Alberta should embrace the coming change

“The ultimate tragedy is not the oppression and cruelty by the bad people but the silence over that by the good people.”

  • Martin Luther King Jr. (1929 – 1968)

It seems that Google is looking to revolutionize yet another industry. Google dethroned Yahoo!, Ask.com, Netscape, AOL and Microsoft to become the leading Internet Search Provider. Google pushed aside Nokia, Blackberry, Microsoft, Apple, Palm and other cellphone providers through the creation of the Android Operating System. Now over 80% of the world’s new cellphone sales use the Android Operating Systems. Google has change the way we use maps, the way we find and store information and the way we understand the world.

Now it seems that Google wants to change the way we generate energy. For they are one of three companies that have participated in a $2.2 billion dollar (USD) solar energy complex. Along with NRG Energy and BrightSource Energy, Google has invested in a complex that can generate 400 megawatts of energy (Sun rises on world’s largest thermal solar power plant, by the Associated Press, Published by Metro Calgary, Feb 14-16, Weekend Edition). That is enough energy to power 140,000 homes or the city the size of Kingston, Ontario or Red Deer, Alberta. What is interesting is that the 13 sq. km. complex is coming close to the output of a nuclear reactor.

This should bring fear into most Alberta Politicians. Not only does Alberta have to contend with the rise of Shale-bound Natural Gas and the Bakken Oil Fields (located in Montana, North Dakota, Saskatchewan and Manitoba), but now Google is starting to invest in Solar Energy. In fact, the US is making such movements forward that the International Energy Agency feels that the Americans will be self-sufficient – in terms of energy – over the next two decades (U.S. to Be Top Oil Producer by 2015 on Shale, IEA Says, By Grant Smith, Published by Bloomberg.com Nov 12, 2013 9:47 AM MT).

In fact, the Americans are not the only people pushing for change. The Danes are also trying to change the way that society works. According to the Danish Wind Industry Association, 28% of Denmark’s electricity comes produced from wind power. Danish companies have installed more than 90 per cent of the world’s offshore wind turbines. However, what is most interesting is that Denmark expects to be a world leader because it will drive European expansion of offshore wind power generation. In fact, that generation will increase by tenfold in the upcoming decade.

However, the Danes don’t plan to stop there. For their government “has set the target of 50 per cent wind power in the electricity system by 2020”. For many, this might seem like a crazy goal. For the problem with wind energy is simple: wind energy is only available when the wind blows and the truth is that it is not always there. To solve this problem, Danes hope to make a huge technical leap: they hope to capture wind power in huge “batteries”. And they hope that those “batteries” will be electric cars.

In other words, cars are prevalent in a modern society and most of the time they are not used. Equally so, batteries take a long time to charge. So the idea is simple: electric cars could take the excess capacity. When there is a net excess of energy produced they will store it. When there is a need for energy, the car batteries will be depleted. The only problem is developing the technology to make that work. Private sector players, like Vestas and Siemens Wind Power, are working alongside public sector institutions, like the Technical University of Denmark and the Danish Risø laboratory, to make this happen. In fact, one would say that the Danish Government’s goal – of being fossil fuel free by 2050 – is likely going to be a reality.
Alternatively, take a look at the Chinese. Long seen as the fly in the “environmental ointment”, they have reduced their CO2 emissions per unit GDP over the last twenty years. In fact, they are aiming to get 20% of their energy from renewable sources by 2020. While it is true that much of this change is driven by internal dissent, their trajectory is clear: developing more energy and doing so with less carbon or fossil fuel sources. So, simply put, the policies of former Premier Alison Redford or Prime Minister Stephen Harper are wrong headed. The trend is clear: Canada will have fewer and fewer customers for our Athabascan Oils Sands Products. And to those who argue that change will not come quickly, I have only one thing to say: remember your history.

