Let’s start with a bit of an introduction to your role at the Center on Global Energy Policy.
I lead the research team at the Center on Global Energy Policy at Columbia University in New York. We’re part of the School of International and Public Affairs, so our focus is really on the intersection of geopolitics, technology markets, and energy security, but from a global perspective. Of course, these days, you can’t talk about energy security without including critical minerals, which is why I’m here at PDAC. I’m from Canada originally, but I’ve been working in the US in consulting for a long time.
Geopolitics are really the news of the day with the recent tariffs coming out of the US. Can you talk about some of the impacts that you see rising out of this?
I think there’s a few different considerations. My current focus is on the US-Canada tariff, which runs somewhat counter to the spirit of our US-Canada-Mexico free trade agreement. One layer of that is economic and sectoral. I think the Trump administration wants to support a more US-friendly United States-Mexico-Canada Agreement (USMCA) at the structural level.
The next level is more economy-wide, and that really has to do with the re-industrialization of the US, which is not just tariffs for short-term renegotiation, but a longer-term industrial strategy, including for things like steel, aluminum, and heavy manufacturing. If you’re going to have tariffs in place for a long time, that could help shift plant equipment back to the US.
Then the third aspect is the geopolitical side, which is what Canadians sometimes think about when they hear 51st state. What would that mean? That may be a topic for another day, but that’s certainly part of the concerns at the moment.
Let’s look at the critical mineral side of this. What are some of the recent trends that you’ve see coming out of this discourse?
The number one trend I would point to, besides these trade concerns, is what I call the big pivot. I think the big pivot is really a switch from critical minerals growth being linked to energy transition, decarbonization, and electrification, to a critical minerals conversation that’s led more by national security and high-tech considerations. It’s not, by any means, that decarbonization and electric vehicles have gone away, but I think there’s been a throttling down in that area and a throttling up of critical minerals investment and demand-side analysis linked to things like national security, semiconductors, and high-tech, in addition to the previous focus on green energy, which is still around, but, at least in the US, has lost a lot of momentum.
Do you see the change in the US administration potentially slowing down the energy transition?
Absolutely. Slowing down and stopping are not the same, and I think it’s been an uneven, intermittent transition already. It was coming along nicely. Then, of course, the Russia-Ukraine war brought the focus back to affordability and energy security. This moment now is another pretty major bump in the road like that was, but this time it’s focused on the US specifically. The US is a large emitter, but it’s also a large financier of energy transition all around the world. It’s a driver of new policy, its companies set the standard in many ways. A lot of that is going to be on hold or at least uncertain, but that doesn’t mean China, Europe, Canada, and other parts of the world won’t be moving forward. But it would be unrealistic to suggest their actions won’t be impacted by the slowdown in the US as well.
Some of your recent articles have explored largescale government interventions in clean energy production and how that is shaping the energy landscape. Can you share a few points about where this trend is going?
I think industrial policy used to be something that you studied in Japan or Germany, and then later in China. Now, it’s a big thing in the US as well, and in Canada. Governments are deciding on what they call strategic sectors, and what constitutes a strategic sector can vary from one administration to the next.
For Biden, the focus was very much on the green economy, energy carbonization, and electrification. I think with Trump, the strategic sectors for him are really focused on national security, re-industrialization, and the high-tech sectors.
But either way, the policy tools are the same – you have carrots and sticks. The stick is tariffs, which are meant to pressure allies to shift their manufacturing investments to the US. Then the carrot is more the incentive, like the Inflation Reduction Act (IRA), tax credits, subsidies, and grants. Trump was talking about a potential sovereign wealth fund, for example, which could also potentially play a big role in incentivizing investment. But one way or another, regardless of the focus on which strategic sector you’re targeting, the policy tools look pretty similar.
We haven’t heard much about the IRA in quite a while. Is this a thing of the past now?
I think the Trump administration has a few challenges on this front. One, I think their preference would be to scale it back, partially for policy reasons because they don’t necessarily support the same scope, breadth, and speed of transition that Biden did. They also want the revenue for other things. I think they’re constrained by how the US system allocates taxpayer dollars through Congress, primarily. Once those dollars are allocated, it’s hard to claw them back.
There’s also the political reality, which is that a lot of the IRA spending has gone to Republican states. When all is said and done, I think significant elements of the IRA will remain in place. But overall, certain sectors like offshore wind and electric vehicles are probably going to be cut back, whereas other sectors like carbon management, geothermal, and nuclear critical minerals, have probably still got some support.
How do you see the discourse around the critical minerals and the energy transition evolving in the coming years?
Right now I’m most concerned about the trade issues, because I think the trade issues underpin the case for critical minerals investment. If you have an open, globalized economy and you’re developing, say a lithium mine or a tungsten mine, you feel good knowing that we have a global market, and you can sell to anybody and that customer can then sell it downstream to somebody else. When you start putting barriers along the value chain, it creates a lot more uncertainty and difficulty in accessing capital. I think trade is certainly the big story. Of course, trade is very closely aligned to geopolitics. The big theme on the geopolitical side has been China’s dominance of the critical minerals industry, especially in the midstream and downstream manufacturing side, and then, through their overseas investments, a lot of the mining as well. The question now is if this is something the Trump administration is going to push back against as Biden was doing?
Or, are they going to push back on China in other areas like steel and aluminum or things like artificial intelligence semiconductors? What the Trump administration might choose to do instead is focus the US on drill energy dominance, which mostly means oil and gas production. This would make them more aligned with how the Saudi and Russian governments view the world. That oil demand is not going away and Russia is a big part of it. When it comes to economic security, geopolitical security, and affordability for consumers, that’s the shorter path for the US in their mind. That’s a huge question and it’s very different than the US and EU trying to create their own version of what the Chinese have already built.
Looking at energy sources, do you have an opinion on the role of nuclear, especially as data centres and other high-energy technologies are pulling more demand for energy?
I think generally nuclear will do well in places that don’t have low cost natural gas, and that have big balance sheets and capital to put in nuclear projects. A great example would be Microsoft working with a US utility to repower a nuclear power plant or to build a greenfield one. That’s hard for a lot of countries in the world to do, and it’s also not necessarily logical for places that have very low cost natural gas. Now, the question is, will low cost natural gas come to the grid as it is, or will it be so-called abated gas with some carbon capture, or methane abatement, or renewable natural gas, or something along those lines, like hydrogen blending? Yes, I think we’re in a great cycle for nuclear, but like all sources of energy, it’s going to be very geographic and regionally specific.
Just to wrap things up, we are here in Toronto at PDAC. Any interesting conversations or themes that you’ve seen coming out of this week?
I continue to be very interested in a couple of things. One is financing. When you look past the current volatility in the markets, with the tariffs and everything else, what are the ways to unlock exploration and unlock innovation in the sector? I think this is a great event for understanding that.
I’m also interested in the discussions around what role government can play in coordinating and adding its own capital into that stack to get things going faster. You hear a lot of “faster and better,” as a key theme, so I’m quite interested in that.
More specifically, I think the concept of regenerative mining and redeveloping ground field sites and extracting value from tailings is also a really interesting theme as well, especially in a more capital constrained world where we’re in a hurry. Sometimes those projects can be brought along a lot faster, with a shorter permit time as well.
“When you start putting barriers along the value chain, it creates a lot more uncertainty and difficulty in accessing capital. I think trade is certainly the big story. Of course, trade is very closely aligned to geopolitics.”
Robert Johnston, Senior Director of Research Center on Global Energy Policy, Columbia University
