The Paul Wells Show - Is there a business case for greening the economy?

Episode Date: November 16, 2022

As the UN’s Climate Change Conference takes place in Egypt, Paul talks to Susannah Pierce, President and Country Chair at Shell Canada, about the green energy transition. Susannah talks about how Shell intends to reach net zero, concerns around greenwashing, and why reducing the carbon tax may actually be bad for business.This episode was recorded live at the National Arts Centre in Ottawa.

Everyone knows the transition to a low-carbon economy is going to require a lot of hard choices. Last week I talked to somebody whose job is to make those choices. We know that we need to reduce our emissions in order to get to net zero but we also need to be able to generate the revenues to actually invest in technologies to get us there. It's kind of a similar dilemma that Canada has. Recorded live at the National Arts Centre, my conversation with Shell Canada President Susanna Pearce. I'm Paul Wells. Welcome to The Paul Wells Show. Susanna Pearce comes to us at an interesting moment. This week at the seaside resort of Sharm el-Sheikh in Egypt,

the countries of the world are coming together for COP22, the conference of the participants, the participants being all of humanity, and the thing they're participating in is trying to save the planet from the scourge of climate change. There's a Canadian pavilion at that conference and a series of programs for public consumption all the way through that week, including three events at which energy companies are being invited to explain their role in the energy transition. The incongruity of having energy companies at a climate conference has struck the fancy of my colleagues at Le Devoir, and they've

had three front page stories this week about the outrage of greenwashing, which is the notion that energy companies can claim to be virtuous when everyone knows, in fact, what their game is. And Shell Canada, I hasten to point out, is not one of the companies that's involved in the Canadian pavilion at Sharm El Sheikh this week, but these are the issues that make up Susanna Pearce's career. She is the president and country chair of Shell Canada. She is also the general manager

of renewable energy solutions for Canada. And in those twin capacities, she has a lot of circles to square as she represents one of the most active, one of the most frequently controversial sectors in achieving the energy transition that is the subject of so much of our public debate. And I thought, you know what, instead of talking about these companies, let's talk to one. And Susanna Pierce, to her great credit, is into that. And she's here tonight. And I welcome her. Susanna Pierce. So what's on your mind this week?

That was a fantastic introduction. You know, we were originally going to do this, not this week. But I think the timing has worked out pretty well. Because it is a pretty important time. Particularly with the Conference of the Parties happening in Egypt. And so, yeah, what's on my mind is what comes out of that. But then also the day-to-day job, which I have, which is how do we continue to drive investment in Canada? How do we continue to meet the energy needs of Canadians?

But then also, I think, for a lot of our interests, how do we make sure that the energy we don't need in Canada can be exported to markets that also need it as well? Now, you grew up in Calgary. Your father was a lawyer for an oil company. A little bit different. He was actually a lawyer and then started to build a pipeline company. So he started as a lawyer in Saskatchewan. He was a lawyer for the Rough Riders. Any Rough Riders fans? Anyone? Yes. Thank you. Thank you very much. Yeah, and then he moved to Alberta, and he started a pipeline company with a guy by the name of Bob Blair. Your mother was in a different line of work. She was in a different line of work, yes. What did your mom do? The questions are going to get a lot harder, don't you worry. Okay, so let's go right into it. Who

remembers the Skyline Hotel? Any old, okay, there we go. Thank you very much. So there was a standing act there called Diamond Lil. Diamond Lil Saloon. My mother was Diamond Lil. And since we're going to go there, my father, who again started as a lawyer, then he moved to Calgary, started building a pipeline company, he also had to go represent the company in front of the National Energy Board, which at the time happened to be here in Ottawa. After he'd go to hearings, he'd then go to the Skyline Hotel to watch a show. And on that show, on that stage, he saw my mother.

And he went back to that show time and time again until finally he got up the courage to ask her out. She turned him down. He came back again, and apparently she was dating the guy who ran the Chrysler dealerships here or something like that, and he didn't show up, so she accepted my father's request for a date. And within a year, she was moved to Regina. Not a great gig.

You know, showgirl moves to Regina. Ottawa, Toronto gal moves to Regina. It was a bit of a transition for her, for sure. Growing up, you looked at what line of work your parents were in, and you decided you sure didn't want to follow the example of one of them. You did not want to work in the oil business like your dad. Yeah, that's right. I mean, it was many of you who have kids.

