The little-known colossus behind the Conservatives' anti-climate agenda

Beyond the tight-knit world of Calgary’s oil patch executives and a redoubt of Ottawa-based conservative activists, few Canadians had heard of the “Modern Miracle Network” (MMN) before The Globe and Mail in late April revealed that the group had convened a private retreat near Calgary for energy industry operatives, senior Conservative advisors and leader Andrew Scheer. The top agenda item, according to the Globe’s account: plotting out a strategy for this fall’s federal election battle with Justin Trudeau’s Liberals. Incorporated in 2016 by Michael Binnion – an Alberta accountant turned energy entrepreneur who has been trying for years to persuade Quebeckers to let his company frack in the St. Lawrence Lowlands– MMN exists, publicly, as a Twitter feed, a Facebook page and a bare bones website. Its mandate is to “educate” the public about hydrocarbon-based energy. According to The Globe’s account, MMN’s board includes other Calgary oil and gas activists, including Patrick Ward, who heads Painted Pony Energy, and Susan Riddell Rose and Mike Rose, who head Perpetual Energy and Tourmaline Oil respectively.

The organization, such as it is, operates out of the headquarters of Binnion’s firm, Questerre Energy, and its other directors include two Questerre employees. At first glimpse, MMN looks to be scarcely more than a ripple in a sea of social media turbulence – an Astroturf. advocacy operation with a curiously anachronistic handle. Even some veteran Tories outside Alberta haven’t heard of either MMN or Binnion, who did not respond to numerous requests for an interview for this story.

Yet in the oil and gas industry, which has a great deal riding on the outcome of an excruciatingly close race, Binnion is an A-list operator, and his expressed views are well reflected in the Tories’ platform. As chair of the Manning Foundation (which is a separate entity from the Manning Centre, a conservative networking organization based in Calgary) and a member of the board of governors of the Canadian Association of Petroleum Producers (CAPP), the sector’s lobby group, according to media accounts, he was also one of 146 attendees at a private June fundraiser for Scheer, held in a Calgary hotel.

The MMN, moreover, stepped in as a lead sponsor of the Manning Centre’s “networking” conference held last March in Ottawa that featured many of the leading figures in Canadian conservatism, including Ontario premier Doug Ford, Ford Treasury Board president Peter Bethlenfalvy, and Stephen Harper’s former finance minister Joe Oliver. Karl Rove, the mastermind of George Bush Jr.’s 2000 election, was the keynote speaker.

A year earlier, in fact, Binnion figured even more prominently at the 2018 Manning Centre talk-fest, boasting during a panel discussion that the notes on a scrap of paper he had in his hand laid out key elements of the Conservative’s energy platform, the centerpiece of which was replacing the Liberals’ carbon tax with tax incentives for emitters to invest in clean tech. “I want to tell you right now that this [is the]official list for the conservative movement on the options that we’re going to discuss,” he said, according to Maclean’s. “We’ve now got an agreed list.”

Binnion: a well-connected insider

To those who know Michael Binnion, MMN offers but one glimpse of a well-connected and determined insider’s campaign to change our national conversation about both fossil fuels generally and carbon pricing in particular.

In contrast to energy luminaries like Gwyn Morgan, he’s a somewhat unlikely figure to be carrying this torch, given his business track record. Questerre was co-founded in 2000 by Binnion and Norwegian businessman Peder Paus, who served as chairman until 2015. (As a side note, Paus’ niece, Olympia Paus, is married to Alexander Nix, the former CEO of Cambridge Analytica, which helped elect Donald Trump in 2016. There is no evidence Binnion and Nix have any association beyond the Paus family). The stock price of Questerre, has been tanking for some time. And its revenues for the first six months of fiscal 2019 dropped by a quarter from the comparable period in 2018, resulting in a $3 million loss, compared to a modest profit the year prior.

Questerre stock, much of which is held by a handful of Norwegian and Swiss institutions, trades these days for about 20 cents, well down from its early 2018 price of more than $1. Much of the company’s steadiest cash flow comes from a handful of Western Canadian wells. But two of Binnion’s bets – tapping shale reserves in Quebec and Jordan – haven’t panned out, despite assists from well-connected politicians, including former prime minister Stephen Harper, whose consulting firm provided Binnion with strategic advice, Maclean’s reported.

