Power Struggle
Improving the energy dialogue in Canada (and beyond) through honest, non-partisan, and fact- based conversations.
The energy conversation is personal: it’s in our homes, in our hands, and now, it’s in our ears. Power Struggle invites you to listen in on honest, non-partisan, and fact-based conversations between host Stewart Muir and the leaders and thinkers designing modern energy.
Watch videos at https://www.youtube.com/@PowerStrugglePod
Power Struggle
America’s Energy Shake-Up and What Comes Next // Robert (RJ) Johnston
Are we in a Cold War where energy is the weapon?
Is energy becoming the world’s most powerful strategic asset? As governments refocus on security and affordability, global energy policy is shifting fast. What does this mean for Canada, the US, and the world?
Robert “RJ” Johnston is Senior Director of Research at the Center on Global Energy Policy at Columbia University and is on the speed dial of CEOs, policymakers, and political leaders navigating energy markets and global strategy.
In this episode, Stewart joins RJ in NYC to discuss:
- Why security and affordability are taking priority over sustainability under the Trump administration
- How the US-Canada Energy Relationship
- The Arctic, critical minerals, and why energy security isn’t just about oil and gas
- How LNG is used as a competitive advantage influencing trade relationships
- The political fate of ESG and DEI initiatives
RJ doesn’t just analyze trends, he’s been in the rooms where these decisions happen. Whether you work in energy, policy, or just want to understand how the world really works, this episode will change how you see the future of energy, economy, and your community as a whole.
Follow us and our guest on social media:
Stewart Muir on Linkedin
RJ on Linkedin
The energy conversation is polarizing. But the reality is multidimensional. Get the full story with host Stewart Muir.
Reach out to us with thoughts, questions, or ideas at info@powerstruggle.ca
Linkedin
Instagram
Facebook
Twitter
🎧 For audio versions of our podcast visit powerstruggle.ca and listen on the go in your favourite podcast app!
Video available on Power Struggle’s YouTube! https://www.youtube.com/@PowerStrugglePod
Hello and welcome to Power Struggle, where we dive deep into the forces shaping the future of energy, climate and the economy. I'm your host, stuart Muir. Today, we're at Columbia University's Center on Global Energy Policy in New York City. It's an intriguing time to be here, just days after the US presidential inauguration, a moment that always brings fresh opportunities and challenges to the energy world and the path ahead, and I have the perfect person with me to do that with Joining me is Robert Johnston, or RJ, as he's known to so many RJ. It's great to be here today.
RJ:Welcome to Columbia and New.
Stewart:York. Good to see you, stuart. Thank you very much. Good to see you. I appreciate the time in your busy calendar you found for us. Your job is your Senior Director of Research. Yes, and looking at your resume, anyone would think it's a roadmap to understanding global energy. You've done so much. You're founder. You were managing director at the Eurasia Group. You know we were on a panel together, I don't know if you remember in Quebec, in Mont-Tremblant, a few years ago. I was watching the audience. You had a, I would say, a deep dive. You had a lot of slides, but you were engaging with that audience of you know, generalists, educated people Everyone was just wrapped.
Stewart:I think you have a gift for getting complexity across but not losing your audience, so I think it's intriguing you've come to academic life, because now you're going to be able to share that with others. How are you liking academic life?
RJ:It's great. I mean, there's academic life. Then there's academic life at Columbia, and Columbia is a tremendous institution and our founder, jason Bordoff, built a great research center here. We're part of the School of International and Public Affairs, which is kind of consistent with my own background, focused on policy and geopolitics in an intersection between those fields and business and energy and markets, and the center has about 50 scholars divided between full-time and part-time, very interdisciplinary. But we also have the pleasure of working with other schools around campus our climate school, the business school, engineering, and when you put those pieces together it's a very comprehensive way to look at the energy story, the climate story, the natural resources story, and I really enjoyed it. And great students here too, without a doubt, really smart 4% acceptance rate. So, yeah, not too many dummies on campus.
Stewart:We're starting a new chapter in America, but the world too, because it is America with a new leader. Energy policy is at the forefront of the conversations that are coming out of these early days. From your perspective, rj, what are the most important factors, you see, shaping how we're moving on this landscape now under this new administration in Washington?
RJ:Yeah, it's a pretty dramatic change in direction from the previous administration, which had really leaned into climate change net zero. Not that they didn't have to deal with the energy geopolitics and the energy affordability concerns with the Ukraine crisis and crisis in the Middle East and, of course, the aftermath of COVID. But this administration under President Trump really is going to elevate a focus on energy security, both at home and abroad, a focus on affordability and the sustainability. Net zero climate agenda is not going to disappear completely, although it may feel that way at times, but we'll certainly be subordinate to a larger kind of security and affordability focused approach. I think most people in the industry would agree that you probably need to focus on all three right At the same time, the so-called tri-lend up, do you?
