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December 13, 2021

In Camera Session with Hal Kvisle: The challenges and opportunities of Canada’s energy transition


By Prasanthi Vasanthakumar, Institute of Corporate Directors

In last month’s COP26 climate summit in Glasgow, more than 100 countries, including Canada, pledged to reach net-zero carbon emissions by 2030 or 2050. What does that mean for Canada’s energy sector, a critical bedrock of our economy?

In our final video of the ICD’s In Camera Sessions, 2021 ICD Fellow Harold (Hal) Kvisle joins Rahul Bhardwaj, ICD President and CEO, to discuss Canada’s energy transition and diversification. With more than 40 years of experience in the oil and gas, utilities and power generation industries, Kvisle is well positioned to comment on the challenges facing the boards of energy companies, and the evolving competencies directors need to navigate this environment of uncertainty.

Following Kvisle’s conversation, Dr. Dan Wicklum explains the significance of net-zero targets and its implications for Canada. The video concludes with a panel featuring Jill Angevine, Brenda Eprile and Kevin Krausert who delve further into the potential impact of the energy transition.
Here are highlights from the video.

Hal Kvisle: We have 20 years of very hard work ahead of us

In his conversation with Bhardwaj, Kvisle explores the importance of having a reasonable timeline for Canada’s energy transition, and the policy, legislative and engineering obstacles facing the energy sector. He also discusses the dilemma confronting Canada’s oil and gas industry, the fit between natural gas and renewable energy as a way to reduce emissions, and the opportunity for Canada to help the world move to cleaner sources of hydrocarbon.

Not surprisingly, many boards in the energy sector are under pressure, as they grapple with international competition, public policy and social movements.
Boards need to understand the facts of the situation, as well as what’s going on in the larger world around them, advises Kvisle. They need to do their best to address climate change and reduce emissions, while keeping the value of the corporation in mind, with respect to shareholders, customers and employees.

“I think the breadth and diversity of expertise that sits on the corporate board is much more important today than it ever was before,” says Kvisle. “I think a diverse board that includes a minimum amount of industry expertise, but also includes people that understand the broader imperatives that exist today…we need all of that.”

Dan Wicklum: Net-zero changes everything

Following Kvisle, Dan Wicklum, CEO of the Transition Accelerator, explores the shift to an emissions elimination paradigm, Canada’s lagging performance on emissions reduction, why incremental steps aren’t enough, and opportunities for Canada in hydrogen production.
He also discusses the significance of the Canadian Net-Zero Emissions Accountability Act, the Net-Zero Advisory Body and the Glasgow Financial Alliance for Net Zero.

Through his work with the Net-Zero Advisory Body, he identifies 10 values and principles that can help Canada get to net-zero as a society by 2050.

“Getting to net-zero is not just about doing what you were going to do to eliminate emissions quicker and better,” he says. “It's about fundamentally different actions, defining future systems and building pathways to those systems.”

Avoiding havoc in the energy transition

In the video’s concluding panel, Jill Angevine, Brenda Eprile and Kevin Krausert, all executives in Canada’s energy sector, discuss the costs and challenges of the energy transition. In recognition of the difficult pathway to decarbonization, they talk about the important role of natural gas in achieving net-zero, and the need for regulators, investors and the industry to collaborate on finding feasible solutions.

The panel discussion also examines the board’s role at this pivotal moment. Boards should be looking at rational, sustainable solutions in the energy transition. They should also consider their capital needs and sources because innovation drives sustainability.

“It’s a seismic shift,” says Eprile. “I think boards in the past were more focused just on overseeing the company, but now I think they really have to get their senior executives working with other stakeholders to influence change. And so internally, I think boards really need to look at capital allocation and ensure their companies are going to be viable in the long term.”

The board’s dilemma

To reach our net-zero emission targets, world consumption of oil has to decline. In the meantime, should Canadian oil and gas, as a higher-quality and more environmentally responsible producer than many others, continue to meet market demand, asks Kvisle. Or should its output be restricted, and if so, what about the economic consequences? At the same time, if oil and gas is the single-largest investor in clean technology, as
Krausert observes, should it be hamstrung by public policy and unwilling investors?

Wicklum notes the world has waited too long for an emissions reduction approach to work. But moving too quickly in the energy transition will create economic challenges, while moving slowly could lead to a climate catastrophe. Navigating this ambiguous environment could be the board’s toughest challenge yet.

Is your board ready for the energy transition? For more context and insights, view the full video.
 
Thank you to our sponsors for enabling us to deliver this In Camera Session with Hal Kvisle:

Series Sponsors
  • LEAD: Canadian Pacific, KPMG, Longview
  • PREMIUM: Deloitte, Torys
Session Sponsors
  • Hal Kvisle: ARC Resources, Business Council of Alberta, Finning, Viewpoint
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