Episode 1886: Understanding of Memorandum

This is the Strategist episode 1886. My name is Zain Velji. With me, as always, Stephen Carter, Shannon Phillips. Hello, friends.

important year? Why do I feel like when I said that, I'm like, oh, that's like, I feel like I'm rattling off.

I think it was important to the people who lived in 1886, but I'm not so sure it's

it's important to us. I mean, did it have historical significance in any way? Do you remember? Does anyone know?

Why does it seem like we should know that year? I'm going to look it up. Hold on. We're going to actually bask in silence. while I look up 1886.

Shannon, how are you doing? Was it important? No, we're going to bask in silence. We're going to bask in silence. No, we're not basking. Why are you guys so uncomfortable in

It's not that we're uncomfortable. Haymarket Affair in Chicago.

Landmark here for Coca-Cola. Maybe that's why I know. Did you know my dad worked for Coca-Cola? That's where we're both reading the Google

That's good. My dad worked for Coke for 35 years.

Well, that's an excellent

Sorry, cocaine. He was part of the drug trade. Sorry, I should have clarified. You should be more

yeah. Haymarket was a big labor thing, right? So it was a big labor demonstration. So, like, we're talking about American history here because we're reading off the Google IELTS lab. Is

Yeah, no, no. Every episode moves up a year and we just start with, have we just not taken advantage of this opportunity for 1,800

,800 plus episodes, Carter, to talk about the year?

Yeah, exactly. What would we have done with episode three? I

I think a lot happened at three. Arguably, some very big shit happened at three. Probably

Probably some Roman shit. Yeah.

stuck all day, the dinosaurs and the humans were both alive back then. Oh, at the same time?

Same time, dueling it out.

Bernie roaming the earth? Wasn't that the...

Yes, yes. And speaking of dinosaurs, Carter, those same fossils now provide oil and gas. Thank God. What do you think of that transition? composition uh well that was really well pretty good you think that's

that's pretty good which in turn in turn also provides all of our electricity so this has worked out well

oh well there you go uh

but without them we wouldn't have a provincial identity or reason to be proud of ourselves uh

uh should we talk about it i guess let's talk about it we i want to break this down in well three quarters talking about the pipeline stuff and then i do want to actually and the reason i'm saying this out loud is just to remind myself because as you know this this show uh works on I want to talk about the UCP AGM and their convention that they're having and what are the ramifications of all that sort of pipeline talk related to that particular group. But let's start here.

Shannon, Stephen, we now have an MOU.

It exists. It is real. It is, as predicted, not several dozen pages. It is two or three pages. It is very short. Danielle

Danielle Smith signed it yesterday alongside Mark Carney in Calgary. He then gave a speech to two standing ovations at the Calgary Chamber of Commerce to 1,000-plus people. Carter, Shannon, we can talk about the details of the MOU or the lack thereof, but I want to spend the majority of it on the strategy side of things for each of the relevant parties. But give me your take, Stephen Carter, in terms of when you first saw it, what stuck out to you or what sticks out for you in terms of the MOU itself? And, Shannon, same question, and then I'll add some details along the way. Well,

Well, I think that if we're talking about the big takeaway, the big takeaway for me was the pipeline, right? The pipeline, the promised pipeline, which has to have a private proponent by July 1st, 2026, which I thought was a super tight timeline. And I saw Carney commenting on it, saying if there wasn't private dollars, there wouldn't be a pipeline, which I had

had hoped he would be saying, because I just don't see a private proponent coming around in the next seven months to build a multi, multi-billion dollar project, even if that multi, multi-billion dollar project is backed by the governments of Canada and the government of Alberta. Um, I just don't see that happening. Uh, I just don't, you know, I think that this is a great memorandum of understanding for, uh, Danielle Smith to wave around at her AGM as you've, as you've kind of alluded to, but

but it is a more important document, uh, for

for Carney when it all starts to fall apart and he has to have a new election in a few, uh, in a few months, uh, or a few years time.

