The Paul Wells Show - Jonathan Wilkinson, Energy Czar?

Episode Date: February 12, 2025

Jonathan Wilkinson has a lot going on. As the Minister of Energy and Natural Resources, he holds a critical position in trade disputes with the U.S. He talks to Paul about dealing with the Trump administration, adapting Canada's energy strategy to a new reality, and the difficult decision not to run for Liberal leadership.  Season 3 of The Paul Wells Show is sponsored by McGill University’s Max Bell School of Public Policy.

The Paul Wells show is made possible by McGill University's Max Bell School of Public Policy, where I'm a senior fellow. He's the Minister of Natural Resources. Want some? We have to step back and look at where we are vulnerable and what we need to do to be able to actually export our products to the world without flowing all of it through the U.S. This week, Jonathan Wilkinson. He's thought it over and he's staying in the Trudeau government

for as long as there is one. And he's got one message. Canada is open for business. I'm Paul Wells. Welcome to the Paul Wells Show. I'm Paul Wells. Welcome to the Paul Wells Show. I used to think somebody should write an opera about Sergei Krikalev. You won't remember him. That's why there should have been an opera. Krikalev was the Soviet cosmonaut who went up for his tour of duty on the Mir space station in 1991. And while he was up there in space, the Soviet Union ceased to exist.

So it was actually a while before there was a country with a government that was prepared to take him back. Imagine floating around up there, trying to figure out how you fit into things. For our purposes this week, Jonathan Wilkinson is our Sergei Krikalev. He's the British Columbia liberal who's been Canada's minister of energy

and natural resources since 2021. In November, his office wrote to me to suggest he come on the podcast. I'm always happy to hear from a politician who wants to come on the podcast. Wait, don't take that literally. I'm often happy to hear from a politician who wants to come on the podcast.

And since Wilkinson is parked at the intersection between Canada's resource wealth and its low-carbon ambitions, I knew he'd have interesting things to say. But then they got a lot more interesting. Our problem, Wilkinson's in mine, was that he offered that interview at the end of November, right around the time that Donald Trump started to threaten big tariffs against imports from Canada. Then a couple weeks later, Christopher Freeland resigned from cabinet, and then a few weeks after that, Justin Trudeau announced he'll step down as prime minister. So by the time I was able to bring cosmonaut Wilkinson in for a landing, the whole world

had changed. And this interview was about a bunch of stuff it wasn't originally going to be about. Things like the liberal leadership race. He's not running, but it's pretty clear he wanted to. And things like the nature of the adversary. Wilkinson is still trying to figure out Trump, whose second presidency already seems quite different from the first. And most of all what's new, or at least it sure sounds new to me, is the enthusiasm with which Jonathan Wilkinson is pitching energy exports as a key to what ails Canada.

Exports to the United States to calm Trump down. Exports to the rest of the world as a hedge against Trump. Energy exports as a solution to a lot of the problems Canada faces. To me, this reliance on energy exports represents a big change for the Trudeau Liberals. Jonathan Wilkinson was quick to disagree, but one thing's for sure, it was a fascinating conversation.

Jonathan Wilkinson in Vancouver. Thanks for joining me. Well, thank you for having me. I was just looking through the documentary history of this interview and I saw that your office reached out to me for this interview. First of all, thanks for that. Secondly, that first email came in on November 27th. So it's taken a while because there's been a lot going on.

And the thing that struck me was Donald Trump first started to threaten a 25% tariff against Canadian imports the next day on November 28th. It seems to me that that has turned out to have been a very significant move by the president-elect as he then was. Yeah, I mean, certainly it's turned out to be a pretty important move. And as we've seen over the course of the past couple of months, he has doubled down on that in many different ways and that obviously has created all kinds of thinking within the government of Canada and given the portfolio that I am responsible for in energy

and natural resources, obviously a lot of it is relevant to that and many of the cards that Canada has to play reside in this ministry. Is there any chance that this threat of tariffs and this coveting of Canadian territory will simply blow over that the president will move on to other things? I think it's very difficult to predict with this president exactly what is going to happen. I think part of his approach is to create a

