels. And it'll come at the expense of industrial activity and energy security and a couple billion people. You know, you cannot have. You keep saying that I want to reduce fossil fuels. I want to reduce emissions because scientists have told us how devastating that will be for people not just in the developing world who will really get impacted by it, but by people in our world as well. And we're seeing it all the time now.

So you just don't have a policy that you would implement. If you were advising, I advised Aaron O'Toole. I advised Erno Toul as he prepared for an election. And so I helped him put together, holding a carbon tax at $50. We designed it with a flex reg for electricity and a flex rig for vehicles and kept an industrial carbon price. So this was a politician on the right of center who said, no, no, no, I really do have to do something.

And there are a lot of politicians like that, both in Canada and the United States, but certainly elsewhere in the world. But you wouldn't put any... You won't name me a policy. Well, I would name several. But I think... My criticism of the left is that they have been more concerned about seeing to be doing something and not on actually reducing emissions.

And so we've spent a lot of money and time into things that haven't reduced emissions, but it made people feel as though they're on the good side. And I just, you know, and I don't think that's working. I think we have to go back and say, what has actually worked? to reduce emissions. Eric, Mark, Mark, I'm going to jump in here. No worries. I'm going to jump in here and say, Mark, like, one of the issues I guess I would have

with the claim that, like, we just need a policy to fix all of this is there was no policy to switch from burning wood to burning something that's more accessible. Like, and moving that forward, we didn't have to implement a policy. Innovations happened that we accepted into the market that had us. move in a certain direction. And so I think when Heather's saying, hey, let's move towards nuclear, you can put in policies that, like, she's not

getting specific as to name, like, I would therefore incentivize through tax credits to see more nuclear pulling, but like that would be a policy, endorsing people to take on nuclear instead of moving towards more oil and gas and stuff like that. Do you understand, like, the underlying

argument is to stop just focusing on doing more solar and more wind and saying, hey, nuclear is something that doesn't burn as much emissions, it's more stable, and that is a proposed pillar. And I understand what you're saying. The Trudeau government came out with a ton of different policies. I mean, one I would put to you is the Green Slesh Fund. The Canadians were furious about as a policy that did not work, that had a lot of corruption tied to it, a lot of questions from the auditor general. And so I'd just be curious from your perspective, you didn't really acknowledge, I think, some of the challenges with the Trudeau. era policies. And so I'm just wondering, is that at least one that you could say, hey, that was

very unpopular and abused? So I don't have specifics on the policy you're talking about. Governments do give subsidies. There were a lot of subsidies. And I guess if you're talking nuclear, you're talking subsidies because it would be cheaper to burn fossil fuels than to put in a nuclear plant. So, but when you're saying, what are we, I still haven't heard a policy here. If, if you're talking subsidies is the only policy, it is really hard to stop burning fossil fuels. And remember, I'm not saying stop using fossil fuels. I'm saying stop emitting CO2 from fossil fuels. If you're going to do that, you probably have to have a regulation or prices. An economist will tell you put in prices. That's why we had the Ecofiscal Commission. But there are ways to do

regulations that are actually quite flexible and cheaper. But I'm not here to defend. But I'm not here to defend the Trudeau policies because the other thing is, yes, politicians can be guilty of a lot of bibles and stuff and throwing around money that doesn't really reduce emissions. Wherever I've been asked for my advice by politicians on climate policy, I've said, you've got to basically forget the subsidies. Subsidies cannot overcome the fantastic benefits of fossil fuels. And this are the kind of areas where Heather and I would agree, I don't, like renewables, are still very expensive. And you can't just compare, you know, wind and solar on a kilowatt hour basis with a natural gas plant because one of them is dependable and one of them's not.

And it's a huge difference in value. But I guess you guys are sort of linking into technology. And I'm saying, if people ask me, are you pro-nuclear against? I'll say, I'm in favor of any technology that gets emissions down. And it all depends on where in the world. So nuclear makes a lot of sense in a lot of places on the world, including Canada. Nuclear might not make sense in some places. I don't know.

