Sometimes, I wonder what the next generation might say about our present political leadership. They would note that in some ways the economies of Ontario, Alberta and BC aren’t that different from each other because they are all exporting economies. The difference, of course, lies in what they export. While, the percentages are different, Ontario and BC tend to export similar products: various manufactured goods, tourism, multiple raw resources and agricultural goods.
That mythical future generation would note that Alberta, on the other hand, with its diversified economy depends on the exploitation of fossil fuels. Our manufacturing sector makes things that allow for the exploitation of fossil fuels. The main customer of geographic information system data in Alberta is the Oil and Gas Industry. I could talk about IT or engineering, I could talk about academics or construction; yet, that dependency on coal, gas, oil and bitumen would not change. Any future generation would have the perspective to see that.
Future Albertans might wonder why we didn’t ask a simple and unique economic question earlier: what happens when Alberta’s main consumers switch from coal, gas, oil and bitumen to wind, solar, hydro and tidal power? Future Albertans would likely be perplexed by our inability to deal with that question. For, they would say that the technological change was evident and obvious. Unlike, Ontario and BC, present-day Alberta’s economy depends on the answer and getting the answer right. It is true that that question asked above is a new one. For, the previous existential Alberta question was either “what happened when the resources were depleted” or “what happened to Alberta when we could no longer drill for them”. Those questions were asked by Premier Lougheed. That is why we got the Heritage Fund and a bunch of projects in the 1980’s which aimed at diversifying our economy.
However, future Albertans would ask why we didn’t see the transition earlier and why we didn’t act with more effort. They would know that Technology, Science and Climate Change would have changed the question of capacity and reserves to a question of customers who are willing to buy coal, gas, oil and bitumen. For today, Countries are pushing companies and individuals to change their energy consumption; and, Alberta will find that the market for coal, gas, oil and bitumen will decrease substantially over the coming 20 years.
This is not a hit on Alberta. We are strong, thoughtful and capable people. The problem, though, is that the world is changing around us. If there is any doubt, let me paint a small picture. Iceland, New Zealand, Norway and Costa Rica were some of the first countries which pushed for the goal of carbon neutrality. While, each has found difficulties in achieving the goal, they have come a long way. Costa Rica is said to be close to achieving 70% of their goal, while Iceland is starting to store some of their CO2 emissions safely in volcanic rock.
Now other countries have joined in. According to the Independent, “France plans to ban all petrol and diesel vehicles by 2040, the country’s new environment minister has announced” (France will ‘ban all petrol and diesel vehicles by 2040’, the Independent.co.uk, by Chloe Farand, 6 July 2017). The aim for France is simple: to make the country a carbon neutral one by 2050.
The Netherlands and Norway, on the other hand, have announced that they wish to get rid of all petrol and diesel powered vehicles by 2025; and Germany and India aim to do the same by 2030. California and seven other US states, Quebec and the UK have also talked about such a ban by 2050.
Car manufacturers are noticing the trend. The Renault-Nissan Alliance remade the Leaf this year and expects a large amount of demand for their flagship electric car. Volvo has announced that by 2019, they will only build electric and hybrid vehicles. The Chevrolet Bolt EV and the upcoming Tesla Model 3 will have a range of over 200 miles and will be affordable at a $30,000 range price tag; and, China is showing its hand by pushing its automakers to do the same. Daimler, for example, and its Chinese partner have announced a $735 million investment to increase EV output. The next generation of Albertans would have hindsight and would be able to say that “the writing was on the wall”. Change was coming, so why didn’t our predecessors act more quickly.
Future Albertans would say that as an exporter of coal, gas, oil and bitumen, Alberta had a problem. Given that 30-40% of worlds’ oils supply ends up in the world’s cars and trucks, one can see that a huge drop in the making of gas, petrol and diesel powered cars will lead to a large “over-supply” of oil. Given that bitumen’s main use is to be converted into oil, one can expect a corollary decrease in bitumen demand.
History would have recorded all of the technology changes and the upcoming trend: A trend that some present-day, existing energy companies are trying to get ahead of. DONG Energy, a Danish Energy Company, has cut its coal consumption by 73% since 2006 to align with a vision: to be a world leader in offshore wind power. By 2023, DONG will have stopped using all coal in its energy production because they feel that they want to transform themselves into a “sustainable energy system and to create a leading green energy company.”
While, StatOil – the large Norwegian, State Owned Oil and Gas Giant – is already implementing their long term conversion plan. They want to move from being a large oil and gas player to being a renewable energy provider. In fact, StatOil anticipates that by 2040, they might have to produce more renewable energy than oil and are working to ensure that they can do so. Whether, that prediction is right or wrong, they are building the wind farms around the world to deal with that potential. Given that this change is happening throughout the world, one question remains: what can Alberta do today to avoid the ire of future generations? As we all know, Alberta has a lot of engineers, scientists and mathematicians. We also have many entrepreneurs who have created amazing businesses, so we can deal with this change. Future Albertans obviously would have hindsight to second guess this generation; so, we, Present Day Albertans, should not avert our heads. Our future sons and daughters will have digital libraries and resources to evaluate the choices of us and our political leaders. Our progeny will be right to ask many questions including why didn’t Alberta’s political leaders have the courage to act. In recognition of this potential future, we need leadership from Edmonton to deal with the new world that will be coming.
