Welcome to the Enbridge Inc. Third Quarter 2020 Financial Results Conference Call. My name is Michelle and I will be the operator for today’s call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session for the investment community. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Jonathan Morgan, Vice President, Investor Relations. Jonathan, you may begin.

Thank you, Michelle. Good morning and welcome to the Enbridge Inc. third quarter 2020 earnings call. Joining me this morning are Al Monaco, President and Chief Executive Officer; Colin Gruending, Executive Vice President and Chief Financial Officer; Vern Yu, Executive Vice President, Liquids Pipelines; and Bill Yardley, Executive Vice President, Gas Transmission and Midstream; Cynthia Hansen, Gas Distribution -- or Executive Vice President, Gas Distribution and Storage. As per usual, this call is webcast and I encourage those listening on the phone to follow along with the supporting slides. A replay of the call will be available today and a transcript will be posted on the website shortly thereafter. We are going to try to keep the call to roughly one hour, but we'll allow for additional time if necessary in order to answer as many questions as possible during the Q&A. We ask that you keep to a single question and rejoin the queue if you have any follow-ups, and we'll do our best to get to each of you As always, our Investor Relations team is available for any detailed follow-up questions after the call. If you are a member of the media, please direct your inquiries to our communications team who will be happy to respond. Onto slide two, where I’ll remind that we’ll be referring to forward-looking information on today’s call. By its nature, this information contains forecast assumptions and expectations about future outcomes which are subject to risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We’ll also be referring to non-GAAP measures summarized below. With that, I’ll turn it over to Al Monaco.

Thanks Jonathan and good morning. I'll depart from the usual process here today and kick things off with how we're thinking about the broader energy environment. So, the fundamentals, the energy transition and the resiliency and longevity of our cash flows, no matter what the pace of the transition. I'll provide a brief business update today, then Colin will take you through the financial review and given the interest in capital allocation, he'll talk about our framework and our current thinking. I'll come back at the end and outline the new ESG targets we announced earlier. And just before we began a quick comment on the results, Q3 was strong. So, we're on track with the 2020 guidance, and we're narrowing that down to the midpoint of our $4.50 to $4.80 DCF per share range. That outcome proves out once again the utility model we operate in the face of the worst industry downturn ever in part of that ability to achieve the range comes from our ability to have moved quickly on reducing costs by $300 million this year, and we're now projecting $400 million for next. Onto the energy outlook. Big picture. Our outlook is based on three unassailable facts. First, global energy demand will rise in the next two decades, driven by population growth and increase the middle class and urbanization. Developing countries by themselves will need at least 35% more energy. And we think North America has a great opportunity to increase global market share of supply, simply because we have the best resources, technology, infrastructure, and environmental standards. Second, the return of economic growth will depend on affordable and reliable energy. That's always been the case over history and won't change. And third, no matter what future demand looks like, what kind of energy we're…

Hey, thanks Al and good morning, everyone. I'll start on slide 20, with our enterprise quarterly highlights. Overall, I think a pretty balanced quarter on various dimensions. Operationally, we saw a solid utilization across all four of our businesses. Al spoke to cost savings, they're on track. This all translates to $1.03 DCF per share, and about $3 billion in EBITDA during the quarter. As Al noted, we'll also -- we've advanced several strategic priorities. Construction is moving along well on our $11 billion security growth program. On Line 3, North Dakota is now complete and in Minnesota, we're starting to receive initial permits. The State 401 water quality permit is anticipated shortly. Let's move to slide 21 for the financial review. Nine month results for EBITDA and DCF are roughly in line with last year for the same period, despite the pandemic and other challenges. And similar to Q1 and Q2, Q3 is a little bit stronger than we planned. Adjusted earnings are lower than the prior year. So, largely owing to a full year of -- full charge of depreciation expense on Line 3 Canada, as you recall, put into service in December. While we were earning only a modest interim surcharge, this disproportional expense to revenue relationship will improve markedly when Line 3 U.S. is completed. Adjusted EBITDA is about on track too, except for the accounting treatment related to make-up provisions on certain contracted assets for volumes not shipped. On these assets, we received contracted cash payments that we recognize in DCF, but for revenue recognition purposes do not get included in earnings or EBITDA. In the third quarter, for example, this impact was approximately $120 million and would have led to EBITDA of $3.1 billion otherwise. I'll now walk you through our segments on slide…

