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Ambassador Richard Morningstar: Good morning, everybody. Thank you, Eithne, for your introduction. I’m wishing you all a good morning, but given you could be anywhere in the world, it could be any other time of the day. I hope that you’re all safe and healthy during these very difficult times. The subject of today’s panel is tackling the challenge of energy transition. How can governments deliver affordable, reliable energy for all while tackling the urgent need to decarbonize and stimulate economies after COVID-19? I might say also during COVID-19. Indeed, we do have a perfect storm of issues with the pandemic, its effect on demand and in investment, budgetary issues, all of which we’ll be talking about today.   

We have a wonderful panel to discuss these issues. I’ll introduce all three. First, my old friend Frank Fannon who is the Assistant Secretary for the Bureau of Energy Resources at the State Department, the United States State Department. I might add that Assistant Secretary Fannon is the first confirmed Assistant Secretary in that position. We also have Associate Deputy Minister Shawn Tupper for Natural Resources in Canada. Minister Tupper has a long and distinguished career in the government.  

Also, the Honorable Dale Nally who’s the Associate Minister for Natural Gas and Electricity for the government of Alberta. Minister Nally, has had a long career in the private sector before going into the government and can comment on that as well. I’m going to start by asking a general question basically for all of the panelists. They’ll briefly respond, and I may follow up or not depending on their response and then get into more specific questions. I’ll ask all of you, how can governments support the recovery of the global energy markets in light of the COVID-19 pandemic?  

How should the energy transition be integrated into these recovery efforts? What kind of regulatory environment is needed to drive clean energy investment in the energy sector? What’s the role of gas and how do you see the continuing role of gas in the energy transition? Those are really a lot of questions and maybe you can take your pick if you don’t answer every single aspect of what I asked. Let me go first to Assistant Secretary Fannon. Also recognizing that the U.S. State Department is involved all over the world in these issues and we may get more specifically into that. Let me ask you to respond, Assistant Secretary Fannon.  

Secretary Frank Fannon: Thank you, Ambassador. It’s good to see my fellow panelists here. It’s good to participate again in Gastech. Unfortunately, we’re doing it virtually, unlike last year. I’m honored to participate again. With the issue with respect to COVID has had a once in a century imminent shock. It has changed the economic future for all of us, and energy at large has also been subjected to that shock. What we saw in the immediate aftermath of the [unintelligible 00:03:55] destruction was in the context of oil, in particular, a fight for market share between some producing countries, Saudi Arabia, and Russia in particular. It worsened an already bad situation.   

In terms of the immediate, what does the government do? What did government do about it in this instance? The Secretary of State recognized that the Crown Prince of Saudi Arabia was, of course, the Saudi Arabia, the kingdom itself is a global energy leader. For the kingdom to harness its role as the president of the G20 which its construct to focus on global economic security and stability, to use that position of leadership to convene an extraordinary meeting and take charge of this.  

We’re pleased to see and of course, the president of the United States is very active in this. It did result in a extraordinary ministerial. We saw the G20 Act. We saw then OPEC plus get back together and had a supply response. We also saw in the context of the International Energy Agency, a  construct that you know very well ambassador, which is there to focus on resilient energy supply, but it is really in the context of having the additional supply to put on market in the instance of a supply curtailment. Now, we saw the IEA change its mission to reflect the COVID circumstances and served as a demand catalyst.   

We demarched posts all around the world to encourage them to increase their storage. There was a demand shock. Global governments got together and took a meaningful response and that normalized oil prices, and of course, associated natural gas prices as a result of that. Where do we go from here? We’re focused on creating the appropriate conditions to catalyze investment and having market-driven system of recovery, to create some of those appropriate signals for investment. We’re having considerable success.  

We see though, in the oil and gas sector, globally, about a 30% reduction in investment. By contrast, renewables and clean energy technologies continue to increase to something like 6% increase in the face of COVID. We see this contrary approach to the future of energy path. Gas, however, is the foundation for deployment of renewables at scale. We anticipate that gas is going to continue to play a meaningful role, just as it has in terms of the U.S. energy story domestically, it’s playing a critical role globally.  