forbid of unpredictability in the context of discussions that he has with many. But I'm still of the view that there is a pathway through these tariffs. That is not a guarantee by any stretch, but I do think that there potentially are ways for us to actually avoid these going forward. And that is why I and others have been spending an enormous amount of time in Washington over the past little while. Including on February 6th, you spoke to the Atlantic Council and you suggested essentially a pretty significant change in Canada's strategic stance with regard to energy exports, the North American market and so on. What was your pitch at the Atlantic Council? So the pitch at the Atlantic Council really was first and foremost to make sure that everybody really understands the interrelated nature of our economies and in particular the energy and

minerals areas of our economy where it's not just that we flow oil but it's that the refineries are actually set up to help handle heavy crude from Canada and they couldn't use the light sweet crude or at least without billions of dollars in many years. That they actually are dependent on uranium for the purpose of actually powering electricity. The transmission lines that go from Quebec also are powering a significant amount or a significant number of houses in Boston, New York. You can go through a long, long list. First first of all, it's the facts. And making folks really aware of the fact that there will be significant pain felt, yes, of course, by Canada, there were tariffs, but there will be significant pain felt by American consumers in the form of higher gasoline prices, higher food prices, higher electricity prices, higher home heating

prices. But then moving on from that and saying, look, we can actually help President Trump achieve some of the things that he campaigned on in terms of keeping energy prices low, enhancing national security, and actually being able to assist with his global energy dominance agenda, which is really about flowing more energy to the rest of the world to use as a geopolitical tool. Canada can help with that. And what we've done is sort of identified a number of very discreet projects that would enable the United States to actually move forward, but to do so in a manner that actually would also benefit Canada. Great example of that is Canada could augment the amount of Germanium that we actually provide to the United States, something that they need for a range of

applications. China has stopped sending Germanium to the United States. That's something we can help them with that would enhance national security, and it would be a very easy thing to do. And so, there's a number of those things where we're trying to create a bit of an off ramp from the tariff discussion. At the same time, you and colleagues have talked about reanimating the energy east oil pipeline that would help get Canadian oil exports to the Atlantic. That also strikes me as a big change and different rather than trying to insinuate Canada into the American market over president Trump's

skepticism, this is a parallel move to diversify our exports away from the American market. It is, and let's be clear that they're not inconsistent. You can do both at the same time. So one is about avoiding the tariffs and finding pathways through which we can actually help Trump achieve some of his objectives through work that we could do together. By the same token, I think Canadians

have been shaken by the approach that's been taken by this president. I don't think we're ever going back to the kind of sense that we had that we could fully always trust and rely on the United States. There is going to be a need for us to reflect internally about how we make our economy more resilient. That's a whole bunch of things. That's about breaking down internal trade barriers. That's about deepening some of the trade relationships with Europe and Japan.

That's about trade and export infrastructure, which is not just about energy. That's about railways. That's about ports. But it's also looking at how can we enhance our resilience from an energy perspective. I didn't say energy east and I didn't say a pipeline through Quebec. What I said is we have to step back and look at where we are vulnerable and what we need to do to be able to actually export our products to the world without flowing all of it through the US. We've made a lot of progress and we are making a lot of progress on gas. We have to reflect on some of the other

things going forward. And I think that's just prudent and I think Canadians would want us to do that. Okay. I want to tease out one assertion that you made there, which is that you don't think that Canada will ever be able to trust the Americans again, in the same way as, as, as we thought we could

take for granted, Donald Trump is pushing 80 and he's term limited. I mean, I take you to be saying that we're not at all sure that he's the last president with this mindset. Yes, that's exactly what I'm saying. And I think we would be foolish to assume

that's the case. It may well be that after the next four years with president Trump, it's President Vance. JD Vance is unlikely to have a fundamentally different worldview than Donald Trump. I think Canadians are going to be increasingly – are increasingly of the view that we actually have to do more to be self-reliant. That doesn't mean we're not going to trade with the United States. That doesn't mean we're not going to work to ensure that we actually have a reasonable relationship with the United States. But it does mean that we just can't be in a situation where all of our energy flows south. 75% of our trade is with the Americans. We need to find ways to ensure that Canada is

