Energy Infrastructure and Rupture in the World Order

(upbeat music) Hello and welcome to Energy Security Cubed. Canada's foremost energy geo-strategy podcasts, where we explore the factors shaping energy and economic security in Canada and around the world. I'm Joe Calman, Vice President, Energy and Calgary Operations at the Canadian Global Affairs Institute. (upbeat music) For today's podcast, we're featuring our fellow Dennis McConaughey for a discussion of the Canada Alberta Memorandum of Understanding and the question of economic integration with China and the United States. But before we dive into that, I'm going to quickly go over some of the news stories affecting global energy security this week. First up, let's talk about the Gordy Howe International Bridge, which this week became a flash point in Canada, US relations. On Tuesday, US President Trump made a post on truth social, claiming that the construction of the bridge was unfair to the United States, based upon claims that it's approval somehow sidesteps US content rules. Importantly, Trump suggested that the United States should be given a quote, "at least one half of this asset," which would disrupt the arrangement made by the government of Canada and the state of Michigan in the Canada, Michigan crossing agreement. Under this agreement, the federal government paid for the construction of the bridge through its crown corporation, the Windsor Detroit Bridge Authority. Once the bridge is completed, it will be jointly owned by the bridge authority and the state of Michigan. Now, since the government of Canada paid for the bridge, the bridge authority will have the exclusive right to collect tolls for the vehicles using the bridge until its costs are recouped. After this, toll revenues are meant to be shared between the government of Canada and the state of Michigan. I should note here, though, that considering that the bridge costs $6.4 billion, it's unlikely that the government of Canada will recoup its costs anytime soon. My back of the napkin estimate is that this new bridge would have to charge two to three times more than the ambassador bridge to recoup its costs within 30 years, even without discounting. It's more likely that the bridge will charge approximately equal tolls to the ambassador bridge, and I should note here, the ambassador bridge is the existing bridge between Windsor and Detroit. So if it charges approximately equal tolls to the existing bridge, the cost of the Gordy How Bridge will probably not be recovered in our lifetimes. However, I'd be happy to hear from any listener who has better information on that. It's unclear what Trump exactly means by owning half of the bridge. The current agreement already has Michigan getting a pretty sweet deal by owning half of the bridge, as well as future toll revenues, and this is all without any major financial commitment. This sweetheart deal was required to overcome local political opposition to the bridge in Michigan. Now, perhaps I'm overestimating how much thought was put into this, but I'm assuming Trump wants Michigan to get its half of the toll sooner. However, you may well be wanting some sort of federal control over the bridge. I don't know. Overall, this spreads more uncertainty over the future of Canada, US trade. The problem is spreading uncertainty over the bridge plays into Trump's hands. There's a good reason why Canada made such a sweetheart deal on the $6.4 billion bridge. Market access to the United States is extremely important for maintaining the automotive industry in southern Ontario. From the zero sum perspective of auto jobs, Trump has every incentive to disrupt this bridge and make it more attractive to move more of those auto factories in Canada down into the United States. It's unclear whether Trump actually has any real tools in his toolbox to disrupt the opening of the already complete bridge. We'll see if he does, but this could heat up to be a big fight during Kuzma renegotiations. Keeping with the theme of automotive issues, another important news story from this week is the decision by car manufacturer, Stellantis, to pull out of the next star battery factory in Windsor. A joint venture between the car maker and South Korea's LG energy solution. It's no surprise that Stellantis would pull out of the factory. In November, it was announced that the plant's batteries would be prioritized for power grid storage systems rather than vehicles. It seems that this shift toward power grid storage has retained federal government support in the tune of $10 billion in promised production subsidies, which couldn't make this a great deal for LG if they're able to carve out a big enough market. The battery power storage market seems to be promising these days as the technology is taking on a larger role in North America and around the world. The recently released short-term energy outlook from the United States Energy Information Administration expects battery storage to increase from 50 gigawatts in the first quarter of 2026 to 89 gigawatts by the fourth quarter of 2027 in the US power grid. To a large extent, this boom in grid scale battery storage is powered by time arbitrage. These batteries soak up electricity when prices are low and then sell this electricity back to the grid when prices are high. Grid scale battery investors can then pocket the difference between the high and the low prices. Importantly, this implies that batteries are best suited for grids which have high price volatility. In other words, frequent swings between high and low prices. Batteries are therefore most attractive in markets with high renewables penetration and relatively free wholesale markets because renewables drop prices down but are intermittent so the prices will jump right back up again as soon as the renewables go offline. And the importance of the free wholesale markets is to make sure that you don't have too much regulation and too much control of prices which generally tend to levelize the average price