From the point of view of the State Department, we’re engaged in helping countries achieve their own energy ambition. Oftentimes, gas is part of that. We put together the regulatory certainty, create the appropriate market signals to help them to develop their own indigenous resources since it’s in the case of the eastern Mediterranean, for example, region, but also to create the appropriate market conditions which we spend a considerable amount of time in the Indo Pacific region where two-thirds of energy demand growth globally will occur. That’s the role, gas is key and we look forward to further discussion.   

Thank you.  

Morningstar: Thank you very much, assistant secretary, although I can’t resist just calling you Frank since I know you so well. I’ll break my own rule, and before going to our Canadian friends, let me just ask you this question, the elephant in the room. The United States, as everybody knows, has withdrawn from the Paris Agreement. I can testify that from observing what the administration has been doing, from my seat at the Atlantic Council, there is a lot of work being done on new energy technologies and on the energy transition. Some might think that’s a contradiction. Could you explain that maybe briefly?  

Fannon: Sure. Again, there’s a lot of work that other more domestic-facing entities like the Department of Energy are really leading some cutting edge technology and innovation and development and how to deploy that at scale. They have a variety of programs and battery storage technologies in particular, which really is transformative. What we’re focused on is identifying where is the direction that a country wants to go, regardless of the type of energy that may be. Oftentimes, as I see it, I very much see this call for cleaner forms of energy as a bottoms-up transformation.  

That’s indicative of just the scale of economic development that’s occurring all around the world. You see this rise in global middle classes, oftentimes where people never existed before. When they hit that point, they often call in their governments to have cleaner forms of energy, and governments must be responsive. You’re seeing this bottoms-up call for clean energy, and gas is oftentimes fundamental to that. A lot of the work we do is to help them to achieve that ambition.  

So, we provide the technical capacity, we bring in other departments to help them have those appropriate conditions all across the board. That can appear in different ways depending on each country and where they want to go. In the case of India, for example, we had an existing program that sought to help clean energy renewable in particular deployment. Indian government was doing pretty well in the context of capacity, but not so well in utilization and creating the appropriate market signals.    

We launched a program last year in New Delhi with the chairman of the Federal Energy Regulatory Commission, FERC, and I went out to New Delhi, we launched a new program called the Flexible Resources Initiative to help them, the Indian government, better utilize and implement their own ambitions. Gas is a part of that because gas, whenever we have renewables at scale, and that’s certainly the objective in India, gas is foundational. Why have they been unable to achieve their goals? We put together a program.    

To get back to the point about market signals, and that’s critical because from the U.S. point of view, the U.S. government can partner with other governments to create regulatory environments and conditions, but it’s really the private sector that actually executes. The government doesn’t actually produce the energy. It doesn’t develop and execute the technology and deploy, it’s the private sector. In all of our efforts, we have a robust commercial engagement, so that we provide the right kind of conditions so that U.S. firms will find these as attractive targets for investment and help those countries achieve that ambition. 

Morningstar: Thank you. Now, I should turn to our colleagues from the North and first go to Minister Tupper, who can address my original question if you can remember what the question was, and then we’ll go to Minister Nally  

Minister Shawn TupperThank you, ambassador. It’s a real pleasure and honor to be a part of this panel. In particular for me to be participating alongside Minister Nally, a fellow Albertan, and indeed with Frank Fannon, with whom I’ve done a few of these events over the last year or so and we’ve gotten to know each other better and better even if it is virtually through the screens. Canada’s strong virtual presence at Gastech reflects our country’s determination not just to be the world’s clean LNG supplier of choice, but to be a leader in the global energy transformation.  

In fact, the clean energy future is central to the government of Canada’s ambitious plans for a smart, swift, and sustainable post-COVID recovery. It’s a plan driven by many things, including our strong, highly skilled workforce, a fair and transparent regulatory framework, and accelerated clean energy innovations and investments in Canada’s diverse energy portfolio. Some of you may have heard from my minister, the Honorable Seamus O’Regan, who laid this all out very well in his keynote address earlier today, Canada isn’t just open for business.    

We’re offering investors one of the most compelling value propositions for this century of clean growth, low taxes, great incentives, and preferential access to two-thirds of the world’s global market. These are the hallmarks of Canada’s economic response to the current pandemic, and these will guide us when we get to the other side of this challenging time.  

