Monthly Archives: August 2007

Alberta needs nukes

The closest thing Alberta’s likely to see to a mushroom cloud
is an unusual cloud formation like this one.
Photo credit: Flickr/Nicholas_T

Alberta’s being all coy about whether it’ll give permission for a nuclear-power plant to be built to power a major chunk of the energy-sucking oilsands operations. According to the Financial Post, a private consortium wants to build one and has a major customer (pretty definitely a global oil company) ready to sign up for most of the electricity it generates. But the provincial government is squeamish about whether to allow it.

Alberta Premier Ed Stelmach says the jury is still out on whether a proposed $6.2-billion nuclear plant will be built in oil-rich northwestern Alberta.

“We first have to decide whether we’re open to nuclear energy,” he said Tuesday in Edmonton.

“You don’t build nuclear reactors over an evening. These are important decisions . . . beyond one person, and we’ll structure soon the kind of public discussion that will occur in the province.”

Alberta uses about 9,000 megawatts of power now, but getting usable oil out of the oilsands is an energy-intensive activity, and forecasts are that demand will double in the next decade and a bit. The biggest energy demand is to produce steam, which separates sticky tar from the sand it’s mixed with in the ground.

I can understand having serious reservations about the technology — Ontario’s nuclear “fleet,” as it’s grandly called, has been an utter nightmare of billion-dollar repairs and slipped schedules as the reactors enter middle age — but that’s a management decision, not one of deep principle.

What baffles me, while principle is on the table, is that the Alberta government would have no problem with powering the oil-sands operations by burning natural gas and spewing carbon dioxide into the air — would indeed warn other provinces not even to whisper about the possibility that might be bad — but will go all twittery about a technology that’s been used successfully the world over, with the only significant problem (albeit a doozy) having been a consequence of gross mismanagement in one of the most corrupt and half-assed industrial regimes ever to befoul the earth when it was embarking on its final collapse.

Certainly, more, lots more, needs to be done to reduce the oilsands’ extractors’ voracious appetite for energy. But if we take as a given in the discussion that more power is needed, nuclear plants seem the only remotely sensible option.

Sticky habits

Photo credit: Flickr/JenniferWoodardMaderazo

I’m not surprised that relatively few people took the San Francisco government up on its offer of free transit rides on smoggy days. According to the San Francisco Chronicle, local governments have paid for up to four days of free service in the summer months, and they kick in when air-quality predictions are particularly dismal.

The BART people are spinning an increase of 6,700 riders compared to a normal day as a big success. It’s about a two-per-cent increase in ridership.

As a result, the additional commuters who chose to ditch their vehicles and ride BART instead, prevented more than 294,800 pounds of pollutants from spilling into the air. According to the Institute of Local Self Reliance, the average commuter spews 44 pounds of pollutants into the Bay Area’s air each day.

They’re probably right. Changing how you get to work is a big deal. Aside from figuring out a different route when you’re not at your best, it means changing what time you get up in the morning, what order you do things in — if you take up biking, maybe you’ll shower at work instead of at home — and paying attention to things like bus schedules and maybe weather reports when you ordinarily wouldn’t. Chances are, it means planning for a different routine the night before.

If that’s how many people modify their commuting habits on a few hours’ notice, I bet the number would be sharply higher if they did it for a week and told people a month in advance. Could be a good marketing technique.

A failure of will

Just a brief pointer this evening, life and work having been zoological today. But it’s a good one, I assure you, the kind of single data point that demolishes an entire hypothetical view of the future.

Think we can meaningfully adapt to climate change without doing anything much to head it off? Consider what’s happening in New Orleans, post-Katrina, writes Joseph Romm at Gristmill.

… Second, a classic adaptation strategy to deal with rising sea levels is levees. Yet even though we knew that New Orleans would be flooded if the levees were overtopped and breached, even though New Orleans has been sinking for decades, we refused to spend the money to “adapt” New Orleans to the threat. We didn’t make the levees able to withstand a Category 4 or 5 hurricane (Katrina was weaker at landfall than that, but the storm surge was that of a Category 4).

Third, even now, after witnessing the devastation of the city, we still refuse to spend the money needed to strengthen the levees to withstand a Category 5 hurricane. We refuse to spend money on adaptation to preserve one of our greatest cities, ensuring its destruction, probably sometime this century.

Please go read. Good stuff.

Window-dressing the Ontario election campaign

Falling with grace

“Falling with grace.” Credit: Flickr/Memotions

When the political parties in Ontario’s election campaign are supposedly trying to outcompete one another on green issues and the best the mainstream parties can do is that one of the leaders will be riding in an SUV instead of a bus, it’s not much of a fight. (Kudos to the Toronto Star, though, for taking the time to ask exactly what form the carbon offsets some of them are buying will take: solar water-heating projects in Ontario itself, not some fly-by-night tree-planting Potemkin operation someplace nobody will ever inspect.)