and reduce the role of something like a grid scale battery. Unsurprisingly, North American grid scale battery facilities are heavily concentrated in Texas and California with much lower presence in the Midwest. This is because Texas and California deep penetration of renewables and generally free markets for the wholesale electricity. Whereas in the Midwest, you have natural gas fired power. You have a huge amount of natural gas production in the region that's kind of bottled up there and you also have nuclear power plants that keep prices stable. Canada with its low penetration of variable renewables and heavily regulated power systems has only about one gigawatt of grid scale battery projects and I believe that there could be more grid scale battery projects produced in places with more renewables like Alberta and Ontario, especially Alberta. But the rest of Canada is not very well suited for grid scale batteries, but we'll see how that all turns out. And one last story of the day, fuel supplies in Cuba are running out as the Trump administration imposes a strict oil blockade of the island. According to the Wall Street Journal, the last shipment of oil to Cuba was on January 9th when a tanker originating in Mexico dropped off 85,000 barrels of oil. The US government has seemingly succeeded in pressuring the Mexican government to cease future deliveries with the threat of tariffs and also there's even some talk about the US administration threatening some sort of military action against cartels in Mexico, but that's all hearsay. Deliveries from Venezuela were also halted after the American intervention in the country in January. So Cuba is now completely cut off from oil supplies, imported oil supplies. Cuba is heavily dependent on this imported oil, around 84% of Cuba's total energy supply is from oil and oil projects, products, that's incredible. This includes the country's main power plants, which all run on heavy fuel oil. There's very few renewable sources of electricity in Cuba for some reason they really should have gotten some solar power plants set up. The country's offshore oil fields reportedly only produce 25,000 barrels per day, and this is less than half of demand. Importantly, we should note that Cuba's oil fields are also declining in output, likely from lack of investment. I'd have to check out that side of things though. Mexico, Venezuela and Russia have supported the Cuban project for decades with deeply subsidized and sometimes even free oil supplies. With a Trump intervention, this is no longer at the case. The breakdown of the Cuban economy is happening in real time. So on Monday, air Canada announced that they would suspend flights to the country because of airplane fuel shortages. This cuts Cubans off from desperately needed currency from tourism as well. Even if the plane's landed, gasoline shortages mean that the tourists might not even be able to take a taxi to their resort. Without this inflow cash, it will be difficult for the country to main imports of other needed goods. It is to be seen how long United States continues [BLANK_AUDIO] It is clear that the Trump administration is interested in regime change, but we'll see how far this goes. Now I'd like to flag again our Energy Analyst Summit, really looking forward to this event happening in Ottawa on March 9th. So please do check our website if you're interested in attending. Like I said, it will be in Ottawa March 9th at the RIDO club. Please do check it out by yourself a ticket if you're available to discuss Canada and the future of energy. Now we'll switch over to our discussion with Dennis. So very fascinating conversation here. So please stay tuned. Hi, I'm Dave Perry, the president and CEO of the Canyon Global Affairs Institute. I hope you're enjoying Energy Security Cube, Canada's leading podcast on energy issues. If you're listening and you'd like to help us keep bringing informed discussion of Canadian energy issues to key government decision makers, thought leaders in the business community, then consider sponsoring the podcast. Reach out to us at [email protected] for options and pricing. That's [email protected]. For today's interview, recorded February 10th, 2026, we talked through the current state of the pipeline, MOU between the federal government and the government of Alberta, in light of warming relations with China and growing speculation about Canada's future relationship with the United States. With us to talk through this is Dennis McConaughey. Dennis is a former executive at TransCanada Pipelines and a resident pipeline expert as a fellow at the Canadian Global Affairs Institute, delighted to have you back on the podcast Dennis. Thank you. Okay, I want to start off with a talking through the current state of the Memorandum of Understanding. A few weeks ago, you published an article in the Calgary Herald where you expressed your opinion that the MOU has two quote unquote poison pills that will kill the agreement when it is supposed to be hammered out. And I believe that should be in April April 1st, I believe is the date that they've set. So Dennis, can you walk us through what are these poison pills and why do you think they derail the agreement? Okay, well, the ever since Mark Carney was going to become prime minister and then actually was prime minister, there was a lot of discussion. I said really how the Smith provincial government would relate to the advent of Mark Carney. And with the anticipation that Mark Carney would represent a perspective that was more even handed, receptive the possibility of additional hydrocarbon infrastructure and in fact additional hydrocarbon production. And that some even used and used a term called some grand bargain between an acceptance of that incremental hydrocarbon production, both in oil sands and natural gas for LNG export. With some kind of a quid pro quo related to somehow redeeming that incremental hydrocarbon production, which of course means incremental Canadian carbon emissions via