Shaun Newman Podcast - #910 - Tammy Nemeth & Ron Wallace

Episode Date: September 10, 2025

Dr. Ron Wallace is a Canadian environmental scientist, regulator, and energy policy expert who served as a Permanent Member of the National Energy Board (NEB) from 2013 to 2016. With a background in environmental management and energy regulation, he has been a prominent voice in critiquing federal energy policies, particularly those impacting Canada’s oil and gas sector. Dr. Tammy Nemeth is a Canadian-born historian and strategic energy analyst based in Oxford, UK, specializing in energy policy, security, geopolitics, ESG challenges, and the global energy transition. With a PhD in history from the University of British Columbia, she has over a decade of experience in energy research, including a 13-year tenure as editor and book review editor for H-Net's H-Energy network. She runs ESG2 Insight, a consulting firm providing tailored analyses on emissions reporting, renewable energy feasibility, AI's energy demands, and hydrocarbon policies.To watch the Full Cornerstone Forum: https://open.substack.com/pub/shaunnewmanpodcastGet your voice heard: Text Shaun 587-217-8500Silver Gold Bull Links:Website: https://silvergoldbull.ca/Email: [e-mail] Grahame: [phone]Bow Valley Credit UnionBitcoin: www.bowvalleycu.com/en/personal/investing-wealth/bitcoin-gatewayEmail: [e-mail] Use the code “SNP” on all ordersProphet River Links:Website: store.prophetriver.com/Email: [e-mail] Money SummitWebsite: ExpatMoneySummit.com

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All right, let's get on that tale of the tape. Our first guest is an environmental scientist, regulator, an energy policy expert who served as a permanent member of the National Energy Board. second guest, a PhD in history, and a strategic energy analyst based out of the United Kingdom. I'm talking about Dr. Ron Wallace and Dr. Tammy Neymouth. So buckle up. Here we go. Welcome to the Sean Newman podcast. Today I'm joined by Ron Wallace and Tammy Neymouth. Folks, thanks for hopping on. Thanks for having us.

Thank you. Now, Tammy, I was just saying this before we started. You know, you were just on. We were talking about windmills and all the things going on in Saskatchewan. And then our conversation after that led to inquiring about having Ron on and Ron it being your first time. I just, long or short, however long you want to go, just for the audience. First time on the show, if you want to just tell the audience but about yourself. Well, I'm an environmental scientist by training. And that work took me into a lot of Arctic oil and gas regulatory activities in. my life and my career ended when I was appointed as a permanent member to the National Energy

Board from which I retired in 2016 and I've been working with wonderful people like Tammy and others writing on energy policy over the last few years. I'm I currently sit on a number of regulatory indigenous regulatory boards up in the Arctic and I'm a fellow of the Canada West Foundation and of the Global Affairs Institute. When we get to where we're at today with this carbon borders idea, and is it CBAM? Yeah, it's CBAM, right? Correct? Yeah.

Yep. Feel free. I should have told this before we hopped on, but it doesn't always got to come back to me. You two are the people that have been writing about this and talking about it. So don't feel like I got to be the one asked the questions. If Ron says something or vice versa, Tammy says something, you want to hop in on. Feel free to hop in. Tammy or Ron, walk me through this.

I've been trying to wrap my brain around and I read your guys' article. I feel like I kind of understand, but I'm kind of a dummy. So just walk us through carbon border idea and what it's trying to do. And then the ramifications, if this gets all implemented. Go, Tammy. Okay. So the carbon border at just, mechanism, the sort of rationale for it is technically to prevent what they call carbon leakage.

And that is where companies relocate their production to countries that don't have large carbon pricing or maybe they don't have any carbon pricing at all in order to avoid the quite expensive EU emissions taxes under the EU's emissions trading system. So it essentially imposes a tax. It or a tariff, you can call it a non-tariff barrier, on imports that's based on embedded emissions. And right now, it's for high-emission sectors like aluminum, steel, cement, hydrogen, electricity, and fertilizers. And basically, the EU is trying to ensure

that if an EU company wants to import these things rather than manufacture them or produce them in the EU, it has to pay the same kind of carbon emissions pricing that products made or produced in the EU have to pay. So it's basically a form of protectionism disguised as environmentalism. And I say that because it doesn't really care about broader regulatory efforts to care for the environment. the only thing that the CBAM cares about is what a country is paying or a company is paying in a carbon tax.

So if I probably oversimplify this, but when you mention the word carbon leakage, basically they're imposing a carbon tax on producing industries in the EU. And so companies going, oh man, that's going to be really tough to afford all these different things. we just ship it across to wherever. It doesn't matter where. And we get away from that carbon tax. And now our price of maintaining said product stays relatively the same. I mean, obviously there would be different costs and moving it out of country.

And so the EU's thought processes then to impose a carbon tariff that if a company does that, that they're basically paying the same if they just kept it in country. Yes. and it doesn't matter if so let's say that's to prevent companies from exiting the EU but the impact is on any country that wants to export its products or commodities to the EU so it would force other countries to adopt the same carbon emissions pricing that the EU has even if like they're producing more for other export markets It basically forces what our conversation with the fellows at the Canadian Global Affairs Institute called the Brussels effect.