If you ever try talking to your kids about what you do, do they generally try to change the channel? Like, I don't want to talk to you, Mom. I don't want to talk about what you do. That was me as a kid growing up. And my father, interestingly, too, worked a lot, traveled a lot. And I felt like I really didn't know him for a number of years. I did know my mother. But I also saw in my mother something that I didn't also want was somebody giving up her career and somebody having to depend on one person for her livelihood.

But the long and short of it was, you know, as a kid growing up in Alberta, I heard a lot about oil and gas. I also heard a lot about, you know, the booms growing up in Alberta, I heard a lot about oil and gas. I also heard a lot about, you know, the booms and busts of the sector. And I kind of wanted to get away from it. And you might find this interesting, because I ended up getting away from it by going to school in Washington, DC, because I wanted to become an international correspondent. I don't want to become a journalist. So I did undergrad at the George Washington University. I worked at NBC, I worked on Capitol Hill as an intern. But then as part of that, I realized,

okay, maybe I need to study a little bit more. I went to Johns Hopkins, and that's where I studied international affairs, energy, environment, science, and technology. Started to deviate my career a little bit from journalism. There were points in time between then and now where events in my life happened, and I kind of came back to Calgary

and found myself in the sector and the place that I now work. You took a sabbatical from the master's job, and you went to work in Chile? Oh, you did your homework. Yeah, it all falls apart later. At a factory that was converting from coal-fired to natural gas. That's right, yeah. First of all, how does a factory go about doing that? And secondly, was that as heavy foreshadowing as it seems in retrospect? It's really interesting,

actually. So yeah, when I went to Johns Hopkins, it was right after Canada had signed the Kyoto Protocol. And my graduate degree was in energy, environment, science, and technology. How do you combine all of those factors together to look at, frankly, energy transitions? As part of that, I had the opportunity to go down to Santiago, Chile, and work at a company called Chiljaner. And Chiljaner ran power plants, and they were coal-fired power. However, there was an opportunity by building the gas Andes pipeline from Argentina across the Andes to Chile, where they could build the first combined cycle natural gas plant. And guess what happens when they do that? They cleaned up the air.

They reduced the emissions by 50% to 60%. So even though I was down there on a sabbatical working in this company, believe it or not in investor relations, trying to help them translate documents into English, I learned a lot about that actual opportunity for the city of Santiago. But then also what was also interesting about this was the pipeline also was finding itself meeting some opposition in parts of Chile, in very beautiful parkland parts of Chile owned by some of the indigenous people in Chile. Now, I thought it was very interesting.

This was back in the mid-90s. What was interesting about that, of course, if you remember the history of Chile and Pinochet, who of course was a dictator, here you are at this point in time in the 90s. Pinochet is no longer in power, but you have people with the ability to stand up and protest and have their rights heard, whereas in the past, under the dictatorship, you might not be able to do that. So I thought it was a very interesting point in time from that as well. Now, of course, I knew none of that would actually be what I'm living now in various different ways, because that was back in the mid-90s. But yeah, it was kind of a foreshadowing of what some of the things I deal with right now. And at some point, there's an element of that story

that I want to tell, which is that those Indigenous populations in Chile and Indigenous populations in Brazil and Australia and the American Indian movement and the American West and populations here in Canada are all comparing notes, coordinating strategy, and getting their act together to make sure that their voices are heard in development. And I know that a large part of your job today is making sure that you don't get on the wrong side of that global movement. Yeah, and you know, I don't know it's so much of getting on the wrong side. I think my experience, and in particular when I was working in British Columbia on a project called Energy Canada, where it was in the Kitimat area, and if you're familiar with that area, particularly Kitimat is on the traditional territory of the Haisla First Nation, in my experience,

you just ended up trying to do the right thing, which was, frankly, when you're working or trying to build a project in a community, you want to talk to the community members, some of whom happen to be Indigenous. You want to understand what their rights are. You want to understand what their interests are. How do we work together?