either decarbonizing at all or paying a sufficiently high carbon tax in respect of it that that was the equivalent of decarbonizing. But nonetheless, the negotiations between Carney and Smith, all in the context of you know, Carney's in unseating other major projects that he thought could become nation building projects. And he had his list, he had some of those projects identified to parts of 2025 all in the context of you know, a detiring relationship with the Trump administration on bilateral trade and all the irritants that have been related to that and all of the other, I'll just say provocations that Donald Trump has directed towards Canada. And so, I think that's one of which was you know, problematic in parts of Alberta simply because North South hydrocarbon export still had as much viability potentially as trying to export incremental hydrocarbons to Asia. I think Danielle Smith in her own way tried to try to careful line between keeping the treatment of Alberta within that fraction of 25 views of the United States as minimal as possible. And at the same time, staying inside the team, Canada tend to some degree through all of the efforts that were made to still hold the line somehow, even though de facto. We've been in this position where really notwithstanding. And specifically applied to steel and aluminum, the US MCA is still in place and Canada's aggregate tariff level consequently has been about as good as anybody's other than those that have had to actually give out absolute concessions. And nonetheless, I would say 2025 was a difficult and tens year bilaterally between Ottawa and Alberta. And their efforts were culminated in this MOU which on its face had carney potentially putting an incremental oil pipeline to the west coast from Alberta as one of the designated projects in the national interests provided other conditions in the MOU could be achieved. And I do that I find particularly problematic were of course the two that were not resolved in the MOU that they were deferred to be completed by April 1st. So let's just discuss what they are the first is in respect of oil sends emissions. Expectation that a project known as pathways would be the support required to make pathways actually commercially proceed or even proceed in a physical sense would be agreed to by the three parties of the actual five major oil sends producers and the federal and provincial government. And so this comes to the point what is the value of doing this well the value of doing is is that whether the emissions related and attributed to the oil sends come about from its upgrading steps that make it some of that oil production light synthetic oil or simply the emissions that come about from the generation of steam for the Institute production. The related emissions are going to be quote captured and then compressed and pipeline and ultimately sequestered in some abandoned oil reservoir this technology generally is referred to as CCS carbon capture and sequestration. And you know what is pathways is you know to me still somewhat of a moving target does it is it just one project related to the emissions related to the upgrading step or is it intended to apply to the totality of hydrocarbon production emissions through all of the insitu regions of northeast of Alberta. But the point remains that this technology is expensive and to impose it on hydrocarbon incremental oil sends production or all of that production is is an unrecovered cost of miles of oil markets to date no one is paying Alberta or Canada for that matter for cleaning up these emissions now the evidence that this has been so problematic is that for the past five or six years the same entities through even through the true to the years have never been able to find an agreement where the governments would basically defray the cost and when we're talking about costs it's not just the capital costs but the very formal operating costs because that relates to the necessity of once you extract the CO2 from the flu gases whether it's from a boiler or from the stack of a natural gas reformer taking out the CO2 is a fairly straightforward piece of aiming technology done in many gas plants around the world in many in Alberta but to actually take that extracted CO2 and compress it to pipeline quality so you can actually move it there is the step in the process that is extremely expensive and the longer you have to haul it to whatever abandoned oil field. Those are also add to that cost let alone the still the still the technology of actually sequestering so I mean in short this is a cost that makes incremental oil production potentially in respect to the Alberta oil sends is high as a million barrels a day which would be the predicate for any pipeline going to the west coast or the expansion of existing systems going into the US that incremental million barrels a day would be set back. So how to solve that conundrum was punted of course to April 1st and to date there's been no news of any breakthroughs the second one was the expectation that Alberta would agree with the carny government on a schedule of essentially, and I'll just use this term because I think it's easier for people to appreciate it. Carbon tax is applicable to industrial emissions. I.e., oil sands related emissions or emissions that could be attributed to incremental natural gas production or natural gas transportation, or the actual LNG production step. That whole idea that we will still have a carbon tax applicable to industrially emissions that will become somehow meaningful. So, you know, it is conceivable that you could pay for CCS if you had a $300 or a ton carbon tax because you would be avoiding it by doing CCS, which might only cost you 200. Problem is, of course, no one else in the world is imposing that level of carbon tax on themselves. And so, the dilemma of how in house is the word is used, how stringent it is, you know, how high is the actual tax, and what does it actually apply to? And after you've done that, is