So Brussels wants to bring in these rules, but they want everybody to comply with the same kinds of rules and penalties, and therefore they're putting this up at the border so that every country would have to do the same thing or pay the same cost as the EU is doing for those same products or commodities. Ron, your thoughts on this? Well, it's a great leveling mechanism. The bottom line is that if you're going to force your producers in one country to increase their costs of production because of these carbon mandates, obviously competitors who don't have that mandate can come in with those markets

with much cheaper products. And so quite bluntly, this is the mechanism to level the playing field so that nobody can sneak in and you don't get any quotes carbon leakage across borders. So then are you four, I'm curious, are both of you four carbon borders having this, Ron, you're shaking your head at me. No. Well, I'm not because I think the whole thing is, is, uh, is, spurious attempt to put carbon on top of the economic ladder at a time when economies are both in Europe and

particularly in Canada now are struggling to keep up with competitive economies in in Asia and I'll give you an example of that China is continuing to build coal-fired thermal plants to provide electricity for their manufacturing base at a phenomenal rate. And in fact, the rate of increase of these carbon-emitting sources, if you want to call it that, meaning thermal power plants that are generating this electricity, has reached an all-time high in that market. So it's clear that while the EU and currently Canada with the Kearney government in trying to maintain a trade economic balance and a regulatory balance with the EU is entertaining these additional taxes and these restrictions

on production, which are driving our cost of production, our cost of electricity, up at a relentless rate, at a time when our industrial base and our financial positions of these countries is declining, what's happening is the economies that are not responsive to this are in a very, very strong competitive position. So there's two reasons that I've shaken my head.

First is it's not working, and it's not fair. and its second is this is unfairly punishing the economic and the resource base of the West, while those of other competitive economies are ignoring it and moving ahead very aggressively. So it's a very dangerous situation. You brought, sorry, Tammy, just to follow on, you brought up China on what it's doing. Our largest trading partner, if I'm not mistaken, is the U.S., correct? Yeah.

Is the U.S. like, I just have my, I can assume where Trump's going, but at the same time, under Trump, is he flirting with carbon tariffs? Is he worried about this at all? Like, how is this going to affect our largest trading partner? Ron, did you want to address that bit? Well, you're right. The U.S. is 69% of our global trade. So any idea that Canada, by leveling itself with the EU, and what? Others have called the Brussels effect by trying to enter that market and to find a market offset into that market. It's a very low probability that we will be able to, by combining ourselves with those rules, be able to offset the impact on Canadian exports, 69% to the U.S., with the European Union. In fact, nobody has really quantified that as far as I can see as to what it might actually amount to, but it sure is not going to amount to 69%. And it's in a market that's in decline.

Whereas in the U.S., the exact opposite is happening. And it's not only, is the U.S. not adhering to this, it's that if Canada goes down this line and adopts all of these measures, at a time when we have a very sensitive trade negotiation situation with the United States going on, how will the U.S., the Trump administration, respond to Canada trying to implement a C-Ban? They're going to see that as something that's a direct assault on the programs and the measures that they're putting in place. in the US and they're going to possibly respond to it in a very negative way. So it's double impact.

It's not going to help us much by conforming to the EU rules. And there's very little, frankly, there's very little upside in the European market for Canadian exports. And it could really harm the negotiations and the outlook that the US has got to us right now. And they may become more punitive than the are currently. Yeah, I would add to that. Canada's current trade with the, with the EU is about 5.8% of our trade goes to the EU.

That's it. Yes, the EU, we have a trade agreement with them, the CEDA, but the trade agreement hasn't been ratified by 10 of the European Union countries. and our exports to the EU haven't increased that much since CETA came in, especially since 2020 when the EU has brought in a lot of these different climate rules, but exports from the EU have increased to Canada. So, you know, we're buying more of their stuff, but we're not actually selling that much more to the EU than you would expect.

And with what Ron said regarding the United States, and, you know, we're going to be renegotiating the United States-Canada, Mexico agreement. And, you know, Trump has made it clear that he doesn't like these kinds of non-tariff barriers. And that's what this is. It's a non-tariff barrier. But if I could also add, Ron mentioned that the EU is in decline. Their share of global GDP has dropped 17.5% this year. Germany's in negative growth territory.

France is suffering. Italy is probably one of the better ones. Poland's one of the better ones. But overall, the GDP of the EU is shrinking. So why would we want to tie ourselves to a declining market? And this is like an anchor that just pulls you down. It's not something that will actually improve the efficiency of your of your manufacturing or your production or any of that.

It's just it adds costs. And the reason I say that is that with the carbon border adjustment mechanism, there's a certain EU methodology. And the methodology requires that there's all kinds of carbon emissions accounting. And you have to put these processes and mechanisms in place in your company. And it has to be verified by a third party that's been sanctioned by the, European Union. The European Union can also send inspectors over to your operation to ensure that you're complying with your measurement of what you've said or whatever. And so therefore,

you've got this extra-territoriality aspect where the EU can come in and decide whether or not a Canadian company is obeying the rules properly or is complying properly with quite an elaborate methodology for doing emissions accounting and auditing and all this kind of thing. So these are all expenses that a company has to implement in order to comply with the carbon border adjustment mechanism. Because people would say, well, you know, maybe it's really easy. You know exactly how much carbon tax a Canadian company is paying through the industrial emitters charge or whatever.

and you know what the EU's carbon tax is. And so you can just kind of calculate the difference, but you can't because the EU requires this really intensive monitoring of emissions and to ensure that you're actually reporting what they want you to report. And then they make all these calculations and stuff. So it adds all of this extra regulatory burden on companies. They have to put all these input costs in. And a lot of their inputs are coming, like for different things are coming from the United States.