Away from the demands of the company, Binnion has been relentless, publicly and privately, in advancing his case for eliminating the federal carbon tax, based on a claim that the Liberals’ pricing policy will lead to what he calls “carbon leakage.” The gist of his argument is that if Canadian natural gas is more costly than American energy, domestic distributors and industrial consumers will import what they need, causing jobs, production and economic activity to shift to the U.S.

“As a result,” he opined in a 2017 essay in Policy Options, “America’s emissions increase, meaning Canadian carbon leaks across the border as well. This offsets the environmental benefits of Canada’s climate action.” Calling last year for a “common sense” climate strategy, he accused carbon pricing proponents of ignoring the leakage issue and called for more research on the phenomena.

The research not only exists; there’s also plenty of evidence, from jurisdictions like British Columbia and Sweden that gradually rising carbon taxes levied on the purchase of fossil fuels send price signals to producers and consumers, and results in less consumption than if the tax had not been in place. Which is good news if you want less carbon leaking into the atmosphere but not so good news if you’re in the business of selling gas.

Despite the countervailing academic and practical evidence, Binnion has worked relentlessly to weaken public support for carbon pricing, and not just by writing op-eds in policy journals.

Binnion, says his longtime business associate Bruce Edgelow, a Calgary investment banker, is “really good…at building relationships and figuring out who should be at the table.” “He’s the kind of person who moves the dial,” adds former Quebec premier Jean Charest, who first met Binnion about a decade ago, when Questerre was looking for permits to start drilling in a vast shale gas deposit along the north shore of the St. Lawrence between Montreal and Quebec City. “I would be among those who feel it’s worth figuring out what he’s saying.”

Binnion is but one voice among the many Tories and oil patch insiders intent on toppling Trudeau and reversing the policy shift towards carbon pricing across Canada. But what seems increasingly clear is that figures like Binnion – who donated to the campaign of libertarian candidate Maxime Bernier in the run-up to the 2017 Conservative Party leadership convention -- have been hard at work behind the scenes, hacking away at what seemed, not so long ago, like an emerging consensus about the effectiveness of using a market-based mechanism, like carbon taxes, to reduce greenhouse gas emissions.

If one had to pinpoint the beginning of that hesitant consensus, it might trace back to about 2014, when Reform Party founder Preston Manning came out in favour, in principle, of market mechanisms like carbon taxes to contain climate change. Intellectual cover came from University of Calgary economist Jack Mintz, who argued in a 2008 paper that the federal fuel excise tax should be converted into a broad-based environmental tax.

At that point, only B.C. had a broad-based carbon tax, which was introduced in 2008 by the right-of-centre provincial Liberals and has remained in place ever since. In 2015, of course, Trudeau swept into office pledging to phase in carbon taxes in those provinces that hadn’t put in place their own. In response, Ontario, Alberta and Quebec rolled out or tweaked their own versions.

In early 2018, further evidence of a growing consensus came from then Ontario Progressive Conservative leader Patrick Brown, who promised to support carbon taxes as part of his bid to defeat Kathleen Wynne’s Liberals with a centrist platform. Most of his caucus, including MPPs who are now ministers under Premier Doug Ford, “signed on,” he points out. “To say you believe in climate change and not be willing to do anything about it seems inconsistent,” adds Brown, noting that he believes the “vast majority” of the public feels it is a serious issue. Citing the policies and stances of previous and current Tories from Brian Mulroney to MP Michael Chong, Brown feels “there’s an appetite for doing the right thing.”

That may be true, but the orchestrated political backlash against climate action from the right has come swiftly, and it accelerated substantially after an alleged sexual abuse scandal swiftly toppled Brown in early 2018.

At the time, allegations of assault surfaced in the media but questions soon arose about some of the victims’ accounts and Brown, who was subsequently elected as mayor of Brampton, Ont., is suing CTV for defamation. The accusations encouraged those on the party’s fringes to push for his removal, he says. “The hard right – the religious right and the climate dinosaurs – took advantage by realizing they needed a leader who would not support progressive environmental policies.”

Brown’s demise, of course, paved the way for Ford to swiftly grab the helm with an explicitly populist anti-carbon tax agenda that included cancelling the province’s levy and using the courts to fight the federal legislation, citing jurisdictional overreach.

