Green Giants – Episode 91

Wes Ashworth (06:11)

It’s a great answer and I appreciate you providing some of that context. I like the real world example too and I think each of those areas you highlighted we’ll start to dig into as we get further in the conversation so that’s perfect. But as we’ve mentioned, and highlighted a little bit. Canada has struggled with weak productivity growth, declining GDP per capita and low levels of private investment overall. Why should people listening to this see energy and infrastructure is central to that economic story?

Jay Khosla (06:34)

The main fact is we have to look at like Canadians in my mind are not as conversant in economics as they ought to be. For example, Wes, I do know for a fact when I have dinner table conversations with all my colleagues, they will be able to tell me whether we’re meeting our environmental targets. But nobody will say we’re meeting our economic targets. Nobody even talks about that and I think that at the end of the day, when you look at our fundamentals economically, there are three or four big sectors that we focus on that can really drive the country forward.

Natural resources, energy and mining is one of those. I mean, you could talk about autos, you could talk about other things, but this is the one. We can monetize it very quickly. The amount of growth in GDP net pack, gross domestic product net pack on this file outstrips anything because those commodities are super valuable basically on a dollar return.

Essentially we have not targeted our production components of our economy. You can’t eat what you can’t produce. Energy is one of those. It’s a production-oriented thing. We’ve been really focused on some services to now and it’s time to flip this on its ear. If you travel the world like I have, I’ve been lucky enough to go to Beijing, I’ve been lucky enough to go to India, I’ve been lucky enough to go to South Korea, all of these kinds of countries, Europe.

The number one thing they talk about is, “how lucky are you, Canada, to be blessed with all this wealth? Why aren’t you doing anything with it? We want it badly.” Do you hear Canadians saying that? I don’t. I think maybe we’ve gotten complacent. We did have a decade of a real focus on social programs and not economic programs. But now, I think as we move our way back and we start to name projects of national interest, this starts to become super interesting, right?

In the end, we are saying at least in a small way, we believe in the sector. I think for a while we were talking a good game around energy transition and all this kind of stuff, but you don’t regulate your way into investment. That’s literally what we were doing. You build things. Now we’re relooking at a regulatory system. We’re relooking at our financing around this. We have this, what I call the alphabet soup of financing instruments in the federal government.

There’s EDC and BDC and clean growth fund and infrastructure bank that says that we’re interested in doing this, but they need to be pulled together and allied effectively on financing. We’ve got an indigenous loan guarantee fund. These things are starting to make moves in the right direction. When investors see that kind of stuff, where government support, it’s a number one factor. If governments do not support the building of projects, the promotion of industry, basically investment walks away. That’s it. We have our fundamentals pretty much in order. Like we’ve got great geography. Like it’s unbelievable.

You think about the Montney. It should be a strategic resource. That’s a gas field out west. We haven’t labeled it yet. We should do that. We’ve got nuclear coming out of our ears. We’re a nuclear superpower on top of everything. Just think about it. Critical minerals. People want it. Unfortunately, we’re just not pushing it hard enough. But we’re starting finally now after a long period of sort of being asleep at the switch. So hopefully, and I do know that investors are starting to come back, because the projects are starting to move. That’s a telltale sign.

Wes Ashworth (09:39)

You said that really well. I love a lot of what you shared there. I do think that framing really matters. It links energy and infrastructure directly to productivity, investment and living standards, not as side issues, but really as core economic drivers. Excited to see what that next chapter looks like. With that too, we’re also living through a period of major geopolitical change, trade realignments, energy security concerns, industrial policy shifts globally. Yiota, maybe for you, why does that external context raise the stakes for Canada right now?

Yiota Kokkinos (10:06)

Well, that external context is huge. Canada exports over 90 % of its energy resources, probably 99 % of our oil. What happens outside of Canada really matters. What is happening with Canada and the US right now, and what we’re hearing from what has been our most steadfast partner in the past, is a real wake up call for Canada.

We need to start thinking about other markets for our energy projects. That is why we see Prime Minister Carney going out there, visiting China, India, UAE, and other countries. It’s really important. We have what the world wants. We have to just get it there. That is why, as Jay talked about, the importance of trade enabling infrastructure needed the ports to get our resources to market. The upcoming CUSMA negotiations, they are going to matter. At PPF, we think about energy as something we can leverage in these negotiations, but we can’t leverage it if we don’t have some major projects underway. Otherwise, we’re kind of crying wolf, right? God, we have these great assets, but we’re not really doing anything with them. The geopolitical context really matters.

