Western Standard - November 14, 2025


Ottawa’s energy rules are crippling the West


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Summary

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The government wants Alberta's oil sands companies to produce oil without increasing the amount of carbon in the atmosphere. What does this mean for the environment and the economy in general? Is this a good or bad thing? In this week's show, I speak with environmentalist Ron Wallace about this.

Transcript

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00:00:00.000 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show.
00:00:21.260 It is Thursday, November 13th. Here is a factoid for you. The government of Canada wants Alberta's
00:00:29.440 oil sands companies to produce oil without increasing the amount of carbon in the atmosphere.
00:00:36.200 You probably knew that, and you knew it as net zero emissions and so-called emissions cap.
00:00:42.020 This costs a lot of money and is a competitive handicap for Alberta oil, a severe one actually.
00:00:49.760 In the prime minister's mind, this is decarbonized oil that we make here, and if any new pipelines
00:00:56.260 are built out west. It is decarbonized oil that they'll be carrying. However, it's not the same
00:01:05.700 for eastern Canadian refineries importing oil from other countries. There is no equivalent added
00:01:12.260 cost. Now, I find this unbelievable, but apparently it is so. There are two energy economies in
00:01:19.540 canada one based on expensive oil out west the other on cheap oil with me today is dr ron wallace
00:01:28.920 who served on the old national energy board that the liberals got rid of and by proposing to
00:01:35.540 modernize it you're the first professional ecologist appointed to the national energy board
00:01:41.500 You have a long career in energy regulation, and in fact last month, Dr. Wallace, you were testifying to the Parliamentary Energy, the Standing Committee on Energy, about this.
00:01:55.460 Welcome, Ron.
00:01:56.280 Thank you.
00:01:56.780 Ron, you know, this sounds outrageous, but I'm drawing my understanding of it from an article that you've published recently in C2C Journal.
00:02:12.740 And that said, you laid it out all in broad terms.
00:02:19.220 They don't pay a premium in the East to import oil.
00:02:22.860 We pay a premium in the West to produce it.
00:02:27.560 What is going on here?
00:02:29.560 Well, this is a situation that's developed since the last election
00:02:34.140 and been brought to a head by Prime Minister Carney's reference
00:02:40.260 to what he called decarbonized oil.
00:02:42.800 It wasn't something that was raised during the election,
00:02:47.240 but it's come up since then.
00:02:48.820 and I have some figures here,
00:02:53.060 is that since 1988,
00:02:57.100 marine terminals along the St. Lawrence
00:03:00.020 have seen imports of foreign oil valued
00:03:02.780 at more than $228 billion.
00:03:06.280 Yes.
00:03:07.160 And that's not including the Irving oil refinery
00:03:13.580 in New Brunswick,
00:03:15.000 which between 1988 and 2020,
00:03:17.940 imported 136 billion dollars worth of oil now there's two things here first none of that oil
00:03:26.500 is quotes decarbonized it's originating from the united states explain i mean i don't think people
00:03:32.820 necessarily believe me decarbonized oil like what makes oil attractive is carbon so like dehydrated
00:03:40.100 water what do we what do they mean dehydrated water is a good example what they're saying is
00:03:45.940 is that this is an attempt to limit the emissions
00:03:50.660 that are going to the atmosphere in Canada.
00:03:53.380 And so the idea of that behind decarbonized oil is that oil sands production will,
00:04:02.020 the emissions from oil sands production will be captured and sequestered in the ground.
00:04:08.820 And this is an attempt to ensure that Canada moves towards, it'll never reach net zero, but that it'll
00:04:19.460 theoretically move towards producing more oil, but maintaining or reducing the emissions in Canada.
00:04:27.220 And so what you're doing is you're capturing these emissions from these oil sands producing
00:04:34.020 facilities, re-compressing them and re-injecting them into geological formations underground.
00:04:41.940 But this happens under very, very high pressure, requires pipe manufactured to extreme
00:04:50.980 specifications, and costs a hell of a lot of money.
00:04:53.940 It's a great deal of money. It's the minimum estimate so far that industry has spent through
00:04:59.940 the Pathways Project are reported a billion dollars just on the basic engineering so far.