The intersection of environmental concern and economics should be front-and-centre in this campaign, instead of relegated to the B list of political issues. The A list consists of one item so far, with the election just about a month and a half away: the question of extending public funding and supervision to currently private religious schools, which would supposedly cost about $400 million out of a $95-billion provincial budget and which nobody was talking about a month ago.

Relegated to positions of lesser importance:

  • Ontario’s energy future. We’re and struggling to close a 4,000-megawatt coal plant. The governing Liberals have had n success reducing consumption and contracting for — not yet delivering, but it’s a long process — greener and more renewable power sources, but is it enough and is it happening fast enough. What are we going to do when our nuclear plants, the backbone of the publicly owned generating system, reach the ends of their lives in 10 to 20 years? We need to make those decisions now.
  • Ontario’s industrial future. We make a lot of big cars, and the auto and parts plants have historically provided many thousands of good jobs at good wages. Big cars aren’t selling like they used to. The governing Liberals have spent hundreds of millions to help automakers retool and redesign, but is that the right approach? And if so, is it enough?
  • Ontario’s transportation future. Most transportation of people and goods in this very large province happens on six- and four-lane divided highways. Is that system going to last? Should we be thinking about rail or shipping?
  • Ontario’s climate future. Are we making any plans whatsoever for adapting to a warming planet?

These are burning questions of science, economics, urban and rural planning, and yes, even ideology. The answers matter.

The threat I pose to Tofino

My column in today’s Ottawa Citizen reflects on what it was like to visit Tofino, B.C. — a beautiful, magical place that I and 10,000 other people were threatening just by being there.

Tofino feels, in short, like a destination on the brink, a hidden treasure no longer hidden. It’s suffering from an insoluble conundrum of eco-tourism: the best way you can help preserve the place is by not going, but if you don’t go, hundreds of thousands of other people will and they’ll wreck it anyway. The district is isolated, which means getting to it is carbon-intensive, too: you can fly, or drive about six hours from Victoria.


One of the Broken Islands in Barkley Sound, off the west coast of Vancouver Island.
That’s an eagle sitting up there. 

Two views of the future

Insulation In quick succession this morning, I read two radically different views of our energy future.

First, Marc Gunther. Thesis: “Buying compact fluorescent light bulbs and hybrid cars won’t do it… I’m ordinarily a fan of incrementalism, and remain one—small steps lead to big changes and all that—but it’s clear that the way we live, work, travel and consume in the U.S., in particular, is unsustainable.” We need major changes and we need them quickly.

He’s mainly talking about greenhouse gases, but certainly about oil supply as well:

First, Americans (and Europeans and others in the developed world, not to mention China) are literally living off our past and our future. The past, because we are rapidly and aggressively exploiting tens of millions of years worth of the sun’s energy that is stored as coal and oil and natural gas. The future, because we are emitting carbon into the air at a rate so dangerous that we are putting the lives of future generations (including our own children) in jeopardy.

Then I read Eamonn Butler of Britain’s Adam Smith Institute. Thesis: “As developing countries like China suck in more and more oil, its price is likely to continue rising. That means those of us who can consume less will be forced to do so. But it also means that new sources will become economic.” We’ll be able to step off the sinking hull of the oil economy onto the rising iceberg of the green-energy economy, in other words.

I gave my head a firm shake and considered. We are in the realm of intuition here, but I think Gunther is closer to the mark.

Whether it’s peak oil or climate change, there are plenty of people who, like Butler, make the argument that prices and/or temperatures will rise so slowly we’ll have plenty of time to adapt and it’s only in retrospect that we’ll notice anything really significant happened. Usually, that claim is meant to oppose apocalyptic forecasts, or at least rhetoric, about the end of the world, which it itself overblown.

What’s at stake, I believe, is not the future of the human race, let alone the planet Earth as a bearer of life, but certainly our prosperity and comfort. Economists agonize over a few tenths of a percentage point of economic growth, and much more than that is at risk if the Earth begins to warm out of control or if we have to cope with an oil price shock that never lets go. That’s how these things seem to come — not as gradual increases, but in spikes that suddenly become the new normal, with a lot of pain along the way.

We have a powerful interest in heading off both those eventualities, and it happens that using less gasoline and other hydrocarbon-based energy serves both ends.

That said, I think Gunther’s underestimating the power of the market to cause people to make such choices by themselves. The low-hanging fruit, as it’s called, is energy-efficiency: we who live in temperate climates can get a long way to where we need to be just by properly insulating our damned buildings, and it’ll only take a few cold winters with higher energy prices to make us do it. Then maybe we talk about redesigning our communities and our supply chains.