Okay. I'll wrap up with ESG. Today, we're a clear leader. I think that's apparent from the proof points here and the third-party ratings. And the reason for that is that ESG has been part of how we've operated this business for a very long time. This isn't our first rodeo at ESG we've set and met targets in the past. And the way we look at ESG is really as an enabler of our operations and our ability to execute strategy. So not a nice to have, but a must do. And we believe this is a differentiator. The new targets are about getting even better. We spent about a year thinking about that and devising a plan to achieve those targets. So, in the next slide, on the E, we're setting an interim emissions intensity reduction target of 35% by 2030 and net zero by 2050, those cover Scope 1 and 2 emissions from our business. And although, the Midstream business today overall in our industry accounts for about 2% of the energy value chain, we're going to be tracking performance against Scope 3 as well to reflect our investments and low carbon infrastructure that we mentioned. On the S, we're increasing our diversity goals, including 40% gender representation, 28% ethnic and racial groups, and that extends to the G for the board level to 40% on gender and 20% on ethnic and racial. And to ensure we have good alignment, we're linking these to executive compensation. The next slide briefly captures our four pathways, first modernizing equipment and applying technology to tackle emissions and reduce consumption, using lower carbon sources of fuel for our pumps and compressors, self powering were solar on both liquids and gas as you saw earlier in the examples, and we'll continue to…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Rob Hope with Scotiabank. Your line is open. Please go ahead.

Good morning, everyone.

Morning.

Appreciate all the color on the capital allocation framework. One to hone in on the potential for M&A here. We've seen some of the super majors looking to kind of redeploy into other areas of the business, and we've seen some utilities looking to potentially spin out some assets there as well. When you take a look at what assets you want to pick up, can you kind of just outline the framework of what you're looking for? Are you looking to kind of increase ownership of existing assets? Are you looking for continuous assets, or you're looking for new platforms?

Okay. Thanks, Rob. So, I think, if you're looking at the incremental dollar of investment beyond what Colin just went through there, as he outlined clearly corporate M&A is unlikely to be at the top of our list. And there's a number of very good reasons for that, which we can get into if you like. But in terms of specific assets, certainly ones where we can build out our core position or protect our core position would be great. I would say from a business line point of view, the marginal opportunity would probably go to Gas Transmission at this point in the cycle, given the opportunity set we see there. Obviously, the normal investment criteria, Rob, would apply here. It's -- obviously, accretion near term is a factor, but what we look for really is growth accretion. So, if something can be added to the current mix that will give us a new platform to grow from then that's obviously something that we would favor and work into our look. So, that's at a high level, how we look at the type of asset and the business line in at least as far as asset acquisitions.

Thank you. I'll hop back in queue.

Thank you. And our next question comes from the line of Jeremy Tonet with JPMorgan. Your line is open. Please go ahead.

Hi. Good morning. Want to build off, I guess, the last one there, as far as using a capital purchase stuff, but I can't see anything better to purchase ENB shares out there. So, I see how share purchases has moved up the Q there, but just kind of a question in -- a 9% yield right now, traditionally you look to grow the dividend and show that stability, but is there real value in it at this point? It just seems like it's trading at such -- historically depressed levels. Wondering, why not move buybacks even higher up in the priority lists there and really kind of pivot capital there to knock down that share count while it's so cheap.