All orders of government in Canada move quickly to help workers and communities hit hardest by global shutdowns by investing in projects that have also enhanced Canada’s environmental performance, all the while creating good jobs, at the same time providing liquidity to sustain our energy producers. We are providing critical help and support in both the short and long term. We’ve seen construction of the coastal gas pipeline and the trans mountain expansion continue uninterrupted, demonstrating Canada’s resilience and our support for diversifying the world’s energy supply, especially in Asia.  

The Ridley Island Propane Export Terminal on our west coast is another great example of Canada’s strengths. It is a model of pan-Canadian collaboration, redeveloping a brownfield site, leveraging existing infrastructure, and bringing together diverse partners from industry and indigenous communities, as well as all orders of government. The result has been a continued expansion of propane exports to Asia, even during the pandemic where half of the new shipments going to Japanese-owned companies.  

The Government of Canada is using that same model of collaboration to develop Canada’s LNG industry, an approach that puts people in the environment at the core. Bringing all of us together is Canada’s world-class regulatory framework. As an oil-producing and exporting nation, we know that major industrial players are looking for a regulatory [inaudible 00:15:25] so they can get access to markets and build the infrastructure to move products to the world. Providing that certainty is a key responsibility of governments.  

To incentivize companies, to move to green energy production, to get to positive final investment decisions and projects, touted to be among the world’s cleanest, and to create the conditions for clean growth and clean investments while maintaining our competitiveness. As we now look towards recovery, governments must continue to find innovation solutions to ensure that ongoing viability of our oil and gas industries. That’s why earlier this spring, Canada announced it was exempting exploration drilling in the most active area of our offshore for federal impact assessments, leaving it instead to local efforts.  

That one decision has reduced regulatory hurdles and project timelines while still upholding the same level of safety and environmental protection. The importance of that cannot be overstated. Canada’s promise of clean green LNG is more than just a brand. It’s a value system. It goes to the heart of who we are as a nation, and it reminds us of the important role governments must play to support the recovery of global energy markets and make our energy transition a key part of the post-COVID recovery. That’s why I welcome the chance to participate in this discussion. It’s another opportunity for us to work together, to build back in ways that make our energy sector stronger, more innovative, and more inclusive. Thank you.  

Morningstar: Thank you, minister. I’ll also follow-up with one question for you before going to Minister Nally. I read an article in the Guardian a couple of days ago which maybe you’ll say is fake news, but basically arguing that Canada is having a very difficult time reconciling Prime Minister Trudeau’s promises for an emphasis on a clean energy recovery, and for funding a clean energy recovery, and difficulties that are taking place with respect to projects in Western Canada.  

Minister Nally may want to comment on this as well. That the cost of extraction is high, low demand, so forth and so on. That Canada may be trying too hard have its cake and eat it too. Do you believe that both of these goals or that you can accomplish your environmental goals and at the same time develop your natural resources in a very positive way?  

TupperWe’re actually convinced of that fact. I think that as the world moves forward and considers our objectives for 2030 and beyond in Canada’s case with respect to net-zero by 2050, that whole plan is predicated on a healthy and growing natural resource sector. Our perspective is that in fact, the energy sector will contribute to that plan. We need it to be able to move forward to meet those environmental goals. It is about producing the cleanest energy that we can, and making sure that we capitalize on the wealth of resources that we have.  

Canada is almost unique among at least Western democracies in terms of the immense resources we have right across the natural resource spectrum. We have capacity to produce the raw material, to see it manufactured in Canada and produced into high-value end products in a way that frankly no other economy has. Our goal is to do that in the cleanest and most appropriate ways so that we can participate in that global marketplace. We’re convinced we can do it.  

Morningstar: Hey, thank you. Then, I’ll go to a Minister Nally, and that you may have that comments as well, with respect to my follow-up question, but also your response to some of the original questions.  

Minister Dale NallyGood morning, and thank you so much for having me. It’s wonderful to be online with you today. I’ll jump right in terms of the first question on how we support the recovery of the global energy markets. We’ve heard this from energy producers is the biggest thing that we can do to support energy markets right now is as governments is to have a unified front, a unified front on economic recovery. Part of that is a recognition that this is about energy transition and not energy transformation. I can’t stress that enough with all the panellists.  