less dependent on an America which right now is not a very friendly one for Canada. Should we not have been avoiding painting ourselves into that corner all along? I don't have extravagant investments, but my banker always tells me to diversify my portfolio no matter what I think is going to happen. Well, I mean, I look at this, this was the debate that we had in 1988 on free trade, right? I mean, if you recall that debate, this was

exactly the conversation and we made the bet and Prime Minister Wal Minister Walroni was the one who made the argument and Canadians supported him in that, that we could actually engage this with the United States in a manner where we could trust them on a go-forward basis. And the Free Trade Agreement included a number of dispute settlement mechanisms that still relied on the Americans actually doing and following the rules. What we are finding now, and this is many years on from 1988, is we can't necessarily depend on the United States to do that. But I would say this is a bet that not just the conservatives made, not just the liberals made, that became a consensus view within Canada. So it's easy to say that in hindsight, but that's

very different from the consensus that developed over the past, you know, 35, 40 years. The effect of all of this is that to some extent, the government is now swallowing itself whole on things like energy east, on things like oil exports, on the importance of LNG exports. You're shaking your head. You don't buy my analysis? I don't buy your analysis at all. I think if you look at what's going on in the West coast, and has been for the past number of years, with cedar wood fiber, LNG Canada one, and the likelihood of LNG Canada two, you

actually have the capacity to export half of the gas or you will have the capacity to export half of the gas that we flow presently to the United States. And certainly, again, I am not proposing energy east. What I am saying is we do have to reflect on ensuring that we have outlets for the oil in the event that there are challenges with the Americans to reduce the dependence. But that is not the government swallowing itself whole. It's just a

recognition of the reality that right now, while economically the past 40 years have been beneficial for Canada from a resource perspective, that we have a very different sheriff in town at this point. Okay. So it's not just me saying it though. Martha Hall Finley, who's the head of the policy school at the University of Calgary, former liberal leadership candidate, says that this government has spent a decade trying everything it can to keep our resources from getting to the global market. Does she need a talking to? Well, I know Martha well. I would say she has the job she has currently, but she spent many years as an executive at Suncor and I would simply say that what she says is factually incorrect. What we have done

actually is move forward. We are the only government to actually have built a pipeline to tidewater. I mean, the conservatives were unable to get that done. The trans-mountain pipeline got done. And we actually bought the trans-mountain pipeline in order to get it done. The LNG facilities that are getting built would never have been built under the conservative government. And we actually fix the environmental assessment process. I mean, before we came into power, nobody trusted that there was any integrity. There was no recognition of indigenous concerns. At the end of the day, you cannot do those things and be able to actually get social

license for these kinds of projects. So I think Martha's just wrong. Okay. Speaking of liberal leadership candidates though, Christa Freeland has proposed her economic policy with a view to the liberal leadership and she says that Canada needs to cut red tape and cost the timeline delays, reduce the number of projects that will require a federal assessment and up its game at exporting LNG to our allies. That sounds like, well, it sounds like it's coming from someone who doesn't believe

that's been going on. Well, I mean, I don't want to have a public argument with my friend, uh, Christopher Freeland, but I, I would say we certainly have reduced the number of projects that go through a federal assessment. Part of that was the government's thinking. Part of it was us getting knocked back by the

Supreme court of Canada in terms of redoing the Impact Assessment Act. We have done a lot of work on reducing red tape and Ms. Freeland would know that because there was a cabinet working group that actually came up with a report that actually looks at how you can streamline these things all the way across the country. And while certainly there is work to do with respect to LNG, we've been working with the government of British Columbia and the government of Alberta to actually expedite those things. We have three projects that are basically, one of them is almost done, the other two are under construction, and a fourth one that is likely going to go ahead over the course

of the coming months. So yes, there is work to do, but there's an enormous amount of work. And as I said, I mean, the volume of gas out of those four LNG facilities will be half the gas that we presently export to the United States. I want to say a word about the people who are supporting this podcast. McGill University's Max Bell School of Public Policy is committed to the research, teaching, public outreach, and practical advocacy of sound public policy grounded in a solid understanding of the overall policy process with all its imperfections and limitations.