00:05:04.900 Okay, for people who don't follow the energy industry as closely as you do, the Pathways
00:05:09.220 Alliance… The Pathways Alliance has been established by
00:05:13.300 the big oil sands producers, four of them, to construct a facility to capture these emissions
00:05:21.860 and inject them underground. They're already doing that in Weyburn,
00:05:25.140 Saskatchewan, I believe, and not Pathways. Well, that's a different
00:05:29.540 situation. In Weyburn, what's doing on is called EOR, Enhanced Oil Recovery, where they're capturing
00:05:36.100 emissions from coal facilities, and they're re-injecting those underground to pressurize
00:05:42.780 wells to bring more oil to the ground. And they've produced a lot of oil by doing this. That wouldn't
00:05:48.840 normally be productive. Now, the government doesn't like this because you're adding oil to the
00:05:55.000 equation. In fact, what has happened is that the government of Canada has specifically set out
00:06:04.280 tax relief for companies that can decarbonize or capture emissions, but they specifically excluded
00:06:15.160 EOR from those tax regulations. So they're two different situations.
00:06:22.840 So to be clear, Weyburn demonstrates that you can compress carbon dioxide and force it underground.
00:06:29.700 And underground and produce oil.
00:06:31.700 But for the way you're talking about it, it sounds like it's a sort of a high school chemistry experiment in scale compared to what you would have to do to bury carbon dioxide sufficient to…
00:06:44.540 Very much so.
00:06:45.340 Well, the major difference between what's being proposed at Pathways is there is no oil recovery.
00:06:51.660 You're just simply taking all that carbon from those emissions,
00:06:55.560 pumping it under the ground, it's gone.
00:06:56.880 In Weyburn, at least, their cost is being offset by the production of the oil.
00:07:02.880 So when you build a plant that's going to cost $16 to $24 billion,
00:07:09.600 you then have to operate that facility.
00:07:14.140 And the operating costs are not covered in that $16 billion.
00:07:18.580 It's estimated that those operating costs could be as much as $1.4 billion a year every year.
00:07:24.960 So what would that do to the cost of the oil that's produced that way?
00:07:28.340 Well, precisely.
00:07:29.840 We're an export market. We've got to sell against the world.
00:07:32.660 We've got to sell against the world. Nobody else is doing this.
00:07:35.700 Now, let's just start a little bit further back.
00:07:38.780 This idea of an emissions cap, which is now apparently in play,
00:07:44.360 There's no other country in the world that is doing that to its oil producers, not one.
00:07:50.740 Canada is an outlier in this, as I explained to the Standing Committee to the House.
00:07:56.740 Not even Norway, which is pursuing injection facilities for carbon to inject the emissions
00:08:05.060 underground, is doing that for its oil industry.
00:08:08.900 It has a major facility that's under production, but that's for cement production from Germany.
00:08:15.540 So that's the starting point here. When you move past that discussion, you move into, well,
00:08:23.060 where will you take emissions? Well, what's happening is that the government of Canada is
00:08:29.940 selectively picking Canadian oil production,
00:08:34.440 not, as you pointed out, Eastern oil imports
00:08:37.700 or transportation emissions or whatever.
00:08:41.560 They're specifically targeting, in fact,
00:08:45.400 the oil sands before that oil can be released.
00:08:48.240 Now, when you add 16 to $24 billion
00:08:51.220 onto your cost of production,
00:08:55.160 before you build a 20 to $34 billion pipeline,
00:08:59.940 you're looking at very significant penalties for Canadian Western producers.
00:09:06.100 Well, I won't ask you to go out on a limb and say how much per barrel this could add,
00:09:11.600 because who knows?
00:09:13.200 Nobody knows.
00:09:13.940 Well, nobody knows.
00:09:15.240 It's estimated between $100 to $200.
00:09:19.540 Okay, well, oil is about $57 a barrel when I looked this morning.
00:09:23.720 It's down a lot.
00:09:24.700 So who is going to want to buy Alberta oil?
00:09:28.380 Well, who could afford to produce that oil at those prices?
00:09:34.420 That's the question, and carry that cost.
00:09:36.940 And so, you know, the government loves talking about stranded assets.
00:09:42.480 If we're going to get out of oil, all of these facilities will be stranded assets.
00:09:46.740 Well, let me tell you, this huge decarbonization project could be a gigantic stranded asset
00:09:54.800 if the price of oil goes below where it is now.