In 1973, overnight, the price of oil on NYMEX jumped 70% because of an oil embargo. While the political issues were resolved by 1974, Americans did not forget. Over the next six years, the Western World became so efficient when it came to energy use that energy prices were stable until the 2000’s. In fact what was most interesting is that when prices started to increase again in 2003, moving from $25/barrel to $147.30 (in July 2008), we saw a number of developments including the increase of the CAFE standards for transportation efficiency, the redesign of cars and the increasing prevalence of hybrid and electric vehicles. This has been so evident that we have seen a stabilization of oil prices.

The truth is, if Alberta is to continue on, both governments – that of Alberta and Canada – need to begin to adopt policies that embrace the coming change. For in a decade from now, the landscape of energy production will likely be different. The proof of this comes in the form of GM creation “EV1”. The EV1 was one of the first electric cars to come to market under a California mandated pilot project. While the Bush Administration successfully killed off the electric car programmes in the States, the experiment scared Japanese Automobile Manufacturers. They were caught off guard by the change and decided to put lots of money into hybrid car technology to ensure that they would not be caught flat-footed again. This is why Toyota and Honda started producing hybrid cars. Today Nissan has joined the fray with their commercially viable electric vehicles.

But they are not alone. A new company – Telsa – has also joined the fight. While they are only making high end high performance electric cars, their aim has been to join the commodity based, every day market dominated by BMW, Ford, GM, Chrysler Fiat, Audi and others. How long will it be before the forces of the market make electric cars a practical alternative? For in the 1990s, when the EV1 was created, it could already do accomplish 95% of most commuters’ daily needs.

However, that is only the beginning. Airplanes are getting more efficient because of airline competition, while rigs and trucks across the world are becoming increasingly efficient to match new energy use standards.

The truth is that human ingenuity is boundless. In 1903, the Wright Brothers attained a goal set by da Vinci in the 1500s: powered, sustained and controlled flight. Not two decades later, those same planes found their way into World War I preforming surveying and limited combat activities. By 1927, Lindbergh completed the first non-stop flight across the Atlantic. Before World War II was over rockets, rocket-powered planes and jets entered service. While, less than seventy years after developing flight, Humanity found itself on the Moon.

Let me think back to when I was young. I lived in an analog world where phones were wire-filled and wire-linked monstrosities, personal music devices used cassette tapes and computers used cassette tapes or 5 ¼ inch floppy disks to hold up to 1.44 MB of information. At the time, I sneered at the 8 inch floppy disks, 8 track cartridges and punch cards as old technology. Yet today, my smart phone does all of that and more because it has 32 GB of information. These unfathomable leaps happened because of human ingenuity.

With all of that being said, how is it possible for anyone to think that we will be using hydrocarbons, as our main fuel source, thirty years from now? History has taught us that changes in energy sources happen quickly and unpredictably. Our movement away from candles and wood happened because technological improvements that allowed us to exploit oil, kerosene and whale oil. Those were replaced by the move to natural gas and oil. The transition to electrical power – shelving hydrocarbon fuel – is already happening.
This is why Alberta should recognize that nothing lasts forever and that change will come.

This might seem contentious but the reality is that the future is coming quickly and this this type of thinking needs to happen. Today, coal is still mined in Alberta but the truth is that on a per capital basis, taking into account inflation, they are not as profitable as they were in the 1920’s, 1930’s and 1940’s. We will not likely get all of the oil out of the ground, before it too becomes an antiquated source of energy. Therefore, Albertans today should think about their future and what is in the best interests of the majority of Albertans. This is not to say that we stop producing oil today. However, we should be planning today for that new economy. Our governments and industry participants should be adjusting toward that new place. While it will cause some hardship on a few, the cost of inaction would damage the province not only for its present residents but of future generations as well. Or put differently, if our only industry is oil, Alberta is dependent on it. Consequently, a reasonable person would say that diversification is best. Accordingly, it makes sense for our industry and governments – both federal and provincial – to think about what happens when oil no longer drives the world economy. Not thinking about that would be the abdication of responsibility.

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