In fact, I can think of places where I don't think I would do nuclear or allow nuclear. And wind and solar, they are subsidized because they're not paying their share for capacity, for reliability. But they are quite cheap if you want to get a lot of energy. So it could be that we'll use a lot of wind and solar. We're seeing jurisdictions that are doing that and figuring out how to get the capacity that matches to that. But it's not cheap. It's certainly not cheap. And I guess so, Aaron, I would ask you as well, how would you get emissions down?

I have no position, but I would ask, I would put the question back to you. What are your thoughts on the policies that are going to have the most benefit to our environment while also balancing the fact? One of my personal big concerns is that often when we've looked at these policies, to your point about the carbon tax, is often these policies hurt people in low-income situations, particularly people in poverty. I understand that the carbon tax is one example where it's argued that that did have real benefits for low-income people. Our tax policy, more broadly, I think, does try and serve low-income people,

but not to the extent where we're actually seeing them rise out of poverty. It just allows their poverty, in my opinion, to be manageable. And so I'm just wondering, this is obviously a critique you hear a lot from conservatives, is that how do we balance people living in poverty with some of these climate-oriented goals? What are the policies you think that I don't want to be unfair to you and tie you to the Trudeau government. You have no like a direct affiliation with them. So what policies are we missing out on? Which ones would you like to see?

Right. So I've written a lot about this. And I would only have four or five policies. And they're all called flex regs. And there's one in electricity and one in cars. And I've been talking about them already in this interview. and all the other policies is a lot of bump. It's about marketing and so on.

And I'm very clear on that. In this book here, it's like the chapter four, I'm being fun of carbon taxes a little bit because they politically won't last. And I just talk about the few key policies and where they're implemented around the world, where they've been successful, and what has been the effect on low-income people.

And Aaron, I did forget to properly answer your previous question is you were saying, why don't we just wait and humans will innovate their way out? And because I'm wondering, if both of you hold that view, externality is the idea that our market economy, there are some things that our market economy is not good at. And those are like an environmental negative externality. Humanity has had to implement regulations or pricing to reduce acid emissions,

to reduce the dirty dozen, to reduce, of chloral fluoracar, the ozone depleting substances. We've gone on and on with regulations. And so I just don't hear either of you saying, here's the regulation I would do, or here's the flexible regulation that has a lot of attributes that economists like, which I've worked on a lot, with countries, and they've been implemented.

They're implemented in Canada and British Columbia, but also in many European countries, the Chinese and now South American countries and now even some African countries. But all of these are to deal with externalities. And if you read, I mean, you guys are saying right and left politics. If you read Milton Friedman, capitalism and Friedman, or Friedrich Hayek, the road to surf them, I can give you the page references in both of those kinds of Bibles of free market economists.

And I'm a free market economist. They all talk about externality and how government has to act with regulations. So, I mean, I'm waiting for you guys to give me your greenhouse gas reducing regulations. I haven't had them yet. Mark, I'll just quickly clarify. I am just the moderator. I don't have a thoughtful position on any of this. I'll be sincere and say that I do feel like this has been completely politicized,

which is why I wanted to have the two of you on, is because you're both thinkers on this issue. There's areas of significant overlap, which I think a lot of conservatives are not on your guys' side about. And I'm hoping through this conversation, they can see that you can want the best for the environment, you want better for ecosystems, doesn't mean that you want a ton of taxes impacting everyday consumers in a lot of different

aspects of their life, which is what I feel like the discussion is devolved into, which is why I wanted you both to kind of lay out your perspectives. There was areas of agreement and areas of disagreement. But I sincerely am thinking this alongside you. I want to see Canada be a leader on all issues, set a positive example, while at the same time making sure that the policies don't make us less competitive and put us in a worse circumstance. But I don't, I don't exactly know what's working and what's not working, which is why we kind of started with what are your guys' perspectives on what's working and what's not working to ground the conversation. But Heather, you've heard Mark talk for a fair bit there. I'd like to give you the opportunity to respond