Yeah. Well, I'll start it off and then we can get Colin comment as well. First of all, this valuation that we're seeing not lost on us at all. We're all heavily invested here. So, we're aligned with the shareholders on what you just outlined. And I think you're right. It's certainly way up the order. I think for us, Jeremy, this is really a matter of timing. And I think it's really important that as Colin mentioned for the next year, we're focused on executing the capital program. And that's simply because we got a ton of cash flow coming out from that and the incremental economics of this are just so compelling. So, I think for 2021, we're pretty much set. I think, as again we outlined, a lot of free cash flow at us after that. And I think Colin was pretty clear. Basically the traditional longer-term payback, organic projects are going to have to compete just as they always have with buybacks. And certainly at this price, that's going to be a tougher threshold for them to beat. So, that's how we'd look at it. I think post 2021, I think it's going to be a race, if you will, between buybacks and our traditional alternatives, but certainly buybacks has moved up.

Got it. I'll stop there. Thank you.

Okay.

Thank you. And our next question comes from the line of Robert Kwan with RBC Capital Markets. Your line is open. Please go ahead.

Hey, good morning. I can follow on capital allocation optimization. And just as it relates to returning capital to shareholders, namely dividends and buybacks, I guess specifically, is it fair to conclude that despite the 8% to 9% dividend yield, that you remain committed to current dividend and growing that dividend and then for share buybacks, would you consider taking advantage of private market valuations to monetize assets on a larger scale basis to buyback stock, because that would also benefit your asset mix transitions.

Hey, Robert, Colin. A couple of questions there you sneak in [ph]. But I'll take them in order. So, on the dividends. So, yeah. We understand this into reality of a dividend to our investor proposition, it's importance to our shareholder. So, we intend to annually increase the dividend including for 2021. And we think of that as kind of the base means of returning capital to shareholders. In terms of share buybacks, you can think of that as a supplemental method. And I think Al set up the timing on that pretty clearly. With respect to your second question on recycling capital, I think the answer to that is yes. I think we've demonstrated an acuity and willingness to do that, and we'll keep looking at that. So, yeah. We're going to be pretty, I think, nimble and look at all alternatives to recycle capital and use it the best way.

Thank you so much.

Thank you.

Thank you. And our next question comes from the line of Robert Catellier with CIBC Capital Markets. Your line is open. Please go ahead.

Hi, good morning. I'd like to further the conversation even drives down with your comments on hydrogen and the energy transition. So, how do you see the relative impacts of hydrogen into long haul Gas Transmission and versus gas distribution assets? So, it's one of those type classes it's better positioned for growth or more risk than the other?

Well, actually, it is a good opportunity for Cynthia and Bill to battle it out. So, I'm going to let them ask -- answer this question. But maybe just a quick comment from me first. The way I look at it, we are in an excellent position here. If you think about both of those systems, very large platforms, massive long haul pipelines and the same really holds for the gas utility business. The gas utility, of course, is, let's call it very close to the customer base here, which could help us a lot with respect to deploying the various elements of hydrogen opportunities. And the other thing is as -- since they will tell you I'm sure. We're pretty much advanced on this, not just with the technology itself, but how it's actually being applied. As I said, we're pretty much ahead of the curve and not to mention good interaction with governments, and that's going to be really important, I think, because it's pretty clear that we're going to need more support and acceleration. So, I think they've done a good job on that one. And on the GTM side, just again, a massive footprint to which to apply future opportunities here. So, it might be good though just to get Bill and Cynthia's comment. Bill, why don't you go first?

Sure. So, on the long haul side, I'd say, two fairly exciting opportunities. First is a blending game, with our current infrastructure. And that's going to take some time to study. We're involved in a couple of different studies as to how that impacts the metal or G what the rate, percentages to blend. But as Al points out, massive footprint with which to operate and make something work there. The second though, is that is some of the shorter haul opportunities, both with existing site to totally repurpose or new pipe and bring our expertise in siting and construction to that. And we're looking to partner with a couple of folks, early discussions, but nice opportunities there. That's -- I think that's how I'd sum up transmission at this point.

