When we think of the climate action
polarization, between those who want precipitously to do away with fossil fuels
and those in a more reasonable camp, we see two very compelling points of
consensus that should unify diverging philosophies and approaches on a
Those advocating for doing away with
fossil fuels altogether do so with good intentions: to avoid a climate change-driven
humanitarian crisis in the future. At the same time, the ironic problem with
that approach, pointed out by equally well-intentioned people, is that it has already
created an energy crisis that, in turn, is creating a humanitarian crisis.
The Russian angle. Additionally,
our precarious situation and energy “insecurity” have been exploited by Russia,
with longstanding ramifications on European and global peace and prosperity.
This is evident in pre-Ukraine-war Europe, where unreliable alternative energy
sources, particularly in the misguided shutdown of German nuclear plants, increased
dependency on Russian natural gas. Renewed reliance on coal, with its higher
emissions, along with natural gas shortages, pushed energy prices to
unaffordable levels, due to blatant and dangerous mismanagement and a renewables-centric
planning process. And let us not think we have sidestepped a catastrophe
because of one mild winter (so far) in Europe; solving the energy trilemma is a
long and protracted battle that will not go away gently.
A unified approach to avoid a crisis. A
mistaken view that renewables can replace hydrocarbons has threatened food
production and promises to push many millions, who have emerged from poverty in
the past several decades, back into poverty. Those who legitimately want to
avoid a future humanitarian crisis surely agree that, while doing so, we need to
avoid creating one in real time. That should be the key point of consensus to neutralize
the desire to kill fossil fuels.
A second possibility for building a
unified approach to climate action is emphasizing the realization that every
country shares the need to reduce emissions; it is not just a North American and
European issue. China and India have cement, steel and chemical factories;
Singapore refines oil. Farms everywhere produce significant emissions—as does transportation—and
home heating affects everyone around the globe. If supplies of cleaner natural
gas and LNG are unavailable, these rapidly developing nations will use cheaper
and dirtier coal.
Strong and positive political
leadership should focus on these two points of shared interest— avoiding
humanitarian crises and the common problem of emissions—to build a unified approach
to deal with climate change.
It is reasonable to expect, but not
inevitable, that political leaders should realize that while the public’s
support (or tacit permission) to pursue climate action is relatively high, it
is also extremely vulnerable to a stark 180-degree turn, if people cannot
afford to heat and cool their homes, and if the overall cost of living becomes
threateningly high, due to unreliable and unaffordable alternative energy
sources. We need to do this right, or there is no chance that it will be done
at all. Environmentalists should heed that message loud and clear.
CCUS will be a key ingredient. We cannot
get to net zero by 2050 without oil and natural gas. It is simply impossible to
build that much alternative energy in this timeframe, period. However, we cannot sustain oil and gas
usage without CCUS, a proven and viable technology that can help
reduce GHGs while providing clean, reliable energy. CCUS is not a subsidy to oil
and natural gas, but it is fundamental and critical to achieving net zero by
A core part of the discussion about
increasing the velocity and viability of CCUS technology and execution can be
found in the U.S. Inflation Reduction Act and its enhanced U.S. 45Q tax credit.
Canada also has CCUS tax policy on the table, but it is nowhere as competitive
and effectual as its counterpart bill in Washington, due to a misguided view in
Canada that mainly industry should bear the cost of carbon solutions.
While some may think that a $170
carbon tax will sustain a price for carbon that will make Canadian investors commit
to CCUS, the political risk that it will be discontinued by some new government
means investors will simply take the money to do CCUS projects and create jobs
in the US. We will see the same cross-border dynamics play out globally, with
investment and opportunity fleeing to the carrot and shying away from the
Cleaner oil and gas output required. Today,
to achieve our climate, national security and humanitarian goals, we must use sustained
oil and natural gas production from democratic nations, combined with economy-wide,
large-scale carbon capture solutions, to reconcile our competing priorities. Cleaner
natural gas can displace coal and lower emissions in developing nations, will
increase security through closer energy trading relationships with our
democratic allies, and will lower energy costs, allowing a global population of
8 billion to thrive. Unfortunately, the current insistence on a binary approach
to replacing hydrocarbons with renewables will increase emissions, provide
leverage to our adversaries and cause global food shortages.
Institutional investors can begin
capital investment into in-the-money government policies while maintaining
allocations to the traditional energy industry, as CCUS is incorporated into
economy-wide carbon management strategies. Reconciling climate, security and
affordability, through a combination of energy and CCUS investment, will allow
long-term capital allocation decisions to more properly reflect the underlying
reality of the global energy system. WO
CFA, president and managing partner at Carbon Infrastructure Partners in
Calgary, Alberta, having been in that role since August 2020. He also has been
managing partner at JOG Capital since July 2007, also in Calgary. Mr.
Golinowski has been involved in private equity fund management since 2007, having board
experience representing $437 million of invested fund capital. Earlier in
his career, he was an investment banking analyst at RBC Capital Markets from
mid-2002 to mid-2005, preceded by a stint as an analyst at Alberta Investment
Management Corporation from 2001 to 2002. Mr. Golinowski holds a Bcom degree in
finance from University of Alberta, and he earned an MBA from Western
University in 2007.
HON. GRANT MITCHELL is strategic advisor at
Carbon Infrastructure Partners. He has a broad range of both
public and private sector experience. Mr. Mitchell was a member of the Canadian
Senate from 2005 until retirement in 2020. During his time in the Senate, he
was involved in a variety of committee work, including vice chair, Senate
Standing Committee on Energy, Environment and Natural Resources, as well as
vice chair, Senate Standing Committee on National Security and Defence. Prior
to serving in the Senate, Mr. Mitchell was an investment banker at CIBC Woody
Gundy from 1998 to 2008. He served as an MLA, Alberta Legislative Assembly,
from 1986 to 1998, including being leader of the Official Opposition form 1994
to 1998. He earned a BA degree from University of Alberta and an MA degree from
Queen’s University (Kingston, Ontario).