Stewart:see this as part of a global trend, or is it really limited in time and space to one place on the map?
RJ:No, I think you know Canada may see a version of the shift right that, if the conservatives win the next federal election again, I think climate will be an important part of their agenda, but there'll be probably an elevation of energy, economic development and more project approvals and a greater, perhaps, effort to coordinate with the US on energy security issues. And then, obviously, you know, pauline has made the affordability agenda a big part, and that's probably what connects countries more than anything is whether you're an energy producer or a consumer, exporter, importer. You know the last three or four years of inflation around the world, the supply chain disruptions with COVID, the Ukraine war everyone's talking about affordability. So I think you know Trump and Pierre Palli have captured that political momentum, trump all the way to the White House, and we'll see what happens in a Canadian election.
Stewart:Sometimes you need a bit of time to look back on events and figure out whether they were historical inevitabilities or something else. Do you have a sense yet of whether the arc of history is one or the other? The arc of history is one or the other.
RJ:Well, I think it's an element of cyclicality, right that you know we go through periods of intense focus on affordability and security, and then investments are made in response to that, new policies are developed in response to that, and then, you know, the focus on things like sustainability starts to take root in innovation, and then the pendulum starts to swing back down the way. So I've been reflecting on this in the context of the passing of former President Jimmy Carter. You know, trump talked on Tuesday about an energy emergency in the US. The last time there was a president talking about energy emergency was Carter, you know. And Carter was dealing with the oil shocks in the 1970s and that led to a very difficult period of focus on affordability and inflation. But also that's where we planted the seeds for a lot of innovation around. Things like solar power and biofuels and nuclear power, and even fracking can all sort of be traced back to then. So I tend to take a cyclical view on these things.
Stewart:Here we are at Columbia. You're with a cohort of teachers and researchers at this highly regarded place and you're engaging with students. What perspectives are you seeing from young people on where we are on energy climate?
RJ:So our center is a center on global energy policy and I'm from Canada, I live in the US, I've always had a strong focus on North American energy policy. You know, with Trump, that's obviously a priority right now, but we do take a very global perspective. Our center has people working in Africa and Latin America and China and so forth, but our parent school, the School of International and Public Affairs, even more so. I mean, it's incredible how diverse it is. And it's incredible how diverse it is and it's a privilege to interact with students from so many different countries and so many different perspectives. And it's pretty much every element of the spectrum you can imagine in terms of interest in energy, whether it's fossil fuel-producing countries that students are coming from, whether it's students from areas like California, where the sort of green agenda is very dominant and there's a lot of innovation coming to Silicon Valley, the Teslas and all those kind of things, and then countries where energy poverty is the major issue, other countries where the energy and natural resource sector may have left an environmental mess of some kind, like in Ecuador, for example, and everything in between. So you can really convene some great events right here in this room where we have the privilege of being able to bring in political leaders, industry leaders, civil society leaders and sit down with the students and answer questions, and I really enjoy that because there's a broad diversity.
RJ:So if I were to pull some themes out of what we hear from the students, there's no question that whether conservative you know conservative or liberal they're all focused on climate, more so than previous generations, and that's not a big breakthrough, but that's still going to be the case. And they do take a more global view and they're also optimistic in terms of the role of technology, innovation and entrepreneurship, but maybe less optimistic about the role of government and big business. So my generation is like oh, the government, if you have the right leaders and big business, can solve all these problems. And my daughter's 19, so I get this from her as well A lot more faith in the ability of the sort of entrepreneurial class, the innovators, the social entrepreneurs, to get things done and solve the big problems, and, of course, all that's tied together by technology.
Stewart:I'd like to get some of your secrets on how you stay on top of things, your daily habits, your trap line for information, so that you are the guy who knows what's going on. What do you do when you get up and you want to get tuned into?
RJ:the world. Inside baseball, here at VAR Center, we have a great Slack channel which you know I'm not sure if you're a Slack user or if your listeners are, but it's a chat room, basically, but more sophisticated, organized by topic and searchable, and we have all of our scholars around the world, you know some of our board members and partners connected and if you want to sort of get reactions to the latest oh, you know, biden put sanctions on Russian oil there's a great conversation about that or critical minerals, or LNG, or you know. So that's a go-to source for sure. And again, that's since the Apple technology.
Stewart:Is that something anyone can do?