We can avoid a dreadful future, if our politicians seek to revitalize existing institutions and have the courage to make new ones. Our transition is in our & their hands. In my last piece, I noted that the creation of a Research University would develop knowledge, the establishment of a new polytechnic in Red Deer would help us to train and retrain our workforce for the opportunities that will arise and the development of an Angel and Venture Capital Corporation – structured as a Private-Public Partnership – which would help to provide the investment capital needed to start more small, Alberta based companies.
However, those institutions are not enough on their own to change the province. If our province is to leverage its engineers, scientists and mathematicians into building a knowledge economy, Alberta needs to be able to protect our knowledge. This is especially true if knowledge is being created in Angel and Venture capital companies. Any person investing in this area knows that while success is lucrative, the chance of it is quite limited. To avoid wasting the limited resources, it make spends to protect the knowledge assets created by our new knowledge economy. In this way, the large numbers of engineers, scientists and mathematicians in Alberta will continue to be our best resources. They will develop the amazing knowledge and technology that the world will use and pay us handsomely as a result.
If we are looking to a model, the RCMP has already done the hard work in this field. In 1995, The RCMP admitted that they had a problem: they had trouble protecting their Intellectual Property. Companies and Individuals around the world didn’t pay them to use their distinctive uniform. Costume makers, Toy Makers and others simply reproduced the likeness so tied to the RCMP without paying them a dime. Well, in 1995, the RCMP hired Disney for a five year contract to put an end to it. Disney, with their expertise in licensing, helped the RCMP to clean up their processes and solve a public policy problem. In that same vein, the Government of Alberta could create a similar institution to buttress the new knowledge economy we can have. For, if the RCMP had trouble using the law to protect their Intellectual Property, one could say that those unfamiliar with the law – like engineers, scientists and mathematicians – might need help to protect their work.
In Alberta’s case, we could create a “Patent Bank”. The Patent Bank could be the holder, the licensee or protector of all Intellectual Property derived with public money in Alberta. For example, if we proceed with the suggested Private-Public Partnership to fund Angel and Venture Capital projects; a Patent Bank, in whole or part, could manage the Intellectual Property derived. Or instead of developing their knowledge, companies and universities in the Province of Alberta could sell their Intellectual Property to a Patent Bank who would then lease it out at a profit. Admittedly, the lease rates would be better if a company was based in Alberta, but the point is clear: our province would become a “library” to the world and charge a fee from every company who used our ideas.
If one thinks that this is not a profitable idea, take a look at Nortel’s bankruptcy. The company, that at its peak had a market cap of nearly $300 billion and 95,000 employees, had 6,000 patents and patent applications which covered a variety of areas including wireless, wireless4G, data networking, optical, voice, Internet Service Provider and semiconductors. That treasure trove was sold for $4.5 billion USD.
Now, given the that a consortium of technology companies (i.e. Apple, Blackberry, Ericsson, Microsoft and Sony) bought the patents together to reduce both cost and future liabilities, one could say that those patents could have been worth more than that. This is especially true since Nortel spent an estimated $40 billion USD to develop those patents in the first place. If one company could spend an estimated $40 billion USD on developing knowledge, one could easily say that turning Alberta into a knowledge economy would be a profitable endeavour. In my view, a Patent Bank would be a necessary part of this adventure; for a Patent Bank would have the might and the resources to protect our largest resource: billions of dollars’ worth of knowledge.
However, this is only the start. To have billions of dollars pouring in, we need to attract capital and interest from overseas. Consequently, Alberta does need a set of “overseas launching pads”. Unlike the present Alberta International Offices which act primarily as lobbyists and policy guides for foreign governments, “overseas launching pads” would act as Alberta’s best salesman in the private sector. Designed to be used by the small and medium corporate and enterprise sector (SME), “overseas launching pads” would provide the local language and network connections that Alberta’s SME sector needs. Or put differently, if a small GIS firm in Red Deer or an Oil and Gas Safety Firm in Calgary wants to expand into Indonesia, Kazakhstan, China or Iran, it would help to have someone on the ground that could provide language and networking assistance. A small office on the ground in any of those countries would allow SMEs based in Alberta to export their knowledge and grow their markets. Our non-oil and gas SMEs would benefit from having customers who are not tied to the fossil fuel industry, while our Fossil Fuel SMEs could benefit from diversifying their Geographic template.
The answers for Alberta’s future are ever-present but we need to acknowledge where we are. We need to say that our economy is an export driven economy. Alberta exports virtually every gram or litre of oil, gas and, by 2030, coal we produce. As countries push towards renewable energy, we know that the Evidence will tell us that the world will be using less of what we make – oil, gas, and coal – in the years and decades to come. Accordingly, if we want to be competitive, we need a plan to deal with the change that will inevitably come. No longer can we rely on the predictions that Oil and Gas Needs will continue to grow; because France, Norway, the UK, India, as well as constituent parts of Canada and the United States are pursuing policies which are at odds with Alberta’s present industrial complex. Consequently, Alberta should try to – as a Nordic Politician said –“save the people and not the ship.” Or put in other words, the Government of Alberta should implement policies which attempt to save our engineers, chemists, scientists, technologists and other STEM professionals and not try to save the Oil and Gas Industry. In the end, by saving our STEM professionals, Alberta can have a new industrial focus which will provide blue and white collar jobs for the rest of us; thereby providing the most benefit, to the most people with the least cost to society and provide a future the next generation will be proud of.