there any economic and viability, not just in terms of that incremental million, but how much extra cash flow are you going to take out of the existing oil and natural gas production in Alberta as a carbon tax that would be potentially sent to Ottawa for whatever their purposes and priorities would be? Again, it is a cost that's unrecoverable from the market. And, of course, when you're talking about over the next decade, a million barrels of incremental oil sands production, of course, that's going to mean incremental attributory emissions to Canada. And because it is incremental production, you know, what that cost is going to be is still, you know, is going to have a cost structure that isn't the same as some of the vintage production. So, there's no room for error here. There's no room for incremental cost to be imposed on this industry if you're actually going to capture that price. And, of course, the Americans still have an appetite for this heavy oil. And, regardless what many might suggest, it will take decades before Venezuela becomes an actual competitor because one of the problems of getting Venezuelan heavy oil back is the enormous amount of capital investment in the same steam injection processes that would be driving them. So, I am very skeptical. They will come to an agreement or that they will come to an agreement that would satisfy Mark Carnie's insistence that somehow Canada be seen to have somehow cleansed this incremental oil production. Whereas, you know, the Smith government has really tended to focus on the pipeline to the west coast on the belief that potentially higher margins would be gained there. I actually think the biggest priority is removing these two impositions of cost. However, I will can make this point. And, I think it's obvious to many, if you eliminate these, you really don't have anything left of Canadian carbon policy. We may have some, you know, efforts to still manipulate fuel standards. We may still have some elements around building standards. We may have some continued efforts to incentivize EV consumption or EV manufacture, but it's not like actually aggressive climate policy is actually impacting the Canadian economy because, of course, we saw that even Mark Carnie blanked in respective carbon taxes on, as they call it, the retail sector, but, you know, basically the consumption that households in Canada or the demand for hydrocarbons that were attributed to them, whether they would have been imposed on this. So, this is a very, you know, difficult moment, I expect. And so, my first contention is that I think they will not get to a deal. And then, where do people go after that? Yeah, yeah. And, you know, I think it's a good point that, if they don't get to a deal, there's a question about where does Canadian climate policy go from there? Because it kind of wraps all of this up in this sort of grand bargain that includes this 1 million barrel per day pipeline. I think a 1 million barrel per day pipeline will be very, very difficult project to actually get off the ground, especially if it's privately financed. But then it kind of wraps everything together. And then, if it doesn't end up going forward, then what's a federal government's next step to say, like, we tried to come to this deal, but it failed. And, I think that's pretty important. Well, to me, the answer to that question is actually easier than what does Alberta do. Mark Roney takes solace that he's prevented incremental emissions, and he's with the angels and the holy and everything that quote he values, despite the setback it represents for Canada in terms of basically for going one of its few truly competitive elements of its economy. And at the same time, an element that actually can be material to moving the needle of Canadian GDP. Yeah, this is an expert industry that's less reliant upon a ring fence market with the United States than most of us contend that there is really nothing problematic about that north-south integration. And it's still to be proven to me that actually going to Asia is a materially superior economic choice. And keep in mind, when we're talking about a million barrels, they don't instantaneously turn on. This is going to be an incremental process, which actually is more aligned with an incremental expansion of existing systems, whether it's the Enbridge systems, TMX, or some version of KXL 2.0 or even an expansion of existing KXL. So the idea of one big pipeline to the West Coast, I think I've always said publicly leave that to the industry to optimize. But this is all academic. If you don't have a policy environment that makes the realization of this extra million barrels, and I might add, expanded LNG export, not beyond LNG Canada, because they both, although oil may be more valuable, LNG export is still another major potential driver. So again, from a federal government, Carnegie Government point of view, if this comes to nothing, well, he at least has the solace of toward incremental emissions in Tribunal Canada. The real questions remain in Alberta. In the Smith government has tried to negotiate terms that really would be the foundational driver for continued economic growth within Alberta to basically sustain the standard of living that Albertans have actually come to expect. And they're continuing contributions to the rest of Canada. To use one of Karni's favorite words, this will be a rupture if this thing breaks down, because what does Alberta do? Like, what can you do with a federal government that is imposing environmental conditions, which is de facto compromising the ownership of that resource? Because the only thing that means you get the right to use it and develop it. Yeah, I think this is a very poor Alberta's position in federalism. Yeah, just to stick with that for a second, because I think federal Alberta relations are big news items right now and our listener base is largely in Ottawa. So I think it's useful to kind of remark on this that the oil and gas sector is, I'd say it's the, it