Wes Ashworth (11:25)

An asset is only as good as what you do with it, right? If it’s not utilized, then it doesn’t have value. But that global lens really does heighten the urgency, especially when other countries are moving quickly to secure capital, supply chains, market access.

Jay Khosla (11:36)

I think there’s a sort of a push and a pull factor right around this. With the tariffs that Trump has thrown down, it really means that we have to look elsewhere. That’s basically the biggest wakeup call we’ve ever had. We’ve never had in the history of our country this kind of a trade dynamic with our biggest trading partner.

The way out of it is by diversifying all of our natural resources to other markets. It’s a very simple equation. As Yiota said, domestically, it means getting our act together. It doesn’t mean just internationally running around signing trade agreements. We’ve got more trade agreements than most countries combined. We’re good at that.

But if they don’t amount to anything tangible, assets moving abroad, then we will not have done the job. Really, it’s life and death, because our economy, our affordability, like you said, our security, are all imperiled by this moment in time. The rush is on. Like the time is now. We can’t afford to take 10 years to approve a project, for example.

We want to take this moment in time to look elsewhere, but also know that we’re coming back to the United States at some point, it’s a very careful and tight calibration exercise.

Wes Ashworth (12:41)

Definitely. As they say, necessity is a great teacher, forces you to innovate and do a lot of great creative things and push forward progress, which I think is what you’re seeing as well. Yiota, having represented Canada internationally, how is Canada actually perceived today by global investors and partners when it comes to building large scale energy projects?

Yiota Kokkinos (12:47)

Overall, Canada has a really solid reputation abroad. We’re a stable democracy. We follow the rule of law. We have a highly educated workforce. We have resource abundance, as we talked about. We have low-cost energy and an electricity grid that is 85 % not emitting. Those are all very attractive things to investors. As Jay mentioned, we have 14 trade agreements in over 51 countries.

Trade agreements with every G7 country. These are all really good things. But if you ask international investors what they think about building projects in Canada, they say we’re slow, we’re a high risk, high-cost jurisdiction. High risk means a higher cost for capital. These are all things in the negative space. We do need to focus on our investment climate. We have to improve our reputation.

We have some high profile projects that were canceled in the past decade. People have probably heard about Energy East. Another one has been Pacific Northwest, where Petronas invested almost a billion dollars in an LNG facility and that got canceled. When that got canceled, and Jay has personal experience, that set a chill amongst global investors. They turned their back on Canada and that’s what we now are working to change.

We have to give this government credit. It is taking the steps to turn this around. It’s placed building major projects, a major priority. It’s created the major projects office to get these projects through in a two-year window. It’s committed to a two-year regulatory process, which is just fantastic. But Bill C5 alone won’t be enough. We do have to take a comprehensive look at our investment climate.

Does our tax policy, does our climate policy, are they all working together to attract investment in Canada? That’s what other jurisdictions are doing. Capital is mobile and we have to do what we can to remain competitive and attract that investment.

Wes Ashworth (15:06)

Kind of the key points you hit on there too, and just perception matters enormously here. Part of the reason you’ve taken so much action in trying to get this out there and show that, this is what we need to do is a necessity. That perception really does shape investor confidence long before capital is ever committed, how important that is. The natural next question for me as we kind of think through this and talk through this, is what needs to change in how Canada approaches building big projects? You started to touch on some of those ideas. At a certain point, you both decided that incremental fixes were not enough and that Canada needed a fundamentally just overall different approach. Maybe you’ve said it, but anything else to share here? Just like what led to that conclusion?

Jay Khosla (15:45)

We commissioned a study, our report is called Build Big Things. It has, we call it the playbook, to getting stuff done. We consulted, the vast majority of the energy sector, the mining sector and indigenous peoples in writing up that report. I encourage your listeners to take a look at it. If they can only look at one part of that, there’s 10 plays, we call them the 10 big plays that we want governments and industry to enact to get stuff done.

As Yiota said, we’re in early days. We’re really proud of the fact that the government has followed some of those plays. For example, when we went out with our report initially, we talked about projects of national interest. I would tell you that not everybody was in favor of a concept like that. Some folks just wanted to get going without labeling that. I’m really thrilled that we’re doing that because I know in my history, once something gets to the top of the government office, it’s more apt to getting things done, right?

When deputy ministers, when the prime minister, when premiers all look closely at something, things move. That’s a fact. You can just look at COVID. I mean, there were, during the COVID period, which, you know, we finally got the vaccine done, there were upwards of, I think, 35 to 40 first ministers meetings. That’s meetings between the prime minister and the premiers. It was almost on a monthly basis.