And so in my first kind of real experience with engagement with Indigenous communities in Canada in this particular project, it was more of a conversation around how do we work together? And an understanding that even though their treaty or their rights hadn't been sort of promulgated through treaties, nor did we feel they had to prove it. And so we went on a process of engagement, how do we work together? And recognition that the Indigenous voice is critical as you move through the permitting process. But then also when you think about how do we actually

operate and build a facility in the community where the Indigenous people live. So you want to involve them as much as possible. And so that for me, it was not so much that, you know, they were getting their act together, it just seemed to be the right thing to do. And now what you see happening, of course, is you see the UN Declaration on the Rights of Indigenous People, which is another way of getting acts together. But what you also are seeing, and I can actually remember this very clearly, when I moved to British Columbia in 2013, British Columbia, the majority of First Nations are not under treaty, which is very unique in Canada. And so in the absence of treaty, it's really on the, I think, the onus of a company like ours to engage, you know, that you have to sit down and have these conversations, which

makes BC very unique. We have seen such a movement, I think, over the last, even accelerated probably over the last three years. And I think businesses like ours are recognizing that you don't wait for governments to do, you need to do it on your own basis to build the relationships so that you have a shared interest in moving forward. I do want to fill in one thing that happened between Chile and Vancouver because I think it illustrates the sort of prise de conscience,

the changing attitudes towards big energy projects. You worked in Washington for TC Energy, which then was TransCanada, between 2002 and 2008. You were no longer at TransCanada, but I'm sure you noticed in 2011 when Barack Obama put their Keystone XL project on hold for what at the time they said would be a three-hour tour, but it turned out to be quite a Gilligan's Island of misadventure. What did you make of the then president's decision to put Keystone on ice, having worked at that company? Yeah, that's actually a really good question. And I'll say that when the original Keystone pipeline was designed and we got it permitted, this was back when I was still in the company. And I was actually responsible for trying to get it through the permitting process,

but then also a lot of the engagement with Congress on this project. It was a point in time when climate change, emissions, and what can be caused by linear infrastructure was starting to become a thing. And so the original Keystone Pipeline, because it crossed the international border, required the presidential permit. But the long and short of that first pipeline, the first Keystone pipeline, we got it done and permitted within two years. But that first presidential permit that we got was then challenged by NRDC on the basis of the emissions that it would cause by being built.

Fast forward to Keystone XL, you've got a different person in the office. You now have a greater awareness of the role of linear infrastructure. Organizations that don't want to see emissions grow will look at linear infrastructures to oppose. I think TransCanada also at the time could have maybe made some different decisions with respect to the routes that they took, as well as the BATNA or all the alternatives they could have taken by not going through certain areas. I mean that's the thing when you're when you're thinking about a pipeline project or you're trying to design and permanent you typically have your your preferred right away and you don't really want to spend millions and millions of dollars of looking at

alternatives but you can't always be sure that your preferred right away is going to be acceptable so you kind of have to be a little bit looking in different places too and I think the challenge we're trying to scan on that second project was they probably didn't do enough looking at that alternative right away. And then again, the movement started focusing even more on the oil sands, and then it became a political hot potato,

and that made it that much more difficult. At the time, Prime Minister Harper called this decision a no-brainer and was astonished that President Obama had gotten it wrong. And yet, that's two presidents ago, and this project is not going forward. Yeah, I don't think it's going forward based on what I've read from TransCanada. In any way, I would say it's a bit unfortunate because if it had, I think some of the challenges that we're experiencing now, not that we could have ever envisaged that what would happen in Ukraine has happened, but it certainly would have been an

alternative to provide oil to the United States instead of having to depend on other countries outside of North America. Fast forward to April of 21, when you become Shell Canada President for Canada. It was largely based on the existence of an ambitious net zero plan for Shell Canada, and it largely entails moving that plan forward. And since we are going to be spending a bit of time kicking the tires of that plan, why don't you just tell us a bit about it? Sure. As you know, Shell Canada is really a fully owned entity of Shell Group. So Shell Group is domiciled in London now. And so I'm responsible for the Canadian component of Shell. And I have one shareholder, it's Shell Group.