forms kind of the lion's share of why incomes in Alberta are household incomes in Alberta are on average much higher than they are on the rest of the country. And that's a, it's an important part of understanding the political economy of Alberta is understanding that well, people in Alberta generally know that this is kind of what's what's happening here. And this includes not only people who are directly working on the gas, but also all of the service sectors, lawyers, bankers, you know, karma cannabis. Everybody. Yeah. Yeah. And so this, it raises, it raises the boats of all of those, all those families. So it's important to note that treatment of this industry, it's kind of important to these discussions that are happening right now. But I'd like to talk a little bit about the carny government, the idea that this poison pill intentionally or unintentionally in the MOU, but nevertheless, it does seem as though the carny government is very interested in increasing Canadian exports, especially to Asia. Language seems to indicate that for sure. And this includes the recent engagement with China on the possibility of diversifying our trade relationships to increase our exports to China potentially, including on energy, Canadian government, the carny plan is to try to double non-US trade or non-US exports by 2030, I believe. But like you said, we don't have the infrastructure to actually do that. And the economics of it aren't quite as straightforward, I suppose, as they are to build pipelines for the prairies. So, Dennis, what do you think would actually need to happen to build this sort of big energy infrastructure to get to those? Well, I'll just come back to the two points that I continue to make on that very question. The first is remove the impositions of Canadian climate policies so you actually have a million barrels or another two TcF of LNG export make those conditions as economically viable as possible. The second part is Canada gets value wherever it can send its hydrocarbon exports to the highest value markets. The oil sands producers themselves are best positioned to know how to do that. So to me it is not a given that pipeline infrastructure to the BC West Coast and on to Asia is necessarily a superior choice than further integration with the US and then there's a third point to make. The expansion of existing systems particularly in Alberta and Saskatchewan that go into the United States and even for that matter Tmx is an order of magnitude easier than having to deal with the issues that would be facing a project of the scale of another million barrels to the West Coast which would ultimately have to be Kitimat because it's simply the better option than Prince Rupert despite some of the things that the Premier of Alberta has used to do. Yeah, just a pause on that Dennis and you know we'll get back to it. Why is it that Kitimat's better than Prince Rupert? Just just it's shorter in distance. Yeah, it's shorter in distance. Just look at the map and it's just a matter from Edmonton to Kitimat is more direct. Now people need to recognize topography, geography. In both cases you have to get over the coastal mountains. It's happened that coastal gas link related to BC Canada, Canada's you know up and running World Scale El Langefus has already done that. So the corridor to do this is already there going to Kitimat. In Prince Rupert I think is at least as challenging but it's fundamentals are that it is just it's not a surprise that BC Canada went to Kitimat. Now there are many who want to contend that the Douglas Channel you know is a more difficult marine risk than the approved Rupert ports that are locations in the Prince Rupert area that are open to the Pacific Ocean. Notwithstanding that my expectation that if this pipe were ever to be built, there were truly Asian hydrocarbon buyers that were prepared to make long-term commitments. I still think the the choice would be Kitimat versus Prince Rupert but it it's really comes down to things as as elemental as just fundamental geography, distance. Notwithstanding that both are enormous engineering accomplishments to get those pipes over those mountains but that's already been done in respect of coastal gas like and that would undoubtedly be the same right of way that would be deployed if we were building an oil pipeline. Yeah yeah. Nevertheless you you were saying that incremental. The other point about any effort to go to the west coast is you know the issues of First Nations. The unsettled land claims of British Columbia will always make that a greater challenge than simply the incrementing of existing systems that are moving through Albertans Saskatchewan in particular. And of course that remains I think a very practical consideration other than what I had already alluded to. This million barrels will largely occur incrementally over the next decade. It won't be in a mass of slug so if you're building something where do you stand in five years on production that you're building up could you have to actually get some money for that build up. So again I my own my only intuition is that if we are able to find an agreement on these climate-related issues that the expansion of production in Alberta will find more incremental options notwithstanding the Premier Wood would still have this desire to have this infrastructure be progressed. Yeah. But I said before I think the oil sands producers themselves who ultimately are the credits they're going to support this will get that decision correct. Yeah absolutely. To get a little bit more into the weeds about what is going on in terms of the actual FIDs happening on the ground. There's been talks about the Trans Mountain pipeline getting closer to talking about improving their capacity and I think about I do think that will actually happen and I do on occasion talk with folks Trans Mountain about this but there's more actual FIDs more actual investment decisions made upon the pipelines are going south to the United States. So for