 The next panel will again be Secretary Rice talking about North American energy and With Secretary Rice, we have Peter McKay from Baker McKenzie in Canada and Jaime Perrada with the Institute of Innovation and Technology Transfer in Nueva Leone, Mexico Oh good afternoon gentlemen, and We've just had an opportunity to talk about the region of the world That I think for the last 70 or 75 years if you had said Energy people would have said the Middle East and they would have said Saudi Arabia They would not necessarily have said North America But now if there is a development that is really in in many ways a Revolutionary development in energy It is the coming on board of the North American platform that stretches from Canada down through the United States and into Mexico And so this is really an extraordinary time to talk about the opportunities That North America presents now I have mentioned with the ambassador that when I was Secretary of State Oil spiked at a hundred and forty-five dollars a barrel Nothing warps diplomacy like a hundred and forty-five dollars a barrel oil It allowed Iran to ignore calls for dismantling its nuclear Program it allowed Vladimir Putin to play games with Ukraine and Eastern Europe and indeed Western Europe with the so-called oil card And it allowed Hugo Chavez to buy elections in many Latin American countries So it really empowered some of the worst actors in international politics Everybody now says oh how amazing it will be that North America this stable Place of good friends will be such a major energy producer as a matter of fact the energy producer Are we right to be encouraged and optimistic by the fact that we have this bounty That's called the North American energy platform I just have to mention Peter McKay was the foreign minister of Canada when I was Secretary of State But he's also been the justice minister and the defense minister And so he held almost every important job in Canada But we were very good friends and Peter welcome to Stanford where I've been trying to get you to visit for a very long time Well, thank you so much Secretary Rice I'm delighted to be here and it truly does feel like Stanford University this forum is the the beating heart of energy innovation and in North America if not the world to your question those who think this is our time and The North American energy sector in particular is hitting its stride. That's true. I Have you followed the NAFTA negotiations? At least we still have we do North American integrated we do and I think that in fact there's lessons to be learned I believe that there is Tremendous strength in the relationship in North America and that could extend beyond and should extend behind the Canada U.S. Mexico trade agreement it it could extend to security and in fact it should extend to energy and Renewables and our effort to wean ourselves off quite frankly some of those countries that you've mentioned who intermingle geopolitics and Malignant influence in the world by by virtue of having countries who are dependent upon them for energy And so there are a number of competing and important Issues that are inextricable is what I would say I don't take issue with what the ambassador of Saudi Arabia was saying but Russia Looked Russia you alluded to use their influence in an extremely negative and destabilizing way very disruptive For not just Ukraine but for the entire region and still to this day I mean the late great John McCain referred to it as a mafia run gas station masquerading as a country I Mean those are harsh words, but they're there. There's there's some truth in it and Coming back to North America. I think we have tremendous opportunity at this moment in time with shale gas with Perhaps working closer together. Canada has always Seen itself and and I say this with great respect to Mexico as your best friend. We're your best friend We're your northern neighbor. It's very cold up there. We need energy. We're all huddling along the border, you know Just hugging each other But we have an opportunity I think to work a lot closer rather than being Competitors which is kind of where we're headed at this moment in time And so I'm hopeful with the successful conclusion of the negotiations around trade that we can perhaps Work closer together on a number of these technological advances in renewable energy But also using our our energy power for a force for good in the world Yes, I'm totally agree with you and And On the Mexican side, I would say that in the last five years Mexico had achieved an important progress in the energy sector in 2013 was approved a new law for energy that permits private investment in oil gas and electricity and That was a huge transformation in the country Because you remember that our national companies Pemex and CFE were monopolies so the country Took a very important step forward To permit the private investment in this sector and this is vital because Mexico is the second largest Latin American economy is ranking in number 16 in GDP in the world We have 123 million in habitants in population We have close to 50 million electricity users We have 98 percent of Coverage of electricity So almost all the people Has access to electricity With its exemption of the poor regions and distant areas and the installed capacity of Mexico is 73 gigawatts and 23 percent of that belongs to clean energies Mexico has signed an agreement to reach at least 35% for clean energies in 2024 and We have a serious commitment With clean and renewable energies. We have a serious commitment for Reducing a greenhouse Emissions Mexico has signed the Paris protocol as you know perfectly well so Mexico is well prepared for the future But especially for the region Because we are very dependent Mexico imports important amounts of gasoline natural gas So the the objective is how can we work together in order to Provide the best conditions for our users and the best terms Thinking not just in North America, but also in the world and the planet So this is the in my view the last Important