Ottawa making energy companies the middle man with net-zero electricity legislation, ATCO chief executive says

Ottawa making energy companies the middle man with net-zero electricity legislation, ATCO chief executive says
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ATCO chief executive officer Nancy Southern at the company’s offices in Calgary, Alta., on Sept. 21.Leah Hennel/The Globe and Mail

Energy companies are being caught in the middle as Ottawa pushes “mischievous” legislation to create a net-zero electricity grid by 2035 without an honest conversation with Canadians about the true cost of the energy transition, says Nancy Southern, the chief executive of Alberta-based ATCO Ltd. ACO-X-T

The federal Liberal government’s plan, revealed in August, includes grandfathering existing gas-fuelled power plants. But Prairie provinces that rely heavily on natural gas for their power and heating needs have pushed back. Alberta Premier Danielle Smith, for example, has called the proposed rules “unconstitutional.” And fossil fuel companies – many with their own net-zero goals – are increasingly resisting the narrative that oil and gas will be phased out as the world scrambles to limit global warming to 1.5 Celsius.

ATCO’s portfolio includes electric utilities, construction and natural gas production and distribution around the world. Over the past 20 years as the company’s CEO – and in the 15 or so preceding that as a board member – Ms. Southern has witnessed massive changes in the energy space.

From the company’s first opportunity to become an independent power producer when then-prime minister Margaret Thatcher privatized Britain’s electricity system, to the increased importance of climate and the Stephen Harper government’s decision to phase out coal plants, ATCO is operating in a vastly different world.

But the current transition to cleaner energy is a broad, fundamental shift that won’t come cheap – and Ms. Southern worries that the price tag has been ignored.

The clean electricity standard is mischievous in that the federal government has failed to have an “honest, transparent conversation with consumers across the country” so they understand what a new grid will cost them, Ms. Southern said, and because it will download onto industry the gargantuan task of systematic power grid changes.

“I’m a big believer in applying new technologies and advancing toward our net-zero target for 2050, but I don’t understand why this would be accelerated without a discussion about costs, about public safety.”

Ms. Southern is confident that Canada will reach its broader 2050 net-zero target, but says citizens, industry and politicians need to set aside their ideology and work through solutions in a pragmatic way.

The Energy Council of Canada named Ms. Southern Energy Person of the Year this month. The award, which she called “humbling,” has fortified her ambition to be an advocate for those discussions, and help create sustainable policy that generates prosperity, rather than denying people access to energy.

But it’s tough being in the energy industry right now, she said, because “it feels like we are being leveraged as the meat in the sandwich” in the increasingly fragile relationship between Alberta and Ottawa.

“If it goes the wrong way, if somebody pushes too hard or does something silly – just like in an actual kinetic war – it won’t be good for anybody,” she said.

“We don’t want anybody coming at us cloak and dagger and with hidden agendas. We want to know the facts and then we want to be able to make choices. As individual citizens, as companies, as voters, that’s all we want.”

Like many in the sector, including the International Energy Agency, Ms. Southern believes a global transition to net-zero will require a combination of all available technologies.

That’s partly why she – and, by extension, ATCO – is so gung-ho about hydrogen’s role in the future energy mix. The fuel is light, storable and energy-dense. When burned, it produces no direct greenhouse gas emissions, making it an attractive form of decarbonization.

ATCO’s hydrogen projects include a proposed partnership with Suncor Energy Ltd. SU-T to build a production facility near Fort Saskatchewan, outside Edmonton. Also in Fort Saskatchewan, it’s piloting a project to blend hydrogen into the natural gas network. Over on the other side of the world, the Australian branch of the company recently received AUD$1-million to support the construction of a refuelling station in a southern suburb of Perth, in Western Australia.

If Canada rids its electricity grid entirely of natural gas, Ms. Southern said, what will be done with the hundreds of billions of dollars of pipe in the ground? Who will clean up the land and – more importantly – who will pay for it?

“That’s why I’m so bullish on hydrogen. It keeps those pipes; it keeps those assets relevant. You can push the hydrogen through and maintain a substantial amount of the invested assets in the ground,” she said.

Ms. Southern hails from a long line of energy stock.

Her great-grandfather helped build the first wooden oil derricks in Alberta, and the first wooden cradle for a pipeline that would in 1912 bring natural gas from the town of Bow Island to Calgary. Later, in 1947, her grandfather was a driller on the Leduc No. 1 oil discovery outside Edmonton. The find led to more discoveries in Alberta, and kicked off an oil industry that enriched the province and tied its economy inextricably to crude.

ATCO itself was founded by her father, Ron Southern, as a trailer-rental company, but has gone through various iterations over the years, including at one point an oil-and-gas exploration and production part of the business.

But more recently it has had something of a reset: Ms. Southern felt ATCO had “become order-takers” and “lost that entrepreneurial spirit that had made us who we are.” These days, it focuses on utilities, retail energy sales and infrastructure, transportation, and the work force and residential modular housing that started the company.

Ms. Southern is experiencing a curious sense of déjà vu between the mid-1980s and today, with worries over the increasing cost of living, soaring inflation and what she labels “mischievous energy policy.” But her experience at the forefront of the energy sector over nearly 40 years means she is optimistic.

“That experience actually tells me to make sure you just stay patient,” she said.

“Things work themselves out eventually.”

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