to some of the policies he thinks would be productive. Yeah. Again, and you made the great example, Aaron, of, you know, we moved from wood to oil, not because there was a policy or regulation, but because it was naturally, you know, the better thing. And you have seen some growth in solar and wind. And, you know, because it was just the cheaper thing. You know, in Texas, they wanted to have more electricity and solar and wind were the cheaper thing and people went there. And so for me, there's a lot of rolling the boulder up the hill on this and it's expensive and has affected competitiveness. And I think other things that are easy to do. And the one, you know, the one thing I think, Mark, that has probably worked better than anything else. the world was coal to gas switching, where you really, that was really the source of the significant emissions drops that you saw in the United States in Europe, you know, since around, you know, 1992. And so helping, you know, doing more of that. It's something that's pretty seamless, pretty easy to do, not painful, doesn't affect competitiveness, you know, doing things like that. And I think you probably do, you know, coal to nuclear. And again, for me, how do you know,

certainly there's investments in R&D you could do, maybe some things. tax credits, I think you can finance nuclear, maybe not subsidize it, but just government financing through utilities. That's how it has always been done. That's how nuclear and hydro, for that matter, I have both, you know, kind of proliferated.

But, but I guess, you know, fundamentally, philosophically, the idea that there's a regulation or a policy, you know, that that's, you know, the goal is to find that regulation is not how, not how I think about this.

Mark, what are you? Just to say that coal the gas happened because of market forces. There were no policy. I mean, there was very little of inequality. Exactly. Yeah. And so market forces, though, can destroy things. And so you do, and so I guess, fine.

You just, you, I don't know what you thought about acid rain. That was done with regulations. And you would be against those regulations, too, I presume, like any externality regulation? No, no, I mean, I guess this problem is so wicked that there's no regulation. is going to make people stop using fossil fuels. And I guess you appreciate this. Our civilization, our industrial civilization has developed because of fossil fuels, because of coal, and then because of oil. And you cannot have industrial agriculture and you cannot have globalization and you cannot have global trade without those things. And so there are certainly

costs from fossil fuels. There are certainly benefits. And I would say the cost benefit for getting, you know, for regulating on acid rain was very clear and it was a low cost. And it was easy to coordinate and we did it. And I think on climate change, we can all agree it's a far more wicked problem because the cost and the benefits are, you know, the balance is far trickier to achieve. You just said stop using fossil fuels. I feel like I'm in a conversation where my words. Okay. So you want to figure out these two.

I have to tell you, you're talking points on, I'm arguing we should stop using fossil fuels. I'm not. I'm saying we should stop polluting our nest. And we've done that with other things. And so your line is we're going to use fossil fuels and burn them. And the environmental effect of that we shouldn't act on, even though we did when we were burning fossil fuels and causing acid rain. And when we were burning fossil fuels and caused local smog, I would just say, let's act on greenhouse gas emissions as well. But you're against that.

No, I haven't said that I'm against it. I've said that the cost benefit. And the argument that we can use fossil fuels, we just can't burn them, I guess for me, I don't see what the difference is. Obviously, the energy benefit from using fossil fuels is largely from burning them. So I would like to just follow up and say, I think, Mark, you are asking a fundamental question. When does government intervene? When, Heather, would you be comfortable seeing the government start to take some sort of

action. And the other one that I can think of on top of acid rain is around the ozone layer. And when we saw that there was an impact happening to the ozone layer, the world came together. We addressed aerosols. We worked collaboratively. We fixed the problem. And we really proved to the world that we could see a problem and fix a problem together by responding in unison. And I think, correct me if I'm wrong, Mark, your perspective is, why can't we do that with these issues? It gets into the politics of certain policies like the carbon tax, but it sounds like, Mark, you're saying that this policy has so much kind of weight on it that it can't continue in its current form because it's not landing with the public. So when that happens, you would just be okay with

adapting. Am I understanding that correctly? No, I wouldn't be okay with adapting because I think it'll be horrendous. But I want to just, thanks, Aaron, that was really clear. But this is where I would be similar to Heather, I think. I'll speak for her and then she can correct me. I do see that the ozone-depleting substances was a way-easier problem to solve, because as Heather has said since the beginning of this talk, fossil fuels have been fundamental to humanity in improving the lives of people. Our well-being today is so much greater because of fossil fuels. And now we have a problem is that if we burn them openly, instead of capturing the carbon or converting the fossil fuels into something while we extract the carbon,