But Shell Group sets the strategy. And the strategy that we came forward with a couple of years ago, we called Powering Progress. And I think what's great about this strategy is it's actually starting to involve things outside of just generating shareholder returns that you would think every public company is trying to do, generate returns for your shareholders, for your investors. I think that's great. But what it's also doing, though, is

recognizing three other elements of that business strategy, which includes something we call powering lives. And that is in the energy transition is not always going to be equal. How are we sharing benefits with communities? How are you making sure we're advancing things like equity, diversity, and inclusion? How are you looking at the just transition, which is to say that not everybody can afford or not everybody has access to reliable and affordable energy? What is our role in that? Another component is something we call respecting nature. It's an acknowledgement that nature is exhaustible and that we need to be paying attention to our impacts on air, water, the environment, focusing on a circular economy, focusing on biodiversity, and then the other component of the strategy, this is the

fourth component, is net zero. When we think about our greenhouse gas emissions, we think about three scopes. Scope one are the emissions that we create when we produce energy. Scope two are the emissions that are created in the production of energy, whether we buy power, steam, or heat. And then scope three are the emissions that our customers create when they use our energy. We're saying net zero across all three scopes. And I think that is relatively unique for a major company. The majority of emissions we have to tackle in net zero are scope three.

90% on average of the emissions we need to get to net zero are your emissions. The point of producing your product is so you can sell it to somebody who will burn it. Correct. And you're saying you need to reduce their emissions to net zero by 2050, along with everything from your own activities. Yeah, that's right. And so what's more in our control? Well, more in our control are our own emissions and the emissions that we cause to be created. But the scope three really, I think, shows that we recognize that the ability to reach net zero in a manner that's consistent with 1.5 needs to work with our customers. Because if we don't work with our customers, if we don't

influence customer choices, then we will not be able to sell the energy that we need to sell to get to net zero and scope one and two. So a great example that I use often, just to make the point, is if anybody's driven from the airport in Vancouver downtown, you go down Granville, the first station you see on your right is a Shell station. And you'll see a couple of hydrogen pumps. They're for hydrogen cars. And I joke about this, because the only person I know that drives a hydrogen car right now is Minister Wilkinson. And I've looked for one, and hopefully I'll get one one day. But when you drive by that station, nobody's filling up their cars with hydrogen, because who here has ever seen a hydrogen car driven one? They're just not in the market yet. So the whole point is we need to work with customers in helping them be able to buy low-carbon energy so we can sell it.

And if we don't, then we're going to be stuck with a couple of pumps that nobody's using. So that's the whole role, I think. And what's interesting, too, in the time that we've announced this strategy, how many countries and companies have also made net-zero commitments. and companies have also made net zero commitments. So now we have a much better opportunity for a dialogue, a discussion, an articulation, and a mapping of what is the path to that? And how can I work with you, industrial customer, to reduce your emissions by selling you lower carbon products?

How can I work with you, trucking company, to sell you low-carbon hydrogen instead of diesel? It's actually beginning to have a really interesting conversation that we've never been able to have. And the way that we're actually approaching it too, in addition to looking at our major customers, is something we call sectors. Because the sectors allow us to look across the value chain and help to design the ecosystem. So we really know what will be required for that customer to make that choice. And so what I mean by that is, you know, if we want the trucking companies that we work with to consume hydrogen, well, they've got to invest in hydrogen trucks.

And so we need to be able to help them understand what the drivers will be and the incentives will be for them to get there. And so, again, all of that is to say the way we're looking at it is one, two, and three. Scope three requires that we look at it on the basis of our customers and sectors. By coincidence, a month after you became the country president for Shell Canada, Royal Dutch Shell got a hell of a thumping in a courtroom in The Hague where Friends of the Earth said that the interim targets on the has to be 50 more ambitious instead of cutting emissions by 30 by 2030 which is tomorrow you have to cut them by 45 and shell group is is appealing that decision but it must have felt like you barely figured out where the coffee maker was in the executive suite and the mother corp was was being chased around a courtroom yeah by friends of the earth yeah so it's a really interesting an important decision why we're appealing and ultimately it's

because we don't think that you can solve the climate crisis by litigating one company and forcing it to reduce its emissions by half by 2030 but even though we are challenging that decision, we're also having to live up to the ruling. So we actually do have to focus on reducing our emissions by 50% of scope one and two. And so we're on the path of doing it. And yes, it's not easy. We have to look across the levers ultimately that we could use, including portfolio decisions, electrification of our own assets, how we make decisions with respect to what we buy, nature-based systems as well, what we can't actually remove in that process. But it's a pretty significant challenge. And I can say that in the