Thanks, Bill. I would just add -- this is Cynthia, Robert, is that as Al mentioned, we are active in this space -- in the utility space in Ontario and Quebec. So, we do have our Powder gas facility in Markham, and we're looking at blending into about 3,600 homes starting early next year, 2% hydrogen blend. So, we've done the research. We're at a point where we're piloting this. And so, I would say we're looking at this as an opportunity. And as Bill mentioned, whether that's going to be blending or it's going to be some new assets, I think we're well-positioned for both.

Okay. Thanks everybody.

Thanks, Rob.

Thank you. And our next question comes from the line of Asit Sen with Bank of America. Your line is open. Please go ahead.

Thanks. Good morning. I just wanted to follow-up on your comments on Mainline volume recovery. Good guidance. Just on light volume. How do you see the lights evolving in 2021? And did I hear 100,000 to 300,000 barrels a day lower volume in Q4? Does that factor in a second wave? And any thoughts on heavy in 2021 relative to Mexico? Thank you.

Okay. It's Vern here. So, overall, we're seeing across North America gasoline demand down 5% to 10% and diesel demand down about 5%, and jet fuel down about 50%. So, that's translating into primarily slight weaker demand on lights. We do see very strong demand for heavy, where we're significantly apportioned this month. And we've been apportioned since July. So, overall, we're not really forecasting much increase in light demand until probably early to the middle part of next year when we see more recovery in the economy of post-COVID. We do see our volumes going up and really that comes from what Al talked about earlier, about blending opportunities that we have, or we were effectively being able to move heavy crude on our light crude pipelines. So that's the medium blends where we effectively put more daily wind into heavy crudes. So, we see a little bit of that happening in the fourth quarter and we see that wrapping up in Q1 and Q2 of next year.

Thank you.

Thank you. Our next question comes from the line of Linda Ezergailis with TD Securities. Your line is open. Please go ahead.

Thank you. I look forward to a continued discussion on all of the energy transition at Investor Day. But in the meantime, I'm hoping you can help us think about your energy services business going forward and recognizing that some quarters can be quite strong, including the first quarter of 2019 you made more than a $100 million. But looking at the -- I guess, laddering of your storage and pipeline commitments, I'm wondering at what pace those expire and whether you would consider renewing those, or maybe adjusting your -- the magnitude of those commitments that you make. And I'm also wondering within that context, if you're seeing any sort of structural changes in the markets in which you operate, which might also inform how you revisit your approach to committing to capacity and specifically, with some of the consolidation on the producer side and maybe some economic fallout of COVID, how that informs your energy service risk management and practices.

Hey, Lin. This is Colin. A great question. So, this is a pretty small business for us. We like it. It was quite effective at what it does. It's a very tightly controlled business for risk management perspective. And as you mentioned, it's transport and storage contract based. There's no trading. So, I think we forecast this business to earn about $100 million in 2020. And the range on that performance historically is probably being zero to $300 million. It's a pretty tight range. It's a generally a positive range. It's a capital-light business generally. And so, we like it. We have a ladder of contracts here so, they renew and get extended and the team does a pretty thoughtful job of trying to be in the right places using their experience. So, there isn't really anything structural, I'd say long-term different here. I think, the impact that we're experiencing in third quarter is very COVID-specific. And we expect the business to return to its historic patterns in 2021 and beyond.

Maybe just a quick add on to that. Just on the whole philosophy of the business, which I think gets to your question as well, Linda, in a way we look at the six nature of the commitments as kind of a base level of opportunity that -- again is like a fixed cost, but then we apply basically one of three strategies. So, contango is a big one. We get value from the basis and, of course, there's blending opportunities as well, where we make some good returns. So, it kind of depends on what's happening in the market in any particular year as to how much of the fixed cost you're covering. Generally, we we've done pretty well on them. I think in this environment, when the basis is getting crushed, I think, we did well on contango earlier in the year, but I think it's one of those things where you've got an interim issue here that's just affecting the profitability. But longer term overall we do pretty well on recovering and exceeding those fixed costs.

