‘We’re squandering an opportunity’: CEOs of RBC and Enbridge urge action on energy strategy
We risk ceding that dividend to others instead of taking control of it and building the world around us that we envision, not letting others do that.”Dave McKay
“We’ve got all these pieces. We’ve got to put them together, so we can actually develop an energy strategy here that utilizes this great competitive advantage we have.”Al Monaco
As published by the Financial Post.
There’s ‘the equivalent of creating a new auto sector in Canada right in front of us’
The chief executives of Canada’s biggest bank and its largest pipeline company warned Wednesday that the country is at risk of squandering a huge advantage if it does not come together to tap the potential of the energy industry.
Royal Bank of Canada CEO Dave McKay added that business leaders also need to be stronger advocates for the sector to give governments the cover needed to forge ahead with changes.
“They need the support of the business community to take the political risk to move forward with this agenda,” McKay said during a lunchtime interview with Enbridge Inc. CEO Al Monaco.
The remarks came amid the current gridlock in Canada over building pipelines, which has prompted political unrest and protest from those both for and against various energy projects.
During their approximately 45-minute back-and-forth, McKay and Monaco attempted to make the case for future development of the energy sector to the Canadian Club Toronto audience, arguing that the demand for energy is expected to grow, among other things.
Monaco said Canada already enjoys several advantages, such as its proximity to major markets.
“We’ve got all these pieces,” he said. “We’ve got to put them together, so we can actually develop an energy strategy here that utilizes this great competitive advantage we have.”
The Enbridge CEO also argued that issues around policy for climate, energy and Indigenous reconciliation should be settled at a higher level, not when individual projects are being reviewed.
“Once those are set, and we know the rules as investors, then we can say, ‘All right, I got the game plan, now here’s how I can build a project within that context,’” he said.
McKay said energy makes up 10 per cent of the country’s gross domestic product, and that Canada could add another 1.1 per cent or so to its annual GDP if its oil and gas industry gains access to the right markets and investments.
“That’s the equivalent of creating a new auto sector in Canada right in front of us,” McKay said during the discussion in downtown Toronto.
The RBC CEO added that also at stake is just under $200 billion in government tax revenue over the next 10 years.
“We risk ceding that dividend to others instead of taking control of it and building the world around us that we envision, not letting others do that,” he said.
Exposure to the energy sector and its volatile oil prices has loomed over the recent financial results of the banks, which are lenders to Canadian oil companies. Calgary-based Enbridge, meanwhile, has faced those same price-related problems, as well as various challenges in getting energy infrastructure built.
Monaco said Canada’s investment climate for the energy industry was likely in a “trough” at the moment, as he noted the exits of global players from the country, which he said was over uncertainty around infrastructure or regulation.
“We’re squandering an opportunity here to really drive our economy and supply energy in the most sustainable way,” he said.
Monaco also voiced frustration over the current climate, with McKay saying the sector faced a “branding problem.”
Moreover, Monaco predicted that if Canada were to eliminate any future development of its energy sector, another country, such as Russia, Saudi Arabia or Iran would step into the void.
“It feels like we’re not proud of our energy industry,” the Enbridge CEO said. “It feels like this is something we tolerate and would rather not discuss.”
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