Shannon, what's your main takeaway? And we'll get into some of the details in terms of what it does show uh

uh my main takeaway is that this is a major signal to uh oil and gas investors that they can place capital here uh without any of the uh other uncertainties that had been placed in or that they had that they had heretofore said were barriers to them placing capital the clean electricity regulations so uh moving those aside means that you can invest in natural gas, fire electricity generation anywhere in the country, because I think we all know that an exemption for Alberta is basically icing the policy entirely, that there would no longer be any oil and gas cap regulations that were still TBD.

And so if you wanted to make an investment in any kind of primary production in Alberta or elsewhere, that you wouldn't have to factor that in to your risk outlook for that investment. And that, you know, linear infrastructure of many kinds, not just the North Coast, but other types of investments in linear transportation infrastructure for oil and gas, that those would be at not just at not frustrated by an oil and gas cap or or other forms of regulation but uh would also be declared in the in the national interest so this isn't just for a pipeline to the as yet notional to the north coast but any other type of infrastructure that people were looking at whether it was an expansion of existing infrastructure or or uh new investments up to you know churchill or east west interconnectivity or those kinds of things so it was rolling out the red carpet for that and saying there are no longer any uh impediments right so we're back to harper era kind of uh regulatory environment there uh and harper era approach uh which is anything goes but harper plus uh which is that um if you know environmental assessment gets in your way or any of those kinds of of laws we'll move those aside for you as well on that side so

so it says that to me um and that's what it's saying to uh global investment community and

and it's also saying also

also on uh climate even the stuff that we're going to keep around

around industrial carbon pricing that kind of stuff also negotiable uh

uh with alberta and therefore for the country so uh and that the on the climate side like methane negotiable industrial price negotiable it's baked right there into the agreement we're We're going into negotiations on this because there's all kinds of ways for 170 or 130, depend on who you talk to, whether that's a carbon price that's a bit of a mannequin in the window. There's all kinds of complexity behind it.

you know, it's basically saying to investors, you don't have anything to worry about in terms of climate or natural resource policy. You can place capital here. If there's capital to be placed, place

place it in Canada. That's what he's done.

Carter, you want to get in on this, and then I want to talk about strategy and stagecraft, which is the heart of this show.

Yeah, I mean, I just think that, you know, Shannon's view of the document, my view of the document, has some variances. And I think it specifically is varied around climate policy. And, you know, I think that she's right. Right. A whole bunch of pre-existing climate requirements have been eliminated, but they've been replaced with an effective carbon tax. And that carbon tax is going to be an effective rate. I think it's one hundred and thirty dollars. And if it is at that level suddenly, you know, and goes up from there, suddenly projects like Pathways become viable. And we could really start to see a reduction in carbon output from the

the Alberta oil sands. That type of reduction in carbon output is essential, I think, to the deal. It is not a deal that says

says we're going to create all kinds of barriers

boundaries for carbon. Instead, we're going to charge you for it. And

And I think the industry has

has often wanted a simple carbon price. I don't think they want $130 effective rate, but

but that's what they're going to get. And I think that that's why you're starting to see a bunch of people within Daniel

Daniel Smith's own world in orbit already

already start to push back and bristle against

against this memorandum of understanding is because they know that the cost structure has foundationally changed for their carbon output. point let's

let's talk about strategy for each of the the relevant players carnie smith and i want to include eb but before i do that can we talk about the stagecraft of what we saw there's gonna be many other shows and podcasts and interviews that talk about the the deals the details and what a

what do you kind of think of smith in terms of how she handled this how they've communicated it um the tone that she took the stagecraft from her perspective and then same Same with Carney. Carter, start me off with Smith. What did you like? What did you not like?

I liked that she just kind of declared victory, right? She was the one who is immediately out there saying, you know, we won. You know, this is a complete capitulation by the federal government. The prime minister has come to Alberta to bow down before the gods of the petrochemical state. um that