Thank you.

Thank you. And our next question comes from the line of Ben Pham with BMO. Your line is open. Please go ahead.

Okay. Thanks. Good morning. When you look at your cost of equity or your given yield and be compared to your all in cost, that it's probably too wide. It's been for some time you're benefiting from the cost of the debt side of things and your guidance. So, I guess, that's perhaps suggesting equity folks are more concerned about energy transition to risk and maybe to fixed income folks at least at this point the cycle. My question more is, you speak to the credit rating agencies or fixed income investor is and maybe even your lenders in North America. Are you finding energy transition conversations popping up more, that's being a risk and in turn, maybe reducing debt and capital allocation might start to move up in the years ahead for you.

Hey, Ben, Colin. Yeah. Thanks for that question. It's a good one. And I think everyone's watching energy transition at different views on it. And it's measuring its pace with different views and values. I think that the debt market, you don't -- I think our observable yields on our debt are pretty transparent and you don't really see that a risk or a concern in the debt market, I would say. But I think everyone's having conversations about it. We speak with the agencies about this topic and they publish on the topic generally. But I think the debt market sees the durability of our cash flows is being quite strong and quite long. So, it doesn't seem to be appearing in a debt market.

Okay. Thank you.

Thank you. And our next question comes from the line of Patrick Kenny with National Bank Financial. Your line is open. Please go ahead.

Yeah. Good morning. Just wanted to back to your comment, Al, on corporate M&A being off the table, while at the same time you acknowledged public valuations of hydrocarbon assets are clearly under pressure today, which I presume presents a few buy low opportunities for your strong balance sheet. Especially if we look back a couple of years from now and global energy demand does come back strong after the pandemic. So, just wondering, why not look at consolidation within the hydrocarbon infrastructure arena, given we've seen some very big synergy numbers from the ENP consolidators, and I know these opportunities might not be ESG accretive per se, right now. We definitely go against the grain. But if you're not looking to monetize your oil and gas infrastructure and make a bigger, more meaningful switch into clean energy, why not look at executing some generational opportunities to capture financial accretion and really drive that payout ratio down to well below your 60% to 70% target.

Yeah. Okay. Patrick, that's again excellent question. Let me put it this way. First of all, as you've seen in the upstream side of things, definitely a shift in focus from growth to returns and with that free cash flow and less capital and a source for the upstream industry is clearly synergy capture, which I think is your point. And we liked that idea. In fact, if you go back to the Spectra transaction, we more than paid for the low premium deal by capturing a lot of synergies. So, we get that. And I accept the fact that that's a big opportunity. We monitor this really closely. We're pretty happy with the repositioning that we've done already with the Spectra deal. So, the focus right now as Colin alluded to is on low capital intensity growth. And we've got the balance sheet in shape. As you said, you don't want to mess with that. And we're an equity self-funding mode here. So, we're cautious to use our currency certainly at this valuation. But the broader reality is here that few targets, when you go through the entire list really fit us well. And the last thing we want to do is mess with the value proposition that we built up around risk and transparency cash flow. So, I guess, in a nutshell, it's not just about near-term accretion and synergy capture for us. We just don't want to dilute the utility business model that we've had. And in many, many cases in the target list where you've got a valuation advantage today between us and them, you find there's a big whack at GNP usually and other sort of commodity sensitive businesses. So, I think it kind of comes down to that one. I do accept that the synergy capture would be attractive, but that's how we look at the broader picture.

That's great. Thanks, Al.

Thank you. And our next question comes from the line of Andrew Kuske with Credit Suisse. Your line is open. Please go ahead.

Thanks. Good morning. Al, I think you mentioned just the competitiveness of the refineries that you serve, especially in the Gulf. I don't think you mentioned anything about the longevity of the assets that you serve up in the oil sands. If you could just maybe give us framing of how you think about that longevity versus just either hydrocarbon assets in North America?