00:09:57.800 In fact, it's a very critical price point right now for all these plants.
00:10:04.600 So how does this affect Canada?
00:10:07.080 Well, if you can't export that oil, and there are estimates that these policies have cost Canada around $680 billion in capital that's fled the country over the last 15 years.
00:10:21.620 Say that again. 0.71
00:10:23.640 $680 billion.
00:10:25.460 $680 billion.
00:10:26.620 Nearly a billion.
00:10:27.800 nearly three-quarters of a trillion dollars in 680 to 750.
00:10:34.520 And that's just capital that's left by projects that haven't been built.
00:10:39.400 If you look specifically at the numbers involved with some of the pipelines, for instance,
00:10:46.440 these pipelines and the production from them that's going offshore is not only competing with
00:10:53.480 oil that's coming in from Venezuela and the United States.
00:10:56.520 I mean, of those imports to Eastern Canada, 72% originating in the United States.
00:11:04.740 They have none of these penalties.
00:11:06.720 So this idea that Canada is going to seek out markets because it has decarbonized oil,
00:11:13.740 the question is, who's asking for that oil?
00:11:17.240 No one that I'm aware of.
00:11:19.880 No one is saying we need to have a premium for decarbonized oil over what's coming in
00:11:24.680 from Venezuela.
00:11:25.680 Well, let me ask you this, Dr. Wallace, I mean, I hate to ask you to put yourself inside the liberal mind, but how do you think that they could ever justify that to themselves?
00:11:37.680 We're talking about the smoke-filled room, the back room where everybody's sitting around.
00:11:42.820 How are we going to, do you think we could ever stick it to the Alberta oil industry and not put something similar on importing oil from outside the country?
00:11:55.040 Well, most people would say, no, you never get away with that, but they're getting away with it.
00:11:58.800 Well, as you said in your opening comments, we appear to have two oil policies in Canada,
00:12:06.480 one for the East and one for the West. East unrestricted imports of any kind,
00:12:11.200 which is taking vast quantities of money as the numbers I cited are
00:12:18.320 well over $500 billion over the last 20 or 30 years.
00:12:24.160 So a very interesting thing happened this week.
00:12:27.680 Bill Gates came out just in advance of the COP30 conference in Brazil
00:12:32.240 and suddenly changed his position on global warming to say we're concentrating too much
00:12:39.840 on emissions as opposed to practical solutions to cope with the warming.
00:12:44.080 Now, this is a position that's been taken by scientists
00:12:47.120 and ignored by the media largely for the last 20 years.
00:12:50.080 This is a very significant commentary
00:12:55.140 because what's happening is that the world is,
00:12:59.060 there was a quote I saw just this morning,
00:13:01.980 the world is transitioning away from the energy transition.
00:13:07.580 That is something that's putting the Carney government
00:13:11.120 and the Canadian government in a very difficult position.
00:13:14.180 The rest of the world is pivoting away from the idea
00:13:18.000 that you can,
00:13:20.080 eliminate a hydrocarbon economy and an energy producing economy and replace it entirely with
00:13:27.280 renewables. Just saying, look, we know that's now wrong and now we're moving into a situation to say
00:13:33.440 we have to focus on adaptation. Bill Gates has been a very strong
00:13:40.320 proponent of cutting carbon emissions to fight global warming. He has now recanted.
00:13:45.520 before he recanted he was very quotable as long as he said that right now of course everybody's
00:13:51.840 oh well you know bill gates fit a little old night and maybe he's losing his losing his grip
00:13:56.400 well nobody's really uh picking up on that i mean i i think that's highly significant well it's
00:14:01.920 tremendously significant and the fact that he decided to make that announcement just before
00:14:06.160 cop 30 and you know it is almost predictable the u.n conferences this is the 30th conference now
00:14:15.520 And aside from the costs of jetting all these people to the Brazilian rainforest, 0.99
00:14:21.520 well, to come back specifically to Canada,
00:14:27.640 Canada has set out these emissions guidelines.
00:14:31.120 Ever since 1998, Canada has not hit one of its objectives for emissions, not one.
00:14:38.400 It's now looking like it's trying to double down on it
00:14:42.080 and keep the myth that you can stabilize or reduce your emissions through decarbonized oil.