When that kind of action happens, it’s great. In the 10 big plays, we argue now that about six or seven of them are done. Or are not done, but they’re at least stood up. There’s a long way from being done. But one big area is, or maybe two or three rather, the governance. Governance is a loaded word. People want to run to the hills when you say the word governance. What we mean is the stick-to-itiveness. Are those meetings still occurring between premiers and the prime minister on these projects?

Not really seeing it as much as I’d like to, or a cabinet committee, or a joined up process between proponents and the prime minister. Like the prime minister needs to be walking around with a checklist. We call it a scorecard. We put out a scorecard. These are the five, six areas he needs to be watching on each of these projects almost on a daily basis. Not really happening. Have we aligned all of our actions to our big strategic goals, like we talked about? Are we setting a marker?

I think we’re projected at a 1 or1.5 % boost in GDP per capita in the next year or two, maybe even less than that. But maybe it’s less than 1 % in the last forecast. Should we not set a marker of trying to outstrip that and focus and be disciplined on that? More importantly, it’s about the machinery. At the end of the day, do we have the right people in those offices who understand project financing? It’s very complex. I’ve worked on the Atlantic Loop. I’ve worked on LNG Canada. I’ve worked on the Jansen Potash mine.

I’ve worked on Lower Churchill, Muscrat Falls, Hydro Dam. All of those needed very in-depth expertise on the kind of credit facilities, the capital stack that need to be brought together, the different tools that you would put together financially to make those projects tick. This is not for the faint of heart. So we have those people in place? Not really seeing that so much, but it’s coming, I’m sure. I’d just like to see those three things addressed in order to move these projects forward, as well as an alignment between federal and provincial governments.

The last thing I’ll say on this, is the reason we say this, is because you could just look at the examples. You remember when we first got going on Trump and he first came in, inaugurated within weeks of that, you had the prime minister and the premiers talking about a fundamental file, which is internal trade, meaning removing all the internal trade barriers across the country. A lot of good actions happened. The federal government removed all of its exceptions in what’s known as a Canada Free Trade Agreement.

But really, what practically has happened to to ensure that we’re continuing to watch and monitor that file and make sure that the barriers are broken down. So we reached that 4 % boost in GDP that the IMS says we can get out of that. To me, it’s evaporated. If you don’t have that focus and discipline, things will evaporate. Maybe we’re comfortable. Maybe we think we did the job. But personally, I don’t see that. I don’t want that to happen in the case of major projects.

Wes Ashworth (19:29)

Great context there. I think that shift between tweaking the system, rethinking all together, feels like a critical turning point. The work is remarkable. I will link that in the show notes. think every listener should go and check it out and review the playbook. I love that it is a playbook. It’s very practical. So many people point out the problem and kind of leave you to your own wisdom to try to figure out, OK, what do we do about it? But this gives you plays and tells you practically what you can do. A remarkable piece of work. I’ll link that as well.

Before we kind of started digging into the specifics of it, anything else that would help just listeners understand kind of leading up to it, the problem you were trying to solve, any of the additional context and how it all came to be?

Jay Khosla (20:05)

I would just come back to two things. One, we talked about already, but it’s really worth talking about again and again. Final investment decision. That was our thesis. We didn’t just get there by an accident. There’s projects that we know got over the bar when that was targeted. Canadians need to be conversant in what that is. It is a decision-making process by proponents. I would argue governments should be involved, period. But where they take it to their board, and we’re competing globally against other projects. People need to know that.

That’s why some projects in Canada have been killed in the past, is that they’ve selected other countries that they found more friendly for investment. Become conversant in final investment decision. The other thing is, our thesis brought together a four-point frame. People are going to say policy and such a vague term. No, we’re being very practical about that. It’s a four-point frame that says these four things have got to be part of a project review. If you don’t pull them together, then that project is likely not going to happen.

That’s investment, financing, it’s enabling infrastructure, indigenous economic participation, and the regulatory system all have to come together under one umbrella and be driven forward simultaneously. Then we’ll get these projects going.

Wes Ashworth (21:12)

Now we set the stage a little bit and explaining kind of what it is, how it came to be. I want to unpack the areas and really those levers that you believe will most consistently determine whether projects move forward or stall. That first one is coordinated financing, which you started to touch on there, but maybe Yiota, Canada actually has a lot of public capital available. Why does money still feel like a bottleneck for major projects?