RJ:Well, that's our own live chat, but I would say that's like the kind of raw material that feeds all the research. But I would say that's like the kind of raw material that feeds all the research which is in the public domain and our website, although it's funny, you mentioned that we have thought about if we can make a public version of this somehow. That could be interesting. Sounds worth paying for, yeah, yeah, but also just being able to sort of walk the floor here and talk to colleagues. I'm a big Financial Times reader for the global coverage. I definitely keep an eye on what's on Bloomberg and Reuters and theglobalmailcom, so I like the old school media as well. But yeah, it's almost like in this ecosystem here if I need to know something, I can find out pretty fast from somebody.
Stewart:Are you a podcast listener on your commutes? Are?
RJ:you a reader? Are you a worker? Well, we have a really good podcast here at Columbia Global Energy Exchange at Jason Bordoff, so I listened to that and he's got some great guests on that, and there are a few others I listened to as well. It's a good when you're stuck on the tarmac or on the subway, it's a really great way to or the treadmill even worse. It's nice to have some good content to listen to, but this time of year I'm usually listening to NFL playoff podcast too.
Stewart:Yes, that's the dominant thread for a few more days. As an energy expert, you circulate with lots of different people, not just on campus. Is there one misconception? You just run across all the time and do you always want to correct it if you hear it?
RJ:Well, I think I would be remiss if I didn't say that, as a Canadian living in the US and dual citizen, I think a lot of times I know Canadians feel like our energy contributions to the US economy are not fully recognized.
RJ:Now it's sort of almost the opposite problem that it's right in the spotlight with Trump and his proposed tariffs which we could talk about.
RJ:But yeah, I think, as a Canadian, not that many people realize that we're kind of a top five oil and gas producer and that we have all the innovation that we have and we're a leader in sectors like nuclear and hydro, and that's something that is maybe I don't know if it's a misperception, but it does catch my attention.
RJ:And I also think the other thing is that I don't think the average person understands the true complexity of the energy system and the different layers, the length of the supply chains where the vulnerabilities are, the steps an industry should take to sort of mitigate those vulnerabilities and how much it takes to keep it all flowing at a time when demand continues to grow and there's there's aging infrastructure and there's political instability and there's volatile capital markets and it's a lot of different pieces to manage. So that's what's always intellectually attracted me is that it's such a complex system it does require different disciplines to understand. My side of it is the sort of above ground side. I look at government policy, geopolitics, markets, et cetera. But obviously the below ground pieces is the foundation of it, the actual literal resources, energy resources that we're producing. That has its own complexity as well.
Stewart:I had a guest recently who, in trying to explain how the North American energy system works because there's, as you say, this interplay used an analogy that stuck with me, which was that the US and Canada are like conjoined twins when it comes to energy especially and woe betide the surgeon who gets the task of separating them, because it turns out they're linked through all kinds of physical ways. Do you agree with that analogy?
RJ:Partially. I think that when it comes to oil, I think that's right. I think there's almost like we hold our own right. The US is producing more right. The US is producing 13 million barrels a day. We're producing, you know, four and a half, five million barrels a day, but we're a very important input, the largest importer, you know, key feedstock for a lot of refiners, et cetera.
RJ:But I think where I would disagree a little bit is that the phrase that's come to mind recently is that it's an asymmetric relationship for both Canada and Mexico and many countries with the US.
RJ:The US has one real rival around the world, which is China, and when Trump goes to negotiate with them, it's going to be an intense kind of meaning of equals for Canada and Mexico and other countries.
RJ:I mean, we have 80% of our trade with the US, but their exports to us are a much smaller percentage for them and obviously they have the military might and the global reach and, you know, economy that's 10 times bigger population, all those things. So it's not that we don't have advantages that we bring to the table as well, but it is an asymmetric relationship. So that's the sort of metaphor I've been thinking about is, you know, in an asymmetric kind of trade negotiation, political negotiation, like what kind of tactics makes the most sense for us to be successful? Is it to kind of confront them and escalate them and threaten retaliation, or is it to find areas of cooperation and strength and collaboration where we can really demonstrate how vital we are to the system here I just get a little worried when I hear talk about retaliation and escalation that in an asymmetric relationship that can be a dangerous proposition.
Stewart:You know, I'm a Canadian. My grandmother came from Ireland and went to Winnipeg, but one of her brothers went to Boston, another came here to New York. You know, we're kind of a family on this continent and that story is common to many millions of people. So it feels a little distressing when we have got you know this maybe a little sense that these countries are moving apart. Are they moving apart? Is it just the sudden? You know, events of recent times are leaving us uncertain about what we thought we knew.
RJ:Uncertainty for sure, and what I've been thinking about is the US and UK are often described as a special relationship, Right, and I think the transatlantic partnership.
