The Munk Debates Podcast - Munk Dialogue with Andrew Coyne: Ottawa and Alberta agree to energy deal and why two-tier care is not the solution to Canada's healthcare problems

Episode Date: November 25, 2025

To listen to the full episode consider becoming a donor to the Munk Debates for as little as $50 annually, or $1.00 per episode. Canadian donors receive a charitable tax receipt. Go to www.munkdebates.com to sign up.   Rudyard and Andrew talk about this week's memorandum of understanding between Ottawa and Alberta that would provide premiere Danielle Smith with the approval to build a pipeline from Alberta, through BC, to western shores. Are more pipelines needed right now? And what about the country's commitment to lowering carbon emissions? Rudyard and Andrew engage in a debate on climate change and carbon taxes. In the second half of the show they turn to a leaked memo about the Alberta government's plan to allow physicians to practise in a mixed system and provide private care to patients willing to pay more. Will this help reform health care in Canada? Andrew argues that while there is room for private care, governments need to address the real problem here and move doctors away from fee for service. Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

Rudyard Griffiths here, Chair of the Monk Debates joined in studio by journalist Andrew Coyne from one of our regular monk dialogues. Andrew, great to be in conversation with you. Good to see you. A lot to talk about all kinds of things happening internationally. But let's begin here at Canada. Some big stories coming out of Alberta since we last caught up with you. Let's start with what looks to be an imminent announcement on a pipeline memorandum of understanding between the federal government and Alberta. that seems to provide Premier Daniel Smith with her big ask,

which is to build a pipeline from Alberta through British Columbia to Western Tidewater. What do you make of this? And maybe it would be helpful for our audience just to calibrate where we're actually at in what could be, I expect, Andrew, a long process ahead of us before this is all ultimately. sorted at. Yeah, I mean, to say to build a pipeline is maybe a little bit premature. There's so many steps still to, they'd have to get through in terms of getting it through BC in terms of past the objections of the British Columbia government. Oh, they don't have any legal power. They have nevertheless power to make trouble dealing with indigenous issues, dealing with

environmental concerns. So it's, we'll have to see exactly the term, but I would imagine it's an agreement in principle. It's an agreement that the feds are not going to object to, to a pipeline. I think there's also a lot of concerns about is the pipeline actually needed at this stage. You could probably, in the short term, adjust, address capacity concerns by simply expanding the capacity of the trans-mountain pipeline,

but arguably in the longer term, they're going to need that capacity, and we'll see when that eventuality comes. And then, of course, getting it built is a long process as well. But the pipelines require such symbolic importance in Alberta that it's certainly a watershed if we do in fact see that kind of deal.

I think also the thing I like about it is both sides putting some water in their wine in terms of their own policies. And for once it looks like to the good. So the feds, it looks like, will drop their emissions cap, which was never a good policy. But in return, Alberta will have a tighter industrial carbon price, which is good policy. So in this case, the grand bargain seems to be pointed in the direction of better policy. And there'll be some sort of pathways, this pathways project for carbon capture and storage. So for once, you know, it looks like a win-win-win, as they say, in terms of the outcome,

rather than so often these things, the compromises on the worst possible concerns. Let me just for the sake of fun, strike a slightly more pessimistic. note. At the core of this, in a sense, you're right, is a bargain around a different way to extract bitumen and bring it to world markets. And it involves, you just mentioned, something called carbon sequestoration. In this case, on a scale, Andrew, that really has never been attempted before. All the other examples of carbon sequesteration that have been attempted to require massive government subsidies. The Trudeau government, in fact, looked at the Pathways project and found that the subsidies

that you and I and taxpayers across Canada would have to provide in the form of basically ensuring the builders of pathways, which are the major oil companies, that they can get a carbon credit for the carbon that they sequester at a market price that allows them to pay for both the capital costs of building the sequester. and then running that facility, the Trudeau government said in effect it was so economically unviable that the federal government's own policies precluded them from funding pathways. So what's changed now? What is the butcher's bill here?

Ultimately, Andrew, which may land on all of our tables to make this grand bargain work, politically for Mark Carney, politically for Daniel Smith. I sense that, I don't know, there's a lot of other pieces going on here. 100%. Look, I'm not here to necessarily argue for carbon sequestration because I share some of your skepticism around it. But on the economics of it, we'll have to see what the price is. But if they raise the carbon price high enough, then carbon capture becomes economic without subsidy. So we'll have to see. But that's where there's room for it to become economic.