example in November in bridge announced final investment decision on mainline optimization and this is mainline optimization phase one which implies that there will be further phases down the line for increasing the capacity of this. I believe that this is increasing the capacity of some parts of the pipeline system by 150,000 some parts by about 100,000 and this will improve the ability of Enbridge to deliver crude oil to the US Gulf Coast and this will be primarily Canadian heavy I believe. So Dennis could you give your thoughts what does this really tell us about the relative economics of projects going west versus south? Well I think it just reinforces what I've already said. Yeah like the the Enbridge is cautiously stepping out and that's based on really I think current expectations of incremental production that's going to come on based on investments that largely have already been taken and can be that can actually give some credibility to this expansion. Until these issues about other incremental oil is resolved in a way that the production investment is attracted then I don't think you're going to see any imminent FIDs on any front until there's clarity on what these rules are going to be. And I do think the Karni government does represent a unique opportunity to get this right because he comes in with an enormous mandate to actually reverse some of the elements of prior Canadian climate policy. But as I noted before this enormous ask of Mark Karni to basically eliminate Canadian carbon policy as it would impact on the one element of Canadian economy that drives its emission position. Like Canada again this is not something that people probably don't already know but I'll reiterate. You know Canada's electric production sector was already substantially decarbonized even before the 1992 convention was ever signed. So we weren't reducing emissions because we didn't have as many as others as well. We should have had a bunch of coal fired power plants there just to make it so that we could have that. Well they would have been the point goes with the enormous hydro endowment plus the nuclear position in Ontario. Canada was substantially decarbonized in the electric sector unlike some other countries who actually had to make those transitions if they were actually going to reduce industrial emissions. But it's not a reality as the Canadian oil sense became in the money. They are a technology that is producing substantially heavy oil and it is a as has been noted many times a energy intensive source of crude oil which is you know simply recognizing that a lot of energy has to be expanded to create the steam or then hydrogen to make the quality of crude oil that the market market wants. However there is a global market for heavy oil like if Canada just produces other countries have and will. So it's again this great irony that our saintliness about trying to reduce these emissions may have zero impact globally because where this is like the world is driving the demand for these products it's not a Canadian domestic thing but on the same token all these things are understood and that's why I think intellectually the appeal of well couldn't we just make decarbonization work because then of course we're we redeemed it somehow. Well of course the United States is not posing this condition on its production and no other country is going to pay Canada for having done that and of course another point people want to discuss you know EU climate policy. I mean their affordability crisis is real and their capacity to impose you know these kinds of constraints on the amount of oil that it has to import you know I think is going to be very strained and very unsustainable. So again Joe I think that the the key point in this is this survival whether the MOU breaks down or not is going to drive you know a real great amount of soul searching with an Alberta like where does this province go these are the a carny government that was supposed to be be like a new deal of, you know, receptivity to industrial expansion, um, seizing economic opportunities, and how that all was going to be done in the very direct way that, uh, to impose, like clean energy constraints was to basically deny that expansion for Alberta. And I do think the point that I'm trying to make is that that is going to lead, and I'll just put it this diplomatically is there will be a political reaction to that event, and where that goes, I think is still somewhat unclear in this province. Mm hmm. Yeah. And, uh, yeah, a little bit of this will be resolved. Well, not resolved, but maybe the result of how we see things play out after, um, April 1st. Yeah. I think obviously we'll all take stock of that. And, you know, the another point just to make, uh, if it is obvious to people, there are, there is one plebiscite that has acquired the requisite signatures to reaffirm Alberta within Canada. And there is another one that is very close that frames the question in the opposite direction. So the prospect of a provincial plebiscite later this year is maybe something the premier cannot avoid having to actually deal with, because she has obligations if they get these requisite signatures to at the very least reconcile the two. And so that looms in all of this calculus as well. Yeah. Yeah. I mean, I'm, um, yeah, I have complex thoughts about how, uh, how, um, like the navigating kind of this, this situation where federal provincial relations have gotten to, gotten to this point. Um, yeah. And quite a bit of it is, uh, like you say, um, wrapped up in kind of this energy conversation where, uh, where there's, there seems to be kind of like a disconnect between, uh, still between the federal government and, uh, the people of, uh, of Alberta, I suppose. But, but nevertheless, I, uh, yeah, I'm, I'm more in favor. I'm more in favor of, um, that's all working together. I think that, you know, I think that, uh, it's, well, I'll, I'll just close by saying, of course, this is going to be a difficult one to