Rand on CBC News Network panel, discussing the implications of rising climate risk in the context of Canadian political wrangling, and the irony of Canada’s political right rejecting market mechanisms as a solution.
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Rand on CBC News Network panel, discussing the implications of rising climate risk in the context of Canadian political wrangling, and the irony of Canada’s political right rejecting market mechanisms as a solution.
Panel discussion on the cost of Ford’s Energy Shake Up w Steve Paikin.
“Ford lost an opportunity to make Ontario’s Cap-and-Trade revenue neutral. He’d get the political benefit of sending out a cheque with his name on it every month, and he’s own the climate file. Instead he’s picked a fight with Trudeau over climate. That’s not a fight he will win.”
With the costs of climate both apparent and rising, Tom Rand (w Ken Green) talks with CBC's Peter Armstrong on who pays and why.
China has joined a number of other countries that aim to reduce, or even eliminate, gasoline-powered cars. Feasible? What does this mean for Canada? Tom Rand discusses issue (w Ken Green) with Peter Armstrong on CBC's On the Money.
Morgan Solar is gaining considerable traction. Two items to note:
We look forward to tracking Morgan's upcoming market penetration.
(listed from latest to earliest) March 21 - pre-budget - talking about how the federal budged might line up behind Canadian cleantech champions and enable Canada to take larger market share of the fast-growing $1 trillion cleantech market.
Feb 8 - Talking about National Energy Boards projections and how Canada has a lot to learn from little Uruguay.
Nov 16 - is cleantech growth a silver lining in our lackluster climate efforts?
Nov 2 - in which Fraser Institute makes the (indefensible and unsubstantiated claim) that adaptation is not only cheaper than mitigation, it's really the only response to climate.
Sept 21 - Is Canada too reliant on oil?
Aug 28 - On Obama's new clean air initiatives
July 27th - $180 B of energy reduction projects announced by US Corp giants (Apple, GE, Goldman, etc) ... Fraser Institute talks "crony capitalist" nonsense. That and the Tim's controversy ...
June 30 - Talking hydrogen-powered vehicles ...
June 16 - Talking oil sands moratorium. "The math doesn't work ..."
May 4 - On Tesla Energy's new Powerwall energy storage solution. "Teaching old dogs new tricks" (starts @ 28:00)
April 20 - On Environment Canada's latest report that (no surprise!) we'll miss our 2020 emissions targets. (starts @28:00)
Feb 23 - On SaskPower's Carbon Capture & Storage (CCS) project: While unlikely to scale, CCS deserves exploration as we might wish we had it in coming years. ...
Feb 9 - On Trudeau's climate proposal... and why Canada's little 2% of global emissions really does matter.
Jan 26 - On 2014 being the hottest year on record ... on the central role played by the oceans ... first 20% cuts are easy (see BC), but beyond that it will be difficult.
Subtitle:"Why not try, Ken?"
These next three - the first in the series - were spent largely establishing the core premise of any discussion on climate: the place to start is peer-reviewed expert consensus (pick your favourite - IPCC, International Energy Agency, National Academy of Science, etc). Without that premise, the show cannot provide smart contextual discussion to the Canadian business community. Disagreements about solutions are interesting, disagreements about the science are a futile distraction. Because that premise is difficult for the Fraser Institute to accept (in my view for ideological reasons) it can get a bit testy.
Dec 1: On latest IPCC climate negotiations in Lima - Challenging the Fraser Institute (and The Exchange) on being data-driven if they can't accept the IPCC as the gold standard on climate mitigation. Adaptation vs mitigation: avoid the car crash, or just fix broken limbs?
Subtitle: "I just want a price on carbon" - see my blog response here.
Nov 17 - On China/US agreement to work together on carbon reductions - also discussed: Canada's EcoFiscal Commission.
Subtitle:"Willful Ignorance" - see my blog response here.
Nov 3 - A testy exchange about the latest dire warnings from the IPPC. We listen to the Canadian Medical Association on health risks (not our chain-smoking uncle). Wrt climate risk, we do well to start with the CMA equivalent (IPCC, IEA, National Academy of Science, etc) - who are very clear on climate risk: severe, irreversible, systemic.
Subtitle: "Listen to your doctor!"