which we're already technically able to do. And it makes, it'll make our, well, in that one book I did it, it makes our energy system two to five to 10 percent more expensive than otherwise is. And we can look at that like by looking at Danish electricity and looking at Norway today, which is a fossil fuel exporter. So, Aaron, my point is that, I would, you know, it would be nice if fossil fuels could be solved in the same way that ozone depleting substances could, but it isn't. So the bigger problem is we have no global government

and fossil fuels are fantastic to burn them. They'll, they'll be cheaper than nuclear power for, in my opinion, for 100 years. And so we have a, we have a challenge. And I'm just trying to call people out and say, are you willing, are you willing to implement some policies that would move us away from emissions. And maybe we'll keep using fossil fuels. Maybe we'll switch to other things. There is a lot of transition going on on this planet right now. I'll pick a fossil fuel exporting country like Norway.

In the 80s, they discovered, in the 70s, they discovered all this natural gas and they were going to convert their buildings to being heated by natural gas. And they decided not to because they don't, just in the late 80s, they already started to hear about the fossil fuel concern. And I've kind of tracked that through colleagues and people that I knew in Norway, and I advised them quite a long time ago. And then they did the same thing in electricity generation. They could have generated a lot of electricity with natural gas.

And they don't. They have one refinery, the monk refinery, that uses a little bit of natural gas. But they could be making, I mean, they make a lot of electricity from hydro, but they've had to have a lot of growth in their generation. And natural gas would have been dead cheap for them. And they had big debates about it and decided, not to for planetary reasons. And now with vehicles, people told them when you can't switch away from vehicles, how can you go to electric vehicles? And they said, and they put in policies.

And the policies were some regulations, some pricing, road pricing, taxation on vehicles, and some subsidies. And they've done that as well. And all I'm saying, Aaron, is that we already have people around who are acting on us. So it's a bit rich when somebody says, oh, we can't have this policy or that policy in Canada. And the Trudeau government was trying to implement some of these. Was it doing all the right stuff? I'll agree with that. But I think if we go on a rant about it, you'd kind of have to ask yourself what policies you would do instead.

Heather, what are your reflections on that? Yeah. I'm going to go to a pipeline question after this. Perfect. I'll just say with Norway, you know, the reason they could subsidize EVs so much is because they had so much income from fossil fuels. And I don't think that is replicable. I think it's, you know, admirable, it's not wreckable. The far better option, the way that we are electrifying transportation to a far greater extent is with China having a cheap EV.

And it's just cheaper for some, you know, for some consumers to just have EVs, not having to subsidize a third of it. But basically just having, you know, again, the market doing its thing, people freely choosing. So for me, when you say, you know, what policies would you do? I mean, there's a few policies. I'm even not opposed to a carbon tax. I'm in favor of the industrial carbon price in Alberta. I just think probably $60 is as high as it can go before Easter, getting less globally competitive. The tier programs work pretty well in Alberta.

But I'm saying for the 8 billion people in the world, what's only going to work are our market solutions where people just naturally choose the lower remitting product. I do want to move forward on this. Mark, do you feel the need to respond to that? No. No. Oh, that line for Norway, like they used all the money they have from their oil to do that. Well, we can do some of that. But also, that's why I used Denmark as the earlier example. They were, by the time they were reducing emissions, they really weren't using any of the bits of money they made from gas in the North Sea. So, and then there are a lot of other countries that are examples. But anyway, no, please go ahead. So in my view, the world has changed quite a bit since those Trudeau era policy. particularly with the war in Iran. And there seems to be a change within the liberal government now under Prime Minister Mark Carney to say, hey, we have to be realistic. He wrote the book values very much outlining the need to take climate action and then has said, hey, you know what?

We need to be realistic about where we are and what our country does. And so, Mark, I'd like to start with you. What are your thoughts on this transition? And should Canada build the proposed pipeline? So here's where I might wreck your show, because I'm, I think I'm going to say stuff that Heather will agree with. But, and so apologies in advance. So I am an energy economist.