last year, we've been able to reduce our scope one and two by 18%, but we still have a long way to go to 2030. So some important choices to make. And I think for us too, when we think about it, it really focuses in on our assets and what's available around us and pushes us to really work with policymakers to help make the policy environment conducive to those emissions reductions. So yeah, we're very engaged on it. And we're making some progress, but it's a challenge. We're very engaged on it and we're making some progress, but it's a challenge. We'll come back to my conversation with Susanna Pierce in a minute. I want to take a moment to thank all of our partners, the National Arts Centre who hosted today's conversation, the University of Toronto's Munk School of Global Affairs and Public Policy, our founding sponsor, TELUS, our title sponsor, Compass Rose,

and our publishing partners, the Toronto Star and iPolitics. I've read some of the academic writing around these net zero commitments, and one of the academic writing around these net zero commitments and one of the prominent papers says that the real test is investment in upstream, which is looking around for ways to extract, sell, burn hydrocarbons in the future. What's the story on your upstream capital expenditures in the last few years? We know that we need to reduce our emissions in order to get to net zero, but we also need to be able to generate the revenues to actually invest in the technologies to get us there. It's kind of a similar dilemma that Canada has,

which is you actually need some of these oil and gas royalties and revenues to help pave the way and pay for a lot of the investments we're going to want to make to transition our country. So we're very keenly aware that the world still needs fossil fuels today. We still need to reduce emissions of the production of that. And we still need to look at how do we high-grade some of those investments so that we can kind of do both.

Pay for the investments we need to make to meet energy needs today. Pay for the investments we need to make so we can decarbonize along our plan. But then also make sure that we're high grading in a way that we can have access to or produce in a way that lowers the emissions in the process. I might as well put my own cards on the table. I actually don't get the impression that your company is not serious. I get the impression they're quite serious. You've done some audacious things. You released 50,000 square kilometers of offshore exploration permits in 2018. In 2017, you sold most of your oil sands assets to Canadian Natural Resources Limited, which to

some extent makes it their problem. But at least you've got much less of a footprint in the oil sands than you used to do. And Chris Turner, who's a prominent environmental writer in Calgary, ran for the Green Party in Calgary and did pretty well for a green candidate in Calgary. He's got a book called How to Be a Climate Optimist, and he talks about how excited and impressed he was with Shell's net zero commitment. But if this was easy, they wouldn't have needed you to do it. But if this was easy, they wouldn't have needed you to do it. And again, yesterday at Sharm El Sheikh, the United Nations High Level Expert Group on Net Zero Emissions came out with their report. This is a group that was mandated by Antonio Gutierrez, the Secretary General of the United Nations.

The chair of the group was a person named Catherine McKenna, who used to hold a government job here in town. And her opening note to this report is called, It's Time to Draw a Red Line Around Greenwashing. And Secretary General Gutierrez at the release of the report said, so-called net zero pledges that exclude core products and activities are poisoning our planet. Using bogus net zero pledges to cover up massive fossil fuel expansion is reprehensible. It is rank deception. This sham must end. I assume you notice when they start talking that way at the COP summit. What would you say? What perhaps have you said to Secretary General Gutierrez? Well, I personally haven't said anything to him.

What perhaps have you said to Secretary General Gutierrez? Well, I personally haven't said anything to him. But, you know, I think, fair enough, challenge whether or not people in organizations that make net zero pledges are real about it. My company is real about it, and we're transparent about it, which is why we are reporting on what we're doing. I think it doesn't underestimate the challenge. It is significant.

I mean, achieving net zero for a company like ours that on average has provided 4% to five percent of the world's energy consumption, we've got a lot of emissions to tackle. And when you add on scope three, it's significant. There's ways of making sure that you're measuring and accounting for those emissions that we do on the basis of the regulatory systems that we work in. So we are living up to that and being transparent around it. Every year, we'll provide an update on how we're doing. And actually, in addition to that, what we also do is that we also provide updates to our entire shareholder base where they have to vote on whether or not we're making progress

or not. So I guess I'm not surprised at the challenge that Catherine and Secretary Gutierrez are saying, you know, show me the money. Show me you're really doing it. You have to live up to these commitments. It can't be greenwashing. And we have no intention of greenwashing, which is why we're being very strategic and transparent about the choices that we're making. About a month ago, Canada's finance minister was down in Washington at the Brookings Institute, and Christia Freeland