RJ:Canada has our own version of that, Right. The long list, undefended border, all those things. I think the question Canadians should ask themselves is are we still special, or are we just another country on a list of countries that Trump wants a new economic and political framework with? I feel like it's the latter, but I'm hoping it's the former still, that there's still some, that it still means something that we fought together in World War II and that we had that border and we had such economic integration and the cultural integration. You know that, and the family integration you mentioned with your own family and mine, right, I mean married an American and have an American daughter, and you know that's all stuff I think about too. But I worry that we're not as special as we used to be and it's looked at from an America First perspective of not neither a friend nor foe, but just like we want a better deal and we're prepared to push very hard to get that on the US side and that's different than maybe what we've seen in the past.
Stewart:Yeah, I'm worried. We're having this discussion about that threat, yeah, but we'll have to see how it unfolds. On a more positive note, rj, what are some ways we can strengthen the relationship between Canada and the US? And, hey, the US and Mexico, let's not leave them out, but I'm thinking more about Canada and more collaboration. That will be at least a counterweight to some of these other factors.
RJ:I'm a very simple person in the sense that I first of all start by saying there's a lot of noise and chaos and headlines and Twitter. There's a lot of noise and chaos and headlines and Twitter, and I try to tune those things out for the most part and focus on the kind of core principles and core data points. So it's basically a two-pronged strategy. Very simply. The first prong is elevate and communicate what's working well today right, the economic cooperation that's in place today economic integration, obviously energy and critical minerals and agriculture and autos there's multiple examples and the second piece is identify the problems and offer solutions. And I think the pain point in the relationship with trying to actually trade and security with mass coast to border and I think for us it's defense that if Trump has a legitimate grievance with candidates, the sort of underinvestment we made in defense and burden sharing, and that's a solvable problem and I think it's a fiscal strategy that Canada needs to develop figure out how to fund defense on a more rapid basis. Whether or not we should have done it 10 years ago doesn't matter. It's what we do the next 10 years, probably even the next 10 weeks, that matters 10 months. And then I think adjacent to that is the question of Arctic security and energy security. Energy security we have a great narrator right now that we can build on.
RJ:Arctic security, I think I'm not sure there's. It's not my area of expertise necessarily, but I don't really see a compelling narrative or strategy around that. So there's some work to do there as well. So you know, emphasize the existing economic strengths which our political leaders are doing and business leaders are doing, and then you know kind of own up to the challenge that they're on the relationship and kind of take aggressive action to to address them. Some will be easier than others, but I think that's what, especially in the defense, and can't take aggressive action to address them. Some will be easier than others, but I think that's what, especially in the defensive security side. I think that's where the real test is going to come.
Stewart:I wonder if we could pause on Arctic security and maybe imagine there's a being from Mars that could understand our language but didn't understand Arctic security at all. What's at play there? I mean, it's the top of the planet. It's a place that most Canadians never go in their whole lives north of 60. But there's something geopolitically extremely significant there. What is it?
RJ:Yeah, that word geopolitics is so interesting, right, the geography and politics coming together. And the map that most of us have on our wall doesn't really show that polar perspective where you see kind of Russia, alaska and Canada all converging. But we think about it in those terms and historically there was a lot of ice kind of separating everybody, and now the ice is not there as much as it used to be, if it's there at all, so there's more ability to move. You know, naval traffic or even commercial maritime traffic through there. There's different climate conditions which is affecting life up there as well.
RJ:But I think the main issue really is the maritime issues. That during the Cold War obviously there was a lot of joint US-Cant efforts to secure that. At the end of the Cold War that kind of went away, although not completely. But now with the conflict in Ukraine and Putin's kind of expansions to foreign policy, there's a lot more concern that maybe we are back to kind of quasi-Cold War conditions and you know, whether it's missiles or submarines or whatever else, that's something that needs to be revisited urgently. Then there's a minerals aspect as well, right, that, whether it's oil or, you know, aluminum and iron ore and all kinds of resource up there. That is something that plays a role as well, but I think it's more the question of the geopolitical confrontation between the US and Russia heating up again.
Stewart:Is there a connection between actions that remove economic activity, including energy activity like drilling or mining, from remote locations that have geopolitical significance? Is there a consequence when the land, so to speak, is?
RJ:vacated. Yes, I think that there's a lot of oil in the market right now. We've brought on new resources like the US shale. So before the US shale came along, 20 years ago or 15 years ago, there was a lot of talk about drilling in Alaska and drilling the Beaufort Sea and places like that. That kind of slowed down on the US and Canadian side but the Russians kind of kept going. So they still are very interested in moving liquefied natural gas out of their northern ports and developing offshore oil up there. It's been difficult for them to deal with the sanctions that have been put in place, but soon they're looking at remote locations and the Chinese also, which are not immediately adjacent to the Arctic but have the economic reach and the diplomatic relationships with the Russians in particular, to think about the maritime energy and mineral resource up there or something that's getting attention in Washington as well.