And so I really try not to have all this as one ideological blinders on this or that. I don't follow left or right, environmentalist or industry. I try to see what are the sort of, in my field, and I'm on several the, some of the major journals, editorial boards and so on. I see a lot of research. And what do we know about energy markets? Well, we know that they equilibrate globally now. So you can't sort of say, oh, there's a North American natural gas market or just a, you know, a regional electricity.

Electricity, yes. But, you know, oil, coal, natural gas, these are global. So if one jurisdiction says, oh, we're not going to produce this anymore as a way of helping the planet get off fossil fuels, what the energy economist experts would say is, no, you'd have no effect. So in other words, stopping an oil pipeline in Canada or stopping a natural gas project in Canada for export, doesn't, won't reduce emissions globally because someone will produce it elsewhere. And then, of course, people add on and say, we're better than them, we're nicer, we're more

friendly allies, and we do it more cleanly and so on. on, fine, that's a justification. But basically, the argument that I hear from environmentalists, like a, you know, a fossil fuel moratorium that's supposed to stop supply projects, I just don't think that accords with reality. And so, and that's why I just pointed to Norway, because there's a fossil fuel-rich jurisdiction that still exports oil and gas, but it says domestically, then, why can't we be at least an example for other parts of the world and actually help to improve the costs of the low emission options by adopting that for our internal consumption? So, Aaron, I hope that wasn't too long-winded, but when it comes, I really separate the idea of global trade and therefore decisions about expansion of fossil fuel production in Canada. I separate that from the greenhouse gas argument that I've been making so far.

And I'll pass it over to Heather, who maybe will still find areas to disagree with me. I don't know. Yeah, well, I can jump in. And for me, I look at it often as a cyclical thing. That energy was very expensive, actually around 2008, between 2008 and 2014. And then it very got cheap because of what we call the shale revolution, hydraulic fracturing and horizontal drilling that unleashed a lot more oil and natural gas into the world. And that Shellm Revolution made energy cheap and it also lowered inflation. So you had very low

inflation. We all enjoyed that if you got mortgages at that time. And the world is able to grow quite quickly. Low, you know, low energy prices and low inflation is a really recipe for development. So why is Mark Carney changing his tune? Why is the public changes too? And why is, you know, Paris Agreement not driving every policy decision anymore is because the cycle change. And you first start to see it, I think, with COVID when supply chains got stretched. He certainly saw after Russia invaded Ukraine in particular when natural gas prices spiked. And energy security came to the top of the list again. Sustainability had been the priority, the policy priority for, I think, those seven years before that. And then it became energy security

and affordability. And now that has just, you know, entrenched even more with the Street of Hormuz, with Trump and the chaos and all those things. So it's just a cyclical thing. So it's just a cyclical thing for me where sustainability is looking in hindsight a little bit like it was a luxury, that it was something you could focus on when all the rest of your economy was doing well, when there was surplus, when there was low inflation. And now that the rubber is hitting the road again, security goes to the top of the list. And for Canada, it's obviously, you know, that oil has become a strength in our negotiations with the United States and with our ability to diversify trade with others. The reason why we're having better GDP, the reason why we're having better GDP, the reason

why we have a trade balance, I've had it for four months, is because primarily those oil exports. So it's just practical reality, and the pendulum has swung back. So, Heather, you're just describing for us reasons for shifts in opinion. I thought the question, so you mean you would have been against fossil fuel expansion when we were more focused on the climate? You would have opposed oil pipelines or natural gas. it seems to me those things would have, you know, if the mark, yes, we impeded them more, governments impeded them more with regulation and so on, but it seems to me that the point I was trying to make, yes, I know that my career is long enough that I've seen several

of these in terms of the interests in how much or how fast you expand fossil fuel production in some country or another. I used to make the point, as did people who influenced me that the Earth's crust is chocka block full of fossil fuels. And so you can get more of it all over the place and you can develop innovations that will do that. That's why it's such a risk for us to just sort of blindly not put in climate policies. But I mean, wouldn't you agree that stopping the Trans Mountain pipeline wouldn't have affected the amount of oil burnt on the planet if we did that 15 years ago, stopped it or 10 years. years ago stopped it. Well, I totally agree. It's just that, you know, producers would have made less profits and royalties would have been lower when, when oil was low. That's what happens when oil is low.