talked a little bit about the notion of friend-shoring in ways that got a lot of attention here in Canada. Because at one point she said that Canada remembers that the European Union helped us with vaccines in the depths of COVID. And she said Canada must and will show similar generosity in fast-tracking the energy projects our allies need to heat their homes. It sure sounded like she was talking about natural gas for Germany. Is that how you heard it? Well, I think the way I heard it is, you know, it seems like a reasonable thing to say on the basis that, you know, if you think about the crisis that we're in right now, you know, it's going to be a crisis in the natural gas area for a few years. And so the extent to which there are projects that are ready to be fast-tracked, then I think that's exactly

the right thing the government should be doing. I think it takes too long for us to actually make sure that projects that are supported can get through the environmental gauntlet. And so I think, if anything, she's saying, look, we hear you. We have energy that the world needs. Let's figure out whether or not we can choose the right projects to fast track. That's what I heard. And I think there's a role for gas. I think there's been certainly some recognition that there's a role for hydrogen in time also to potentially be exported.

So when we look around the world at what other jurisdictions are doing to accelerate lower carbon projects, Canada ought to be doing the same thing. So I thought that was a very good message. And now it's about how do we actually get that done? How can Canadian LNG be part of the solution in Europe? What projects come to mind? You worked for LNG Canada, which was designed to produce an export at Kitimat

for the Asian market. Could that gas be turned around? Are there other prospect projects? Yeah, so I think, and that project is more than 70% done, which is fantastic. We expect to see gas flowing from it by mid-decade. But you're right, it's on the western coast of Canada. It's a little bit of a longer distance to Europe. But by adding gas from that project into the portfolio of natural gas or LNG in the portfolio globally, it actually releases more portfolio LNG to move elsewhere, for example, into Europe. So it increases the amount of supply that can be moved around.

So I think from that basis, it's a very good thing. there in a subsequent phase of that project or other projects that are already being advanced, including the Cedar LNG project, which is a project that the Haisla First Nation is working on right next door. Normally, when I go to Europe, I fly east. And the problem is that between here and there is Quebec, whose premier has said there is no social acceptability for LNG in Quebec. Is there any prospect of changing that guy's mind? Well, I haven't talked to him about it.

But there are opportunities off the eastern coast of Canada. There's a few. And I think if those projects, again, have the ability to start to build those contracts, those relationships with offtake agreements in Germany and others, then they should be able to find ways of getting them permitted. Those projects don't necessarily have to go through Quebec. Where would they go?

Well, one's actually out of New Brunswick, and so that's the Repsol project around Canaport. I think that one is advancing. Then there's a couple other ones that are offshore. That one in New Brunswick is one that's getting a lot of attention in the context of post-Putin Europe. Yeah, and I think that one too, if I remember correctly, that was previously an import facility, and so being able to sort of use that area for an export gives it some advantage. Okay, let's stop trying to parse Minister Freeland's speech and turn to Pierre Pauliev,

who is the leader of the Conservative Party of Canada, and last week in a speech to the Empire Club in Toronto, he said, we have food and petroleum in among the most abundant supply on planet Earth. If only the prime minister would get out of the way and let our farmers and energy workers produce it. Do you have sympathy for that argument? Is this government too often in the way? Well, I think if you're a farmer or, you know, having obviously spent quite a bit of time in Alberta, I think that there is a sense that they're not necessarily being heard we've got all this wonderful natural resources that really needs to find its way to market so there's a lot of frustration there and I think

Pierre is touching in on that and you know I'll be honest too I mean I think about the fact that we have we are the sixth largest producer of natural gas as I said we have the ability to produce natural gas with the lowest amount of carbon when we really look at the natural reservoirs, when we look at our access to hydropower. You know, I think it would be great if we were already producing and sending more gas, because that would enable more gas to be in the market as it is today. But we're not there. And so I think, if anything, coming back to what Christia Freeland said, looking at how do we accelerate these projects is the right thing we need to be doing,

and we need to be doing it quickly. Because the other challenge we've got, just because of what we've seen happen with Russia invading Ukraine, is gas prices are equivalent at some point to about $250 barrel of oil is the equivalent of what natural gas prices have been over in Europe. And you're seeing some demand destruction. You're seeing that there's also an acceleration of alternatives.

