When you think of champions of the interests of the Energy sector, it is hard to find someone more interesting and dynamic than Michael Binnion, President and CEO of Questerre Energy. With experience as Executive Director of a private merchant banking firm, as Chairman of High Arctic Energy Services and the Manning Foundation and as the founder of the Modern Miracle Network, Binnion has been championing energy interests for decades.
The BOE report last talked to him in February 2022 about the Quebec Government’s Bill 21 to end petroleum exploration and production and the public financing of those activities. I caught up with Binnion to chat about his current focus on policy, tech and oil and gas.
Questerre’s website describes the company as an energy technology and innovation company, leveraging expertise through early exposure to the low permeable reservoirs. The company had early success finding a giant field in Quebec. But anti-fracking lobbying resulted in investigations and long-term environmental reviews, new energy policy and finally legislation and expropriation.
One result of the experience was that the company developed a zero-emissions energy approach. Binnion refers to it as carbon tech- using carbon technologies to transform oil and gas applications in Canada as well as other countries. They investigated different technologies to recycle CO2 into products, partnered with First Nations, and proposed piloting carbon sequestration projects.
As Bill 21 came into effect this year, the company is being “expropriated for less than one cent on the dollar” by the province according to Binnion. It’s interesting to note that the anti-fracking movement seems to be declining in force in Europe. The UK is now allowing fracking in England, an adjustment of attitudes due to energy security concerns.
As an energy technology company, Questerre is building on its work to create a zero-emission energy hub in Quebec and is looking at U.S. locations like Utah and North Dakota for carbon tech industrial development. Carbon technologies create lucrative carbon credits and offsets. Sales of carbon credits are booming as companies in many industries embrace them as a new tradable instrument.
Companies are purchasing compliance credits to meet regulatory obligations which are a liability for a lot of operators because the obligations reduce their profits from their large facilities. Binnion, like many in the industry, has questions about carbon markets. They can be opaque and it is difficult to ascertain what counts as a credit and what doesn’t. Confirming the validation of credits is also challenging.
“ I would say in Canada, the system is extremely confusing. The U.S. system is much easier to understand and clearer and regulations are more certain. I think in the current circumstances that Canada is struggling to be as compliant as the United States. The U.S. has become the world’s largest LNG exporter while Canada is still struggling to get its first project going. I think the next thing we’re going to miss out on is all the new carbon tech. The ability to get a carbon credit in the United States is very clear and certain.”
Yet in terms of CCUS Alberta has ideal formations, a rich history of CCUS technology development, and other advantages for CCUS. However, the US has the 45Q expanded tax credit that is attractive to both U.S and Canadian companies. Binnion says claiming the 45Q credit is quite straightforward for a company and has what he describes as “legislative certainty.” Since carbon capture projects are million and multi-million dollar projects, companies won’t justify the typical 10 to 20-year investment and high CAPEX cost of projects if there is uncertainty.
Could Canadian industries lobby for a Canadian version of the 45Q tax credit? Binnion urges companies to submit comments on the proposed Oil and Gas Emissions Cap this week before the Sept 30th deadline via email. The document is titled- “Options to cap and cut oil and gas sector greenhouse gas emissions to achieve 2030 goals and net-zero by 2050.” People can submit written comments by email by September 30, 2022, to PlanPetrolieretGazier-OilandGasPlan@ec.gc.ca.
As executive director of the Modern Miracle Network, Binnion is encouraging groups he connects with to comment when the Federal government asks for input.
“Whether they’re looking for consultations on whether people think that we should go to a carbon trading system, or if we should just have more carbon taxes, we’re encouraging people to say, ‘Can we just throw both of those ideas out and harmonize ourselves with the US system?’. Because if we don’t, I think what we’ll find is our system is too complicated and too uncertain. We will find that five years or ten years from now, not only will the United States completely surpass us in the world LNG markets, they will completely surpass us in CCS/CCUS.”
Binnion thinks that if we continue along the route of increased carbon taxes, companies will find increasing difficulty navigating them. It may be easy to obtain a tax credit for reduced fuel use, but what’s not clear currently is how to avoid the carbon tax if a company sequesters or utilizes CO2 in another manner.
“There’s also more clarity needed on the clean fuel standards which have not come in force yet. In addition, these programs are only as good as however long the legislation lasts- year to year. They are complicated and they’re now talking about Federal carbon trading. There is no way a carbon trading system in Canada is going to work that isn’t integrated with the U.S. The European trading system in Europe involves the European Union. What is fundamental to carbon trading systems is that they need to be regional. Every jurisdiction in the region has to be involved, or people will just move their business to where they don’t have to pay.”
Binnion’s last point brings us to the June 8th announcement from the Federal government proposing the Federal greenhouse gas offset credit system, which will some are saying will overrule Alberta’s TIER. As Federal legislation changes, concern increases among the provinces that Federal changes are affecting investment in their province. Binnion advises:
“The Alberta government and the federal government aren’t coordinating their activities. So there’s no way to get certainty. I just come back to my point that for September 30th, please make sure you get your submission in by email. Because if we don’t, Alberta and Canada could completely miss out again, initially on LNG and secondly on carbon tech and Alberta is so well positioned for both. Albertans don’t want to miss out on the coming boom in carbon tech.”
Last week, on September 21st, major Wall Street banks like JP Morgan Chase, Morgan Stanley and Bank of America threatened to leave Mark Carney’s alliance of banks (GFANZ – formed in 2021) over legal risks. The sentiment was that members felt ” blindsided by tougher UN climate criteria and are worried about the legal risks of participation” and feared being sued because of the alliance’s increasingly stringent, decarbonization commitments. Binnion doesn’t see this as a move away from ESG or that ESG importance is fading.
“What I hope we’re going to see is people moving away from ESG policies that don’t work and moving towards ESG policies that do work. I would like to think it’s not the end of ESG- that it’s actually the end of the approach to ESG that is ideological, political and does not work. Hopefully, people are now seeing clearly that divestment has caused emissions to go up and energy prices to go up. It has had the opposite of its intended effect. So hopefully people are starting to see that their pension plan was divesting or their investment fund was divesting and it has caused a lack of investment in cleaner energy. We caused an energy crisis. The emissions as a result have gone up as people move to more available, cheaper fuels like coal. So this has been a massive failure as a policy. But that doesn’t mean there isn’t a type ESG policy that does work.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.