And you try to make yourself resilient to that. But no, I totally, I totally agree that Canada has not gained at all from stopping Northern Gateway or from, you know, proposing an emissions cap or putting on the industrial carbon price. But that, you know, other countries have gained market share as a result, the United States being, you know, top of that list. And that was, why the balance is so important. Where do you put your industrial carbon price? What environmental regulations do you have? What social license do you need? Because when oil is $60, then it's a fight. Then it's a hunger game to be still competitive, to still be able to produce, to not have to shut in. And Ken, unfortunately, for a long time, was at the top of the cost

curve. And we're trying to get that lower now. Mark, one of my questions for you is you seem very confident in your position and I appreciate that you're saying like, hey, I kind of look at how these things are playing out and recognize the curves and I'm sure you've experienced that over your career. But what is what is going on in our society from your perspective that there are these incredible ebbs and flows? Like in my community, in my indigenous culture, the idea that it would be controversial to put the planet first, to recognize that if we burn it all down, there's nowhere for us to live and we die as consequence of that. And I think those are some of the concerns that undergird your perspective. But why does it become so controversial from your perspective?

If the Trudeau policies weren't so bad, I'm not saying you are endorsing all of them, but if they're not so bad, why has it become such a, such, so politically unpopular for anybody right now to be advocating for the environment and for climate change and for these pieces? Yeah. Thanks for that question. It costs money. to save the planet. It's not free. And so humans, you know, you're going to, humans have a lot of challenges with stuff like that. And especially because what can I do as an individual. And then we say, what can I, what can we do as a country? Like, it's a global problem. So humans are going way too slow. And the reasons why, I mean, there are so many books written about this by good scholars. And so the

basic line is, in your own private life, like human voluntarism and choices in the marketplace, as maybe Heather was describing and yourself, aren't going to take care of a major externality like atmospheric climate-causing greenhouse gas emissions. And so people can say they care about, that's why when I do media stuff and the media will be always doing shows on somebody who's done something different, like they're not using plastic anymore or they're walking more. Like, people try to do something in their lives. And I understand that. And I sympathize with that. But you need so much more than that with an externality. So you just, you look at the history of acid rain. Look at the, you know, I taught, I taught most of my career in an interdisciplinary

school. I'm an economist, but it's called resource and environmental management. So we talk about, and we teach about and we study and we advise because we're a very applied school, where governments have had great success in environment. And I look to indigenous people as having been, you know, already having a mindset that's accepting of that. And to some extent also having a mindset to say there's things we have to do as a collectivity. Like it isn't just about individual choice in the marketplace.

We actually need to get together and make, you know, seems to be a dirty word here, but policies that, you know, that actually take care of the externality. And it's funny, I was wondering if we'd be talking about that. So that's why I brought, I brought my capitalism and freedom and the road to serfdom from Hayek. And the yellow stickies are where I'll read to you if you want, where they tell you you need regulations for environmental issues. Fascinating. Heather, on that note, and Mark, I do not want you to think that policy is a bad word here. It's an incredibly important one and I think you've grounded us in the importance of that. But Heather, I guess my question to you would be, what if you're wrong about this being a free

choice? What are the consequences for our planet for future generations if we leave this more towards market forces? I understand you're not saying only market forces, but if we leave this more towards market forces and you end up being incorrect in your final analysis and in 50 years we realize that Mark was correct and that we needed to, if we had to put in more policies, if we had have made it cost more to do some of these things and try and control emissions and really throw everything at the kitchen sink to address it. What if you're wrong? What are the consequences from your perspective? Well, I mean, I do think the world is warming up and I think that has many negative consequences for humans. And so I'm not blind to that. So I don't, but I guess I

am less alarmous. I guess I do have more faith in the ability of humans to adapt. And I think, but mostly I just don't think there are policies that are going to change this problem. Maybe in Canada or maybe in Denmark, maybe in Norway, but certainly not for the 8.5 billion people, certainly not for countries that don't have those same resources as us. It didn't work for those of us with resources. It wasn't enough to make us change our behaviors and there were costs to changing those behaviors. So I just don't see it trickling over to the six billion people that don't have that excess. So I think the world will get warmer, I guess is what I'm saying. I'm just realistic about that. I don't want it to get warmer, but it's clear to me that it will get warmer. And so I think