Managing Partner Tom Rand is a regular contributor on The Exchange with Amanda Lang: e-Squared - an on-going debate with Kenneth Green of the Fraser Institute.
In order to accelerate Canada's transition to a low-carbon economy, and unlock private sector creativity in so doing, Rand proposes Canada/Ontario set up an arm's length 'green bank'. With a clear mandate, and free to be sensitive to the dynamics of market signals, such an institution would be far more effective in disbursing climate-related funds than a government ministry. Read it here:
Globe and Mail - Hydrostor launching compressed air power storage off Toronto Island Toronto Star - Pilot project stashes power in balloons deep down in Lake Ontario
Cleantech Canada - Toronto firm launches energy storage project
Greentech Media - Toronto Hydro Pilots World's First Offshore UWCAE Project
Energy Matters - Underwater Energy Storage-Hydrostor
CBC's Television's The National - Canada's Clean Energy Race
Toronto Hydro's press release here, and video:
Recent article in Canadian Manufacturing outlining Circuit Meter's positioning to redefine the sub-metering market; both in performance and price. Bringing electricalmetering into the 21st century.
CEO Greg Nuttall interviewed on BNN's Power Shift - speaking to Ontario's potential as a "biomass superpower" and Woodland as the "world's lowest cost automotive fuel supplier".
Woodland's highly-efficient proprietary process to convert cellulosic biomass is strictly thermo-chemical - three catalytic conversions; no enzymes, fermentation, etc.
Tom Rand's latest op-ed in the Globe and Mail: Premiers musn't let spilled oil become a red herring - in which he argues Premiers Kathleen Wynne and Rachel Notley have an historic opportunity: trade Ontario's approval of TransCanada's Energy East pipeline for hard emission cap (and coal phaseout) in Alberta. Like all good compromises, everyone loses something.
(text is below for those outside paywall)
This week’s Nexen Energy pipeline leak may throw a wrench into provincial leaders’ ability to reach consensus and wrest control of climate policy from Ottawa.
The premiers have been gaining momentum with their pragmatic “subnational” approach to creating a new, low-carbon economy. At their summit in St. John’s, the provincial leaders addressed fast-tracking decisions on the pipelines needed to expand high-carbon oil production in Saskatchewan and Alberta – an agenda they also hope to wrest away from Ottawa.
Pipelines are where climate promises meet pragmatic action and national targets bump against provincial ambitions. Leaks and spills make it more difficult to find compromise. This latest one has naturally outraged many Canadians, who are concerned about the environmental damage. My concern is that it will prove to be a red herring that distracts the country from a bigger opportunity on climate change: a coherent national climate strategy built with regional consensus.
It seems impossible to square such disparate provincial climate goals with a coherent national strategy. Alberta’s emissions targets have been, and remain, Alberta’s own business. If they grow as planned, Canada has no chance of meeting even the most modest of emission-reduction targets. That’s the hard truth both Ottawa and the premiers have been dancing around for years.
The status quo in Alberta has been to avoid any talk of absolute cuts in emissions, focusing instead on fuzzy intensity targets. All that changed in Alberta’s recent election. Oil executives might not be on board, but voters clearly want a new conversation. And that’s where Ontario Premier Kathleen Wynne and newly elected Alberta Premier Rachel Notley have the opportunity of a lifetime – if the recent pipeline leak doesn’t spill into provincial goodwill.
For Ms. Notley, the spill underscores her decision not to support the more contentious pipelines, Northern Gateway and Keystone XL. But on Friday, she argued (correctly) that pipelines remain the safest way to transport Alberta’s bitumen, and is a proponent of TransCanada’s Energy East pipeline, capable of carrying about a million barrels a day from Alberta and Saskatchewan, through Ontario and Quebec, to refineries in Eastern Canada.
For Ms. Wynne, the spill is doubly challenging. Even prior to Nexen’s fumble, any show of support for Energy East would strain her hard-earned credibility on the climate file. She’s already stated that greenhouse-gas emissions will be part of Ontario’s approval criteria. Now she’s got pictures of oil spills to deal with.