So then a Canadian company would have to ask an American company, can you give us your emissions so that we can make a proper calculation of what our embedded emissions are? What are the odds an American company is going to say, yeah, sure, we've got that data on hand. I don't think that's going to happen. And then it creates problems with the Canadian supply chain. probably the simplest question to ask is why would we ever do this that's a really good question well why would the Kearney government do it look at the history of the prime minister and his work in developing things geofans and so forth over the last 20 years this is a philosophical ideological argument it's not an industrial economic

argument. It's an argument made to ultimately get carbon emissions, CO2 emissions, under control in a larger context, assuming that these emissions are driving global climate change. So is it an economic argument? Is it one that has been set out to enhance Canadian producers, enhance a competition, competitive capabilities, not just with Asia, but with our American friends in the South that are not obviously following these rules anymore.

And where is it what is the upside? Now, when you look at Bill C5, that was recently brought in, where they're now setting up a major project's office, and I've written about this

recently, as Tammy knows, this legislation has been set up largely to countermand legislation from the previous Trudeau government. Now, if you believe that the way for have more production and to have a more effective economy is to have more government and more regulations that override the regulations that are already in process, then what you get is what we've got what's happening right now in Canada. If you think that less government might be the answer, the direction that the U.S. is very aggressively moving in, and less regulatory constraints, then you're in a different camp.

Just for the audience, Ron, Bill C5, can you just walk me through that quick, just in case anyone doesn't understand what Bill C5 is? Well, it's the Building Canada Act. And it received almost an emergency passage in the House of Commons before the House of Commons rose just after the Carney election. And it is set up to remove interprovincial trade barriers and to accelerate approvals so that major projects,

which are designated by cabinet as being in the national interests, can be accelerated. So as I said, I've been writing about this in other, well, anybody who's interested in it can Google my name and pick it up. On the surface, Ron, is that a good thing, Bill C5? You know, you said more regulation to counteract the other regulation of the previous government and more government, less government, all these different things. You hear keywords in there like national interests.

basically pushing projects through getting rid of interprovincial trade barriers, different things like that. On parts of it, it sounds like a really good bill. Well, it does. Well, let me come at it from the perspective of a former National Energy Board member. In the 1950s, the liberal government back in the 1950s decided it was going to build the Trans-Canada Pipeline project. across Canada. And this led to a thing called the Great Pipeline Debate, which ultimately brought down the liberal government and brought John Defenbaker to power. Now, that debate was that

was about conflicts of interest, the fact that Ottawa was deciding these projects, that lobbyists were working behind the scenes for multi-billion dollar projects, etc., etc. And so the solution to that, back in the 50s, was to bring in the National Energy Board Act. And that act said, okay, we are now going to have an independent, absolutely independent, expert tribunal that will examine proposals that come from industry and will choose and decide whether or not those projects are viable economic and in the national interest. And that process lasted 60 years and became internationally recognized as probably one of the gold standard regulatory standards for energy development in the world. Well, Bill C-69, that was brought in, was set up, greatly reduced the independence and the capacity of the National Energy Board to be.

be able to discharge those decisions, not in an expert way, but in a nonpartisan way. Now, Bill C-5 has turned the whole process upside down, where we've gone right back to the 1950s, where it is now cabinet with no expert witnesses, with no cross-examination, cabinet behind closed doors will make decisions on what the national interest is and how it will be defined. It will then override that legislative base and say we're going to accelerate this project

through and at the end of the process they're going to turn around and say, okay, having done a lot, anybody interested in putting money up and building these projects? It's completely upside down. Well, industry is making it very clear.

Enbridge and others have been talking about this saying, yeah, you can go through this whole process, but we're putting our money into the United States. And if you look at where TransCanada, they went to Mexico, they built a complete pipeline there. I think it was

either six or 800 kilometers from beginning of initiation to completion in three years. We're talking in Canada about getting through a regulatory approval process with Bill C5 in two years. And then

after that two years, they're going to turn around and effectively canvass the private sector and the finance sector and say anybody interested in building this thing. Well, industry is saying very, very clearly, you're going to have to do a lot more and change that underlying regulatory system. So the choice really was for the Carney government facing very serious economic reality. that's evolving in Canada. Either you change or eliminate that previous Trudeau era legislative mandate

that has done so much to prevent development in Canada and start over again, which is a horrendous mess, to be honest with you. Or you take that whole box of those regulatory systems and you put C5 on top of it and says, okay, well, we'll just ignore all that like it doesn't exist. Well, we'll see how that goes because we've got indigenous feedback. We've got private and municipal agency feedback, negative feedback, and we've got the NGOs that can still use the court process to use those existing legislative mandates. So the question is, does C5 make any sense? Does it, will it actually work?