Yiota Kokkinos (21:31)

Coordinated financing was like our number one in the four point pillar framework. That is because, there’s a lot of public money out there. But when you’re a project proponent, you have to knock on a lot of doors at the federal level and at the provincial level to make your case for the project and try to get these departments excited about your project. That is a very inefficient way to go.

Not only do we advocate for a one window approach to financing and that’s where the MPMO comes in. But then you need to coordinate that public, all those different public financing, the alphabet soup of financing that Jay talks about, your Canada infrastructure bank, your Canada growth fund, your strategic infrastructure fund, for example. You really need to kind of look at that capital stack and how you can put it together more efficiently and most importantly to minimize the cost to the taxpayer, because we know that with major projects they tend not to get done unless there’s some government involvement particularly at that pre-development phase to de-risk the project and make it more attractive for private capital to come in. Coordinating the financing is really key. I think we’re starting to get our act together in that regard and we’ll see.

Wes Ashworth (22:50)

It’s good. I think the distinction between how much capital exists and how much navigable it is really stands out, especially when proponents are trying to make their way through the alphabet soup as you both highlighted there. Jay, from an execution standpoint, how does fragmented or poorly coordinated financing slow projects down before they ever reach that final investment decision?

Jay Khosla (23:08)

It’s everything. I would just maybe again, take one step back. Like ideally, governments shouldn’t be involved in market situations to top things up. But the reason we have to be is A.) Yiota’s right. There’s not enough capital going around and we’re competing against global markets, right, for this form of capital. We have to make it somehow enticing for proponents to come forward and a nominal amount of government financing is required.

What I would say is that, at the end of the day, the fact that governments have launched all these tools across the board tells you about our investment climate, that we’re competing against the United States who’s topping up stuff. That’s basically why we need to be involved. That’s point one.

Point two, in terms of the difficulty of bringing this stuff together, I just love to talk in specifics. I’ve had proponents tell me, “I went on a four billion dollar project I was looking for maybe an infrastructure piece to be built. 100 million. I came to the government, it took me, this is CEO that said this, I came to the government, it took me 80 % of my time to unlock that capital and I almost walked away.” He was saying that in Australia, that would have just been signed off immediately. In this situation, I know when we say 100 million, people kind of go, that’s a lot of money. Not in the case of big projects. These are billion, billions and billions of dollars. It’s really like almost a 1% factor and we shouldn’t take so long to have them walk through many, many ministers doors, many, many officials doors and so on. I find it odd that we got ourselves in this situation. We have investment tax credits, right? That can be married up against some of the, what we call concessional capital. This is the Clean Growth Fund. There’s $19 billion sitting there, the CIB and another 20, 30 odd billion dollars sitting there. We need to put that package together.

How does the investment tax credit work with any kind of loan or things like that? Usually this will be in the form of a loan or a grant and come together to allow that project to hit final investment decision. What puts it over the bar and what in the province puts it over the bar? It’s a high degree of coordination on a very specialized niche area. You need to get the right financing people on these files. But if you don’t and you continue to make them walk through all these doors, they’re just walking away. They’re saying, forget it. Like we’ve got better places to be in the world.

Wes Ashworth (25:23)

That really paints a picture. Those, especially the real life examples, make it really clear, kind of the importance of this and what happens if you get it wrong, but also the potential of if you get it right what the power can be on the other side. You may have mentioned this lightly, but you’ve made the case to the government should not replace markets per se, but should play a smart role in de-risking projects. What does that look like when it’s done well?

Yiota Kokkinos (25:44)

It’s looking at all the tools in the toolkit. As Jay mentioned, whether it’s a grant, whether it’s concessional financing, whether it’s an investment tax credit and determining where best to put those public sector dollars. At the pre-development phase, you’ll find that it might be a different type of financing versus in the operations phase of a project. It’s very different. But the point is, it’s not going to be the same for every project. You almost have to customize it for each project using your generic toolkit and maximizing the potential of the project, but also, again, minimizing that cost to taxpayers.

Wes Ashworth (26:25)

The balance to me feels critical where government helps de-risk early stages, markets still lead investment decisions ultimately. With that, financing is one piece of the puzzle we touched on there. Regulation often becomes the defining bottleneck as well. There’s often a narrative that faster approvals mean weaker environmental standards. Tell us a bit about that and maybe why that’s a false choice.