00:14:51.600 The cost of this proposal, even though it's been looked at by industry as a viable option,
00:15:01.120 it's not the question of whether or not we can do this. Engineers in Canada are more than capable
00:15:07.280 of doing it. Although the technology is unproven and the largest comparable facility in Australia
00:15:13.920 that's run by Chevron has never come even close to meeting its requirements. And so assuming it
00:15:20.960 works, assuming that you spend that 16 to 24 billion dollars and assuming that there's a
00:15:27.600 market for that oil at the other end, you still only bring down your emissions in Canada by less
00:15:35.520 than two percent oh that happens really less than two percent yes we do all that you do all that
00:15:41.200 all the rest of us are driving our cars and we're breathing and exhaling and well and the the comment
00:15:47.280 i heard from the prime minister that made me laugh that he said you have to realize that this
00:15:51.760 decarbonizer oil is going to generate enormous jobs and enormous industries in canada well it will
00:15:58.320 it's not going to be if you're going to spend 16 billion dollars you're going to employ a lot of
00:16:02.800 of people. The point is, it never makes money. It's a constant negative impact, not only in
00:16:10.000 operations, but on your pre-capital cost and on the penalty it imposes on the pipeliners and the
00:16:17.220 oil producers who are going to have to pay for this. Now, the part that he's leaving out is that
00:16:23.180 it is not the pipeliners and the producers and the federal government that's going to pay for this.
00:16:29.840 This is going to probably land very heavily on the Alberta taxpayers to the tune of between maybe $500 million to $1.4 billion a year to operate that facility.
00:16:44.160 Well, okay, let's talk about that, because there is a sort of an understanding, I think, that Premier Smith has, or hope, perhaps I should call it, that we will be able to develop the oil-producing industry and have pipelines going to the coast and lift the tankard ban as long as we can decarbonize the oil in the manner prescribed.
00:17:12.560 it now at the price of the decarbonizer well nobody's going to want to buy it we're not going
00:17:19.120 to be able to afford to use it even locally or sell it or sell it so what chant what chat two
00:17:27.280 questions first of all is when you laid this out for the uh for the parliamentary committee what
00:17:32.720 did they make of it and the second question is do you think this grand bargain has got lengths yeah
00:17:38.560 Well, the Parliamentary Committee didn't ask me one question.
00:17:42.580 The Conservative members did, but the Liberal members did not rise to the occasion.
00:17:48.600 So quite frankly, I know what Honorable David Bextie and his Tory colleagues thought of it
00:17:57.520 because they were asking me questions where I used these numbers.
00:18:01.440 The Liberals, not so much.
00:18:02.940 So I don't know what they're thinking about.
00:18:06.000 As for Premier Smith, you know, I really congratulate her for trying so hard to find outcome when she emerged from the Premier's meeting in January in Saskatoon and came up with the idea of a grand bargain where a new pipeline could theoretically pay for this and be a grand bargain, which meets the requirements of the federal government and Alberta's expectations for oil export and development.
00:18:33.740 my only comment is is that if you're going to spend between 16 and 24 billion dollars
00:18:39.660 you need to do something more than a back of the envelope calculation and that uh if in fact the
00:18:46.700 federal government is presenting that as an alternative for alberta i think at alberta
00:18:52.140 government needs to look at this very very carefully so the parliamentary committee
00:18:57.100 basically
00:18:58.620 you've had a chance to get the message
00:19:01.840 out to more people on this interview
00:19:03.580 than probably you have through the
00:19:05.120 parliamentary committee because the liberals
00:19:07.740 just wouldn't pick up the ball
00:19:09.700 and play
00:19:10.180 but
00:19:12.780 if the grand bargain
00:19:17.460 doesn't happen
00:19:18.660 what is
00:19:21.580 the future
00:19:23.120 of the oil and gas
00:19:25.860 industry in Alberta
00:19:26.980 Well, if you look at and you listen to what, it's interesting to listen to the prime minister say that they've set up this new major projects office that's going to accelerate these projects.
00:19:43.660 Well, that may be true.
00:19:45.120 I mean, I don't think it's going to be that effective.
00:19:48.880 They're paying people very significant amounts of money to make it work.
00:19:53.220 I hope it does.
00:19:53.960 But in effect, they're trying to countermand their own regulatory process and end run it.
00:20:01.740 That's something that I find to be unique in any parliamentary democracy.