and will anybody put up billions of dollars to say, okay, we think this is a great idea, we're going to try and build it here, when they could be doing it in the United States. Well, right now the answer is the latter. Tammy? Yeah, I mean, it basically allows the cabinet to pick and choose what projects they think is going to be a winner. And if you're not in alignment with whatever the ultimate liberal plan is or what cabinet wants, you're not going to be chosen. And they haven't really provided an appropriate definition

of what national interest is. What's national interest? Because I suspect they're going to, one of the first things they're going to say that they're approving is the Port of Montreal expansion. Why is that in the national interest? And by the way, it's already run through 10 years of the regulatory gauntlet,

and they're about to break ground anyway. So it's not like the major projects office has to approve something new because it's already been pretty much approved. So, you know, it's, again, it's a matter of when in the 1950s, when they established the National Energy Board, it was to depoliticize the whole process. And they, during the 2010s or whatever, they allowed the environmentalists to cause so much damage with lawsuits, wanting standing, wanting to participate. in the process from people from all over the world to participate in a national

Canadian process and it just dragged things out and made it virtually impossible for for the board to operate and then they provide this new solution which is basically you could never get anything done in in the country without running through this regulatory gauntlet so they don't get rid of the problem they've just added a new thing on top that permits the cabinet to pick and choose what projects they think would be suitable for a national interest that hasn't been defined. And the United States, like Ron said, the United States is, it's got the capital there, willing to do things. They're looking to expand their energy. They see that it's important,

especially with respect to building out data centers and all these other things that is a contradiction of what net zero is, really. And they're willing to put the money in and, and, and truncate the process in order to get stuff done. And Canada's just, we're not doing that. I want to make sure I got this correct. They put Bill C5 on top of all the junk, one of them being Bill C-69, which essentially is the No More Pipelines Bill, correct?

Yeah, yeah. And so what you're saying is, is they could have walked in and just gotten rid of a whole bunch of regulation or a whole bunch of bills that really constrict what industry can do. And so we've been feeling that for, the last roughly decade.

So you could have pulled that all out, added nothing new in, went back to the National Energy Board the way it was set up, and that would have been reducing the bureaucracy on major projects. Am I correct? Yeah. You could have depoliticized it, yeah. Well, it's, yes. I mean, broadly, that's correct, but it's much,

it's in fact much more complex than that. The complexity is that having pushed through the Trudeau era regulatory mandates, which are I can list them off, but everything from the tanker ban on the West Coast to carbon emissions requirements set out for Canada

on and on and on. Electrical mandate, EV mandates, etc. The methane mandate? Methane. Low fuel standard. Yeah. Well, the fuel standard is just, that's becoming a major political issue right now in Ottawa.

But the reason is complex is when Bill 69 went through, it was one of the most contentious bills since the Great Pipeline Debate in 1950. And it ended up with Senate hearings across the country.

Experts from every from industry and from others and some including myself testified at the hearings saying this was a very, very negative step because 69 not only changed, and this is something that's often overlooked. It not only changed the regulatory system for the way these projects were going to be assessed. It brought in a major change to the National Energy Board in that it made it a useful bureaucracy. It did not allow it to become an independent regulatory tribunal

that made decisions in the national interest. It violated the principles that brought down the liberal government in the 50s and made it not a rubber stamp, but greatly reduced its powers to make these decisions. Now, when that bill was passed, it was challenged in the Supreme Court, parts of by, and this is very significant, it wasn't just challenged in the Supreme Court by Alberta.

It was challenged by every province in Canada joined the Alberta case. And it was found to have sections that were ruled to be unconstitutional, not the whole act, but sections of it. And the government was told to change and amend that act to bring it into alignment with the Supreme Court ruling. Well, they did make some minor changes, but they were nowhere near what was required, in my view, to meet the standards of that. Supreme Court ruling. And as a result of that, Alberta is now going back again to challenge what has been changed there. So this has been kind of clouded over by Bill C-69.

Now, if you were sitting in industry and you've had this history where it's been a regulatory bloodbath over the last five years. And as some have called it the No More Pipelines Act, Bill 69. is still on the books, is still the law of the land. Well, one political party said that they were going to withdraw Bill 69

and start over again. Now, from industry's perspective, you withdraw Bill 69 after you've gone all over all over this. You have to start all over again from scratch. And you would effectively have no environmental regulatory laws

governing major projects in Canada at all if you withdrew it. So where does that put you as an investor? What is coming next? At least they know in 69 is a bad act. It's not working except to prevent anything to be coming done in Canada. But what are you going to get if you start over again? And you have to, is it better to do with the devil let you know or one that you don't? Or do you create Bill C5 and just say, okay, we'll just pretend it isn't there.