Jay Khosla (26:45)

I love that question because I frankly reject the notion entirely that a faster review leads to worse environmental outcomes. The fact of the matter is the reviews are really all based in law. They have ministerial authority. The kind of things that need to be looked at are fairly well defined and generally can be done very, very quickly if you’ve got the right people around the table.

I think that’s really what this is about. It’s not about fast or slow. It’s about getting the right team on the ground and moving quickly. We have lots of good examples of reviews that took place in less than two years or less with really good projects up and off the ground. We don’t really ever talk about them. I mentioned LNG Canada as an example. There’s some mines, et cetera, that we’ve done and really off to the races.

The question is why aren’t we just following that process regularly? I think the answer is perfectly abundantly clear now. As you see these regulators, we have a regulators table that we work with very closely,mand they’re all undertaking reviews of their processes, their decision-making processes, they’re trying to right-size them and re-engineer them. They’re recognizing the problem unto themselves and it’s like a pile of paper on somebody’s desk, the most sticky issue, the riskiest issue gets addressed first but generally you just need to have the right teams around these files.

I love that the Impact Assessment Agency, for example, I think in the last budget, they said, we’re going to take up to five years to review. Mark Carney walks in and they say, “no, we’re going to take two years.” That should just give you the sense of everything. I actually established the major projects management office, the first one in 2012. Our goal at the time was to take the average review down from four to eight years, which is we had analyzed it.

We had 4 to 8 years down to two years and we got pretty successful in that, but it was really a very tough exercise and disciplined exercise and going through what are all the roadblocks? What are all the consultations? How do we quicken the pace on all of this stuff? It takes a lot of stick-to-this and determination and rigor to make that happen, but it can happen and it absolutely does not mean that projects, bad projects get approved. We’re not saying approve bad projects. We’re saying do the review in a decent enough time if you decide not to approve the project then then that’s where it leads to but there’s no need for all that time. It literally is it is an albatross around Canada’s neck and it’s got to stop.

Wes Ashworth (28:57)

The distinction is important because the issue you’re describing is not environmental protection itself. It’s accumulated layers of an uncertainty that really just slow everything down, which again, is what you guys are trying to fix and what you’re after there.

Yiota if Canada truly committed to clarity, timelines and certainty, what would change for investors and proponents?

Yiota Kokkinos (29:17)

Well, they’d have certainty. They would know what they’re getting into. They would be guaranteed a two-year regulatory process. That’s part of their risk calculation. “Okay, going to tie up my capital for two years. You know, I can, I can do that. I can’t tie up my capital for five, 10 years going nowhere.” Investors look at the cost of the project, how quickly am I going to get a return on my investment?

Is there policy certainty? Is there regulatory certainty? Are things going to change in the middle of the project? If we get all those things right, we really, really will be a real beacon for investment. I truly believe it because we do have it all. We really do.

Wes Ashworth (29:55)

The idea of certainty as a competitive advantage really resonates in the global market and I agree you can see the potential there. A lot to win if you get it right.

Yiota Kokkinos (30:03)

Just to build on that, energy accounts for 10 to 12 % of our GDP right now. Imagine if we maximized the potential of our resources, that could be so much higher. That would have, of course, spin off benefits throughout the economy. It’s not insignificant.

Wes Ashworth (30:19)

Massive potential there and pretty exciting as you look at it and see what’s possible. We’ll transition a little bit. Another of the areas that you point out that Canada needs to think differently is indigenous participation. Why is indigenous participation maybe no longer just about consultation, but increasingly about ownership and economic partnership?

Jay Khosla (30:39)

We argue, as we’ve said, that generally projects in this country will not move forward without Indigenous participation. Consultation is another matter altogether, as you said. That’s paramount. It’s a must. It’s the law. But what we’re talking about is what’s happened with some of these major projects where Indigenous peoples are coming around, especially when a project involves climate. Energy doesn’t mean we’re just blowing the doors off our climate process actually means that we develop these resources very effectively. Then our climate issue, our energy transition issue gets solved at the same time.

I think about transmission lines in particular, or hydro facilities. Indigenous peoples really want to get involved because they like the climate aspects of all of those. We’re not making it easy. We consulted so many indigenous peoples through this process. They say the same thing as the developers were saying, which is we have to go through so many doors, so many hoops.

No advisory body there, nothing there in terms of topping up funds to allow us to participate. These are real barriers to their involvement. You could see the majority of Indigenous groups, at least the larger ones, are very much wanting to get involved. The fact that we got past the LNG Canada Bar, the fact that TMX, maybe not the best example, but they’re looking for Indigenous ownership and Indigenous peoples are talking to the government on that front, tells you a lot that they’re ready to step up.

