Caisse CEO sees energy policy challenge ahead for Canada

Energy policy is the single biggest issue facing Canada, according to Michael Sabia, head of one of Canadas largest pension funds.

The Caisse de dpt et placement du Qubec is a major investor in the energy sector and energy infrastructure.

But Caisse CEO Sabia foresees significant change in the energy sector because of the energy revolution in the U.S. caused by massive tapping of shale oil and gas.

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That shale oil revolution is partly responsible for the recent glut of oil worldwide, which has driven oil prices to the $80 a barrel level.

Mexico has also restructured its oil sector, making it more open to foreign investment.

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All of these things can very much change how the Canadian energy industry itself works. So that is an issue that were very focused on, because we are a large energy investor on a global basis, Sabia said in an interview with CBCs The Exchange with Amanda Lang.

Sabia said the Caisse is a big investor in both traditional sources of energy and renewable energy. But right now, pipelines are of particular interest, he said.

Realignment required

We think that particularly in North America, there is such an important realignment of energy infrastructure thats required, given whats happened in the United States and what may happen in Mexico, that there should be some very interesting pipeline or infrastructure opportunities in the energy business, he said.

I think the issue facing Canada is, how do we market it, how do we move that energy into markets where it can be consumed?- Caisse CEO Michael Sabia

Canada faces some difficult issues on the energy file, including who will buy our oil and gas as the U.S. becomes more energy self-sufficient and world oil prices fall.

I think the issue facing Canada is, how do we market it, how do we move that energy into markets where it can be consumed? Sabia said.

Some of that will always be in the United States. But in the past weve relied very heavily on the United States. Will that be sufficient going forward, given whats happened in that country? Open question. Therefore, moving energy east-west is important.

The Caisse had just under $215 billion under management as of June 2014, including public pension and insurance assets.

Sabia said the Caisse sees future investment potential in Australia, but also mentions Mexico as an area of interest.

We think that country may be on the brink of really some breakout levels of economic growth which could present us with some very interesting opportunities, he said.

Hes acutely aware of the signs of a world global slowdown which means taking great care in selecting investment opportunities, and looking to the long term. He also seeks out regional partners who can open doors.

What that [slow growth] means for us is not that there are no opportunities there are opportunities but it requires a particular approach to how we go about investing, Sabia said.

It requires us to place...a great deal of emphasis on the quality of our research, on deep, deep asset-specific research. I think the key word in these kinds of markets and in this kind of global situation is to be highly selective. This is not a time to be buying indices, or buying broadly asset classes, this is about asset by asset selection.