With their one-year intensive Master of Public Policy program, they teach a principle-based design of policy solutions to important problems. Learn more at mcgill.ca slash maxbellschool. This is a very different interview from the one I was expecting to have with you when you folks wrote in November, but there's been a lot going on. And one of the things that went on was that for a couple of weeks there, your name kept coming up among the people who might run for the party leadership. How seriously did you consider that? I considered it very, very seriously. It was perhaps the most difficult decision I've ever made in my life. And part of what made it difficult was there were enormous numbers of folks from across the country who actually came forward to ask me

to do it and offered to help, including raising money. I thought about it a lot and I made the decision after real soul searching for two reasons. The first one being and probably the most important one was I do think that we are facing enormous challenges via the United States. I'm one of the most central ministers to that conversation and the stuff that sits in my portfolio is perhaps the most important that we have in the context of trying to find pathways through this with the Americans and I felt like I would be letting Canadians down if I actually stepped out of this role at this point in time and certainly I talked to a lot of my colleagues about this before I made that decision. The second is, well, I do think we have a number of excellent candidates in the race

for the liberal leadership. I have known Mark Carney for 25 years or so, and he and I would have been almost carbon copies of each other from a policy perspective. I don't think he and I disagree on almost anything with respect to policy. And so I actually was of the view that he would make an excellent candidate.

And given the work that needs to be done vis-a-vis the US, I just made the decision that I would support him rather than entering the race. Had he not been in the race, I probably would be. Do you think the job would be open if President Trump hadn't made these tariff threats? Do you think that there's a straight line from there to here?

Uh, no, I don't think so. Um, I think there were a whole bunch of other things that actually went into the decision that Prime Minister Trudeau made to leave. I don't actually think Trump had that much to do with it. I think there were lots of other reasons for that. Okay. The result though is that you've got an inner cabinet, Champagne, Jolie, LeBlanc, yourself, who were all considering running for the leadership but have decided that they have not a long enough runway and two important responsibilities to step outside of the government for now. Well, you know, I mean, at the end of the day, my hope across party lines, whether it's,

you know, you're a liberal, you're a conservative, you're a Democrat, is that you get into politics because you actually believe in something quite passionately. And ultimately, that's because you actually want to in some way contribute to building a better country. I think it's actually a good thing that people made the decision that it's country first. Country first and personal ambition should come well behind that. And I do think that, you know, I respect a number of my colleagues who made similar decisions.

I should ask what the response to your speech at the Atlantic council was. These are, it's an American think tank, pro Atlantic, essentially, um, a great a great avatar of a Western consensus that has lately been challenged from abroad and from at home. What did they have to say about a Canadian minister who comes saying, let's reinforce this trading relationship rather than let it be jeopardized? Well, I think it probably won't surprise you that there was a lot of support for that message,

but the council, as you say, is one that probably sees things in a similar way in terms of strengthening relationships, including with our friends in Europe. But I would say beyond the council itself, all of the conversations I have had with folks in Washington, whether it's in the business community, it's in Congress, it's in the Senate, all are of the view that the way in which Canada is being dealt with is inappropriate. It doesn't serve the long-term interests of the United States, that it will actually harm American consumers. Most people are a bit bewildered by it and that includes Republican senators. But at the end of the day, there is only one decision-maker and it's difficult to find somebody in Washington that's going to say that they actually know exactly what he's going to do tomorrow.

It was all hands on deck when president Trump was elected the first time. There were not only threats of terrorists, there were terrorists implemented. There was a renegotiation of NAFTA. There was a concerted effort to activate a pro Canada network within the United States. How is the work similar and different this time

compared to last time? I think it's similar in the sense that a lot of the folks that we're going to talk to are the same. Although the terrorists the last time, as you know, were a bit more focused on steel and aluminum. Now it's a broad base across the economy and it brings into play a lot of people who probably didn't see themselves as being impacted. So I have met with a whole range of different associations in the energy sphere. They are very concerned about the tariffs. They probably were a little bit less engaged in the first time. So I think the coalition of Americans that can be activated is broader. There are obviously some that are similar.