So I think there's a window for us, and we need to get on it. So if anything, what I'll say is what I think Pierre is touching in on is the frustration that we could be doing more and we're not, and we need to get after it. When you talked about permitting Keystone 15 years ago in the United States in two years, I almost gasped. It's hard to get almost anything done in two years in this country. But part of the reason for that is because everyone needs to get their ducks in a row right away. All of the various

stakeholders, all of the environmental assessments and stuff. Is it realistic to greatly accelerate that process? I think it could be. And again, a lot of it has to do with, again, in my experience, how do you really make sure that the majority of stakeholders you're working with want to see something happen? Okay, so site selection really matters. What hung up, I think, Keystone XL

was a pipeline that went through a jurisdiction they weren't able to move around. When we did the LNG Canada project, we right up front, before we even landed on site, we scoured 400 sites all up and down the coast of BC. We went to a jurisdiction that was used to industrial development. We engaged with the Haisla First Nation as well as the community. We found a site that it could actually work. And then we worked with all the various agencies. We had a substituted permitting process between the feds and the province to actually accelerate to make it more efficient

And we really put boots on the ground Now that whole process itself Took about three to four years to get to the end, but we got it at a time when that was expected now Could we accelerate that again? It's if there's a will a Commitment to get to the end of that process that we agree that we ought to be doing this project. I think it's possible I do think it's possible. I do think it's possible. Mr. Paglia says that to lower the cost of living

in inflationary times, to help people make ends meet, that the best thing that a government of Canada could do would be to cancel plans to triple, triple, triple the carbon tax. Surely that would make your life more easy. Well, here's the challenge. I think the carbon tax. Surely that would make your life more easy. Well, here's the challenge. I think the carbon tax, the way that it's currently rolling out,

particularly for consumers, as many of you, if you haven't signed on the plan, you're getting it, it actually paid back to you. But I think from my perspective, when we look at making major investments in decarbonization, why are we doing it? We're doing it because it's the difference between paying a carbon tax

or actually removing the carbon from the air. The higher the carbon tax, the more incentives you have to actually build a project that could essentially take the place of that carbon tax. So carbon capture sequestration, for example, when we look at doing projects like that which can remove carbon, we say, okay, well, what carbon price would this actually be economic? And we begin to build an economic model around that. When you add on a layer of regulation, which actually will give you a credit

for being able to sell the lower carbon fuels that you can then produce by being able to capture those emissions, you begin to see a different type of economic model working for you. So if you start to tweak the model by removing things like carbon taxes that you've actually baked in,

it has an impact on the economics of the project. And that's where we'd start to say, okay, well, if that's going to be a policy decision, some of these investment decisions we're about to make may not make sense anymore. So what do you need to do about it? So you need to look at other ways of keeping these investments whole. Again, if you want to see projects or companies like ours actually invest in decarbonization solutions, such as carbon capture sequestration. So if the carbon tax goes away, the economic case for some of your biggest investments goes away?

Yeah, it could go away, because you're making it on the basis that the alternative to paying the carbon tax would be to invest in CCS. Have you told the opposition leader this? Yeah, well, not personally. But, you know, again, like there's other ways of skinning the cat as well. I mean, I think the carbon tax is something that my company has always believed is an important policy measure. And I think one of the other areas that, you know, we as companies really look for is some degree of regulatory certainty. So I would say that when you change major pieces of policy like this, you truly need

to understand the consequences. And I would say tweaking the carbon tax, threatening to remove it, you know, without an alternative to make these investments whole. And there's things that governments are talking about, carbon contracts for difference, which could deal with that. That's something that, again, really needs to be contemplated. that, again, really needs to be contemplated. And then to tie it all together, how sovereign is Canada in its decisions when a court case in The Hague can radically change your parent company's plans

for the next half century? How sovereign is Canada as a nation or me as a country chair? Start with you and then extrapolate. Well, who pays my salary? So it's an interesting question, actually. We all have to roll up to the group. In other words, when the group reports out, this is our net zero KPI, and this is where we are. Everything we do here rolls up to the group. Similarly, in Canada, I'm very conscious, as well as the team that we've got here, on how are we also meeting Canada as a country's