So this is kind of an Alice in Wonderland regulatory environment in Canada. That's where we're at. Humor, a younger man, Ron, I'm curious. You mentioned that. Much younger. The National Energy Board, when it was formed in the 50s, was the gold standard of the world. Yeah. Was. Can you answer me? Because when I just look at Canada and I just oversimplify things,

which I, you know, in fairness, you know, that's a problem I have. But I just look at it and I go, why don't we have a pipeline that goes coast to coast then? If you had the experts in place and everything was there and we were great for 60 years, why did they never do that? Was there no business case for it? I have a hard time believing that, but forgive me. I'm just curious. Why don't we have a pipeline that goes from, honestly, not Vancouver, but in fairness, Vancouver to Montreal or further? Well, Transcanter Pipeline, when they put forward to Energy East proposals, they thought they had an economic base case to do it. And they thought that it was feasible to be done in an engineering context or so well. because of the changes that were being made to the National Energy Board at that period of time,

there was so much regulatory uncertainty in terms of the outcome, they effectively withdrew the project, and they walked away from it. So that's one reason why we don't have that pipeline. The other reason is that these are very expensive long-term projects. If you look at what Trans Mountain had to go through, building a relatively short pipeline from Alberta to Tidewater in BC. The cost overruns, the legal challenges, the regulatory delays on a relatively short pipeline relative to a transnational pipeline. And you can understand why industry and the investment community reacted to that regulatory uncertainty. There's nothing more poisonous in an economy than regulatory uncertainty.

If you want capital to flow through, you have to have some kind of a regulatory impact analysis before you make those multi-billion dollar investments. And quite frankly, anybody attempting to do that in Canada right now is going to have a difficult time. There's a corollary to your question, which is what is cabinet now going to deem to be a national interest transnational energy corridor? Is it going to be a pipeline? There's going to be an oil pipeline or a gas plan. Or is it going to be an electrical transmission system? and that's what Tammy and I are pulling our hair out a little bit, although I've got much less hair to pull as she does.

But the point is that I believe that what's coming out of this cabinet is they're going to decide that they're going to electrify Canada, coast to coast. They're not going to hydrocarbon it from coast to coast. And the fact that Quebec and Ontario have very, very large, I mean, people don't understand that, and this is something, that is very significant. Canada generates 80% of its electrical energy in non-hydrocarbon produced systems, either hydro or nuclear.

80%. There are very, very few countries in the world get anywhere near to that standard. But what has happened is that the 20% of the generation that we're generating is obviously out of hydrocarbons and almost exclusively in western Canada, Saskatchew and Alberta, that 20% has received all of the regulatory and environmental attention. And it is clear that Carney is highly inclined towards continuing that anti-carbon generation industry. And so if I had to predict what was going to come out of this cabinet in a national interest determination, determinations that are not made based on expert testimony, not based

on economic assessments, and not based made by an independent expert tribunal, made by politicians, my guess, like Tammy says, is you're going to see a lot of attention in Quebec and on for non-carbon generating projects. And I believe that what you're going to see is a push to have a Trans-Canada National Electrical Transmissing System, which I think will be a catastrophic mistake, but who am I to say? Just sticking on. Can I ask one more? Can I chime in here? Yes, you can. Yes, fire away. My brain's firing.

Ron's got me going here. Fire away, Tanny. Okay, so two things. On the history, one of the reasons why there was never an oil pipeline that went all the way across the nation was because it would have made the price of oil more expensive in eastern Canada. The cost of producing in the 50s and 60s and early 70s, producing oil from Alberta and Saskatchewan, and to put it into a pipeline to the East Coast would have increased the cost. to the people in the East Coast, particularly Montreal, which is why they had the Ottawa Valley line that had Western Canadian oil up until Sarnia

and then imported oil from Venezuela and the Middle East, primarily Venezuela, into Montreal and the Maritimes. When the energy crisis hit in 1973, suddenly it was like, oh my gosh, we need a pipeline to Montreal. So they expedited. They managed to construct a pipeline from Sarnia to Montreal, that brought Western Canadian oil into the Montreal market. The maritime still continued to receive some imports.

Some of it came from the United States, some of it from Venezuela and elsewhere. And then when you saw energy prices drop again, then it was like, well, we're going to reverse the flow. So they reversed the flow from Montreal to Sarnia bringing an imported oil because it was still cheaper to import than to use Western Canadian oil. Western Canadian oil would feed down into certain refineries that have been built up in the United States specifically to use that Canadian oil. So that's one of the reasons why we don't have a coast-to-coast oil pipeline. Natural gas was a little bit different. They did manage to get to Montreal, but, I mean, we never went to the East Coast for that. The second point I wanted to make was about where does net zero? We have the net zero accountability, Act. We've got all of the different stuff about net zero. How is that going to factor into

whatever decisions cabinet makes about what's a national interest project? And then that ties into what Ron was saying about the likelihood of an electrical corridor, a transmission corridor to bring apparently wind power from Nova Scotia to help power Saskatchewan. So Saskatchewan doesn't need to use coal anymore or something. I mean, it's an absurd idea. But then the other thing is the other day, an LNG facility has been proposed for Newfoundland. And there's a massive natural gas field that's near hibernia offshore of Newfoundland and Nova Scotia. And there's talk about developing that to export LNG to Europe. So it wouldn't be natural gas from Western Canada because it'll be very, it'd be very,

difficult to build that pipeline across Quebec, which says, we won't allow anything unless there's something in it for us. Like, what does that mean? So they're going to build something on the East Coast to develop East Coast resources. And again, where does Net Zero play into this? Because the other element, when Ron's talking about financing, how do you finance all these different projects and the carbon border adjustment mechanism factors into this to some extent, is how are you going to finance something that will be considered a stranded asset? So in finance terms, a stranded asset is when, if you have these net zero policies that by 2050, you're not allowed to use it anymore, why would investors support a pipeline

or develop oil and gas fields or whatever for a commodity that will be put out of business? So, and part of what Mark Carney has always talked about was the need for transition plans. And transition plans is basically the plan to phase out your business, if you're an oil and gas producer, or if you have in any way high emissions. So then how do you get them to phase out their emissions? You make it expensive through the output-based pricing system, which is Canada's industrial carbon tax. You use a C-BAN to make it really expensive, to be used. using hydrocarbons in order to manufacture things or produce things in what they call high-emitting industries.