achievement of this government Going just to that and then Peter I'd like to come to you about the politics in Canada because I Mentioned that we think of the politics of North America is Settled as stable. I think it's fair to say that They feel a little less settled these days. Maybe all the way from Canada to Mexico, of course not in the United States but in any case the politics of Mexico's recently taken a very potentially very big turn with the the election of Manuel Opes-Lobrador and As you mentioned Mexico made a really Fundamental decision a few years ago under President Pena to change the Constitution so that there could be foreign investment in What had been considered? Mexico's price Price energy that could never be shared with with anyone else There are many who wonder now if given the politics of Lopez-Obrador. He would try to undo the change in Mexico's laws Concerning private investment now. He said that he would honor current contracts. I understand that But in the long run, how does this how does this look? Well, if we are seeing the the numbers As a consequence of this energy reform in Mexico, we have to take in account that we have achieved at least 254 billion U.S. investments in the energy sector 13 in oil, 13 in gas and 13 in electricity 100 billion additionally for the oncoming years and Those contracts were provided to hundred and thirty different companies From 19 different countries 51 are Mexican companies so as you can see Based on facts and numbers the energy reform broad investment employment and Mexico requires additional energy to sustain the growth So there are some concerns about if the energy reform will continue in these terms or not I am a positive guy that thinks that the energy reform will be respected as it is Notice the case About other structural reforms like the education Education. I'm not so feels so optimistic They will make important changes especially in the evaluation process for professors Because for political reasons the unions Professors in Mexico are very strong so That the structural reform will be affected in my opinion But in the energy sector we have two important allies Canada and U.S. And you know, this is the check and balance very very important and also Will transmit a negative sign For foreign investment if we don't respect the contracts and Obligations that Mexico has subscribed to them. Yes. Thank you So Peter talk about the politics of Canada at this point and in particular several in the audience have raised the question of the carbon tax and And whether in fact this is now Canada taking leadership in North America indeed maybe in the world in terms of a carbon tax But how do you think about the the fact that there is a carbon tax But also the sort of pull and tug between The provinces on this issue Alberta for instance with the tar sands very concerned How should we think about the political situation in Canada around this carbon tax? So it's a very it might surprise you to say that it's a very volatile time We're in the perpetual election cycle that every country seems to be in but will be in an earnest election cycle starting in the new year and I suspect that energy will figure very prominently in the run up to and even the outcome of the next election carbon tax Which I'll address in a moment, but also pipelines and the politics of pipelines have become very divisive in Canada And very difficult to reconcile In part because of our Relationship with our first nations are Aboriginal people the courts have intervened on a number of occasions to stop pipeline development Provinces have launched lawsuits British Columbia in this instance to block The development of a pipeline and we saw for the first time since Petro, Canada, which was a government-run Gas company the purchase so the the nationalization of a pipeline When our current government invested in and paid An exorbitant amount of money billions for a pipeline that probably won't be built So in the run up to the election, these are going to be very contentious issues to come back to carbon tax Yes, I think Canada is projecting leadership on this issue But again, not without call causing a great deal of internal consternation with our provinces And it's a jurisdictional issue that they're fighting over the federal government wants to impose a price on carbon the provinces who will be tasked with Implementing and and basically policing And it's it's a tax on everything which is never popular It'll affect disproportionately rural parts of our country of which there was massive amounts of territory that will be affected and the problem is is this Canada I would contend has a very low manufacturing footprint to begin with a relatively small population vis-a-vis Mexico and the United States and others and With our forestry we are really a carbon sink. We are not a major emitter You know relative again to other economies if you look at if you compare us to China Russia India Pakistan Other countries who may or may not have signed on to Paris Accords Kyoto But they're not doing it and they're not going to reach their targets And so the debate becomes oversimplified if Canada is going to hobble our industry and our population By imposing a carbon tax and other countries are not going to do it. We're whistling past the graveyard We're really not having the impact. We may be able to say at UN meetings and otherwise Climate change accords, you know look at the world Boy Scouts that we've become But it's not going to impact unless everybody participates and therein is the problem One last point. I want to register. I heard the president of Stanford this morning and his opening referenced the Arctic You and I have had discussions about the Arctic waters Contentious areas even even boundary disputes in the Beaufort Sea the internal waters of Canada the the Northwest Passage The change is happening. I mean this is beyond any debate now. I Went there when I was 17 years old on supply ships spent summers in the Arctic as a student 25 30 years ago and to go back today as