That word transformation is a dangerous one that makes energy producers nervous because it suggests that there’s some virtue signalling versus science that is driving the agenda. I want to talk about energy transition because we believe that energy transition has already begun. We believe that natural gas is an integral part of that transition. Now, energy transition is not a light switch that you just flip. It is a multiyear approach as we know, but we believe that natural gas is a huge part of that.  

We know that if we can simply get our natural gas, our LNG to global markets, the impact that it will have on a cleaner future for everyone is tremendous. Simply converting coal-fired power plants over to LNG is the most substantial thing that we can do to reduce GHGs. We believe that we need to have a united front, and supporting that natural gas is a big part of the energy transition that we’re going through. Secretary Fannon made a comment that I really support, and he mentioned market-driven recovery. That’s something else that we have to be united on as well, is that we need a market-driven recovery and that means no subsidies.  

I’ll be specific about our domestic market in Alberta is we have the only deregulated electricity market in Canada. We also have the most robust, renewable energy market as well. We have more wind farms than anywhere else in Canada. It’s an industry that we are very proud of and will continue to grow. Now, here is what’s important is all those renewable energy projects in Alberta are all market-based. They are not subsidized, and that’s important.   

The challenge is if we allow subsidies for those renewable energy producers, then that means that our other electricity producers, both coal and gas because we’re transitioning our coal over to gas, but it means they can no longer compete in a deregulated market with subsidized renewable power projects. In February, when it’s 30 below and the wind is not blowing and the sun is not shining, it means Albertans are going to freeze in the dark if we don’t have clean natural gas to power our homes. That is put at risk if we allow subsidized energy projects in our province.   

Unfortunately, right now we have a federal government that is looking at subsidizing 44 renewable energy projects. That is the most dangerous thing that could happen right now to our deregulated market. I can’t stress enough that we need to be united in not allowing subsidized energy. It must be as Secretary Fannon said, “Market-driven recovery.” I’ll give you an example. We were expecting three announcements totaling $500 million in investment in renewal energy that was market-driven.  

Those announcements have all been put on hold because those producers don’t want to make those announcements of those shovel ready projects because they’re afraid of 44 subsidized projects coming into Alberta. I can’t stress enough to Secretary Fannon’s point. It must be market-driven recovery. One of the biggest things that we can do is be united on all levels of government and all governments globally. It needs to be a market-driven recovery. Some other specific actions that we’re taking, we’re trying to remove barriers like market access.  

It’s imperative that we get our natural gas and all the resources for that matter to markets. We must deal with inefficient regulatory systems. We have made a commitment as a government in Alberta that we are going to be amongst the fastest approvals in North America. With respect to petrochemical, which uses natural gas as a feedstock, we are going to be approving petchem facilities as fast as they do in Louisiana. That’s exciting and that’s going to attract global investment and it’s going to drive energy recovery. That’s hugely important.  

Then, of course, also dealing with infrastructure challenges as well, but we’re casting the net wide as we are our transitioning and promoting recovery, there are things that we can focus on, not just petrochemical, but hydrogen is extremely important to our future, and of course, LNG as well. As I’ve said before, it’s imperative that we get our LNG to global markets, if we really want to reduce global greenhouse gas emissions globally. The one that we like to talk about a lot, and we talk about energy poverty, because it’s important to Canadians that we believe that access to clean, affordable energy is a human right.  

There are parts of the globe that do not have access to clean, affordable energy. We only looked to some of these countries like India, where they’re still burning dung patties when it gets cold to stay warm, and people are dying because they’re inhaling that particulate. If they only had access to clean, affordable energy like LNG, then that would go a long way. Not just from a human rights perspective, but when you get rid of that energy poverty, it gives them access to economic opportunity, as well. Those things are important to Canadians. We believe that energy poverty is also an important part of this conversation as well.  

Morningstar: Thank you, Minister Nally. Your answer leads me to this question. I certainly understand your points on no subsidies, and technologies being market-driven. How much agreement is there between you and I guess maybe the Alberta government and the federal government on that issue? It seems to me if any COVID recovery emphasizes green technologies, that in itself will create subsidies.  