I'll get Vern to comment and he didn't really want to go on today. But I think you've asking a great question. And if you think back to the slide that we showed about the heavy refinery outlook, and in particular, the reduction in heavy globally and where the oil sands plays there and the role it will play, I think it's just a great opportunity for us. And, of course, as you know -- and this is why I think many people see our Mainline contracting opportunity as attractive. You've got a basin there that has really brought its cost down and doesn't need a lot of new capital to develop. It's very much unlike tied oil and fracking related investments that happen south of the border. So you got long life reserves anywhere from 30, 40, 50, 60 years. And I think that's entirely suitable and a good opportunity to marry up that outlook with the great heavy refining capacity in the Midwest and the Gulf. So, I think your questions are spot on and a very good opportunity for us. And it goes back to the transparency and longevity of our own cash flows here for many years to come. Vern, you got anything to add on that?

I think you've covered most of it off, Al. The only other point I would make is that those -- the supply, which is long life is directly tied to our customers through our system where three quarters of those refineries are sole source from the Enbridge system. So, we're at the natural conduit between very long life heavy supply and the most competitive refineries globally.

Thank you.

Thanks, Andrew.

Thank you. And our next question comes from the line of Alex Kania with Wolf Research. Your line is open. Please go ahead.

Great. Thanks. Good morning. I guess, just a question on the offshore wind business. Do you have a sense that maybe you'd want to get more involved than I guess the ground up development side of things, where returns might be a little bit better and now that you've got a little bit more experience? And if I can as well, this kind of being focused a little bit more in Europe give you maybe a little bit kind of better sense of kind of how the hydrogen strategy is evolving over there as well.

Okay. On first part, I'll take it on the offshore strategy, let's call. I think you're spot on actually. What we're seeing today with late stage projects which, frankly, we've used to kind of build up the business is -- it's very frothy, as I said, in my remarks. So, I think the natural thing for us to do to build out the business from here, given we now have great capability on operating commercial and development is sort of to move up the value chain. And so, call it more traditional development model that we use elsewhere in the business on the pipe side. So, yes, I would say that's an opportunity for us and likely a good way for us, frankly, to make sure that we're getting the returns we need of the business. Of course, you have to develop. You have to manage the risks more carefully when you're further up the chain. But as I said, I think we've got the skills now where we can manage those wells. So, I think, you're heading in the right direction. On European affects of hydrogen, I don't know Cynthia, if you want to comment on that on the global front.

Sure. Thanks. Al. So, we are very active with the international kind of hydrogen market. So, we do have lots of opportunities to interact through rural hydrogen councils and other activities. So, it's something that we're interested in, and we've had an opportunity to monitor. And we'll continue to look for opportunities for us to see how the technology is developing.

Yeah. I think that's right. Certainly from where it is in its life cycle, I think us learning as much as we can and that includes Europe is the way to go. But I'd say we have so much right in our backyard here with the Gas Transmission side and then, of course, the Utility. We've got a lot of -- a lot in front of us right now. Generally, Europe's probably a little bit ahead on this. But I think as I said, we're at the curve as well.

Thanks very much.

Okay.

Thank you. And our next question comes from the line of Michael Lapid -- Lapides with Goldman Sachs. Your line is open.

Hey, guys. Thank you for taking my question. Just curious -- and this may be a Vern question or someone else on the team. We're seeing Trans Mountain starts to make a little more construction progress, and obviously you guys are making some progress in the permitting process for Line 3. Just curious about your macro views of production levels, and whether you think production will kind of grow into this potential significant amount of new pipeline takeaway capacity, and that even not including what would happen if even KXL came online as well. So, just trying to get your views on kind of the economics of production filling all this new pipeline capacity, where is there potential pertaining to be overbuilt like some of the other pipeline takeaway markets are?