At a lower carbon price, yeah, you have to give people all kinds of subsidies to make it worth their while. But if the carbon price is high enough, these things become economic. obviously you don't want to jack the carbon price higher than it needs to be in terms of the economic or the environmental impact, but anyway, that's the tradeoff. But that's a really interesting point because guess who controls the industrial cap? It will be the government. There'll be the federal government. And they will, if they want to, go to Canadian corporations, Air Canada, Telcos, I don't know,

other people who use power and say, we need a price for, the industrial cap that provides a market for the carbon credits that the sequesteration will produce, which is in effect, and you and I may support this, but it's kind of going back to the carbon tax, isn't it? Just in a different way. It's levying a carbon tax on all kinds of things that aren't related to the production of energy. They're related to the consumption of energy, but they're not related to the production of oil and gas, who will then have to, to pay a carbon tax that will be set at a certain price in order to create the carbon credits to make the Rube Goldberg device that is Pathways work.

Well, I haven't heard that they're planning to extend the carbon price beyond the industrial carbon price regime that they have now. Have you heard that? No, no. What I'm saying is that the, let me be clear, the industrial price would be set at a level to create demand, artificial demand for a market called carbon credits that would be manufactured by carbon sequestration. Well, that could be, but we'll have to wait and see.

Well, what else would they do, Ann? Well, ideally, what it would be, it would be a price sufficient that it allows us to meet our targets, our emissions target. So that should be the ultimate goal. Now, whether that works out to make carbon capture and sequestration economic or not, I don't know. We'll have to see the numbers. So we're both kind of speculating at this point. But even if, let's say, our own emission targets required us to create a price on the, for carbon that paid for pathways, the reality is still that probably the cost

of the pathways program. If you look at other examples of carbon sequestration around the world, this is really expensive to do. And there's going to be a delta that has to be closed. So who closes the delta? In that case, it would be a subsidy. So, Roger, we're both in the dark. We're back to subsidies. Well, you're determined to beat this into the ground.

Let's wait and see what the numbers actually are. And if it involves massive subsidy, then I will certainly say that Roger was right. But sorry to beat this because it's fun. But it would resolve, it could be massive subsidies either way. It could be massive subsidies because you've been. decided that, you know, emissions need to be reduced by X. So therefore, you have to have an industrial cap that's set at Y. Or you've turned around and you've said to John and Jane Q public, well, carbon sequestration costs more than we thought. And you need to close the gap

because these companies can't go to a business running their sequestration operation. So it just seems at the end of the day, Andrew, that this is not a free lunch. I just don't understand how this... It's never a free lunch. How this creates, in a sense, a market for Canadian energy that is supported by actual market forces. We're kind of saying goodbye to that. Up into this point, we've largely sold Canadian energy abroad at a market price, at a spot price, that reflects where we can bring that energy to market. We're now stepping in, in a big, way, are we not, Andrew, with government who will be directly or indirectly setting the cost of that energy through these different schemes?

Well, the point of industrial carbon pricing or consumer carbon pricing is absolutely to adjust the price to take account of a market failure. The market failure being we're releasing all this carbon into the air, we're not absorbing the cost of it. So the argument for the carbon pricing is to adjust for that, to correct for that market failure. It's the most efficient way of reducing your carbon emissions. And if you accept that we need to reduce our carbon emissions, that's the way to go. And we should never have scrapped the consumer part of it in. Here, here. 100%. But the other thing is they should have brought

the consumer, the carbon price should have been brought in as a replacement for subsidy and regulation programs and instead was layered on top of them. And then they put more subsidies and regulations on top of the carbon tax. So unfortunately, you know, it gave the whole program a bad name. But let's say let's wait and see the numbers. The advance word is that if you tighten up the industrial carbon pricing regime, which is not only a matter of raising the price, but also closing some of the exceptions, that that would make the sequestration program economic. We'll see.

You're right to be skeptic. We'll see. Look, I support action against climate change, and I like you, I would have preferred to have the most broad-based, consumer-based carbon tech. But we walked away from that. The Liberal Party walked away from this. Mark Carney walked away from it because something called affordability arrived as a political slogan, which is still a powerful political slogan today.

So I'm just wondering if we could talk about the politics of this because not me, but some critics would say that this is just another way. the industrial cap is just another way to have that bad thing that including Mark Kearney and the Liberal Party got rid of, which was the consumer-based tax. We're just bringing it through a back door, again, through this really complicated Roobabreck device called carbon sequesteration. No, I don't think the carbon capture has any impact one way on that or the other, except that it is part of the argument for tightening up the industrial pricing regime. industrial pricing regime stands on its own as an art, it would exist and should exist, whether or not you had carbon capture.