NallyWell, we disagree that it’ll create subsidies because we have such a robust renewable energy market in Alberta that is all market-based. We have proven that renewable energy can compete on an even playing field with both coal and gas because we have so many wind farms and solar farms in Alberta. I reject that a green recovery has to be subsidized. I believe that, in fact, like I said, there was three renewable energy projects that were market-based that are on hold right now because they don’t want to come into a market that is subsidized 

Like I said, we have been clear as a government, no subsidies can be allowed, and not just for renewable energy. We don’t want any energy projects to be subsidized. There’s no risk right now of anybody subsidizing any natural gas projects, but the risk is on the renewable side, and we absolutely cannot allow it. In terms of what our alignment is with other levels of government, I should probably allow Minister Tupper to answer that question, but I could only say definitively from our position is, we need to be absolutely clear, as Secretary Fannon said, it must be a market-driven recovery.  

Morningstar: Well, then, let me ask Minister Tupper, is there any space or light between Ottawa and the Alberta government on these issues?   

TupperIt’s a democracy. Governments take different perspectives in terms of how they want to advance things within any sector of our economy. Where I can say, I know Minister O’Regan meets regularly with Minister Nally and Minister Savage. There is no light between our governments in the sense of wanting to see the success of the Canadian energy sector and particularly the petroleum sector. How we choose the frameworks that we put in place, sure, there may be some debate but frankly, that’s just a healthy democracy.  

Both Minister Nally and myself on this panel, Minister O’Regan doing the keynote at this event is a demonstration that Canada is convinced it’s got a global role to play, that our goods are the right goods for the global market. The penetration of clean green Canadian LNG into markets, and particularly in Asia, is a shared ambition across all governments who are involved in natural gas production. It is our belief that that is absolutely part of our future energy mix.  

Morningstar: Good. Okay. Let me go back to Assistant Secretary Fannon and maybe set up a round of questioning on this issue. One of the things that this pandemic has emphasized is risks to supply chains. Certainly, with respect to new technologies, supply chains from different parts of the world, particularly China, places like the Congo, other places, are absolutely critical. What is being done to secure those supply chains and what can be done cooperatively? Does Canada face the same issues as the United States or Europe? Let me start with Frank. Why don’t you respond, and then maybe we’ll hear from our Canadian friends?  

Fannon: Thank you, ambassador. The COVID pandemic has– I think there were a variety of trends that existed pre-COVID, and the COVID pandemic accelerated those existing trends. One of those key trends is an identification of the vulnerabilities that the world has in terms of some of the key supply chains, of course, the issues with respect to China and PPE, the initial issue that drove that was in regard to some of the PPE issues. The other issues, it’s created a greater awareness of the globe’s vulnerability to single points of failure and the ability for a party, a state-driven not market-driven, a state-driven enterprise to control the levers of supplies.  

One of those is in the case of renewable energy technologies. We’ve been doing some work, and Canada actually has been a leader in this, and Shawn in particular in our partnership, in a couple of areas was looking to what is the– Minister spoke to the energy transition. As you see this energy transition, what is the scale of that transition and implication? What are the inputs to allow that transition to occur? We weren’t alone, our respective governments, but entities like the World Bank, the International Energy Agency, the International Renewable Energy Agency have all looked into this question relatively recently as to, what are the inputs into this clean energy future?  

What we’ve found is that the inputs are minerals. Effectively as clean and green as any energy technology may be in deployment requires enormous shovels at the beginning of its life cycle. Where are those life cycles or where are the shovels being deployed? How are they being deployed? What are the supply chains? How are they processed and developed and turned into the clean energy, not technologies that so many applaud? The minerals intensity of these technologies is exponential.  

The World Bank did a report in 2017, updated it recently, 500 to 1000% increase in demand for these minerals that go into clean energy technologies. We see this exponential increase, it’s opening new frontiers of exploitation of mineral development. Some of the work we’ve been working is looking into, where are these minerals? How are they being developed? How are they being processed? We have real grave concerns about the future of energy transition technologies to achieve the ambition that peoples all around the world want. If they can’t get the minerals securely, reliably, and have a resilient supply chain.  