While Ford was facing off against a long-in-the-tooth government headed by an unpopular premier, his campaign got a big assist from Ontario Proud, a third-party group that spent almost $450,000 on advertising, mainly social media attack ads. Some its largest backers were developers like Mattamy Homes and members of the non-union contractor lobby, Merit Ontario. The group now claims about 400,000 followers.

In office, Ford has made common cause with Saskatchewan, Manitoba and New Brunswick. Jason Kenney’s spring victory over Rachel Notley doubled down on this backlash, featuring loud denunciations of carbon taxes and threats of more legal action. (A Saskatchewan superior court in the spring dismissed that province’s move to challenge the constitutionality of the federal carbon tax.) Both Ford and Kenney have ratcheted up the rhetoric, warning that carbon taxes will either trigger a recession or sink the oil patch.

The attack has been joined by others. Jack Mintz late last year took to the op-ed pages to accuse the federal Liberals of botching the design of their carbon tax policies. Charest, who favours the carbon tax, contends that the opposition to the current system – which imposes a levy on carbon and provides tax rebates to individuals -- is rooted in growing mistrust of the federal Liberals and their failure to get buy-in from the opposition.

With the current election, Ontario Proud has morphed into “Canada Proud" and has been pumping anti-Trudeau attack ads and memes onto social media that reach hundreds of thousands of accounts. Canada Proud shares some contributors with Ontario Proud, but its most deep pocketed backers include Alberta billionaire Ronald Mannix, his investment company Coril Holdings and the national non-union contractors group, Merit Canada.[1] New Brunswick Proud, meanwhile, was set up with $15,000 in funding from the Manning Foundation and the Modern Miracle Network, The Globe and Mail has revealed.

Binnion, meanwhile, has continued to tell anyone who will listen, including successive Quebec governments, that policy measures to restrict fossil fuels will create unintended consequences – what he calls a “green paradox.” While he freely admits that climate change is real, he also insists that no one has ever come up with compelling evidence that carbon taxes contribute to a solution. “[M]any conservatives have let themselves be convinced that carbon pricing is an efficient, market-based policy,” he wrote in the National Post last year. “An acceptance of the theory without examining the practice is what got them there.”

Binnion's blessing: boundless energy

Michael Binnion moves in the overlapping circles that encompass Alberta’s oil and gas entrepreneurs and the conservative policy networks that radiate from Calgary. Besides running Questerre, he recently became a part owner of a B.C. heli-ski resort called Silvertip Lodge.

Unsurprisingly, he and his second wife, Maria, give substantial sums to conservative politicians; in the past three years alone, according to election filings, they’ve contributed $35,500 to Jason Kenney’s various campaigns, almost $15,000 to the Conservative Party of Canada and, somewhat awkwardly, $6,100 to the failed Conservative Party of Canada leadership run of Maxime Bernier, an outspoken opponent of carbon taxes who has actively courted the climate denier crowd during this election. (No Binnion donations ended up with the winner, Andrew Scheer.)

Michael is one of those congenitally optimistic people blessed with boundless energy,” says University of Calgary political science professor emeritus Thomas Flanagan, a former advisor to Stephen Harper. He cites one Binnion venture: an annual Christmas party for friends and employees at Calgary’s River Café, including carol-singing, raffle tickets, and silent auction, with proceeds to a foundation Binnion established to support disabled skiers. “Just thinking about him tires me out.”

While his public pronouncements stress the importance of engaging in policy dialogues and are occasionally seasoned with nods to the advocacy work of environmental activists, Binnion in private comes across as a hard-driving ideological libertarian, recalls one person who met him recently to discuss a partnership opportunity and took note of all the Ayn Rand tomes in his office. “This is someone who understands how change happens.”

Binnion wasn’t always as politically active as he is now. After stints with the accounting firm, Clarkson Gordon in Toronto and then a real estate company, he’d moved to Calgary by the early 1990s to work for a succession of junior oil and gas firms with assets in northern B.C., the Republic of Georgia and other remote locales. He established Questerre Energy in the early 2000s, and took the company public in 2003, partially on the strength of 16 natural gas exploration licenses in the St. Lawrence Lowlands in Quebec.