We need to give them the means to production. In other words, the financing tools. There’s a small financing tool in place now. It finally came out after 20 years. Why did it take us that long to get that thing up? I don’t know. We should never allow that to happen again. Also, the advisory capacity. They don’t want to walk in blind. They think in terms of seven generations. They think about air, water, and land. They want that to be respected. We should understand that and we should provide the best advice we can from whether it be lawyers or engineers or what have you.

We should be able to step in and provide them an avenue to getting that advice as opposed to what they’ve been receiving now is a lot of reach outs from proponents saying, “here, we want to talk to you about a deal.” That’s just not the way to start that process. It’s not a deal. There was a famous case a couple of years ago where a deal was put on the table from a pipeline out west. I don’t want to go into a massive problem on that, but, it was kind of like they started with the deal first and it was predictable at the end of the day that the outcome would be no.

Let’s talk about what’s feasible, what’s credible. I see a lot of great proponents now, including that one on that one pipeline, completely reversing the trend and government needs to partner up with.

Wes Ashworth (33:06)

I think to me those barriers make it clear this is less about intent, more about systems, access and capacity, which is what we’re getting to. I think through that you both emphasize trust. What government need to do differently to build trust early in the life of project rather than late?

Yiota Kokkinos (33:21)

Well, it’s about early engagement and that’s on the government front, but also on the proponents front because through that early engagement right at that siting phase of a project, only then are you going to start to build the trust. Trust doesn’t happen with one conversation, right? It happens over many conversations and it happens when you start to show Indigenous rights owners or communities what’s in it for them, not only in the building of the project, but what’s in it for them after the project is built? Are there Indigenous businesses that are going to be able to benefit from that project? All these little things matter. And they really are prerequisite, as Jay said now, to building major projects in Canada.

Wes Ashworth (34:03)

I agree completely. I think the emphasis on timing really stands out. Trust is far harder to retrofit than to build it, you know, than build it just from the start. It’s a part of everything you do. Many, many steps. It takes a lot to build and earn trust. I agree with that wholeheartedly.

Jay Khosla (34:17)

I also think that we’re talking about complex things here and they’re not easy to simplify. The more conversation that happens, the better. For example, I was on a panel a month or so ago with BC First Nations and it was all about nuclear. They just wanted to convene the panel to understand what nuclear is. Many of them just didn’t even know thing one about it. We went about demystifying all the products that Canada vends nuclear-wise and how it could be of benefit in BC and so on and so forth. They were so appreciative. The questions were like so rock solid. I kind of wished all Canadians were in that same headspace. I thought it was wonderful that, these BC First Nations chiefs are like really thinking things through, right? They get it. They really do.

Wes Ashworth (35:01)

I love that. Then the emphasis on demystifying things and just part of what I’ve tried to do with this podcast is just getting as much of that out there so many people can hear it and learn just as you see in the light bulbs happen. We’ll zoom out a little bit to how maybe projects are planned in the first place. This is just another one of those that are focus points. Why do major energy projects fail when enabling infrastructure is treated as an afterthought instead of a core part of planning?

Jay Khosla (35:26)

Great question. Usually, let’s just think about an intertie, transmission lines between provinces. It’s shocking to me that we don’t have more going between our provinces in this country. That would be the same thing as internal trade. If we can get those interties moving, then off they go. But think about it. An intertie is only a joining mechanism between a production and a recipient or vice versa. It can be two-way flow.

At the end of the day, that’s the concept of enabling infrastructure. It identifies only enabling infrastructure towards, let’s say, a hydro facility and a nuclear facility being attached. If we could do it, it’s great. But what we have done in this country is just built the production facilities locally. We haven’t really thought about a systems approach. This is why these projects can fail.

I think about pipeline, a gas pipeline to a production facility. We review them separately. How is that possible when you know that one begets the other? Or a mine that needs to be powered up, like, well, somewhere in remote areas. We always just think about the mine review, like ensuring that whatever critical mineral, et cetera, gets approved. But we don’t think about the energy source to bring, to power up the mine. These are things that have to be thought about from a systems-based perspective.

It’s up to governments to ensure that these projects are investable. Can you imagine if we invested in project and then it just kind of failed because we didn’t think about, yeah, the elephant in the room? That would be silly, right? It’s really for a government and proponent to sit down and say, is this project viable? Is it investable? What needs to happen for it to get done, including if it needs an airport, a bridge? I would say the number one thing that’s missing in this country right now from that perspective, the number one by far is west coast access. We only have one port, it’s clogged up, and it’s a lag on the system. We should be thinking about another port. That’s the example, the perfect example of why you need enabling infrastructure to be done.