What we’ve done is we formed an organization called the Energy Resources Governance Initiative. The founding partner countries are Canada, Peru, Botswana, Australia, and the United States. Diverse countries spanning four continents, all have a record of responsible mineral development over the long term. What are the lessons learned? Why have we been successful? We then developed a toolkit. Actually, my last trip anywhere internationally was wonderful Toronto at the PDAC Global Mining Conference where we unveiled our toolkit to open access.  

It’s free to help governments to better understand, with this exponential growth and mineral demand and development, how can they meet the test and produce these minerals responsibly so that we can get these technologies. The United States is also looking to help countries implement the toolkit. Lastly, we have a relatively new institution called the International Development Finance Corporation. It provides financing for projects around the world in infrastructure and energy. We’ve integrated the ERGI principles. By the way, you can go to toolkit 

Integrated the toolkit’s principles into the development finance corporation’s lending practices, so it’s a preference so that if a country takes the toolkit, looks to implement, identifies these principles, saying that these important, then they have a preference in DFC financing. DFC financing is there to catalyze private sector investment. It’s some of the seed money to help de-risk projects. It helps create a more level playing field. We’re blessed in the United States, of course, Canada as well with mineral resources, blessed with them.  

We need to make sure that there’s a level playing field globally in the regulatory context so that we’re competitive, and that countries around the world who want these clean energy technologies, they also integrate and recognize how they’re produced. Is their production responsive to human rights issues? Is it responsive to true environmental protection and management? Are they responsible to local communities? Are local communities being empowered, or are the minerals being produced from imported labor with substandard labor conditions and despoil the environment?  

This is trying to create a level playing field because we’re convinced that the world will move from the focus singularly on greenhouse gas emissions and reawaken to issues of human rights and these other issues that I mentioned. If we don’t integrate these concepts now, then there could be a future where the minerals don’t get produced, or they do get produced, but not in advance of some of these shared values that we all have in support of people.  

It’s something that the Secretary of State convened an event on the margins of UN General Assembly last year, we’re looking to virtually do something around the same time this year, in a different way. It’s something we’re quite passionate about and we’re very, very pleased that Canada continues to be a partner in this effort and really help lead the effort globally.   


Morningstar: I’d like to ask our friends from the north, either minister to give their views as to what the situation is with respect to supply chains? How the partnership with the United States and other countries is going in connection with that. Then, the area of the world that hasn’t been mentioned is Europe, which has a huge stake. Will Canada and the United States be working with Europe on these issues?    

NallyCan I jump in, ambassador?   

Morningstar: Yes.  

NallyIn terms of the cooperation with Europe, I think that COVID-19 has taught us a couple of things, and one, the more global cooperation, the better. COVID-19 is not a time to become protectionist, it’s not a time to through our borders, it’s a time to work together. One of the things that we saw is supply chains are absolutely at risk when you have impacts like COVID-19, and specifically what was important to Canada was access to PPE, and the N95 masks, is a great example. We were able to source the appropriate amount of N95 masks, but of course, it wasn’t clear that we would be able to get all the masks that we could.  

The fact that we were even having that conversation was shocking to us. It was a big eye-opener in terms of supply chain. What it taught us is that we also need to be more independent in terms of developing and enhancing our own supply chain and specifically with regards to natural gas because it is the building block of polypropylene. As you know, polypropylene is a significant ingredient in the N95 masks. The fact that we were having conversations about sourcing enough N95 masks, when Alberta has a 300-year supply of natural gas, it’s a conversation that we don’t want to be having again.  

We think that we need to be enhancing our supply chain and we need to become a destination for N95 masks. We’re already a destination for natural gas. We’re already a destination for petrochemical. If COVID-19 taught us anything was the importance of plastic. Plastic has been hugely important, not just for N95 masks, but for single-serving containers that provided protection. Plastic use has gone up significantly because of COVID-19 and the hygiene and the protections that it offers. We need to protect that supply chain. Part of it is because there are conversations that are happening on the peripheries around plastics, and we need to address that.  