Stewart:I know you pay a lot of attention to LNG. You were at the LNG 2023 conference in Vancouver. I saw you there and I think you spoke at the diplomatic forum. There's been a very heavy response to Russian Arctic LNG, including by the Biden administration. I mean, they kind of shut that down for the reasons related to Ukraine, and the opportunity there is a vast one. Do you think that LNG is going to be not only an economic opportunity for those who can legitimately stay in the market, but also a climate solution?
RJ:Yeah, and that kind of goes to the earlier conversation with the conservatives and their view on, or Republicans who prefer their view on, climate. On the security side, I think since the Russia-Ukraine conflict, us LNG has been an incredibly important factor in replacing Russian gas to Europe and to Japan and Korea, canada perhaps indirectly providing gas supply to the US, which can be free up resources to export its LNG from the US. As Canada adds its own LNG capacity, with LNG Canada starting up and maybe some other projects after that, we'll probably be part of that conversation and there'll be an opportunity to work with the US. Our gas is very well aligned with the Pacific, given the location of British Columbia. The US gas in the Gulf of Mexico or Gulf of America, pardon me, is very well aligned to send across the Atlantic to Europe or to the Mediterranean market, latin America. So as we develop our own LNG resources, that will be an opportunity.
RJ:On the climate side, it's a controversial question and one that gets a lot of discussion here on campus about the role of natural gas in transition.
RJ:It's probably fair to say that in the US and Canada a lot of our climate goals have been achieved by retiring coal plants and bringing on natural gas or, in some cases, like in Ontario, nuclear power to displace, you know, those more carbon-intensive fuels.
RJ:Asia has a version of that as well. Right that if they bring in LNG to displace coal, that does help from a climate perspective. The obvious caveat is that it can't be just any LNG. It has to be LNG that isn't associated with a lot of, you know, future emissions and high methane intensity, because methane's an important greenhouse gas, as we know. So, yes, there is an opportunity there, and that is something that I think the Trump administration and his energy team were really deep into saying. Hey, it's not that we don't have a climate strategy, we just think that natural gas should be central to it Less methane, fugitive emissions, flaring and more coal-to-gas fuel switching and things like nuclear and geothermal and carbon capture as well. But gas, at least from a US perspective, will be central to that. At the same time, I was in Baku at the COP29 and climate conference and everyone there was protesting the role of gas in the climate conversation. So it's obviously a controversial idea.
Stewart:So here's one of the big questions I'm hearing. A lot People are asking me forms of this question Net zero 2050. Is it possible? Was it ever possible?
RJ:So I've always felt that we've, over the last several years, moved to more certainty on the technological pathway. I mean we know that we have electric vehicles and solar and clean hydrogen and nuclear and other pathways to get to net zero energy efficiency, among others. What we don't necessarily know is the policy pathway and the financial pathway. I think, in the sort of developing economies, the financial question of who pays for all this, the sort of developing economies, the financial question of who pays for all this, africa, parts of South Asia, parts of Latin America, that negotiation between the global north and the global south over climate assistance and finances contentious. And you know, again in Baku there was a significant increase in the commitment to fund climate action in the global south and developing countries, but well short of what the global south was hoping for.
RJ:And then the policy question, especially in the north, that we're seeing have played out here in the US and will play out in Canada, is that things like carbon taxes aren't very popular, not in Canada, not in the US. We've never had a carbon tax here. I mean we've had California, a couple of other places, european carbon tax. They're now creating this carbon border adjustment mechanism to kind of like protect their own industry from the effects of their own policy. Right so that you know, imports of steel and cement will have to pay a carbon tax before the end of the European market. So yeah, these are very tough in democratic countries. Very tough policies to sell because they come with cost and maybe at times the green jobs angle has been a little bit oversold. Not that there aren't green jobs, but are they in the same places where the fossil fuels are, the same pay, the same skillset? Not always. So that just transition question, which I know is a phrase you don't like to use in Canada anymore, at least in Alberta, but it's dope wise.
Stewart:Yeah, I mean, I find myself wondering sometimes when I hear phrases, whether I'm hearing an aspiration. If we just say this, it will bring people along and that will get to where we want to go, do we know it's going to actually work? Well, maybe we can't prove it, but we want to aspire to it. And that's what this is about, because it links to another question.