(Update: Some numbers on the low-hanging fruit. Significantly bigger and juicier than even real-estate professionals realize.)

The key will be for legislators to avoid the temptation to subsidize dangerous ways of keeping on keeping on — kicking public money into ethanol and liquefied coal are obvious ways they can screw it up. We do need to make some changes, but if we don’t try to hold them off, we shouldn’t find ourselves having to force them, either.

Photo credit: Flickr/pdz_house

Undermining property rights

The Green Party of Ontario is proposing a radical change in the treatment of property rights in the province. It’s in this press release, announcing a campaign stop for party leader Frank de Jong in eastern Ontario:

Monday, August 27
1 to 3 p.m.
Hwy 509 just north of Clarendon Station
(10 km north of Hwy 7; Hwy 509 runs north
from Hwy 7, just west of Sharbot Lake

De Jong will show his support for the Ardoch Algonquin and Shabot Obaadjiwan First Nations’ ongoing protest against Frontenac Ventures Corp. The mining exploration company wants to test drill for uranium on the bands’ ancestral territory, which is the subject of ongoing land claim negotiations.

De Jong will call for:

  • A moratorium on uranium prospecting and mining in Ontario.
  • Modernizing of the mining act, which hasn’t been revised since 1880, to include subsurface rights with the title of land.
  • Settlement of the First Nation land claims.

The Ardoch Algonquin and Shabot Obaadjiwan have been blocking access to the land since June 29, and have vowed to remain despite an Ontario Superior Court order for them to leave.

MineDoorThe Greens are, very broadly put, opposed to mining and to nuclear power, so standing with natives trying to stop a uranium mine is a natural. In that sense, this is a pretty routine campaign stop. And for the Greens, it’s absolutely typical in that nobody, but nobody, will go to Sharbot Lake, an hour from anybody, to see what the leader of the fourth party in a three-party system has to say about anything.

That said, the second policy point is a doozy. In Ontario, as in many places, most land doesn’t come with its mineral rights — in general, if the land was ever owned by the Crown, and almost all of it was, the Crown kept the mineral rights when it granted the land to somebody decades or centuries ago and has never relinquished them. The government licenses out those rights to qualified prospectors, and with the mineral rights come rights to access land, to explore and dig and drill, and ultimately to set up a mine if an economically viable mineral deposit is found. Surface rightsholders need to be compensated for direct damage done to their property, but not much else, even though sometimes exploration can go on for years and years on a given plot while the value of the surface rights plunges nearly to zero. Who wants to buy land that a mining company might be able to kick you off of on a few months’ notice?

Proposing to change this system by handing mineral rights over to surface rightsholders is an extremely significant idea. Potentially very damaging to the mining industry in Ontario (not crippling, since a lot of the exploring happens in the sparsely populated northern reaches of the province, where the Crown still owns a lot of the land, but damaging) and also a colossal giveaway of government property to private individuals and landowning corporations. Using the Crown’s mineral rights to establish a mine someplace, after all, doesn’t come free. Mining companies pay the government big royalties on the minerals they extract.

Nevertheless, this is the way most people assume land rights actually work, and in this day and age, perhaps they should. Maintaining a system of parallel rights — that, in fact, overbalances things in favour of prospectors, who can come and go as they please and tramp on surface-rights owners more or less at will — casts a pall over all surface rights by valuing them at next to nothing. It amounts to a subsidy for mining that isn’t extended to any other land use.

If a mineral deposit is really worth getting at, it’s probably worth buying out the people who own the property on top of it at a fair market price.

(A provincial election is scheduled for Oct. 10 in Ontario, where I live, so expect more posts than usual on the provincial political parties’ environment-related promises as the campaign gears up.)

Photo credit: Flickr/SplaTT

Put the hose down and back away slowly

John Whitehead of Environmental Economics points out the folly of asking people to use less water in the midst of a water shortage, making an argument for spot pricing. Key quote:

Command and control regulatees usually can find a way around restrictions. If commercial fishermen are told to reduce the number of fishing trips then they get bigger boats so that they can catch more fish on each trip. In the same way, if households are asked to water their lawns on a limited number of days, then they’ll increase the amount of water they put on their lawn that day.

Stéphane Dion: Stop talking about Kyoto

Canada’s opposition parties continue their posturing on the climate-change file, threatening to bring down the Conservative government unless it does the impossible:

StephaneDionsignsLiberal Leader Stephane Dion urged Harper to apply solutions endorsed by all three opposition parties and accept a consensus that was growing among environmentalists, economists and business executives that the minority government’s climate change plan is too weak to succeed.