The story of Binnion’s epic campaign to convince Quebec officials to let him pursue a massive shale gas strike there offers glimpses of not only his strategic approach, but also his persistence in attempting to shift public opinion. “Michael has been a leader in trying to organize oil and gas producers into an effective political force,” observes Flanagan. “It started with his frustration in Quebec, after he made major gas discoveries there that he has never been allowed to produce.”

In 2008, as the Bakken shale gas boom in the U.S. Midwest was beginning to catch fire, independent geologists reported that they had identified huge volumes of natural gas trapped in the so-called Utica shale deposits in the region of Quebec where Questerre and a few other larger energy firms had resource permits. In the spring of 2008, the company’s shares shot up and Binnion began the regulatory slogging involved in securing approvals to begin a $100 million pilot project, which would only be the beginning.

In interviews, Binnion talked enthusiastically, and perhaps unwisely, about eventually establishing 10,000 wells between Quebec City and Montreal. Others, including a large Quebec utility, enthused about the prospect of energy independence for a province that had been pumping in its gas from Alberta for decades. As the Calgary Herald noted, the area potentially contained about five times more than Alberta's current proven conventional gas reserves. The Geological Survey of Canada later estimated a 7 trillion cubic feet reserve, potentially worth $93 billion in GDP to the province, trapped in the shale deposits beneath the Lowlands, Anticosti Island and parts of the Gaspé peninsula. "I just can't fathom what kind of numbers we're talking about," Binnion said at the time.

Nor, apparently, could Quebeckers. In the wake of a damning University of Toronto study about the potential risks to groundwater, local opposition to fracking in Quebec crystallized and then surged through 2009 and 2010. Binnion attempted to ease fears using the time-honoured technique of whataboutism. "In full development,” he told a reporter at the time, “the industry is estimated to use less water a year than car washes in the province and about one half of one percent of the water used by the pulp and paper industry in Quebec."

It didn’t work. The then-Liberal government had gotten caught offside, partially because the province had “no culture of oil and gas,” observes Charest. “Quebec was a difficult environment in which to convince decision makers to even try pilot projects. We assumed this was something people would want to see. It was a classic political mistake.” In late 2010, Questerre and its partner, Talisman Energy, moved hastily to postpone the proposed test wells. But their tactical retreat made no difference: the province imposed a moratorium the following year that has survived, more or less intact, ever since.

Binnion tackled the political culture in Quebec head on, getting out of Calgary and embarking on a hearts-and-minds campaign aimed at securing that most elusive natural resource: social license. He was a driving force behind (and then headed) a nascent Quebec oil and gas industry association, whose board has included political insiders. Most conspicuously, though, Binnion set out to learn French and address Quebeckers directly, beginning with a blog documenting his thoughts on all matter fracking, energy and politics

If I had not learned French,” he said in 2014, “I never would have had deep and emotional discussions with many Quebecers about what their language and culture means to them and how they see the history of our country.” He claimed to see key links and parallels between Quebec and Alberta. “I believe that Canada’s oldest culture and its newest [Alberta] have something to learn from each other.” In other blog posts, he’s even publicly expressed agreement with statements about shale-gas drilling from Greenpeace and the David Suzuki Foundation.

Binnion tried to make the case for fracking using a range of rhetorical and policy tactics. Besides pitching the pocket-book appeal of a new industry that can create jobs, GDP growth and welcome tax revenues, he’s prodded Quebeckers by cheekily pointing out that the province’s imports of fracked gas represent “carbon leakage,” i.e., methane emissions related to fracking do take place, but just in another jurisdiction. What’s more, Binnion has been touting the rather general results of an IPSOS poll commissioned by the Canadian Association of Petroleum Producers, which has also stepped up by condemning the Quebec government’s recalcitrance. (The IPSOS poll found ample public support for natural gas, but didn’t ask respondents about shale drilling in particular.)

The company, which describes its Quebec projects as examples of “clean tech” investment, has also sought to line up political support from the two regional rural municipalities in the St. Lawrence Lowlands, Lotbinière and Bécancoura campaign that has included offers of three percent profit sharing with the host communities.

But over nearly a decade, and through three different governments, Quebec hasn’t shifted meaningfully in its opposition. Even the new right-wing premier, François Legault, has offered little room for optimism.