commitments for decarbonization? Because our net zero commitment for Shell as a group is a global one. So we have to be able to make sure that my voice is being heard with the group with respect to investment decisions they're making. One of the things that I often say and truly believe is that one of my jobs is to try and create the best investment case for Shell Group in Canada by trying to stitch together areas where they'll be able to generate a profit, but then also help them meet their decarbonization goals, which in turn, by the way, actually helps Canada meet its decarbonization goals. So what does Shell Canada look like in 2030, which is eight years from now? I would start with probably by saying that what's great about Canada is very much

everything that we've done in this country for more than 100 years has very much paralleled Shell Group in terms of its investments. So we started, of course, producing in the upstream, oil and gas. We had oil sands for a period of time. You see our Shell stations everywhere. We invest in shale gas as well. So we have natural gas assets, of course, that would feed algae Canada. But we're also looking at a number of decarbonization solutions

already, which includes, for example, in Alberta, buying wind power, by investing in solar power, by looking at how we can use existing kit to produce lower carbon fuels such as hydrogen, such as renewable diesel. So what I think Shell Canada looks like by 2030 is you will see more investments in lower carbon technologies to enable lower carbon fuels that can then serve industrial medium heavy, heavy-duty truck tracking demand, hopefully the aviation sector in time, as well as you and I, should we ever decide to drive a hydrogen or electric vehicle. My wife would confirm that I'm kind of slow on money files,

but it's starting to sound more like a venture capital firm with a portfolio of clean energy holdings. That's an interesting way of putting it. I think the way that we're looking at, frankly, some of these lower carbon fuels and systems is a little bit like that. Because right now, some of the lower carbon opportunities are not yet commercial and at scale. And I keep on going on about hydrogen, but because it's true. Hydrogen, lower carbon hydrogen, you can produce through electrolysis, green hydrogen, they call it, but I Hydrogen, lower carbon hydrogen, you can produce through electrolysis,

green hydrogen they call it, but I just call it low carbon hydrogen. There is not yet the ability to produce it at scale or customer demand such that we can really make a big return on this business right now. And so in other words, we can't just shut down everything we're doing right now and throw it all into hydrogen

because customer demand's not there, the infrastructure's not in place. So for us, what we're beginning to do is begin to make some of these initial investments so that we learn how to do it well, we leverage some of the efficiencies, and then we grow with our customers in time as they begin to make the right investments as well. It's a little bit of a dance, but it's more of a jigsaw puzzle, I think is a better analogy, because we know we can produce it, but it's about producing at the lowest possible cost so that our customers will buy it. And that's what we're trying to do. Does Joe Biden's Inflation Reduction Act complicate your life at all with its half a trillion dollars in investment in the energy

transition south of the border? You know, competites is probably not the right word. I think it's a great dose of competition. You know, I think what we are seeing is that these sorts of incentives are helping to spur investment in the United States. And when I have one shareholder who has a choice of where to invest, I now have to look south and go, okay, well, wait a minute. What is the gap between what they could make in terms of investing in the United States versus here? And for example, the budget update that just came out talked about an incentive tax credit for hydrogen, which is going in the right direction

as well to help close some of those gaps. So yeah, I think if anything, it's, hey, here's a healthy dose of competition happening right there. What do we now need to do in Canada to attract investment here? I'd even say this, that when I was working on the LNG Canada project, there was a gap between what the United States was able to produce LNG for versus Canada. But we were able to work on that with governments in order to close that gap. And as a result,

we had the largest private sector investment in Canadian history. Susanna Pierce, thanks so much. Thank you, Paul. Thanks, everyone. There's cheese. much. Thank you, Paul. Thanks, everyone. There's cheese. I have some other thanks to deliver tonight. We have a large coalition of partners and sponsors who make this podcast and these events possible. And I want to make sure you know about them. Our production team is Antica Productions. Kevin Saxton is over there making sure that I sound reasonably good. Our founding sponsor is TELUS.

Our title sponsor is Compass Rose right here in Ottawa. Our institutional sponsors are the National Arts Centre, who are always such gracious hosts when we come here to bring these shows to you, and the Monk School at the University of Toronto, at which I am the first and perhaps only journalist fellow in residence. And our publishers are the Toronto Star and iPolitics. We come out every Wednesday. Tell a friend, spread the word, help these conversations keep going. One final programming note. We'll be taking a bit of a break after this episode. I'll be back with more episodes in the new year.