the obvious thing that governments and societies are doing now is adapting. And you're adapting with air conditioning and you're adapting with irrigation. You're adapting with, you know, genetic technologies that make plants more drought resistance. And we are producing more food than we've ever produced and we do have more humans than we've ever had. And overall, people's quality of life is still getting better. There's fewer poor people in general than there has been in the past. And so is there a tipping point, you know, where everything breaks down? I was thinking, you know, I go to Europe and I think it's a very pleasant place and I like it. But if you were to say 200 years ago, wow, there'll be no more forests, there'll be no more animals, there'll be no more

bears, you'll have no more biodiversity. You would think, wow, Europe is going to be a hellhole in this in this future in fact what it is today is a pretty pleasant place for humans to live in so maybe i'm just an optimist that's not the drummer no well with air conditioning it's not too bad i mean we like we like to go to phoenix for god's sake the phoenix has been made quite pleasant with air conditioning and irrigation so so so regardless of whether you want it to warm or not it's going to warm if you ask me and so how do we adapt uh and how we do you know the things that eight billion people can do to mitigate these frauds. not the things that one billion people can do.

Mark, your thoughts? Well, I mean, I think what the Chinese have done is there, let's say on the vehicle side, you know, it is, how do we generate electricity? And in buildings, in most of the planet, it's not about heat anyway. It's already, it's about air conditioning and electricity. And so it's not about burning fossil fuels. It could be fossil fuels, but you can burn other, you could, there's other ways to make electricity.

So much of the planet is going to get more electricity in their buildings. And so then the question will be, how do you make that electricity? And where the planet is, where people are going to move around in vehicles and then trucks, I think we can see the writing on the wall that humans and the Chinese, there was huge subsidies. But it's funny, I was in China last November and people are saying, well, they're making forced laborers, build electric cars. I was in a car plant and there's nobody there. It's all robots.

The Chagis are making very cheap cars and they're selling them around the planet. They're going to wipe out our auto industry because we didn't move fast enough towards electricity. And so there are good things that are happening because of policies. But I think I appreciate that Heather has been honest here. And I, you know, and just saying, I don't want to do policies that make anything more expensive than we have to help, you know, help poor people. And I don't think that'll work in the rest of the planet. And therefore, we should just adapt to two, three, four degree temperatures.

And it's good to know about that. Most humans, I don't think, will accept that position, but she's welcome to have that. Have there any comments on that? And then we'll just do closing statement. Again, I guess it's not what I want, you know. And I think that's the feeling that many people on the left in Canada have is if they just want policy enough, if they just want to change enough, that's enough. I guess I don't see any evidence that wanting policy to change this is having much difference. And so, yeah, I just think realistically adaptation is what's going to happen.

I don't see a decline in fossil fuel use, a decline in emissions in a meaningful way coming anytime soon. It is not the choice of the Indias, of the Chinas, of the Nigerias, of the Nigerias of the world. And so what do we do about that reality? For closing statements, I'm hoping that each of you can just share your takeaways, maybe the best argument you heard from the other. The goal, as I said, is this to be nuanced. And what I appreciated about both of your approaches is you sought agreement on some of the key issues. And I think that's important.

You guys disagreed vigorously on some aspects, but agreed on, I think, some key points. So if I can start with you, Heather, would you mind laying out kind of your reflections on this and your thoughts on Mark's arguments? Yeah, sure. I mean, there were quite a few things we agreed on, kind of just the factual, you know, basic things about economics, you know, about how energy economics work and what people choose. And so I think, you know, the area of disagreement is just on the power of policy to change, you know, some things. something so fundamental as our energy system. And whether you say I'm more optimistic or pessimistic, it depends on how you take it. But I think that's our difference is that I just don't think policy. I think we've shown that very expensive policy and efforts. And, you know, for 10 years

have not done that much to change it. And we need to think of a different tack. And it's not just what is the next tax or what is the regulation. Those things haven't done the job. And I think we need to be able more creative going forward. Mark. Yeah, I don't. So I, yeah, I think there's lots of what we do agree, actually. And I think where, and Heather, let you come back if you want. You've often said people on the left, people on the left.