According to Pembina, Energy East will enable upstream emissions – which come from producing the oil in the pipeline, not burning it – of more than 30 million tonnes of CO2 per year. That’s equivalent to doubling the number of cars on Ontario’s roads, or reopening Ontario’s coal plants. Worse, the proposed cap-and-trade legislation asks Ontario industries and citizens to bear the burden of significant emissions reduction – targeting an ambitious 80-per-cent reduction by 2050. Ontarians will not want an energy project in their backyard that cancels that effort.
Ms. Wynne could simply refuse Energy East. Fast-tracking a decision doesn’t mean automatic approval, and an early and clear signal is better than the fog of uncertainty that exists now. But that puts pressure to put more bitumen on rail, a far more dangerous option, or to open a pipeline to the fast-melting North.
There is another choice.
If Ms. Wynne demands from Alberta, in return for Energy East approval, a hard and legally binding limit on tar-sands production levels and a coal phaseout to match Ontario, she will have accomplished something no other politician – federal or provincial – has been able to do. She will also provide Ms. Notley with political cover to push through the most aggressive climate strategy ever proposed in Alberta. The limit on production can be set to today’s level, plus Energy East capacity, less today’s rail transport. The net result increases production by 750,000 barrels a day – about a third over today’s levels, but much less than what Alberta wants.
A good compromise hurts everyone. Climate hawks like me hate to see any increase in tar-sands production. But there are multiple wins: Producers get cheap access to markets; Eastern Canada gets new refining jobs; no more bitumen goes by rail; Alberta’s entrepreneurs can apply their entrepreneurial talent and capital to clean-energy technology; Canadians get a coherent climate strategy.
And Ms. Wynne and Ms. Notley keep the lead from Prime Minister Stephen Harper – on climate, on pipelines, on energy and on the emerging global clean economy. That is, if we don’t get distracted by spilled oil.
The National Observer published a series of four op-eds, summarizing the main themes in Rand's recent best-seller Waking the Frog: Solutions to our Climate Change Paralysis.
Climate Denial's Siren Song - a discussion of why belief in climate disruption is so difficult for humans to take on board cultural norms embedded in unconscious world-views; distinguishing passive from active denial; strategies to get around our cognitive defences.
Myth of the Free Market vs Creative Complexity - historical analysis of the priority of 'free' over 'market' reveals limits of out-of-date-math in describing the modern global economy; modern dynamical systems theory as a more useful tool in understanding how to make the market work for and not against climate action; pricing carbon as the single most effective tool in our arsenal - unique in its ability to both harness and unleash market forces to solve our climate problem.
The Dismal Science - (with apologies to my economist friends) a discussion of the limits of quantitive analysis of climate risk; climate uncertainties as where the 'monsters lie'; a new language of folk psychology as a means to capture truth conditions of climate risks.
The Fossil Fuel Party is Over - So What's the Good News? - clean energy as increasingly competitive; why that's not enough to solve our problem; how to turbo-charge solutions; why costs of climate action are easy to bear.
Op-Ed by Managing Partner Tom Rand (Globe & Mail, April 14th) discussing emerging role of sub-national jurisdictions on Canadian climate policy. The Provinces get it: Carbon pricing can be simple and efficient
- on CBC Radio's Ontario Today (Rand starts 18:20)
(Full text below for those outside paywall)
Tom Rand is senior advisor, MaRS Cleantech Venture Group, and managing partner of ArcTern Ventures.
Globally, some 40 national jurisdictions have implemented, or are scheduled to implement, some form of carbon pricing to combat climate disruption. Carbon pricing unleashes market forces to lower greenhouse gas emissions. Instead of governments picking solutions, the market does.
Markedly absent are Canada and the United States. What to do about recalcitrant national governments? Go around them. Oregon, California, Quebec, British Columbia and Alberta all moved ahead in the absence of national leadership. As more sub-national jurisdictions stitch together complementary carbon markets, the ability to define climate policy is snatched away from national capitals.
Enter Ontario and Quebec. On Monday, Ontario Premier Kathleen Wynne announced that Ontario would adopt a cap-and-trade plan to help battle climate change, in preparation for Tuesday’s summit of premiers in Quebec City.
Having planted a stake in the ground, Ms. Wynne and the premiers have taken charge of the climate file and are indirectly setting Canada’s federal climate policy for decades by establishing the rising role of sub-national governments in the fight against global warming.