We don’t have a plastic problem in this world. We have a waste problem. We need to figure out a responsible way to deal with that waste and create the circular economy that we need with plastics so that we view plastic in the light that it needs to be viewed at, which is its part of the solution. It’s the solution for single-serving containers. It’s a solution for N95 masks and things like that. COVID-19 was a good opportunity for all of us to look at our own supply chain and say, “What can we do better?” What we decide that we could do better is we need to be more aggressive in protecting the development within Canada on things like N95 masks and focusing on creating a circular economy with plastics as well.  

TupperI’ll jump in on that. Picking up on Frank Fannon’s comments, the bringing together the North American perspective in terms of looking at global supply chains and trying to understand how we can convert those into true value chains for our economy in North America and how we play globally, is critical. Certainly, after Prime Minister Trudeau and President Trump announced their joint ambition with respect to critical minerals, that has become a real focal point of the dialogue between the two governments.  

I’ve had the pleasure of leading the Canadian side in that engagement with the United States. It’s really started to make progress in terms of understanding how our value chains are working and what we need to look at in terms of clearing some of the rocks off the road. There is no question that we have a lot of opportunity within our economies to partner and to grow those value chains, and indeed to engage with economies all over the world.  

We have begun a very active dialogue with our European partners. It is a joint dialogue between the United States, Japan, Europe, Australia, and Canada. It is that coalescing of like-minded countries and regions that will allow us to make sure that we don’t, as Minister Nally pointed out, become vulnerable in the future to supply chain disruptions. Making sure that we are doing all we can do to ensure that the market and the economy is thriving and that it’s got a letter a level of security to survive things like we’re going through right now with the pandemic.  

Morningstar: Thank you. Anything to add, Minister Nally before I ask Assistant Secretary Fannon what the U.S. is doing with Europe on these issues?  

NallyNo, I’m in agreement with Mr. Tupper’s comments.  

Morningstar: Okay, Frank?  

Fannon: Thank you. We have ongoing discussions with Europe. One of the things that is pretty important to be mindful of is, Europe had this Green Deal, which preceded COVID. I don’t have the exact count, but it wasn’t equally embraced by all of the member states. Some of them outright opposed and for a variety of reasons. It was a bit upon introduction, as often new policies are. Especially, there was some states had the yellow-vest protests in France. That was a climate-related fuel surcharge that was being imposed. Some people in France oppose that. There was that air.   

In the COVID response and the COVID stimulus, Europe took key elements of that Green Deal and wrapped it in the COVID response. About a third of the COVID stimulus in Europe is portions of the Green Deal. What that is doing is, again, this was the trend and then COVID has accelerated the implementation of it. One of the ongoing discussions we’re having is for Europe as they are going to accelerate this market by virtue of this policy shift. It’s important that, for all of us that they integrate some of these concepts of the supply chains.  

It’s not just to be mindful of how the battery storage technologies, electric vehicles, the renewables, how they were produced and from where and re-integrate those concepts in because this is a big, their COVID Green Deal stimulus-response is a big market driver. It’s important that we have this global level playing field and that countries and the processing industry and the manufacturers that those who are adopting best in class shared values that we in the West certainly have, that those are integrated in the procurement policies.  

We can’t have a focus just on cost alone, but these are somewhat value-driven policies. They should incorporate the values throughout. By doing so, we’re confident that the integration of some of these technologies will be more widely embraced, and it creates the opportunities for countries as well as investors who are willing to do the right things by virtue of the way in which they conduct themselves in their business that they’re preferred. That’s one of the ongoing points of discussion we have with Europe especially given their significant market driver here.  

Morningstar: Speaking of Europe there’s been a lot of attention given to their proposed carbon border adjustment mechanism, and other countries may end up setting up similar kinds of mechanisms. One of the issues that clearly will come up is, how do you set up a mechanism that’s not discriminatory and is based on objective and transparent data? Canadian LNG should be treated the same as U.S. LNG should be treated the same as Russian piped gas or Qatari LNG or Caspian gas, wherever.  

What needs to be done to ensure that that happens? Does it push towards the need to have uniform standards as to what producers do with respect to reducing the environmental footprint, particularly of gas, and for that matter of oil as well? Since Frank you just spoke let me see if we have any comments from Minister Tupper and Nally and then Frank we’ll get your response. We only have a few minutes left.   