Okay. Well, I think if you go back to pre-pandemic in the first quarter of this year, the basin was obviously significantly pipeline short, where we were moving a significant amount of crude by rail. And we had a lot of curtailment happened on the oil sands side of things. So, ballpark we're 500,000 or 600,000 barrels a day short capacity. As we started this year, obviously our customers have dialed back week crude prices, but we expect those facilities to come back online as demand grows and we see more pipeline egress. So, our expectation is when Line 3 goes into service that we will fill up immediately. We have in our plans that TMX will get completed and will also fill up very rapidly as well. So, if you look at all of the sources of data for where supply is going to go, we still see robust supply growth in Western Canada. In fact, if you look at the most recent IEA report, it talks about supply growing by 1 million barrels a day between now and 2040 in Western Canada.

Got it. Thank you, guys. I'll stick to the one question requirement and follow-up with John offline. Much appreciated.

Thank you, Mike.

Thank you. And our next question comes from the line of Joe Gemino with Morningstar. Your line is open. Please go ahead.

Thank you. With the positive momentum surrounding, Joe Biden potentially becoming the next President of the U.S., do you have any concerns about the progress of Line 3? Do you think with his green deal, he may potentially do what he can to try to stop the replacement? Thank you.

At this point, we have all of our Federal permits with the exception of the Army Corp 404 permit, which is well underway and near the final stages of being issued. So, once we get the Minnesota Pollution Control Agency 401 permit, our expectation is to get the Army Corps 404 permit relatively quickly. And we should remind you that under the prior administration where Mr. Biden was the Vice President, we were able to get all of our cross-border permit.

Okay. Thank you.

Thank you.

Thank you. And our next question comes from the line of Praneeth Satish with Wells Fargo. Your line is open. Please go ahead.

Thanks. Thanks for outlining your emissions targets. I'm just wondering from a high level to meet these targets, would you need to increase the amount of CapEx you're spending on renewables, or would you kind of get there naturally based on the current amount you're spending on renewables?

Okay. Well, good question. First of all, renewables really doesn't come into this picture, although it's certainly part of our strategy. It doesn't go to, let's call it, offset Scope -- wanting Scope 2 emissions. We do that by the other elements of the strategy. So, as I said, modernizing the grid for example, new compression where we reduce emissions and in those cases the plan is to recover that capital as we spend it. The other elements are very low capital intensity. Solar self power is an item, but very small. And of course, procuring lower emissions power from a transitioning grid overall, for example, given the coal is coming off, that's part of how we're going to achieve the target. So, hopefully that helps. Bottom line is, as I said, we don't anticipate capital intense effort here in terms of achieving the targets.

Got it. Thank you.

Thank you. And our next question comes from the line at Jeremy Tonet with JPMorgan. Your line is open. Please go ahead.

Hi, this is Joe on for Jeremy. Just wanted to build on the ESG side and different Scope emissions. Could you talk about -- I think kind of some of the Scope 3 emission reductions are a bit later data. Could you talk about how significant that could be compared to kind of Scope 1 and 2 emissions both in terms of what the size is now and how Scope 3 emissions can be reduced?

Well, okay. First of all, given that we -- as I said in my remarks only represent 2% of the energy value chain as a starting point. We're, first of all, focused on our own emissions. Scope 3 emissions are obviously upstream and downstream of us, including at the consumer level. So, the way we look at it, we do invest in renewables and other new technologies. So, really those investments are going against, if you will, the Scope 3 emissions. So, the way we look at it is those investments serve broader societal benefit, because obviously Scope 3 -- our emissions that occur at the consumer level. So, again, we really don't see that is a key metric as far as Scope 1 and 2. But it's always good to keep in mind that the renewables investments we make actually go to Scope 3, and we'll see how that develops here in the next little while as we start tracking that.

Thank you. That's helpful.

Okay.

Thank you. This concludes the question-and-answer session. And I will turn the call back over to Jonathan Morgan for his final remarks.

Thank you. And thank you for joining us this morning. As always, we appreciate your ongoing interest in Enbridge. Our Investor Relations team is available to address any additional questions you may have. And once again, thank you and have a great day.

Ladies and gentlemen, thank you for participating in today's call.