Ontario, however, can learn from experiences in British Columbia and Quebec.
B.C.’s carbon tax is simple, transparent – and works. Carbon is priced at the source – gas pump, electrical power plant. The cost percolates through the economy. The money raised lowers corporate and income tax. Since its inception in 2008, emissions are down nearly 20 per cent compared to the rest of Canada, while economic growth has been slightly higher. There’s good reason the Economist called it “a winner” that “woos skeptics”.
The key lesson is we can reduce carbon emissions without broad economic harm. The reductions over just six years are roughly equal to Canada’s 2020 reduction targets, and would have been more than enough to satisfy the Kyoto deal that Prime Minister Stephen Harper threw under the bus.
That it was revenue-neutral won over many on the political right. It’s an easy sell: more tax on what you don’t want, less tax on what you do. B.C. now has the lowest fuel use in the country and the lowest income tax rate. It’s hard to undo – subsequent governments have to increase the taxes lowered by carbon pricing.
The lessons are clear: carbon pricing can be simple and efficient. Initial emission cuts emissions – say, up to a quarter – come with little economic pain. And since it’s still popular, it doesn’t have to hurt politically.
Quebec went with “cap-and-trade”. Emitters trade the right to emit greenhouse gases with other companies under a decreasing total cap. That cap can be sensitive to an industry’s profile – cement factories, for example, cannot reduce emissions the way the energy sector can. Companies hunt (trade) for the lowest cost incremental emissions reduction across a broad market. Quebec’s carbon market is linked to California under the Western Climate Initiative (WCI). That market is sure to grow in coming years – including Ontario.
Large emitters prefer cap-and-trade because they can look beyond their own operations to find lowest-cost emissions reduction elsewhere. Bigger markets are more cost efficient. If a state-of-the-art Quebec factory finds it cheaper to retrofit a factory in California, they can pay their American counterpart to upgrade.
Critics correctly point out that emitters can effectively subsidize foreign companies’ reductions instead of lowering their own. But for an individual company facing ever-steeper cuts, against competitors in more lax jurisdictions, it might be the only way to stay in business in Canada. Export-oriented industries are particularly vulnerable. Once the early, easy reductions are done – B.C. style – the option to trade across borders enables companies to remain competitive.
There are other ways to gain economic benefit from carbon trading. Canada has a lead on low-carbon technology – thanks in large part to Sustainable Development Technology Canada’s (SDTC) fund. Why not link Canadian technology purchases to retrofits paid for by Canadian industries, through Export Development Canada?
It’s critical to ensure no-one games the system. Europe gave away too many emissions credits at the outset, causing a price collapse. Industries that knew cap-and-trade was coming avoided scheduled upgrades figuring (correctly) they’d only get credit if they do it later. Some power plants artificially cranked up emissions in order to have a higher initial cap. With the benefit of hindsight we can avoid these pitfalls.
A hybrid system brings the best of both worlds. For the short term, it’s hard to argue against the success of B.C.’s simple market signal. The more politically palatable revenue-neutral option is likely, but it’s not unreasonable some portion be put into a climate adaptation fund or be used to spur more investment in the clean energy sector.
Ontario’s signal that it prefers WCI’s cap-and-trade makes sense over the long-term. As reductions get much steeper – which they must in decades to come – Ontario’s large industrial emitters, particularly those reliant on exports, need cap-and-trade’s flexibility. Ontario’s participation in WCI will attract other North American jurisdictions, and may build enough market heft to link large developing world markets like China and India.
Ontario’s carbon move will not just set the stage for Canada. It means Canadians can have real influence at COP21, the critical next climate negotiations in Paris – despite our federal governments ongoing recalcitrance on climate. As goes Ontario, so might the rest of the world.
Published in The Embassy and the Hill Times. Full pdf here: All great parties come t...oreign Policy Newspaper
Original text follows:
The fossil fuel party has been great. Plentiful, low-cost hydrocarbons pulled humans out of the muck and into the 21st century. For many Canadians, life is grand - we fly on vacation, drink wine from Australia, and watch TVs made on the cheap in China in homes that are warm in winter and cool in summer. Our ability to export abundant fossil fuel resources means Canadians doubly benefit. Nobody in their right minds wants the party to end - but end it must.