Wes Ashworth (37:20)

Great example and I think it really highlights why planning enabling infrastructure in parallel, not afterward can really make or break a project. Maybe we covered this slightly, but I guess more broadly, why does Canada still struggle to plan projects as integrated systems rather than these isolated developments that you just shared?

Yiota Kokkinos (37:36)

Too many players. We’ve got three levels of government all involved. Unless you take that systems approach from the beginning, you will never succeed. It’s complicated and no one’s saying it’s easy. I know we say systems approach sounds easy. No, we know it’s not easy, but you really have to try. It has to be right from the beginning, bringing all the players around the table. What is the ultimate objective? What are all the pieces that are going to have to come together to advance this project? I mean, it’s that simple and that complex.

Wes Ashworth (38:09)

Very complex. But again, simple as you think about what needs to happen. I think that’s it’s great that that you can see through the playbook and others like what needs to happen, what course needs to happen now, the potential again. I’ve said this a lot of times, like what happens if you get it right is super exciting and why it’s that critical that even though it’s complex, even though it’s going to take a lot. Got to start today. I love these levers ultimately depend on how decisions are made and who owns the outcome.

Jay, you often stress governance as the decisive factor. What does good governance actually look like when it comes to delivering major national projects?

Jay Khosla (38:40)

I think it really has to do with A.) ensuring that the data is in place around the project, meaning what are you reviewing? There’s five or six things in these projects that are fundamental that need to be tracked. Tracking and monitoring those five areas. We’ve talked about the four that we’re thinking about, there’s probably some other investability questions that need to be thought about. That’s point one, but once that’s in place, what we would call a scorecard, who’s overseeing it?

To me that’s where things live or die and it’s a fact. Maybe let’s talk about success, right? Success looks like when the prime minister is really involved. I know that for a fact because we had an office that reported directly to the previous prime minister on the Atlantic Loop. We had access daily or weekly to brief and say, “here, this is where this is going.” That makes a big difference.

There was also access to cabinet. There was also access to the provincial colleagues. There was also access to in that particular case, CEOs and utilities. We had the top 12 people who we thought could impact this project named and outlined. We pulled them together on a monthly basis and said, “this is where it’s going.” In fact, we have the previous example of the major projects management office, where deputy ministers in the federal system met monthly on projects and reviewed them one after the other to say, “is it a regulatory issue? Is it a financing issue? What is it? What do we need to do with our departments?” They were coming together in an aligned way, a whole of government way to get these things done.

I really think that that’s what we’re talking about. We’re talking about politicians and bureaucrats being fully aligned at the highest level alongside the provinces to move things forward and working with proponents and facilitating the projects moving quickly and ensuring that they don’t fail because of something you just forgot off the top of your head.

Wes Ashworth (40:20)

That clear ownership collaboration, obviously, where progress really starts to take off and happen. Let me ask you, that’s just out of curiosity. Why do capable public institutions so often default to risk avoidance instead of problem solving?

Yiota Kokkinos (40:33)

It’s the culture. It’s a culture of no risk, not even low risk. When we were working on this report, we talked about the need for a change in mindset in the public service, especially in the regulatory space, where it’s about not whether we should approve a project, but this project is of serious economic importance. How can we build that project?

That line has been picked up by the Prime Minister and it’s true. We have to ask ourselves, is that really happening in the public service? Why has the Prime Minister established three new entities outside of the regular bureaucracy for three of his top priorities? The major projects office, build Canada homes for the housing priority.

Then we have the defense procurement agency, all built around speed and they’re outside of the bureaucracy. That’s a huge wake-up call. The bureaucracy needs to focus on outcomes, not on outputs or processes, and that is a huge culture change and it needs to start at the top. Prime Minister has sent the signal loud and clear, it’s now up to the clerk to figure out how he’s going to work with his deputies to really change the culture of the public service.

Wes Ashworth (41:45)

I love everything you said there. So powerful. I think the importance on culture change. We all know culture change is hard. It’s hard to fundamentally change those. You have to do it. It does start at the top. I love that reframing of the question really like how can we make this happen? How can we get this across the finish line? That’s amazing. How do you do that? You mentioned some, but maybe any other detail of like how do you realistically shift that public service culture towards enabling outcomes without compromising accountability? What does it look like if it’s actually done and done well?