But in the EU, those six that I mentioned at the beginning, those six high-emitting industries, that's just the tip of the iceberg. Eventually, within five years, they want all of the different manufacturing that is currently on the European emissions trading system to be included with the carbon border adjustment mechanism. And then the last thing, the third thing I just wanted to mention is that yesterday in the Financial Times, they were talking about how there's the UN climate meetings coming up in Brazil. There's talk now that Brazil wants to organize basically an emissions club. And it would include for international global carbon pricing, the EU, China, Brazil, and any other country that doesn't want to be like the United

States and not do it. So the United States has said, we don't like climate disclosures, we don't like the emissions accounting, they pulled out of the Paris Agreement. And so the EU is now trying to convince Brazil and China to join a club to have a global pricing system, carbon pricing system that would be in alignment with the carbon border adjustment mechanism. And I just want to add just one little humorous note to thanks for bringing us back onto the C-BAM. Tammy, you did that very well. But if you want to see an example of a stranded asset in the new green economy, ask Quebec how the Northfold battery project's going.

As I understand it, they've just written down, I think it's $238 million, and they have a giant plant site that is there. And I was just reading this morning about, you know, the thrust, that we have towards our EV mandate where the EVs in Canada that have been mandated are still the, the sales are collapsing. But, you know, there was tremendous press when the prime minister and premiers all over Eastern Canada announcing these EV production targets and the batteries, the manufacturing facilities and so on. And that is probably an example. example of one of the great central planning catastrophes that's unfolding in Canada right now.

And I don't see the prime minister or any premier standing up talking about it very much, but a very serious reflection. If I can just put a note on top of what Tammy has just said, a very serious reflection about what political-based ideological central planning. decision making results in. And here we have a five-year plan, which was developed in cabinet based on net zero emissions, based on the new economy of EV with requirements for industry to make it,

make these manufacturing targets, which they're saying they can't make, and it will be a catastrophe. So we come back to this thing, How does central planning work and where are we ending up in terms of the efficiencies of our economy? At a time when our debt is spiraling out of control, how are we doing on a net zero economy? And what really is a stranded asset? I don't see a lot of stranded assets in the hydrocarbon industry in Western Canada. I see quite a lot of stranded assets in the green centrally planned economy in eastern Canada.

Isn't that funny? Oh, and by the way, who's paying for all this? Yeah, taxpayers. Sorry, Sean. I've wondered for a long time. I keep going back to history because as I started to do this show, I was just like, why don't we have an East-West pipeline? But I feel like if I am understanding you both correctly,

and I thought Tammy, you did a great job bringing me through the history. It's like, well, economically, it did. make a whole lot of sense. And when you look at the size of Canada and the fact that I think Ron, you said, where did I put it, 80% of our powers done by hydro and nuclear, I wrote that down correct, right? Yeah. Yeah. So you look at Eastern Canada and they go, why the heck do we need all the oil and everything when we have our own generation here? But now, on the flip side, when you talk about an electrical transmission system to come across the country, the theory would be that their hydro and nuclear and windmills and whatever else

is going to go across this giant country and help eliminate coal? Yeah. Yeah. Well, and where it came from was people, Britain, the UK, prior to the Second World War, was a very fragmented electrical market. And they decided very, very, very fortunately that they were going to have a unified electrical transmission and generation systems through the UK. And that was one of the major things that helped contribute to helping the Allies win the war in World War II. It was a very, very efficient system.

Well, people have said, well, the UK did this and look at the great advantages. And now they're transitioning disastrously, trying to try. transition that to a non-renewable generation system with right now I think the UK has the highest electrical costs in the world or among them. Tammy's the expert on that. However, here's what's happening. I have heard that same argument being made for Canada saying, well, if Britain did this, you know, this is a great idea.

We can do it. Well, the UK, the entire UK, could fit inside the borders of Alberta. Well, it says the United Kingdom is about 243,610 square kilometers, while Canada is approximately 9,000, you get the point. This means Canada is roughly 41 times larger than the UK in terms of land area. For perspective, the UK is slightly smaller than the Canadian province of Newfoundland and Labrador. So like when you're talking about connecting things and you're talking about economics, it actually makes sense maybe to me now.

And I appreciate that, you know, like where we started to some of my questions of why we don't have a pipeline going across because there's economics. And when you stare at the economics of things, you go, that doesn't make any sense. And when you go back to the National Energy Board of having a group of experts that are independent that aren't swayed by political ideologies, looking at what actually benefits the country, and actually starts to make sense to me why there isn't this giant pipeline going across.

Right. But now you're saying what they've done is with Cabinet, you've got a bunch of people who are ideologically, I can't even say it. Ideologically. Thank you.

