Regaining Global Trust Bigger Economic Challenge Than Low Oil Prices: Gaz Métro CEO

By Pat Roche – Daily Oil Bulletin – Oct. 15, 2015 –

If Canada wants to sell its energy to the rest of the world, it will have to play by the world’s rules.

That’s the message the chief executive of Quebec’s biggest natural gas distribution company took to a Calgary audience ahead of the United Nations Climate Change Conference to be held in Paris Nov. 30 to Dec. 11.

Because of Ottawa’s refusal to respond to climate change, Canada has lost the trust of the rest of the world, said Sophie Brochu, president of Gaz Métro, which distributes gas and power in Quebec and Vermont.

“It’s foreseeable that in the future, countries that will have taken it upon themselves to reduce their own emissions will impose taxes and duties [on] products and services rendered by countries who will have not,” Brochu told the annual Calgary Energy Roundtable conference on Wednesday.

“If you think this is crazy, that it goes maybe against the free trade agreements, I suggest you go look at the text of those agreements.”

“So one of the greatest economic challenges facing Canada today is not the decline in oil prices. It’s not the global uncertainties of the economies, although these are major. The biggest challenge that we have effectively as Canadians, from one coast to the other, is to convince the world to trust us again,” Brochu said.

“The world doesn’t want Canada to be perfect. The world doesn’t want Alberta to stop producing oilsands. They want to see [Canada] make a real effort to have a plan, and to explain what is our plan. Getting back their trust implies changing our models and our methods, starting with a change of attitude of the federal government.”

Launched in 2004, the Energy Roundtable is a private-sector forum on the Canadian energy sector’s role in domestic affairs and international oil and gas markets. The annual conference series gathers industry leaders in Toronto, Calgary, and London.

With more than $6 billion in assets and 10,000 kilometres of underground pipelines, Gaz Métro is a major energy provider. In Vermont, where it has about 300,000 customers, the company distributes gas and produces and distributes electricity.

Citing Quebec and Ontario as examples, Bruchu said the energy-and-environment discussion has matured to the point where industries and environmentalists can work together.

She said a good example is the so-called SWITCH Alliance. Members include energy companies such as Gaz Métro and Enerkem, environmental groups like the David Suzuki Foundation, industry groups such as the Quebec Employers Council and the Aluminium Association of Canada, and Quebec’s Desjardins Group, which bills itself as the largest association of credit unions in North America.

The goal of the alliance is to work together on what members agree on.

“Everything we don’t agree upon, we put aside. And we have to start to work on what we agree upon. And you know what? We found more things that we agree upon than things that we do not. So we progressed,” Bruchu said.

A few years ago Gaz Métro asked its stakeholders what they expect from the company.

“Nobody told us, ‘We want you to stop distributing natural gas,’” said the CEO of the private-sector firm. “They wanted us to make more efforts in having our customers consume less of the stuff we sold. Fair enough. They wanted us to inject [renewables] in our network. We’re just about to do that. They said, ‘Why don’t you get into renewables?’ So we did. We’re now into wind power, solar power, biomass power.”

“In Vermont, for God’s sake, we’re producing electricity with cow manure,” she said, adding that Gaz Métro’s customers are “perfectly happy” to pay a higher price for this biomass power. “So we’ve started to do that. Has this crippled our company? Absolutely not.”

Brochu said the market associated with the green economy represented $740 million in 2009 but is projected to grow to $2.7 trillion by 2020. “I think Canada should get its fair share.”

To regain the world’s trust, she said Canada needs a strategy, a plan or a policy to address climate change. “Call it whatever you want. But … we absolutely need this.”

But first Canadians must agree amongst themselves.

“What I’m talking about essentially is a formidable pan-Canadian private/public partnership. Because we are indeed talking about a partnership first and foremost among Canadians. This is what we have to start with. To inspire the world’s trust, it would be a good thing that we start trusting one another across the country.”

She added: “People in Quebec need to understand your reality in Alberta. You need to explain it to Quebec people. …. And the Quebec people need to explain what is their reality.”

Brochu said Canadians have mostly avoided a national discussion on energy policy because energy falls under provincial jurisdiction. And historically there was no need because the main market for Canadian energy has been the United States.

“The commerce was north-south. It was true for oil, true for gas, true for electricity. We didn’t need one another. So we were lazy. We neglected one another. And now what do we have? We have a country with a patchwork of approaches [and] realities, people across the country who don’t understand necessarily the realities of the other. And we are paying a heavy price.”

East-west pipeline projects have run up against powerful opposition in British Columbia, Ontario and Quebec.

So the private sector is left to carry the ball in what would normally be a national government role.

“Private companies devise a project and say it’s in the best interest of Canada. Oh yeah? And why is that? And all of a sudden, we realized that we have neglected our [neighbours] for the last 35 years. It’s a senseless situation and it has to be addressed,” the Gaz Métro boss argued.

Brochu said the good news is Canada’s premiers provided a small but important stepping stone with their unanimous agreement in St. John’s, NL, last summer on a Canadian energy strategy (DOB, July 17, 2015).

“This initiative and the leadership shown by the premiers [has] to be applauded. Despite sometimes difficult and divergent goals, they chose to work together on what united us, not what divides us,” she said.

On Monday, Canadians go to the polls in a federal general election. Brochu said the winner will have six weeks to come up with a position to take to the Paris climate change conference.” It’s no exaggeration to say that the rest of the world is looking at us.”