Yiota Kokkinos (42:16)

I think accountability is something we have to fix because we are not making public servants accountable for the outcomes. We’re making them accountable for the process and we need accountability at every level and there have to be consequences, right? I think that’s the only way and every you need that clear signal from the top about the mandate, the timelines. But then we all have to turn our attention to execution, implementation. That’s not something that we did well in the last government. That’s something we need to fix in this government if we really truly are going to Build Big Things.

Wes Ashworth (42:53)

Very powerful sentiment. I heard somebody say one time, efforts are appreciated, outcomes are preferred. If we’re all focused on the outcomes, a lot of good things happen. As we get closer to time before we close, I do want to look at what comes next and look into the future a little bit. You’re applying this the same thinking to small modular reactors, which of course get a lot of press and attention these days. Why is nuclear such a powerful test case for whether Canada can actually Build Big Things?

Jay Khosla (42:59)

First and foremost, I think we have to recognize that Canada has a deep and rich nuclear history. It’s a huge sector and I think most Canadians don’t know how vast it is, but you just have to show up at an average nuclear conference and see 2,000 people there and it’s stark. It really stands out and that happens regularly around the country. It’s because we have a history of can-do. We’ve been strong in big nuclear.

We go all the way back to after the second world war. We have a really good research base. It takes a lot of research in nuclear to get things done. We’ve got scientists, all-star scientists around this file. We’re big. We’re a tier one nuclear nation. We’re one of five in the world. Tier one is defined by having a good regulatory system, by having products in the market and so on. We’re about to pivot away from big nuclear to small nuclear.

That’s not for the faint of heart. These are oversized projects from a financing perspective. What we’re looking at in particular in our report, heavily authored by Yiota, I have to give her ton of credit for that, is really the financing side. We’re trying to say what is the capital stack that can come together? What are the examples globally that we can bring to bear to stand up a small modular reactor? It hasn’t been fully tackled in our estimation. We’re putting out a new playbook on exactly that largely on that but also on you does a regulator need to do? How do they need to shift their thinking?  We really hope that an SMR we’re ahead of the pack a little bit in the OECD on this one and we really hope will shine. That’s why we’re putting that report out. It’ll be out in about a month.

Yiota Kokkinos (44:45)

I mean it’s a real tremendous opportunity for Canada because we are this tier one nuclear nation and we’re steeped in a nuclear history and we have a real opportunity to decarbonize our electricity system in Canada. If we get the Darlington SMR right and we build it on time and on budget, that will send a really strong signal to the world that we can build complex projects and build them well.

We’re going to build an expertise through this Darlington SMR that we’re going to be able to export internationally and that’s very exciting. Lots of positives if we get it right. We’ve applied our four-point frame to this subsector. We’ve once again developed some really concrete implementable recommendations to achieve deployment across Canada.

Wes Ashworth (45:35)

Incredible and exciting for what’s to come there. Obviously, we’ll stay tuned for that report as well. We’ll have to do this again and chat through that as well, too. We’ll link a lot of stuff in the show notes as well, too. Please, listeners, go and check that out. Great to learn as well. Final question, if Canada gets this right, over the next five to 10 years and beyond what does success look like not just for energy projects, but for the country as a whole?

Yiota Kokkinos (45:40)

We will be a true energy superpower, right Jay?

Jay Khosla (45:57)

We’ve called ourselves that over several iterations of governments. We’ve never really demonstrated. I think the underpinning of this entire conversation is get things done. We want to show that we can get things done. If we do that, the prize is enormous. It’s enormous, not just economically, but also environmentally, socially with Indigenous peoples. It will reshape the country. We need to diversify our markets. It’s been a longstanding thing. The time is now.

Wes Ashworth (46:26)

The time is now. Yiota, anything to add to that?

Yiota Kokkinos (46:28)

We tried to quantify this opportunity for Canada, actually, and we did some modeling with Navius Research. We took the Natural Resources Canada database of projects that are in the queue. We found through this modeling that we could add, by 2035, a trillion dollars to Canada and about 4 % to our GDP by 2035. This is real. The potential is really there if we get it right.

Wes Ashworth (46:54)

The long view really brings together everything we’ve discussed. The really is remarkable and excited to see that unfold. With that, a great way to wrap up. Yiota, Jay, thank such a thoughtful and practical conversation and for the work you’re doing to help Canada move from potential to performance. For listeners, if this episode resonated, I encourage you to explore the work coming out of the Public Policy Forum and to watch for their upcoming work on small modular reactors, as we said.

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