Maybe the carbon cap. I mean, you're always dealing with least bad solutions here. Right. And what I might put to you is, even if I thought the carbon capture thing was a Rube Goldberg thing, if it made possible getting rid of the emissions cap and tightening the industrial price regime, both of which are good things, I would say, then I'd be prepared to accept a certain amount of bad policy to enable the good policy. You're never going to get the blackboard solution because you've got to make the politics work.

And if as part of this, you also get a pipeline built. And if we can fit that into our overall carbon emissions scheme, then everybody wins in that score. So if we get one oversubsidized program, I'm not going to cry my sleep. It'll be one of many. You're right. We're just adding to the litany. But just to talk about the politics of this, because it is interesting that, you know, an industrial, price for emissions will affect Air Canada. It will affect the price of the airline tickets that

you'll buy. Presumably it's affecting it now. I mean, it's in place now. Right. But we're just going to tighten it up someone. Right. But I think it depends on, again, where what they understand how much we have to bring our emissions down. We've done a pretty lousy job of that, despite whatever scheme and policy we've had in place for the last 15 or odd years. This will become part of the affordability debate, will it not? People will say this is raising prices on manufacturers, on people who are providing all kinds of consumer services or goods, and it will make things cost more at a moment where people don't want to pay more. People can't feel that they can't pay more. It may resonate differently. First of all, it's not overtly put on the consumer.

and people, that sometimes that matters in politics. Is it visible or invisible? I think people almost prefer to have things hidden from them. I hate that. But I think there's a part of the public that says, look, just don't put it in my face. So politically, that's one thing. Secondly, Justin Trudeau is no longer there to be an irritant.

And sometimes when people evaluate a policy, it's based on who they like and who they don't like. Thirdly, in a context where pipelines are getting built rather than not built, it may not be quite as much of an irritant. So I don't think we can assume it will have the same political resonance today that it did three years ago. I think every context is different. But you may be right, but we'll have to see. Let's see.

I predict that we'll, you know, for better and maybe worse, we'll have another fight over this. And whether it's making the Canadian economy also less competitive or more competitive, because the United States has completely walked away from the Paris Climate Agreement. they have no emissions caps of any sort. Well, no, but they do at the state level. Some states. So California, for example. So a lot of stuff which goes on in the states happens at the state level.

But look, we had this raging fight about should we have a carbon tax or should we do nothing. And the incremental cost of doing a carbon tax versus doing nothing is on the order of 1-20th of 1% of GDP, five basis points. Conversely, we have not had much of a debate about should we have a carbon tax or should we have regulatory and subsidy schemes. And in fact, even under the Trudeau government, the carbon tax was only about maybe a third of their plan and projected emissions reductions. Most of it was from subsidies and regulations. The difference there is dwarfs the other delta. The delta here is on the order of 80 basis points, four-fifths of a percentage point of lost GDP every year owing to these subsidies and regulatory schemes. So it's 16 times the incremental cost versus the going from doing nothing,

which was not really an option, to doing the carbon tax. So when people talk about the cost, let's get serious. The cost is all these other schemes, not the carbon tax. Yeah, I would just say we're, the government's own numbers suggest a very low rate of economic growth going forward. So every loss point of economic growth matters when you're sub 2%. And, you know, you're staring at local. productivity. But if you take climate change at all seriously, so point one, if you take climate change

seriously, if you think the impact of that in Canada and around the world are going to be important, if you take seriously the idea that we need to do our part, no more than our part, but our part, then you're left with what's the best way to do it? Well, the cheapest, most efficient way is with carbon pricing. I mean, some people might say that the most efficient way would be to ship a whole bunch of liquefied natural gas to Asia to get Asia off coal-fired plants. and oil and diesel and other much more carbon-intensive ways because the emissions, whether they originate from Canada or mainland China or Japan, are still emissions into the global atmosphere.

If you can get the rest of the world to acknowledge that in terms of the emissions regime, maybe that's fair to think. But we'll have to see. Thank you for listening to the first half of Andrew Coins-Munk Dialogue. If you'd like to get the full program, consider becoming. coming a monk donor. You can do that for as little as $50 a year, a buck a week. You also get a charitable tax receipt for your contribution to the monk debates and you get access to our popular Friday program. Friday Focus with Janice Gross Stein. Sign up for all of your unique

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