we did on on Arctic maneuvers with our military These now these small ports are wide open where they used to be packed with ice the maps that you see today satellite images show the Incredible incredible mountain melting of ice that's happening both on land and sea And you're going to see increased traffic. We're already seeing increased traffic because it opens up waterways. There's a Arguably a fourth ocean now around North America the Chinese the Russians in particular and others are Interested in our resources and they're interested in having a presence there So it has a very much a security element to it. So again, I come back to the need for cooperation and we do it through NORAT We do it through other international security forums like NATO But I think there is again an impetus in North America for Canada and Mexico in the United States to really pull together When it comes to the subject of climate change when it comes to the subject of energy and energy security Yes, yes, in fact what's happening in the Arctic both in terms of the competition and the melting Which is it says that we'd better get busy quickly about the issue of environmental sustainability and one of the one of the challenges for any government is to find a balance between economic growth energy mix and environmental concerns and so you mentioned the Mexican commitment to It was thirty four percent thirty-five percent reliable reliance reliance on renewables How does Mexico plan to get there? and What are the steps that are being taken? How is this something that can be helped through? Cooperation with Canada in the United States I often thought that one of the problems with NAFTA and the new negotiations on NAFTA and what has come out of it the US Mexico Canada Relation Mexico Canada Treaty is that actually we were going back over old ground We didn't really Peter you and I used to deal with dairy price supports in Canada and apparently Dairy price supports are still at the center of US Canada discussions when perhaps we could have used this time to Have the region be more Sustainable and more influential on things like the sharing of technologies some have suggested that Environmentally important technologies ought to be tariff free This would have been a chance to try that so how are we going to get there? And can you start with talking about how Mexico might get there? Yes? It's a very good question and in the last five years Mexico Has passed it from 150 megawatts in solar energy to 5,000 megawatts in solar energy That represents more let's five billion US dollars of investment We have to take an account that Mexico is a it's a very sunny country 85% of our territory is sunny. We have five kilowatts per square meter per day so in that respect the the forecast that The Ministry of Energy has made for the future. I mean talking about the potentiality For solar energy and other clean energies Represents a potentiality of 6,000 Gigawatts that represents 35 times of our present installed capacity of Mexico. So the opportunity is huge and Mexico is providing tax incentives for the investments associated with clean energy a Of that figure 6,000 gigawatt of potential application for clean energy 75% for solar and I would say 20 20% for wind in a very selected areas of the country So the opportunities there The the government attitude in terms to provide tax incentives is there So the big question is the cost of the solar panels is one real Challenge and the other challenge is the cost of the natural gas You know because we need to to create a sustainable business to Generate electricity in a very solid foundations in that respect probably Mexico, Canada and US can provide the necessary framework in terms of financing in terms of Prices in terms of install capacity for producing High-efficient solar panels and so on So it's a very in my opinion. It's a very integrated and systematic approach that we have to take in account In order to take the advantage that Mexico could offer for the region Yes, and in fact You one of the questions here is do you think that the new government? I'm low will Continue these policies and it sounds as if you think this is these renewal these target renewables is going to that's going to stay in place Yes, I Think that the the next government that will take place the first day of December this year will take seriously the The take care of the environment. We have a very solid legal framework for control the environment Mexico has developed a good attitude To control our natural resources So it's a tradition not that comes from this last government comes from several governments ago So my forecast is that the the next government leading by Andres Manuel Lopez Obrador Will continue with this path so The vital ingredient Ingredient is that we have we are we're going to sign the final agreement between Mexico, Canada, and US So this is a very very important step forward facilitate the next Action plan for the energy sector and Peter a year There's a question from the audience about why you keep talking about pipelines which are dirty rather than Focusing on renewables and Canada's actually been quite a leader to the degree that you can some of the Geographical limitations for Canada on certain kinds of renewables, but do you want to talk a little bit about this? Yeah, sure I mean the reason pipelines are important to us is We're now discounting our oil at about $50 a barrel sending it to the United States 97% of oil in Canada oil and gas goes to the United States We don't have diversity in our market. We can't get it to tide water and I alluded to some of those problems earlier So that's that's a big issue that cost the Canadian economy about 16 billion dollars annually the fact that we discount our oil and send it to the US so You know there's regions in Atlantic Canada for example where I'm from where we import oil We buy it from who Saudi Arabia? Algeria and Venezuela and then we hector them about their human rights, and we complain about Military contracts, but we buy their