finesse. Yeah. Uh, I mean, it's always possible that you can reduce the scale of pathways down. And you can always try to impose a stringency on this industrial tax that is low enough that people may abide it. So there's always a Canadian instinct to find compromise. But I think in this case, these are being driven by some, you know, real ideological convictions. Mm-hmm. Moreover, uh, you can't actually get this investment unless you have clarity on the environment. And I don't mean that it's a pun, but I mean, the policy environment is much as, uh, if anyone was wondering. Uh, so, uh, let's just leave it that at the same OU, if, if I'm correct and it does break down, uh, is going to catalyze these, um, it's going to catalyze, I think, a national reaction, but essentially, essentially in Alberta, it is going to be, uh, a driving force for how these plebiscites are reacted to. Yeah. Yeah. Like from what I'm hearing, um, you know, the, the, the, the current government seems to have taken very much like an infrastructure first, uh, path here, which I think could be getting the sequencing wrong here. It seems to me like the sequencing for getting this infrastructure built for, uh, greater trade is first of all policy and then greater production and then greater infrastructure. Whereas we seem to be kind of getting it backwards where we're talking about the infrastructure before we're talking about the policy and the production. Uh, I, I agree with you there, Joe, but I think the primary of Alberta is as guilty as that as, as, as anyone might have been obsessed with this pipeline as opposed to the oil production itself. Yeah. Like that's the stuff. The oil production, that's where the economic value comes from. Oil production at a, at a reasonable price. That's a point of having the infrastructure. It's not the infrastructure in of itself. Yes. Yeah. So this conversation does come amid, you know, a larger, uh, strategic question of economic integration with trade partners. And this is something that I've been a little bit, um, I guess worried about thinking about ever since that announcement of the strategic partnership with China. I'm really unsure what makes this agreement with China like, uh, really a strategic partnership. You know, some people are saying that it's just a resolution of some, uh, you know, authority trade issues that it's not. You know, so important, but then other people are calling it, you know, a strategic partnership. Well, as far as I read Mark Carney, he goes to great pains to say this is simply a bilateral deal now on rapeseed for EVs. It's not a strategic, uh, it is not the signal of a strategic alliance between Canada and China. No, am I, am I wrong on that? I believe that there was the language of strategic partnership involved, uh, in these discussions. I'm not sure if Mark Carney said those words though. So that's, that's an important thing to know here. But I don't know. Because I took no quarrel with Mark Carney making a smart bilateral arrangement to get relief on, uh, canola oil, which is material to Canada, um, for tolerating, you know, EVs, uh, imported into Canada. Uh, but, um, so I applauded him publicly for doing that. Uh, and there is no reason not to be talking to China about, you know, rational trading arrangements. My only proviso is Canada is never going to be able to sustain its current economy and everything that it can, it can be expect to come out of it without some kind of stable relationship with the United States on trade. Like that is simply in, in, inescapable and, um, the tactics for getting there, I think suggests that there are some very hard trade-offs that the Carney government, um, uh, and without, um, and, uh, and, uh, we'll just make the comment. my suspicion that one of the basic strategies that the CUNY government has is to rag the puck as much as it can through 2026 so that perhaps there is something that resembles constraints on Donald Trump because any renewed USMCA seems to be getting harder for all the other reasons that we don't have time to actually get into. The necessity of understanding what trade between Canada and US looks like on a sustainable and reliable basis, it's never going to be replaced by other options because you just again cannot escape geography and you can't escape the complementarity of our two countries especially in Western Canada for the US market. Yeah, absolutely. The geographical lens is something that I really recommend people looking to some infrastructure maps, particularly rail infrastructure, pipeline infrastructure. And electricity. And electricity. And electricity. And electricity too. It really, you can really see where, well, where the Canadian shield is basically. It makes so much more sense for provinces and the prairies to be connected in with the Midwest across that big diagonal than it does to try to go through the Canadian shield. And unfortunately, that creates a big geographical barrier for Canadian broader economic integration. But in the wisdom of generations that recognize that going back to the 1980s, you know, held Canada in Goodsted, which is why disturbing it was so unfortunate with the advent of Trump 2.0. Yeah, yeah. And yeah, that's really undermined a lot of the basis of Canadian thinking about the world where we just took pause relationship in the United States for granted. And you know, this kind of reminds me of this idea of this idea proposed by economist Danny Roddrick that this idea of this trilema where democracy, national sovereignty and global economic integration could be kind of mutually incompatible. And for a long time, I feel as though Canada has been doing this trade off of sovereignty to the United States in a way in exchange for greater economic integration and preserving our democracy about things that are still domestic affairs. But now that the United States is cutting off that economic integration, we're now talking about sovereignty again, but they'll come at the expense of standards of living. So I guess