The reason, as in other regions, like Nova Scotia and New York State, has everything to do with public nervousness about the techniques required to extract shale gas. This kind of drilling has triggered seismic activity in earthquake-prone regions, but the most contentious aspects involve water – the sheer quantity that must be pumped into these reserves to force out the gas, as well as concerns about the downstream health impacts of the chemical additives generally used to make the water more viscous.

Allan Fogwill, the CEO of the Calgary-based Canadian Energy Research Institute, which in 2015 published an upbeat assessment of Quebec’s reserves, says shale gas firms increasingly recycle water in their wells and rely on more biodegradable chemicals. Says Fogwill, “It comes down to a risk-reward decision for Quebeckers.”

Not surprisingly, Quebec anti-fracking activists strongly dispute such claims. Éric Notebaert, an ER physician in Montreal who is president elect of the Canadian Association of Physicians for the Environment, says a recent literature survey shows that there is an association between fracking and many health issues including low birth weight babies, some congenital defects (heart and neurological), leukemia, and pulmonary problems (asthma and chronic bronchitis).

A few years ago, Binnion sought to demonstrate the safety of the process by drinking some fracking fluid. While Notebaert and others acknowledge that recent toxicology and epidemiological studies fall short of demonstrating a causal relationship between fracking and health impacts, he warns that stunts like Binnion’s public quaffing falsely suggest the additives are safe. “We just don’t know,” he states.

Others question Binnion’s attempt to grease the wheels by offering to share profits with local municipalities. Carole Dupuis, spokesperson for the Mouvement écocitoyen Une planète , condemns this approach as a subversive wedge tactic, one that’s not intended to obtain social license, but rather “local” licence, to make it much more difficult for neighbouring municipalities to say no to drilling proposals. “This ‘local’ license trick is immensely important because the industry manifestly wants to use it as the `sesame’ to open large territories which would otherwise be difficult to penetrate.”

What happens in the months to come remains to be seen, although it seems increasingly likely that the next front in this war of inches could play out in a court, given Legault’s post-election pledge to prevent drilling in populous regions.

Indeed, in the final months of the Liberals term, former premier Philippe Couillard’s energy minister effectively banned gas fracking in the province.

Questerre, which continues to spend millions acquiring acreage in Quebec, has filed a motion for a judicial review, and Quebec’s Superior Court decided to allow a hearing. Binnion has said little publicly in recent months. As a company presentation to investors released early in the year tersely warned, “Only if it becomes necessary will Questerre evaluate a legal claim for expropriation.”

Binnion's true miracle

Time will tell whether Binnion is a Svengali-like figure with a preternatural ability to manipulate public policy, or little more than the natural gas industry’s answer to Don Quixote – a deluded oilman tilting at metaphorical wind turbines.

Patrick Brown, who claims he hasn’t heard of either MMN or Binnion, thinks Canadians “should be treating the environment as a non-partisan issue.” Others on the right evidently disagree. Bruce Edgelow, who as Binnion’s investment banker back when he turned up in one of Calgary’s junior oil and gas firms in the 1990s, points out that shifting far-reaching policy conversations is “slow work. This is not overnight.” But, he adds of the Modern Miracle Network’s efforts to methodically convene opposition to the federal government’s carbon tax policy, “There have been a lot of beachheads that have been firmed up.”

McGill University economist Chris Ragan, who chairs the soon-to-be-folded Ecofiscal Commission, told me earlier in the summer that he fully expected climate change and the carbon tax to be front and centre in this fall’s federal election. A Nanos/Globe and Mail poll released in May indicated that more than 60 percent of Canadians oppose provincial attempts to block federal climate change policy, and other polls have shown growing public concern about emissions. Ragan welcomed a political showdown over carbon taxes. “I’m not discouraged at all that we’re debating this.”

Has it happened? Despite two court rulings upholding the federal carbon pricing policy, new measures that refund taxes directly to individuals and the energy unleashed by the climate strikes, Trudeau’s Liberals have mostly avoided climate policy so far in this race, and they are running neck-and-neck with Scheer, who is promising to tear up the carbon tax and replace it with clean tech tax credits.

For Binnion, that seismic shift in our politics may be the true modern miracle.

Editor's note: This story was published simultaneously on Canada's National Observer and Corporate Knights.