The rapidly changing geopolitical landscape was a major topic of interest at the forum’s 25th iteration
Decades of history can unfold over a matter of months and years, Robert Kaplan told an audience of business leaders on Thursday in Banff, saying the past two years have been particularly eventful.
“The world may seem tumultuous now, but because of the very finite size of the Earth combined with the advance of technology, it’s about to become even more tumultuous,” Kaplan told the Global Business Forum, the lead speaker for the two-day conference.
The rapidly changing geopolitical landscape — from the wars in Gaza and Ukraine to the United States’ increasingly tense relationship with China, which Kaplan said may be building toward an event similar to the Cuban Missile Crisis — was a major topic of interest at the forum’s 25th iteration.
Canada won’t be immune to the challenges that arise from these shifting tides, Kaplan said. The warming and melting Arctic region, much of which Canada stewards, will open massively sought-after sea lanes and natural resources that many countries will seek to take control over.
“The Chinese, the Russians, the Norwegians and others are ready to go, ready at the starting blocks to take advantage militarily of this,” Kaplan said. “I’m not sure that Canada is.”
This new reality will require Canada, with its limited military capacity, to fortify its ties to the U.S. due to the sheer size of the Arctic’s geography, he said. That relationship will need to be strengthened by providing more to the U.S. as a method of creating leverage.
“Canada is fated by geography, to be a trusted ally of the United States, which has been going back many decades — but this is going to increase, not decrease, as time goes on,” he said in an interview following his session.
Decarbonization a challenge for businesses
Various changes inside Canada’s borders and abroad are meanwhile forcing the country’s key industries to rethink their long-term future, executives at Calgary-based Nutrien Ltd. and MEG Energy Corp. said in a later panel on leading companies through global and unpredictable risks.
Those companies are still focused on decarbonization, said Nutrien CEO Ken Seitz and MEG Energy CEO Darlene Gates. Both said Canada’s framework for carbon markets and legislative approach to decarbonization are either nascent or in some way causing issues for them to approach reducing their emissions.
Nutrien’s pilot carbon program remains in its infancy because there is still no value on carbon in the agriculture industry, Seitz said. “We’re deploying dollars in the name of learning, but there’s not a sufficient value to carbon; there’s not tradable carbon markets today.” That lack of a business case for decarbonization initiatives, along with other sources of instability, has forced the company to focus on its bottom line and has shifted the focus of conversations with investors away from sustainability, he said. Seitz said he still believes Nutrien will achieve its net zero target by 2050.
“It’s in this economic environment where it is about returns, it is about our costs. It is about all those things that you sort of rush back to in a challenged backdrop,” Seitz said.
U.S.’ Inflation Reduction Act impacting Canada
The United States’ Inflation Reduction Act (IRA), which in 2022 committed $370 billion to clean-energy programs, has made the U.S. particularly competitive against Canada’s green-energy framework. Seitz said the amount of brain power that’s moved from Canada to the U.S. — referred to in Canada as a “brain drain” — has been palpable, and companies currently have greater incentive to set up projects in the States.
“I can say that the next nitrogen plant that gets built in North America is not going to be in Canada, even though we have access to very low cost natural gas,” Seitz said.
Rodi Guidero, managing director of strategic investments at the Bill Gates-owned Gates Ventures, said he’s witnessed first-hand the IRA drawing people out of Canada.
“It is interesting to hear about the view on the IRA, the view on referring to it as a brain drain, which I’ll plead guilty,” Guidero said.
MEG Energy’s Gates said Canadian oil and gas companies don’t need the IRA to be mimicked, but “the outcome needs to be the same as what the IRA is driving.”
Gates said Bill C-59, an omnibus bill that included anti-greenwashing provisions the energy industry has said is overly vague and has prompted them to scrub their websites of information on emissions-reduction efforts, has led to questions from American shareholders trying to understand Canada’s approach. MEG Energy is a member of the Pathways Alliance, a consortium of oilsands companies that have committed to reaching net-zero emissions.
“Until we have clarity and certainty on what C-59 exactly means, we’ve had to go quiet on it until we have that clarity,” Gates said. “The shareholders for us, in a lot of cases, are from the United States, and they look over the fence and they’re trying to understand our politics and what those messages are . . . that’s a tough one for us.”