Motivated to push green energy across the country. But when you look at the UK, who has a way smaller footprint, they're struggling and have the highest energy cost. It's like, what are we doing? Yeah.

But I keep thinking that the entire time I talked to anybody about this idea. That's the point, is that this is, if we, if cabinet decides they're going to do electrify Canada, that will not be a decision that's based on economics or on fundamental electrical transmission engineering capabilities. That decision will be made on a basis of ideology. This is a great idea. and it's going to be green. And well, I want to go back to a comment that we may just very quickly,

and that is, what is the basis, what is the definition of a national interest project? Well, they actually have put out one sentence definition. It has to be green. It has to, I don't have the definition in front of me here. It's a very short thing, but it has to be indigiously acceptable, it has to be green, It has to be da-da-da-da.

Well, if that's the basis of your decision-making for national interest determinations, you're in an ocean of trouble because economics is out the window. I mean, the first, and part of your question is, why don't we have that? Well, we do actually have transmission, oil transmission pipelines that now go all away from the West Coast,

all the way to Sarnia. Now, they have to go through the United States. There's tremendous geological and geographic barriers to crossing Northern Ontario, Manitoba, and so on. And there's obviously political opposition in Quebec and so on. But we already do have, if you drew a line on a map, it deters through the states. As Bonnie or as Tammy says,

you can get from Montreal down to Sarnia all the way across Canada, all the way now with Transmountain, the West Coast. So we technically do have. Now, we don't get into the Maritimes, and yes, they're importing a tremendous amount of offshore oil in eastern Canada, but it probably makes sense in a regional economic sense to do that

when our major markets run north-south down into Houston. And I saw another comment the other day. We said we're not exporting our LNG to Europe. Well, actually, we are. It's just that it goes through Houston. Or Louisiana. Yeah. They make all the money and we don't.

And the same for our oil that's going down to the stage to the Coke refineries. The differential on heavy oil that was going down into the U.S. was making the Koch brothers very substantial amounts of money over the last 20 years because of that oil price differential because we couldn't sell it to international market. Yeah, and like Termaline, which is Canada's largest natural gas producer, they just recently signed an agreement with Germany's Uniper, which is one of the big power producers there, to, they're going to buy a bunch of LNG from Termaline, but it's going to run through Louisiana, and the price that they negotiated will give them the world price rather than the discounted price

that some of the natural gas from Canada is currently getting. So they at least negotiated a better deal than what current suppliers are getting. Yeah, but that's a really good example, Tammy. But the quick answer is that you don't build pipelines or electrical transmission lines because they make ideological sense with a net zero economy. you build them so that they're economically sustainable and they can make money. And they go to the markets where those things are available. And what's happened is that on Trans Mountain, for instance,

people have been poo-pooing Trans Mountain for some people for quite a while, saying, well, all we're going to be doing was just facilitating exports of Canadian oil into the California refining market. Well, the shocking thing that's happened, It's caught everybody off guard, all the analysts and even the companies is more than 40% of that oil is now going into Asia. Yeah. Originally, the project was based on a 5 to 7% Asian export potential market. More than 40%.

I believe it may be high as 50% right now. So you just don't know in a world of shifting economic priorities what you're going for. but if you can't access any of those markets, you can't play. And that's really where Canada has been, is that we've been 100% captive of the American market. They have profited very substantially from that. Termoline has figured out brilliantly. They're a pretty brilliant bunch of guys there, how now to access that market, not through Canada, but through the U.S. and we'll see whether or not there's

Carney has talked about the potential of a second oil pipeline to the West Coast. We'll see if that meets the national interest determination of Cabinet. Yeah. Any final thoughts before I let you two out of here? This has been, I appreciate you both coming on.

I mean, you've really outlined this. You know, just there's a lot of we don't know what the next month's or years hold. I'm not holding my breath on a lot of great things because when you talk about national interest and it being pointed to a green net zero economy, all these different things, certainly that doesn't speak to. We're going to focus on the economics and making money and

how to better our economy. You talk about the national deficit and things like that. Is there anything else you want to bring up to the audience before I let you out of here? I would like to add national security because when you look at a lot of the what the C-BAM covers and what C-5 covers, a lot of these different industries are national security related. So you need aluminum, you need steel, you need concrete, you need all of these different things, electricity, and fertilizer for national security, you know, to make sure you have enough food production that you're building out. things and so on. And one of the, when you think of like a grid, it makes no sense. And I think the UK and other countries are learning and what we saw in Spain and Portugal is that if you're dependent on other areas that are far away for your electricity and you're building up these interconnections, whatever in order to do it, that makes you vulnerable. And if you're worried about

national security and the defense of your nation and your region or whatever, it makes more sense to be having the electricity from your local region. It should be more regional, like locally based than importing it from Nova Scotia. I mean, that's just insane or getting it from Ontario or whatever. That has a profound impact on whether your industries can operate. Because what happens if there's an outage? What if there's like a one of those ice storms across, you know, if the interconnections are going across Quebec and there's an ice storm? And now Saskatchewan's affected. I mean, that makes no sense. So if that's also an issue with producing things and you make everything more expensive in order to, I think Christia Freeland was talking the other day

about how she really likes Canadian steel and aluminum for shipbuilding or whatever, or for building our own ships or something. Well, if you're adding all of these extra taxes on top and this extra regulatory burden, then how are you going to be producing these things for your own defense or for your own production and economy to grow? It doesn't.