Such radical environmentalists as Mark Carney, Governor of the Bank of England, have confirmed that almost three-quarters of known fossil fuel reserves must be left the ground to avoid 2C of warming. The warning to investment funds and fossil-fuel dependent economies alike is stark: the risk of stranded conventional energy assets is not negligible, and will only increase as global economies face pressure to reduce climate risk.Canada can and should hedge our energy bets.
It’s not just climate policy that increases the risk of stranded assets. The cost of low-carbon energy follows a technology curve, not a conventional resource curve. Competition to oil, coal and natural gas is moving much faster than Canadian energy incumbents might realize. The initial phase of clean energy’s exponential growth curve feels linear … until it doesn’t.
Solar, in particular, hit an inflection point in 2008. Since then, panels have dropped four-fifths in price. High-profile casualties, like Solyndra, point to a maturing industry: consolidations bring economies of scale. Subsidies seeded the industry but Deutsche Bank has now identified nineteen jurisdictions in which solar competes without training wheels, including Mexico and China. New installs blew past forty GW last year (a gigawatt – GW - is like a large nuclear or coal plant).
Canada has lots of emerging clean energy stars. Morgan Solar will produce solar energy for less than 5c/kwh this year in the oil-rich Mideast. Woodland Biofuels can produce clean renewable transport fuels from wood and agricultural waste for less than the gasoline it replaces. And Hydrostor’s grid-scale energy storage makes renewable energy robust and reliable. Diesel generation can’t compete with the combination of Hydrostor and wind or solar.
Canadian cleantech companies are mainly small and medium-sized companies (SME’s), off the radar of mainstream economic analyses. But they employ more people than Alberta’s oil sands, and are growing fast. They’re also more likely than their peers in other sectors to be export-oriented. That shouldn’t be surprising: they’re exporting technology into the fastest-growing energy market in the world.
Sustainable Development Technology Canada (SDTC) played a crucial role in the birth of these companies. SDTC needs a strong, renewed mandate. Institutions like the Export Development Canada (EDC) and the Advanced Energy Center at MaRS now play a critical role in their growth into global markets. And pricing carbon in Canada doesn’t just lower our emissions – it unleashes market forces to adopt and develop solutions the rest of the world needs too.
Two low-carbon sleeping giants are next-generation nuclear (NGN) and enhanced geothermal systems (EGS). Canada can and should step up to support their development, as it currently does Carbon Sequestration and Storage (CCS).
Canada’s Terrestrial Energy has developed a molten-salt reactor design, based on technology left on the shelf at American Sandia National Labs. These modular reactors burn plentiful thorium, or even better, existing nuclear waste – turning a problem into a vast energy source. By extracting an order of magnitude more energy from the pellets coming out of the CANDU, the half-life of resulting waste is measured in decades not millennia. A passive safety design eliminates the possibility of melt-down. Canada can regain a lead in advanced nuclear.
Enhanced geothermal means drilling deep – 8-10km down – to find hot, dry rock (200-300C). By fracking that rock – in the same way we do for shale gas – drillers create a loop through which water extracts heat. The potential is enormous – extracting just one degree from a cubic kilometer of rock provides the energy equivalent of seventy thousand tonnes of coal. Canadians know how to drill and frack, and we can lead on EGS design.
The risk of Canadian energy incumbents facing unburnable reserves is not negligible. Hedging our bets is good risk management. How Canada responds to the shared global challenge of climate disruptions depends largely on the big energy incumbents. ‘Us’ and ‘them’ doesn’t work anymore – it’s just ‘us’. The federal government has a key role to play in ensuring our policy framework encourages our traditional energy companies to use their capital, engineering skills and market access to accelerate clean energy adoption.
Canada will always produce fossil fuels, and the world will need them for the foreseeable future. But the assumption of growth in production is likely a myth.
Rand spoke recently at Canada2020's Five Big Ideas event in Ottawa; speak to ways we might break our paralysis on climate change, the talk covers psychology, markets, finance and economics. Yes, in 15 minutes. Five speakers, with a TED-style 15 minute time for each. Canada2020 is one of Canada's leading progressive policy think-tanks.