oil so it hasn't it there's an issue of independence and sovereignty The United States is doing the opposite You're becoming more energy independent to the point where you won't be importing any oil at the current rate And you're up to I think it's around 10 million barrels a day So, you know diversity within the industry is one thing we need diversity within our entire economy in terms of our supply and the supply chain that also I Should say doesn't take away from the fact that we're moving into renewables. We're moving quick You know solar. We don't have the same amount of Sun as Mexico, but we have water We have some of the biggest hydroelectric generation Plants in North America and they're getting bigger Newfoundland and Labrador is is completing a project What what's called the lower Churchill falls or muskrat falls that could literally light up the whole eastern seaboard of the United States? When it comes online we still use nuclear we are one of the world's biggest producers of uranium We are moving in the area quite innovative innovative in the area of wave technology We have some of the highest tides in the world And so water is part of our solution and water is as I mentioned is contentious I remember we had some discussions around Passamaquoddy Bay and some of these very I Used to just a I often said that when we were going to we had a US Mexico Canada forum for all issues And it felt like a homeowners association because we were always talking about issues like water And then treaties for water made many many centuries ago So one of the most undiplomatic things I ever did and I got chastised by my own department was one of your first visits Ottawa I got up from the table and I walked around to the other side and put a map in front of you and started pointing to things that The officials were horrified that I would do this Anyhow it didn't it didn't seem to to affect the relationship where we're okay, right? No, no, I've seen the map I thought you did But I I think that the whole subject of how the countries have Integrated on trade on economy on energy bodes well for us in in the broader sense This university to my astonishment has invested in energy projects in Canada substantially Which I think again helps with the understanding of the North American Responsibility that we all share. I think we can do more on things like tailpipe emissions I think we can do more in the area that we have in the past around emissions generally with new technology The acid rain treaty was a shining moment in the relationship between Canada and the United States Going back to the Reagan administration where they work very closely To address these issues because you know We have borders at the the 49th parallel and between Mexico and Canada But pollution doesn't stop at these borders. These are not smoke-free Cylones that we live in so that is an energized Generation behind us to address those problems and I for one think we're going to get there I think we will find ways The carbon tax is not the be all and end all Because you some have called it a price on pollution, but it's it's a license to pollute Is another way to look at it and unless everybody's in it doesn't work so there's also a Question about nuclear cooperation with the United States because Canada has continued to be all in on the nuclear side the United States is on and off on On the nuclear side, but that might be an area for cooperation as well. I believe so I think we've certainly advanced in Our understanding of nuclear technology nuclear energy I know it's contentious in the mind of many rightly so what we've seen happen in places like North Korea and Iran are Reasons for concern because it's taken from from a domestic purpose to weaponize it But it's there. It's it's at our disposal. We know that it has a much When when used properly has a much more positive impact on the environment than fossil fuels But we're not going to be off fossil fuels I mean, that's a hard reality, but we're not going to wean ourselves off fossil fuels for decades We can accelerate it in certain ways and the way to accelerate it is in my view to share technologies With like-minded countries democracies predominantly Let me ask you about the view from the north and the view from the south of the middle How should we think of these days about how the United States is thought of in terms of some of the issues that we've been talking about Energy renewables Climate change There's a question here that asked me about the Paris Agreement, but let's start it as a Conversation if you're looking from the north you're looking from the south. What do you see in the United States on these issues? Wow, please Well, Mexico's first in the named agreement with the United States so it makes sense Okay. Well In my view we need a 25 year plan a very well integrated 25 year plan because it's the the limit time that the this humankind has To reduce this negative effect of gas emissions so It's a very complex Problem that needs to take care of many many aspects One is infrastructure Because when we are talking about the clean energies the the first hurdle The first tackle that we need to remove is transmission lines That means infrastructure when we are talking about natural gas we are talking about pipelines So infrastructure means a very very important capital expenditure Issue that we must solve together because that represents a huge investment The second point in my opinion is How how can we design the appropriate conditions for the three countries To encourage to facilitate and to provide the necessary tax incentives for clean energy investment and the third point in my opinion is the Regulatory aspects. I'm talking about Prices Because all the time the clean energy Alternatives is Fighting against the natural gas prices and the oil prices So we need to define some clever strategy to deal with that aspect Because if we leave all this The final solution for the market Never never will happen never So we need to to make an agreement among these three