TupperFrom our perspective, one of the critical elements of that work is about transparency. It might’ve been minister Nally earlier talking about having good science, good data, good information upon which investors in governments are making decisions. That’s the trick is to make sure that people aren’t being arbitrary, that they’re not succumbing to the myths that are sometimes out there, and making sure that people do understand the kinds of frameworks, the kinds of regulatory processes and indeed what industry is doing to ensure that we are producing the cleanest product possible.  

That’s a challenge for Canada because there is a myth out there and we’ve seen this by some of the big investors in Europe that they are questioning whether they can continue to invest in Canada. We think that’s nonsense. We think Canada is as competitive and as clean and as good a producer as any country in the world. From our perspective, having the right information, having the right data, having transparency that we can demonstrate to others we’re meeting the standard and we’re exceeding the standard, and that this is a good place to invest, and we can get the job done.  

Morningstar: Minister Nally, would you like to add anything to that? I’ll go to Assistant Secretary Fannon and I’ll ask the question on, do you think there should be uniform standards on things like methane emissions in order to ensure that there would be no discrimination?  

NallyI’ll talk specifically to the carbon border exchange. I haven’t been tracking it, but I will give my comments on carbon and generally which is, Alberta’s one of the first jurisdictions globally that started taxing polluters. This is something that we believe fundamentally is that there is a cost to carbon. If you pollute, then there should be a cost to that, but it should be the polluters that pay.  

One thing that we have been adamant on is that if you’re a large emitter, that there’s a cost to that carbon, you should pay that, but we should not punish seniors for heating their homes in the middle of winter. We don’t believe the carbon costs that are being passed onto consumers and talks of paying upwards of $300 a ton. We think that is irresponsible for sure. In terms of the methane, absolutely, we think that there should be both equivalency and there should be some uniformity as well across jurisdictions to create a level playing field. That is something that we absolutely support.   

Morningstar: I’ll go to Assistant Secretary Fannon. Frank, your comments on these issues.  

Fannon: Thanks. I guess Shawn made a comment speaking specifically to Canadian gaps that there’s a myth out there that it may not be as green as other gas or something. I would say it’s not a myth, I would say it’s purposeful disinformation. It is not just related to Canada. In fact, we saw this disinformation campaign that’s being pushed by the Russians relative to U.S. gas. The Nord Stream Group, the pipeline, Nord Stream AG, they put out their own environmental assessment of their own gas relative to U.S. LMG, Australian, and Qatari. Of course, they concluded that theirs is environmentally preferable to all of ours.  

By contrast, there’s an organization in, I think it may be UK-based, called the Carbon Disclosure Project. They put forth a study, and I can’t speak to their methodology or whether it’s good or bad, but they concluded that Gazprom is the third biggest carbon emitter in the world. One of those is untrue, but I would say that this issue with the carbon border adjustment tariff being imposed on gas imports creates opportunities for the Kremlin’s disinformation campaign to continue. We shall scrutinize this very, very carefully.  

Again, unlike the companies in our countries, in the United States and Canada which are private sector companies where there is a, especially with a publicly-traded company in the United States, there’s an auditing function there, there’s clarity, there’s transparency, and there’s ability for shareholders to hold management to account. This doesn’t exist in Moscow. These are state entities whose gas business is a geopolitical tool.  

As we continue to engage with our friends in Europe, we have to be mindful of if you were to impose some kind of methodologies or anything else to measure anything and one of your largest provider is known to be to use their product to coerce other countries, we have to be very suspicious about such methodologies and structures going forward.  

Morningstar: I’d also add that the private sector on their own has recognized the need to reach carbon neutrality, the energy companies. They’re doing their own work to reduce the environmental footprint, which ultimately will be extremely helpful. We’ve run out of time. This has been an excellent discussion, an excellent panel. We could go on probably for another couple of hours if we had the time. I would like to thank Gastech as well as our panelists for doing a superb job. Look forward to seeing you again on other panels or in other settings. Hopefully maybe in person before too long. Thank you very much.  

NallyThank you, ambassador.  

Fannon: Thank you.  

U.S. Department of State

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