RJ:I have for you, which is is there an energy transition underway or is something else going on? That's two terms that I didn't think were controversial or suddenly very controversial. One is the phrase natural gas. Right, because now here on campus and elsewhere people talk about abated gas and unabated gas and fracked gas and all these things. But on energy transition, that's also including with our president, our new administration not a very well-accepted term because I think the oil and gas industry doesn't like the idea of transitioning away from something.
RJ:So you get this debate about energy addition instead of energy transition, which I think is a bit of a distraction, honestly. I mean, the system has been transitioning for centuries from wood and biomass to coal, to oil, to gas, to renewables, electricity, and people are still burning biomass all over the world and it hasn't disappeared completely and obviously we're still using more coal than we've ever used. So I think in a world where energy demand is growing and population is growing, economy is growing, a population is growing, the economy is growing. Transition doesn't necessarily mean away from something, but it's become, unfortunately, like ESG and DEI in the very political term. I would still say an energy transition is happening, but I don't believe that we're on a pathway where demand for fossil fuels is going to disappear. It may plateau, it may shift and it may see political and consumer preferences over time shift towards lower carbon intensity and more carbon capture and things like that. But I don't think the transition should be viewed as the end of the oil and gas age, at least not yet or anytime soon.
Stewart:The moment ago you put ESG and DEI into a sort of a basket. I haven't really heard too many people just state it. So what's in that? Let's zero in on this. These are two very different things. Dei's social, and ESG is environmental, energy, economic. Do they have the same root system, cause for why they're manifesting the way they are now, and is there some assumption that they're being treated the same way and we'll see? You know, kind of a conjoined there's that word again trajectory for these writings.
RJ:I think they are connected because the S and ESG does take you in the direction of diversity, right. The environment, society, yeah, and the environment, government, environment, social and governance is the ESG. And on the social side, I think up until this day, but certainly recently, certain investment funds have been looking at providing data to their customers about the diversity of boards and corporate management from a racial or gender perspective, along with their carbon intensity or their you know supply chains and you know their labor practices, and that's become politically controversial. Maybe some people feel like that was an overreach in certain areas or distracted from the core mission of profit making. I think that's unfortunate, right, because these are important values that most people agree on. But it become very political on all the ES and G. So that's too bad.
RJ:But I think probably what will happen is much like natural gas regardless of what we call it, we're still going to be using it in some form. It's still an important resource. It still has challenges, and I think that's true with ESG as well. Right, that this big wave of ESG we saw over the last five or six years has sort of crested and is declining. But to my comments about cyclicality earlier, I think you'll see new forms of ESG emerge and new funds and new strategies that can try to meet the goal of providing both environmentally and socially responsible investments while also generating the returns that investors expect on their capital. And that's the beauty of the market, right? We'll keep innovating until we find the right solution.
Stewart:Just a little sidebar on the term natural gas, Because of some research I did, I discovered that natural gas I've noticed a lot of fossil fuel activists are saying that's a marketing term from a gas industry to make their product seem, you know, natural, which kind of makes sense when you hear it. But actually what my research showed me is that natural gas was a term that was used to distinguish a certain product from another one, that being town gas, which was manufactured gas, versus natural gas. So that's actually why we have these different terms.
RJ:That's why I used to hear, like in the 19th century in the UK, the idea of the gas plant, like we're manufacturing gas over here in this facility and the dirt and the pollution and smog and everything. Well, that was because they were making gas from coal.
Stewart:Essentially Right pretty nice as far as the role of still doing that Pretty dirty, yeah. And then you could have this nice natural stuff you pipe in from somewhere.
RJ:So that's a long time ago and it's probably an archaic term. But I think the students on campus here not all of them, but some of them when they hear natural gas they almost see the opposite, kind of like where coal was 200 years ago. They're saying, well, you're trying to cover it up and saying that methane, which is this pollutant and you know heating atmosphere, it's leaking out of oil wells and gas wells around the world, shouldn't be called natural, and so you have to do that after, revisit the history and then. But the language changes, right yeah.
Stewart:And it's going to go the way it goes. But it's one of those little footnotes. You know we were talking about conservative approaches to climate and energy, and there has been for a long time in Canada, I think, in Europe, maybe in the US this belief that if you put a price on carbon as a conservative doctrine, you are going to be able to encourage the activities you want in order to react to that price certain kinds of innovations. So you will find a biofuel developer or someone investing in a refinery that produces less emissions will say well, I'm doing this because it's an opportunity created by this carbon tax, or it's a penalty I must bear, created by the carbon tax, and it will result in something that's not bad for my business. I can make money on this.