And every time I hear you say that, I'm like, what? I can introduce you to lots of people on the right who will also say that there are, there are reasons to intervene in economies. Like it's not pure free market economy, let it go where it wants. And so there is lots happening towards an energy transition in which we burn less fossil fuels per capita and then totally. And as Heather said, in a planet where the population is probably going to, you know, stabilize and even start to decline. And so I am hopeful that humans can not make the planet to unload. livable in key areas.

And so I would still work towards that. And in working towards that, I would, you know, invite people to think about there are ways to do this that are fairly economically efficient. And I think, you know, Heather and I would agree, we got to really pay attention to economic efficiency. And I think there are ways where you can do it where it's affordable. And then you have to pay attention to the lower income people because both Heather and I, and I'm sure you, Aaron, could afford more, slightly more expensive.

electricity that was zero emission. So I guess my argument would just be I relished people that are free market economy types like me who do recognize externality and then try to see if we can solve a global problem. But I understand why Heather says, you know, if she's betting on it, like in this two things, ask me, what do I think humans will do? And I think it's, it's, it's, it's, it's very difficult. But what do I think we should try to do in our lives? And I think we should try because we have evidence where we have made some progress.

And so I want to encourage people like Heather to think about making those policies happening in Canada rather than just tearing away any climate policies. And I'm not saying she's trying to tear them away. But anyway. I think that's really important. I'll be humble and say, uh, this is the first nuance to do. debate we've hosted so far, hopefully the first of many. So I have a lot to learn about trying my best to moderate and make sure each of you have the time to speak and share your reflections.

But I took a lot away from this. I think one, knowing that there is areas of agreement, because I'll be honest, Mark, it feels like a lot of people are in Heather's court right now. It feels like that's where the culture is right now. And I understand what you're saying, which is that that shifts and moves and you don't have direct control over that. But it feels like a lot of people are feeling a little bit hopeless about this topic right now, that there is nothing we can do. The last time we did do something big was the ozone layer. There's just this felt sense that we tried and it didn't work and now we need to get back to business as usual. And so I really appreciate the energy you brought to this reminding people, hey, there are other

countries doing things. There are other countries putting their best foot forward and trying to make a difference and not making it political and seeing some results that we should be looking out for. Heather, I appreciate you bringing in like, hey, some of those examples. there are nuances to what they did that maybe we can't replicate perfectly. And Mark, I think your argument is why not? And maybe we do it differently in order to get to the same spot. And so I just really appreciate you both challenging each other. I think you brought the perfect balance and tone of challenging each other

and yet finding areas of agreements and pushing back against each other. So I took a lot away from this and was very grateful for the opportunity. Can you each, we'll start with you, Heather. Tell people where they can find your work, follow you on Twitter, wherever they can go to keep up to date with you. For sure, yes. So at McDonaldlorea.com, you can find our energy work. You can find my own individual work.

And, of course, I'm on X or Twitter as well at XnerPro. Mark. Can you just look for my name at Simon Fraser University? And we've got a blog up there and information and so on about the research group. And Aaron, I just want to say, I actually thought you did a great job as monitor. You kept us on the line of the topics. then you let us run. So I kudos to you on your job as a moderator.

I'm really excited about that. I'd love to come on again one day. I look forward to that. To be honest with you both, I think you both handled this extremely well. I have had, I've been trying to get this started for some time now, and the amount of people who do not want to debate their ideas with another person,

again, you guys didn't yell, scream, kick. This was not an episode of Pierce Morgan, but you guys still challenged each other. And I just find that finding people who are willing to do what you just did is really, really rare right now. So kudos to both of you for being willing to participate and bring that honest energy. Like, Mark, I could feel you being like this. I know I've got to get my thought in. And Heather, same with you. I could see you being like, I don't agree with you. And so I

just thought you guys both handled this, this format really well. And I'm just really grateful. Thanks so much, I appreciate it. Thanks.