So when we talked about a response should the broad-based terrorists have been put into place, it was pretty clear that there were a number of states that would probably be impacted more than others just because there are significant quantities of exports to Canada from the United States. And you saw some of those governors coming out and actually saying we're concerned about this. And you saw Senator Grassley come out and saying an impact on farmers would be significant if potash actually. So some of it's the same, some of it's different. I would say I think folks though are probably a bit less sure about how to influence Trump 2.0. What are relations with the White House like and with the senior administration figures? I mean, basically are you talking to everyone except the people around Trump?

So we're talking to lots of folks in the non-Trump and then we're talking obviously to folks in the inner circle. You know, LeBlanc has had many conversations with Howard Lecknick, for example, and others. My counterpart, my most direct counterpart is Chris Wright, who is the Secretary of Energy now. He was only confirmed late last week. So my expectation is I'll be in Washington next week or the week after to sit down with him. week or the week after to sit down with him. Okay. Um, normally, I think Canadians normally underestimate the extent to which their government gets a warm and attentive welcome in Washington.

Do you think that we're still in that world or is it a tougher slog now? No, we still get a very warm and attentive hearing in Washington largely because a lot of folks who are legislators and business folks associations there fully understand how interrelated the economies are and that it's in their economic interest to actually ensure that the relationship stays the same. I would also give a shout out to Canada's ambassador, Ambassador Hilden, who does a phenomenal job and the embassy does a phenomenal job there. And everybody I talked to in Washington says, one of the reasons why Canada punches above its weight

is because the embassy is just so good at what it does. It has to be kind of maddening to be in an environment where every couple, every several days, there's a new threat, so far unrequited, unfulfilled, and yet it must be a very difficult environment for any kind of long-term planning. It is, it is very difficult for long-term planning. And as you say, it does seem like every few days

there's something new. I would say that folks who know the president well would probably tell you that that's part of the way in which he actually negotiates is to try to keep you off balance on an ongoing basis. But it's certainly for those of us who do believe in planning for the longer term, it does create a whole series of challenges. At the end of the day, I think I keep saying to folks, take a deep breath, this is going to probably be a bumpy ride and it's not going to be two weeks and it's not going to be two months. This is minimum four years and we're just going to have to get used to it and manage our way through.

There's also an element though about this of recess is over. I mean it wasn't Trump 1 and Trump 2 who invented the notion that NATO nations should pay for the common defense and that the Arctic is important and that there's a nearly existential competition with China over things like the materials that are going to help to build the future. And everyone's got to get their game face on and has Canada been a little bit slow to move into

that new and fiercer world? There were three different things that you talked about there. I think on the material side and there I think you're referring largely to critical minerals which presently you know they're dominated by China and the processing supply chains are dominated by China and are required for defense and the whole range of applications not just energy. So there I mean we actually did move quite early on developing and launching a critical mineral strategy for Canada. I think we were ahead of most of the G7 plus, including Australia and

others. Could we have started even earlier? Probably. I mean, China actually has been working on this now for decades and has been very good at actually locking up supply and locking up technology. But I would say we've made enormous progress there over the past four or five years, and we're starting to see some of the fruits of that. I think the Americans are actually quite a bit behind us on that, and it's one of the reasons why they've actually looked to do some joint investing with us under the Biden administration in projects in Canada. On the Arctic, let's be clear. I was actually with the prime minister announcing the renewal of the Coast Guard fleet that included the polar icebreakers which are being built both here in

Vancouver but also at the Davie Yard in Quebec. Those are about Arctic security and that actually happened like seven years ago. So I think we've been pretty cognizant of that. I think the one where you could make some argument with the government of Canada, and this is not just our government. I mean, it was actually much worse under Stephen Harper, is the level of defense spending. We have significantly ratcheted up. If you go back to the last year of the Harper period, the numbers in terms of being spent on defense on a percentage basis were extremely low. But of course, Canada needs to meet its obligations, and the 2% number is something that was set collectively and we intend to do that.