Stewart:But then you have this other strain of conservatism. I'm testing this idea If I'm wrong I know you'll tell me but where it's a little more like what's happened in the US, where the carbon pricing was not the factor that pushed coal out of generation. I don't think it was natural gas that became a better, faster, cheaper way to provide energy. Oh and, by the way, it's way cleaner. So both of these things are conservatism and I'm thinking there's a conservative government in America. Is it going to go one way or the other? I don't think it will. It's obviously not going into carbon pricing. So will there be a kind of robust sense of how the market is going to drive the decarbonization that's still needed?
RJ:Yeah, there's some really interesting layers to that question. One thing I would say is that I agree that natural gas was the predominant factor in driving a coal, but the acid rain and the sulfur credits, that were sort of, in some ways, a model for later debates over cap and trade. And you know, carbon markets for greenhouse gas emissions did play some role, especially in the East Coast here. The second point is that when we use the term conservative we used to associate that with free markets, the Reagan kind of Republican era, stephen Harper kind of Preston Manning era in Canada. Now it's. You know, the conservative political movement is not as free market oriented as it used to be, as we see with Trump, and has sort of more America first, protectionist kind of populist instincts, the sort of old orthodoxies of sort of free market approach to carbon policy where you have buying and selling of credits. That's not necessarily the case anymore. Right that maybe that voice of kind of free markets is not as influential as it once was. But I would agree that, you know, when economists talk about carbon policy, they see, you know, carbon pricing as the best mechanism to manage this challenge. And we know in Canada there's been a lot of studies showing that the cost of regulation, the inefficiency of regulation, but governments particularly Canada, european Union have really leaned into regulation that's been harder to get Not just carbon prices but like meaningful carbon prices that would actually change behavior and change investment flows in place and the US.
RJ:It just hasn't really happened at all. I mean, the last real push for carbon pricing here was the wax and markey legislation in 2009, obama's first term. So that's a long time going on. It's 15 years, and there hasn't been a serious consideration since then. And remember that in Clinton's first term, I think in 94, they had something called the BTU tax right, that was Al Gore's sort of shadow carbon tax idea that we're going to put like I don't know, it's like five or 10 cents a gallon, maybe less than maybe a couple cents a gallon, and that basically cost Clinton his House majority, the Democrats, because it's so unpopular. And since then and then wax from market there's been very little political upside on a sort of free market approach to carbon pricing. So we'll see, but so far the politics and economics have not come together on that one in many countries, including the US.
Stewart:RJ, you've talked about your Canadian connections. Here you are in the US. Your career's flourishing. You've got a rare degree of insight into the cross-border relationship. Right now there's a lot of political leaders, industry leaders, labor, who are asking the same question, the question being how to advocate, what's advice you would give to someone who's in one of these organizations that would apply kind of equally to all in some sense to be influential in Washington and in the US, to stand up for what they believe in.
RJ:Yeah, I think, probably spending serious time thinking about Trump's agenda and what his policy priorities are. Policy priorities are so if he wants, you know, jobs and economic growth in America, how are we contributing to that? If he wants sort of a reimagined global security architecture where, you know, regimes like the Iranians or the Chinese are playing a lesser role, how do we contribute to that? If he wants to innovate you know the growth of artificial intelligence, or you know advanced nuclear power how can we be a partner? I think that's always the best strategy to sort of look across the table like what's the objectives of the person I'm working with here, and then kind of put your own problems aside for a minute and try to see it from another person's perspective, and then you know where's the common ground. And that's something that Canadians think we should be pretty good at, especially when it comes to the US, given that asymmetric dynamic that I mentioned earlier. So I think that's the most important consideration is that you know Trump denumbers from a vacuum. It's not a, you know, fictitional character that someone made up. This is very real and it's. He won the election by a pretty healthy margin and he's a response to a lot of changes that happened in the US over the last 25, 30 years, influencing factors, understanding the solutions he's trying to get to, and then where Canada can contribute and, conversely, where do we have red lines with something that we can't agree to?
RJ:I'm not sure what that is at this point. I have maybe a few ideas, but most of the areas I think are areas where we can work together. And, like I said, on defense, it's not easy when I talk to people not a lot about defense, like oh, we can't afford it and you know how are we possibly pay for we don't have fiscal capacity, like really, I mean, come on, let's take a whole, look at the whole bot, zero base budgeting, right, let's look at revenue. I mean, god forbid. I mean sometimes when you're in a war, you have to raise revenue. This is not a but it's a trade war and it's an important political conflict and I think there's probably a solution there somewhere fiscally of how we pay for it. But I think we're going to have to figure that out.
Stewart:Do you think 2% of GDP will be sufficient? I know that the president of Poland came out to Canada last year and I believe he was advocating for a higher number. It might've been 4%, which is a big lift.
