Thank you, Mr. Chair and members of the committee, for having me.
My name is Moe Kabbara. I'm the CEO of an organization called The Transition Accelerator. We're focused on helping Canada win economically and geopolitically in a world in which the energy transition is disrupting the global economy and global power.
Today I want to talk about energy security and how that definition is changing in real time around the world. For most of modern history, energy security really meant one thing: securing the supply of fuel. The disruption we're seeing right now in the Strait of Hormuz has put roughly one-fifth of the global oil supply at risk, and Canadians have felt it here at the pump. Despite producing over five million barrels of oil a day, that is the security problem in its purest form: Oil is essentially priced in global markets. Conflict on the other side of the world sets the price here at home no matter how much we produce.
One thing to watch is how other countries are responding to this moment, as well as how they've been responding over the last few years. Pakistan, for example, imported 17 gigawatts' worth of solar panels in a single year last year. When the Strait of Hormuz crisis hit, solar exports from China doubled in one month. Most countries aren't thinking of Ethiopia as a country in which six out of 10 vehicles sold or new registrations last year were electric. It's not that they're trying to do this for climate policy or environmental policy. They're saving $4 billion a year in foreign currency by avoiding fuel imports.
These, I would argue, are not environmental decisions made by countries that are growing economically. These are energy security decisions. Around the world, electricity is becoming how countries buy security, because it is produced, delivered and priced domestically.
In Canada, the sectors that drive our energy demand—how we move, how we heat our homes and buildings, how we run our industries, manufacturing and data centres, etc.—are going to increasingly shift to electricity. As they do, security in those sectors stops being a question of fuel supply and becomes a question of whether we have electricity to provide reliably and affordably.
I'm here to make the point that the frontier of our energy security is moving from fuels to electricity systems. I'm a pragmatist. I'm a realist. We cannot electrify everything overnight. This is a multidecade undertaking, and energy demand still has to be met every year while it happens. Oil and gas remain essential through the transition itself. Again, I'm here to make the point of watching where the puck is actually going. Electrification can only proceed if electricity stays affordable and reliable. For example, a perfectly clean grid is not necessarily the objective if we compromise on whether we can build it large enough, whether it's reliable enough and whether it's affordable enough to enable the electrification of the economy.
The point I want to emphasize is that, to get there, we need discipline, because Canada is going to commit to new, long-lived energy infrastructure in order to secure our energy—conventional and electric. The decisive questions are concrete ones. What volumes are we talking about? What markets are we serving? What is the demand, and over what time frame? Does the asset we're building still earn its place? This discipline matters, especially when public funds are put on the table to help de-risk private investments, precisely because when the analysis is incorrect, it falls on the taxpayers—a downside.
That brings me to the opportunity and risk of this. The supply chains that underpin electrification are going to be a central risk because we're still going to be importing switchgear, transformers and batteries from a small number of concentrated global suppliers if we don't build these things at home. For me, that is a risk. It's different from buying a fuel you have to burn every year, but it's still a risk when you're importing this equipment. That same build-out is going to create an industrial opportunity for Canada to create the supply chain here at home, in order to help us supply the growth we're talking about for our grid, supply our allies and diversify our trade.
Essentially, in the last 30 seconds I have here, what is the federal role in enabling energy security through electrification? We know we're going to have to spend a lot to build or modernize the grid. We're currently spending about 0.7% of our GDP. We need to be spending 1.7%—an additional 1% of GDP, or about $30 billion a year. Obviously, the federal government is not going to pay for all of that. There's a lot of provincial jurisdiction.
What can the federal government do to sustain a durable, long-term horizon signal and leverage our AAA credit rating to lower the cost of capital and increase support so these benefits show up on Canadian bills, not just on paper or in theory?
Thank you so much for having me today.