Okay. I was gonna be argumentative, but I'll... I'm fine with you being argumentative, so. Well, I just, I read Chris, I read Christopher Freeland's economic policy document and it's like, we should do a bunch of stuff that you minister claim you've been doing. And theoretically, as finance minister, she

was at those cabinet meetings. Well, I can't speak for Christopher Eland, but I would tell you some of the things that we actually have been doing. And I can tell you with some authority because I was actually in the middle of almost all of them. So it's not to say there isn't an enormous amount left to do.

I would say, you know, in the critical minerals area, it's an enormous economic opportunity for Canada. We have been doing a lot, but there's much more we can do. And to be honest with you going forward, we're going to need some help from the Minister of Finance to actually ensure that we do the things that we need to do. Okay. On Energy East, it sounds like you've got a pretty clear policy and social license path right up to the Quebec border. And then again, as soon as you leave Quebec, what do you think your chances are of getting it built through Quebec?

So again, I would just say to you, I think before we get into any particular project, we need to take a step back and look at what the different options are. I wouldn't say that the only way to solve some of the challenges are necessarily going with a pipeline all the way through to Atlantic Canada. There are other ways to supply Atlantic Canada with oil. There are potentially other ways to actually supply Quebec with oil without a new pipeline. And there are other ways to actually export oil outside of the United States,

which would include things like the Port of Churchill. So before people get too attached to one particular project, I do think it behooves us to step back and actually have a look at what things are actually most efficient, what things actually are likely to be most effective. And I would also say that the issue of social license in Quebec is enormously important. You cannot just jam a pipeline if that was the chosen path through Quebec without some degree of support from folks. And so that's a conversation that needs to go on. But you've heard even people like the Premier voicing concerns that things have changed and we need to step back and reflect on that. I agree with that. I would be very careful though, just attaching,

it's gotta be one project and the project is named Energy East. There is no project that's named Energy East anymore. There's no proponent that's actually proposing Energy East right now. But there is a need for us to step back and look at the infrastructure and see what we need to do to ensure that we are not vulnerable and that we

have the ability to export products. Do you need the House of Commons for these kinds of conversations or are they mostly executive level and intergovernmental? I mean, this is a question about whether the Commons needs to come back from prorogation or whether we're heading straight into an election after the Liberals have a new leader. Well, I mean, obviously there will be lots of conversation depending on who wins the liberal leadership, they will have some important decisions to make around timing. And I think these kinds of things will factor

into a decision as to whether we actually try to get support because we would need support from other parties in the house of commons in order to continue. And all three of the major opposition parties have to date actually not said that they would actually support the government, which creates the situation where the government may not have a choice.

You may end up going into an election irrespective. But it also is the case that many of these things can be done through ongoing programs, ongoing instruments, and federal provincial conversations. And as you know, ministers continue to be ministers with some restrictions throughout an election campaign. And so I think we will be able to manage either way, but I think it will be something that whoever wins the leadership is going to reflect on before they make a decision. And it will obviously depend

in part on the conversations he or she has with opposition leaders. You've been generous with your time and generous simply in offering to come and talk. I appreciate that. Jonathan Wilkinson, thanks for joining me today. Not at all. Thank you for having me. Thanks for listening to The Paul Wells Show. The Paul Wells Show is produced by Antica and supported by McGill University's Max

Bell School of Public Policy. Thank you to the National Arts Centre for letting us record this interview in their studio. My producer is Kevin Sexton. Our executive producer is Stuart Cox. Laura Regehr is Antica's head of audio. If you subscribe to my Substack, you can get bonus content for this show as well as access to my newsletter. You can do that at paulwells.substack.com. If you're enjoying this show, give us a good

rating on your podcast app. It helps spread the word. We'll be back next Wednesday.