RJ:Well, that's kind of what we were getting at earlier. Right that, the geopolitics, right. So the geography of Poland. You know their history with Germany and Russia, the Baltics, and it's not surprising that, given how acute the security threat was historically and how acute it is currently presently with Ukraine, that they'd be spending a significant share on defense. Canada's had that sort of geographical blessing of being isolated, notwithstanding the melting ice in the north, but also being friends with the world's most powerful country and being separated by two oceans from China and Russia and the Middle East or anything else. Well, those times are changing right. The threats are now, you know, the Russians have the hypersonic missiles, there are cyber threats, there's all kinds of things that terrorism. They can reach us and our allies as well. So, no, I think it's quite possible we'll see pressure to go well beyond 2%. I mean, I hope not, but one can imagine geopolitical scenarios where we would need to mobilize very quickly.
Stewart:And do you see, we were talking about critical minerals earlier, the defense minerals that are needed for manufacturing weaponry ammunition. Do those maybe go toward that 2% or higher side of a ledger, like, okay, you're getting points doing that.
RJ:I think so. Yeah, I've floated that idea by a few well-cliented people in Washington and I think, yes, I mean that's just a few people's informed opinion, but that is a plausible path to explore. And if Trump's metric is things that can be done quickly, relatively quickly, you know, a again as I said earlier, kind of reinforcing what we're already doing, but also looking at the potential to bring on additional projects, additional supply to support the defense sector, also the high-tech sector, right. And this kind of rebranding of critical minerals is an enabler of the green transition, which is still hasn't gone away.
RJ:But the political priority in Washington now is more about, you know, do we have the critical minerals we need to compete with China on the tech side with things like computer chips? And do we have the critical minerals we need to maintain a defense industrial base that is not only now about the US, but also maintaining support for Israel or Ukraine or other Taiwan, right. So it's unfortunately a time when that defense industrial base is really being called upon and it starts with the minerals. I didn't realize until recently that NATO has its own critical minerals list. Not just Canada and US governments but NATO as an organization put together a critical minerals list. It looks like things that we have in Canada in many cases.
Stewart:RJ, I'd like to close out because we're the Power Struggle podcast. We look at struggles that are external and sometimes internal struggles to achieve what's needed. Is there something you're really proud of in your career? Some initiative, something you did that you think made a big impact, but you had to struggle to get that you could maybe share with us.
RJ:So I think probably the most consistent thing in my career has been certainly since I went to Eurasia Group in 2006 that as a Canadian you know I've been able to help government and industry in Canada and civil society and the First Nations and many others investors, media think about Canada's role in the world and as an outsider it always struck me it's like, wow, there's so much debate and rancor in Canada over our domestic issues and how we approve pipelines or how we do indigenous consultation or in afederal, provincial, and I always say that those things are incredibly important. But when it comes to energy, it's a global commodity and a lot of the outcomes that we get are determined by things that are happening in the Middle East or in the US or in China. And even when we do everything perfectly on our side, if the Chinese economy slows down and there's no demand for copper, then you know, so you can't lose sight of that. And if we're kind of a line of all of our ducks in a row to get more oil sands projects going and the Saudis decide to increase production, then it's all that effort Right.
RJ:So I think I've been successful in trying to keep that connection, that side of the conversation in place, saying, hey, what's Canada's place in the world really when it comes to energy and what are the opportunities and risks that come with that? And that's how we met in that conversation around LNG. Okay, canada's out looking at LNG. What else is going on in that world and who are we competing with? And what are the forces that shape LNG demand? Like you mentioned, coal retirements and things like that. So that's probably one thing that I'm really enjoyed and been proud that, even though my advice hasn't always been perfect and sometimes you know when it's a crystal ball, it's been something I've really enjoyed and engaging on.
Stewart:Well, there's been real progress there and I think that's a topical thing to consider, and thanks for sharing that. We're pretty much out of time. I just got one last question. You went to school in Canada. You're from Canada. Do you miss any part of Canadian?
RJ:life down here, immensely, immensely, yeah, and I think the other side of it is that I've been able to travel extensively in Canada. In my work, I think, at Eurasia Group I had about 35 Canadian clients, so I've really been able to travel a lot Went to Nunavut, you know, went to Yellowknife, you know, everywhere and anywhere. And I think that's because I have been homesick and I've enjoyed not just the analytical and intellectual side of the work and commercial side of it, but just being able to reconnect with Canadians and also be able to host games. They come to Washington or now the last three years here in New York, when they come to Columbia. So glad to be able to host you and hopefully we can continue to keep in touch.
Stewart:Yes, well, this is still a new chapter for you. Good luck with it, thank you. You're clearly making a difference and thanks so much for today. My pleasure, nice to meet you.