there's the question about that economic integration with the United States, like what really are the tradeoffs of? I think the tradeoffs are obvious in their. extremely difficult because the trade-offs all come at the cost of central Canada and the elements of the economy that are going to be enriched by further integration aren't in central Canada. And so that is a fundamental dilemma why even with the advent of Mark Carney, really rolling up sleeves and saying we're going to make these fundamental trade-offs, because I think it's even evident when some of Trump's reaction to the EV arm importation is again the presumption that Canada is going to sustain an automobile industry because whether he can sustain one or America can, at the very least he wants some of that integration that has existed to both countries benefit to end as misguided as he may be. But like we're here and we can't even get into the no-brainer of supply management, but nonetheless like I say it as a no-brainer because like there is no reason to be sustaining so far management other than the fact that there are interest groups that have political influence and have for a long time. Those are trade-offs. Even though it's not even clear it's a big impact to Wisconsin dairy farmers anyway, but I'm just saying that this this effort to get back to this administration and all of the provocations they make still come down to because these same irritants existed before Donald Trump. It's just that the those administrations tolerated Canada to some extent having its cake and eating it too. And yet at the same time I would contend that Canada has no choice but to find a renewed relationship with the United States on trade regardless because ultimately this will transcend Donald Trump. And so and again I think our discussion we've already had like going to Asia with a big pipeline is much harder to do than the continued expansion of as extra million barrels of oil production into US markets. Yeah I mean I think I think the irony is that you know although Trump is the one talking about Canada as a as a 51st state during the Biden time Canada was aligning its its trade policies largely with the United States especially where it comes to EV is where we applied the same tariff on on China effectively becoming closer and closer to like kind of a customs union with the United States like that was the kind of direction of things if we had another you know 15 years of of Biden like government then we could have we could have effectively become much more I suppose aligned with the United States and all all aspects of trade policy and perhaps the hard part in all is it's it's not the things that you can agree to have the same tariff on it's the non-tariff protections that you're expecting the other partner to put up with. So I mean a customs union always has implications for Canada come back to supply managers and obvious example. It should be no brainer to think in those terms but it's always the tolerance that and many was another classic example of this of trade with me but I still insist on ensuring that there's certain protections because those trade protections keep certain industries certain political factions sustainable and that's the price that we need to have where your tolerance for that and of course the great irony in this is that the world is better off with an average tariff level of 2% than 15 that should be obvious it is not obvious to the Trump administration so very very inefficient tax and but at the same time you know the Trump administration at least we used to be Canada you know has its irritants related to some of our unique protections but of course they do stupid things like tariffs on Canadian aluminum only adds real cost to their economy and may you reach a few aluminum producers who don't have the you know comparative advantages of making aluminum in Quebec. Well we could talk about you know the larger context all day there's there's so many things going on the world Denis and really why don't we agree to talk towards the end of April because I think that that will be there will be a lot to talk about it with a little more clarity when we get there but I'm glad we've had the chance to frame this today. Yeah absolutely maybe we'll get a panel together or something like that and we can you know I've kind of a live discussion about things as they unfold but one last question before you before you wrap things up here Denis what is a book you would like to recommend to our audience? I think one of the interesting books people should take a look at is a recent biography by Barry Diller. Barry Diller was a media magnet who may still actually have something to say before the resolution of Warner Brothers but it's a great insight into the evolution of North American media so and how a person who was at the very center of all of that I'd give people what that suggestion to them give that a read it's well written and he's a person who was right at the very center of the evolutions that went from starting out in the early 70s and the technology changes and the entire landscape that is so fundamentally different today and will be even more different so I would recommend that book Joe. Very interesting co-founder of Fox with Murdoch. Yeah yeah something of very interesting follow well fantastic this is great Denis thanks so much for coming on and looking forward to having you on again very soon here. Thank you. Thanks for listening to this episode of Energy Security Cubed on the CGAI podcast network. You can find us wherever you get your podcasts. If you like the show give it a rating you can also find us on Facebook, Twitter and LinkedIn. If you like this podcast and want to help us maintain our contributions to Canadian foreign policy research you can support us by donating on our website www.cgai.ca. Energy Security Cubed is brought to you by our team at CGAI. Thanks go out to Drew Phillips for our music. I'm Joe Calnan thanks for listening to Energy Security Cubed.