“We believe that all political leaders have a moral obligation to do all that can be done on this critical challenge facing Canada and the world, and to put an end to the partisan politicking around this issue,” Dion wrote in a letter to Harper. “To date, your approach falls far short of the best that Canada can do. I urge you to put consensus ahead of confrontation. Every day counts in this battle and we must take real action now.”

The warning came two days after Environment Minister John Baird published a report that appears to ignore requirements of a new law, introduced and supported by the opposition parties, calling on the government to honour its international commitments under the Kyoto protocol on climate change by reducing Canada’s greenhouse gas emissions by an average of six per cent below 1990 levels between 2008 and 2012.

Since we’ve done squat on the file in the decade since the Kyoto protocol was first agreed to, this would essentially mean cutting Canada’s greenhouse-gas emissions by one-third between now and the end of 2007.

Nobody could do this, not even Stéphane Dion, whom I quite like but in whom I’ve been disappointed as Liberal leader. By insisting this should by the government’s goal, he’s made the Tories look like the credible ones on the climate-change issue, which is a nearly impossible feat.

And if the opposition actually did bring down the minority government by defeating it in the House of Commons, there’d be an election, the Clean Air Act now winding its way through Parliament would die, the weak greenhouse-gas regulations proposed by Environment Minister John Baird would be scrapped, and the whole ridiculous dance would start all over. Presumably Dion’s strategy, were he to become prime minister, would be to say the Tories had left such a mess he couldn’t possibly fix it in time.

That’d be true, but it’s also exactly what the Tories have been saying about the government of which Dion was a part, and it’s also true when they say it.

Canada’s parties, particularly the ones that actually want to make a difference on climate change, ought to simply stop saying the word “Kyoto.” It’s dead in Canada, and until we can move on, we won’t be able to come up with anything better.

Photo credit: Flickr/ycanada_news

Long-term hopes for long-term climate predictions

(Going to try something different with the pix and go a little more visuals-heavy. We’ll see how it goes.)


Credit: Flickr/rednuht

David Jeffrey at Oikos points to a MarketWatch story on the rise of futures markets in weather, and wonders whether this presages a market in climate-change predictions. MarketWatch:

For example, golf courses lose business on rainy days, while ski resorts see their bottom lines hit by unseasonably warm winters. The contracts are tailored to meet a business’s particular needs and based on temperature and precipitation levels, and they can range in duration from one day to six months.

One example would be a golf course purchasing a contract to be compensated based on the total number of rainy days over a given period. A golf club in Louisville, Ky., for instance, could buy a contract to be paid $2,000 every day it rains at least half an inch during the peak season.

Futures markets in weather were something Enron got into, shortly before the end, and that’s been used (in The Smartest Guys in the Room, for instance) as symbolic of how ridiculous the company got before it collapsed. Here’s how NPR mentions it:

Besides buying and selling gas and electricity futures, [Enron] created whole new markets for such oddball “commodities” as broadcast time for advertisers, weather futures, and Internet bandwidth.

Now, the idea doesn’t seem so silly, with so many businesses directly weather dependent. If you can find somebody to sign the other end of that golf-course contract, for instance, it’s probably a good idea to do it — you’ll shave off a little bit from the top of the maximum possible profit you might make in ideal weather conditions to drastically reduce the costs you’ll pay if things go horribly wrong and it rains cats and dogs.

The trick is finding either a speculator willing to make the bet, or someone who stands to make a lot of money if it rains like that and wants to hedge in the opposite direction. And indeed that seems to be the challenge for the post-Enron pioneers (think of Enron as the Donner Party) in this area. Says MarketWatch:

[T]he real challenge is not in designing and listing a contract but in creating opportunities to trade the products, he said, because it normally takes some time to develop an even, two-sided order flow.

“You have natural hedges looking to buy insurance against the risk, but (the demand) doesn’t correspond with speculators willing to take the other side of a trade,” Andersson said. “We listed our hurricane contracts knowing the big reinsurance companies wouldn’t be trading them on Day One.”

For the same reason, I’m doubtful that Jeffrey’s hope, that a direct market in climate-change futures, will ever come to fruition in anything other than toy-miniature form. We’re talking about an extremely long-term question, or set of questions (what will the temperature be in 2028? what will sea levels be at such-and-such a spot on the New Zealand coast in 2040?) that you’d almost certainly be better off anticipating the possibilities in the operations of your business rather than buying a futures contract to hedge against a particularly bad outcome.

Here’s a question: Are there any commonly traded futures contracts already out that extend that far into the future?

Anyway, none of this is to say that toy-miniature markets couldn’t work. They work pretty well for elections, even though the participants are generally playing because they’re political junkies, not because they’re trying to hedge against specific personal or business risks. But, pending Jeffrey’s further research, I’m not seeing it as an actual functioning part of the business world.