countries to think jointly Not just in in terms of the marketplace and the benefits and the returns But as a whole integrated strategy that take care of the environment and the Cheap access to energy for everyone I try to take a positive view of of what's happening and It's alarming sometimes. We have institutions that are being challenged. We we have Agreements that are being rewritten and that's fine. I think you know, you made a very good point that modernizing Age-old agreements and institutions is actually not a bad thing if it's done if it's done properly And if people do so with the best interests of everyone in heart There's such a history Between our countries that goes back militarily that goes back throughout our our entire history that can't be ignored You know other than that little dust up in 1812 and the White House and all of that But that was the Brits. It wasn't that's right. Yes sort of Well, you know, they're they're paying for it now in brexit there They have their own problems. I mean that that to me is another example of a country that You know while they're they're going through this unscramble of the egg in the European Union We should be doing more with Great Britain. It's a natural extension in North America to loop in the British and they they are doing a lot of Interesting and innovative things and energy as well. I mentioned wave technology. They like Canada, US Mexico have offshore platforms The oil sands have been mentioned a number of times. There is remarkable technology that gets overlooked what's happening in the oil sands It is not this major Dark, you know hellish spot in North America. It's actually when you see it with your own eyes It's remarkable how they leave the ground after the bitumen has been extracted So they they are using rightly so highly regulated important technological advances to do proper extraction Pipelines have been referenced time and time again, but look, this is about an economy That we can help produce competition Away from some of those countries instead of using sanctions for example Against Iran and Russia if we can sell them clean North American oil and gas put it on tankers and send it to their ports I mean what greater way to defang Vladimir Putin than to be able to offer clean renewable and and Energy that has been improved produced in North America at a competitive price So those are things that again we should be looking to work together on to find a way a North American Energy solution I think is very important at this moment in time and we're never going to be able to get away from the geopolitics of all of this It's so important to the world economy We're never going to be able to put it off to one side or Remove the politics entirely from it that that to me is impossible and can't really be part of the solution the problem is in some cases the The lack of continuity when governments do change That's why international treaties international climate accord international agreements have to be respected and have to stay in place Regardless of the turnover that happens quite rapidly in governments in North America Well, I would the Paris Agreement is referenced here and obviously the United States withdrew from the Paris Agreement The the good thing about the Paris Agreement was it was really unlike the Kyoto Accords, which I think had created Targets that no one was going to meet as a matter of fact only two countries met them little Croatia and Germany and Germany because it shut down the power the dirty plants in East Germany and met its targets that way so Having these sort of artificial targets, but but Paris had a different approach Which was to have each country come up with an answer to the three e's economic growth environmental sustainability and energy mix and then to sort of aggregate that up into an international treaty I think thought it was actually a very smart way to go about it, but the United States is currently out I think we need to remember that the United States an awful lot of environmental policy in the United States actually not federal It's actually at the state level and we're probably Going to have a test here soon of whether a state like California can have its own emission standards So American institutions are struggling with all of this But let me ask you one final question about our cooperation, which is that we we have Governments that have to deal with one another. We've had our ups and downs I think Amalot will will test those relationships in important ways But if you could give the president of the United States the prime minister of Canada and the president of Mexico One thing to do So that 30 years from now we had fully realized the potential of the North American energy platform What would you say? We know that politicians have kind of limited Attention span so you only get to say one thing Peter I would say a North American Emissions reduction standard I Think I think if we came up with one here in North America and we can that doesn't negate our obligations Internationally but to aim for something here in North America And and how we coordinate better our grid and we're not talking about marijuana here because that would be another contentious That's a different matter. Yes. Yeah different different summit. Yes Hmm Well, I would say We have a tax to do Me in my opinion the first Component of the answer will be Increase the efficiency and the effectiveness of our actual present grid Incorporating all these fabulous technologies that we are ready on place 4.0 for energy sector means many many many things In my opinion, that is the first task that we have to do a smart grid distributed network Storage energy solutions We have many many many projects and things to do in that respect and the second one I Totally agree with but that we need to take care about the environment and comply the The obligations that we have in the in front of the humankind Thank you very much, and if you'll join me in thanking our guests for their really very powerful insights. Thank you