All of these extra expenses and whatnot, they threaten national security and they threaten your own economic security. And I think Canadians really need to think about what this all means for our future, especially as Ron had mentioned before, how in debt Canadians are, how in debt our government is. And for Carney to just be separating out how we do our budgeting is, you know, it's an issue. If I can just add to that, we're all holding our breath watching the federal government

finally come up with a budget that it hasn't had for two years. there are rumors that they're thinking of adding another $70 to $100 billion in borrowing to economy where our GDP is going backwards and it's easy to blame the United States and say well the Trump administration has caused all this but these are just as Trump as Tammy points out these are decisions that Canada has made deliberately

over the last 20 years that has put us into a very difficult situation. And my concern is I'm very, very concerned about the economic viability of Canada in the next 10 years. I think that Canada is going to come to some very, very hard decisions. And if you decide you're going to get to a near zero economy, you can get there pretty quickly when your economy collapses. As we saw in COVID, COVID was one of the only times. at enormous economic cost that we actually reduce the carbon footprint.

That's a pretty worrying example. Yeah. If I may just ask one question before I let you out of here then, just for the common person, when you say in the next 10 years, there's going to be economic uncertainty, though that's been true for, I don't know how many years, but you can both put your title on how long that's been.

But you talk about economic collapse. For the average person, I assume that means energy prices for their house, food prices, gas prices. Is there other things that you think of that people will notice in an economic collapse? Well, unemployment. Look at the youth employment problem in Canada right now. There's just no jobs for these young people coming up. Look at what the bond markets are signaling right across the EU and across, including the EU, U.S. and Canada. The interest rates are going up. And so you get much tougher access to money, much more expensive money, less job opportunities, and less economic development. That's not a very

happy situation. And with all of these sort of net zero regulations like a carbon border adjustment mechanism and climate disclosures and all of these different things, that means that companies have to invest more money into compliance, which means they can't hire more people. So if they have to spend all this money to do compliance and verifying and all this different kinds of stuff, then they don't have enough money to expand their business, to invest more in the business, hire more people, which then has this knock on negative economic effect. And, you know, should we be looking at increasing our trade to a declining market like the EU? Or should we be looking to, countries like India and places in Southeast Asia that are projected to have GDP growth of between

5 and 8% over the next 5 or 10 years. So I think if we're trying to look at our priorities, what this means for the average person, fewer jobs, higher costs for living. And if they continue with this EV mandate, which starts in effect next year, then what's the cost of operating your vehicle? if those vehicles now need to be charged, that means more demand on the grid, which means an increase in prices. So then there's this knock-on effect of price increases throughout the entire economy, not just everyday life or just for businesses. It's everything. Well, and just to put a tie a bow on top of that, the fact is Canada has to sit down and say, is net zero, achievable or is it even feasible?

And now we're beginning to see the costs of, as you can see in the UK, the highest electrical generation costs in probably the world, if not Europe, are these objectives that we have set out and that we built into legislation that's forcing Canada down this road? Can you just ignore that legislation with C5 and say, okay, we'll circumvent it and somehow we'll make it happen. Or do you have to come right back to fundamentals and say,

is this even feasible? Is it even achievable? And what are the costs? Yeah. And that's the debate what we're not having. Yeah, there hasn't been cost-benefit analysis done. And that's a big issue. On any of this, whether it's when they were originally entertaining the idea of a C-BAM

in Canada in 2021, and then it was brought back. And then Carney was talking about it again. there's never been a cost-benefit analysis, nor for net zero. Bob Lyman, who's an economist and former diplomat with the federal government, has been on about this. Like, there has not been a cost-benefit analysis. What are we doing? You would never do that in a company and be like, oh, yeah, we'll just buy into this

without figuring out what are the costs and is it worth it? And I would say that this isn't worth it. Yeah. And does it work after having put it? all these regulations and laws and in fact, are our emissions actually going down? No, they're going up. And the rest of the competitive world, whether there's India, China, Brazil, whatever, how are they doing?

Where are they in the process? They're talking a great talk, but China has just built more thermal generation capacity in the last two years than they had built in that country in the past 10. Yeah. So, you know, it shows you a clear direction of where they're heading. A very clear direction. That they're not buying into this at all. And they're watching, as Napoleon said, never, never, never intercede with your enemy

when they're making a mistake. Well, and they're helping us make the mistake by providing the solar panels and wind turbines Right? Produce with coal. Produce with coal. Very economically that we can't compete with. Yeah. Appreciate you too hopping on and doing this. More and more my head scratches when I think of the Canadian government

and what it's doing and where it's leading us. But I appreciate you two coming on and sharing some insights on this issue and bring us up to speed on carbon borders because I stare at that. And you've done a very good job of explaining it to me. I still scratch my head. Either way, Ron, great to finally meet you. Tammy, as always, thanks for hopping on. And appreciate you to give me some time today.

Good luck, Sean. Thank you. Yes, thanks, Sean. It's a pleasure.