00:20:06.740 If your legislative base is so formidable that it's preventing things, as has been documented,
00:20:13.360 to the extent of the billions of dollars that have left Canada,
00:20:17.720 if you would think it would be reasonable
00:20:22.300 to change that legislative base
00:20:24.580 rather than and run it.
00:20:27.320 So that's what we've chosen to do.
00:20:28.880 But to come to your point,
00:20:31.800 if in fact these projects are going to be built,
00:20:37.980 they're not going to be built by the federal government.
00:20:41.240 They may be funded in part by it,
00:20:43.600 but they'll be built by industry
00:20:44.920 and by private capital.
00:20:48.220 And when you listen to the presidents of TransCanada and Enbridge,
00:20:53.220 they're giving messages out very clearly
00:20:55.600 that they're directing their money for capital investment
00:20:59.480 into the United States.
00:21:01.160 Now, they may be, in fact, looking at a potential project in Canada
00:21:06.160 after the cancellation of Gateway.
00:21:07.800 I mean, Enbridge had to eat, it's been reported,
00:21:11.700 something like a billion dollars when Cabinet,
00:21:15.640 unilaterally overruled the National Energy Board approval for Gateway.
00:21:21.560 If you had to be a producer in a capital markets, as I said to the committee,
00:21:27.080 would you be interested in investing in Canada when A, you had to build a $16 billion
00:21:33.080 decarbonization project, then face $20 to $30 to $40 billion in pipeline costs,
00:21:41.160 for which you would have to go through what's called an expedited regulatory review process
00:21:48.520 when you've got Aboriginal communities and the premier of British Columbia in completely opposing
00:21:57.480 those ideas and a tanker ban on the West Coast, which would allow you to transport that oil to
00:22:03.320 market. Those are tremendously formidable barriers. And it explains why TransCanada, or TC Energy,
00:22:12.360 excuse me, and Enbridge, the presidents are making very clear statements saying,
00:22:18.840 our money, our capital investments is going to the United States.
00:22:22.040 Well, I know some people are watching this and they're saying, this is all very interesting,
00:22:25.720 but Mr. Carney said he was going to lift the emissions cap. So surely we don't have to do
00:22:30.520 this anymore. Well, he said that they wouldn't need it if they did all of the other things.
00:22:35.480 All these things. All of the other things, which is
00:22:42.280 the current suite of emissions and climate regulations. You've got to understand that
00:22:48.040 there's the clean fuel regulations. This is the tanker ban. The list of regulations goes on and
00:22:54.760 on. What he's saying is that if we do all those things, then you won't need an emissions cap.
00:22:59.320 well it's the same thing yes it's the same thing only different we're just about out of time dr
00:23:05.080 wallace but let me pitch let me pitch something that's just really crazy because all of this is
00:23:09.720 crazy so i can be crazy too we've got uh the trans trans mountain expansion line out to the coast in
00:23:16.600 bc if it gets so if it gets to be that we alberta oil becomes so expensive we can't even afford it
00:23:24.680 never mind sell it to anybody else right the industry goes down and we start reversing the
00:23:29.880 flow and bringing imported oil in just like they do from in eastern canada and bringing it up to
00:23:35.080 alberta through the tmx well i think well is that crazy is well you'd have to reverse the line that's
00:23:41.640 a very difficult situation but you know trans mountain represents a very viable alternative
00:23:49.080 for Canada to very quickly increase its export oil by simply optimizing that line like Enbridge
00:23:58.680 and TC Energy are presently doing. You don't need a new pipeline. You can optimize existing ones
00:24:05.160 and get it there. Now, if you've got it, the only way you can optimize those lines is to
00:24:12.440 buy, quote, decarbonized oil, then you've got a very difficult process.
00:24:17.240 Dr. Wallace, it's a funny world we live in, except it's not really that funny.
00:24:23.080 But that was an amazing article.
00:24:24.920 And I think you're one of the first people to bring it to light.
00:24:27.960 Thank you for doing that.
00:24:29.720 And I think we may be having you back to talk about this as things develop.
00:24:34.120 So thanks for coming on the show.
00:24:35.720 Thanks for having me, Nigel.
00:24:39.320 For the Western Standard, I'm Nigel Hannaford.
00:24:47.240 so
00:24:58.760 foreign