Canadian federal budget misses mark — by a mile

I want to bang my head against my computer monitor, I really do, but it would be difficult to write this post with blood splatters on my screen.

Canadians got the details of their 2008 federal budget today and, well, let me just say that the Conservative government of Stephen Harper is consistent. New subsidies for the coal, oil and nuclear industries and new handouts to major automakers. No mention of climate change. No extension of incentives for renewables. The cancelling of incentives for buying energy efficient vehicles. Dismissal, once again, of a carbon tax.

I think I’m going to throw up. We’re screwed.

Now, you could say that the promise of $300 million to help Atomic Energy of Canada Ltd. finish its latest Candu reactor design, or the promise of $250 million to the oil and coal guys to help with carbon capture and sequestration research, is a decent chunk of change aimed at carbon mitigation. You could also argue that $250 million going to the auto industry for research into more fuel-efficient cars is also “green.”

But let’s start with the nukes. Atomic Energy of Canada, according to most optimistic estimates, could be fully privatizated for $600 million if the government decides this year to go through with it. So what we have now is $300 million of taxpayer’s dollars — half of AECL’s total commercial value, if you’re generous — going towards completion of a nuclear reactor that might not get sold anywhere unless Ontario can be coaxed into buying one. This, you could argue, is money thrown into the reactor core. Poof! Gone. And even if AECL does make a sale and is itself sold, the buyer walks away with a $300 million injection. Name one venture capitalist willing to invest that much — or anything — in nuclear?

Oh, wait a second. Some of that money is going into improving safety at Chalk River. Hmmm… I thought that was already done. In fact, a recent Toronto Star story — citing experts — say there’s not much more you can do to improve safety of the NRU medical isotope reactor. So claiming this money will improve safety is simply theatre aimed at winning political points after the government mishandled the isotope crisis.

Now let’s move to $250 million for CCS, in this case a clean-coal project in Saskatchewan. I fail to understand why government must pay to clean up the mess of industry. Couldn’t a carbon tax effectively deal with this problem? What CCS investment does is two things: encourages the use of coal for electricity generation and the exploration of oil through enhanced oil recovery. In isolation, this investment delays real action because the CCS stuff being funded today won’t have any impact for a decade, likely two. In the meantime, we’ll continue to burn coal and extract oil from the ground at record rates because, hey, CCS is coming so we’ll all be okay. Comforting.

And the automakers? Seems every month I hear about new funding being thrown their way aimed at green, energy-efficient vehicle manufacturing. But there doesn’t appear to be any conditions, and targets, as part of this funding. Also, it ignores the fact that the technology is already here. Research is nice, but what we need is deployment. Meanwhile, the federal government refuses to validate the safety of low-speed electric vehicles on low-speed public roads, despite the fact that 40 U.S. states allow them. Oh, and the incentive for buying these fuel-efficient vehicles is gone. Now that makes sense.

What’s common to all three? Money being thrown at existing industries to help them cope with a changing world they’re not willing to adapt to at their own expense and without a bit of kicking and screaming. Fair enough. Perhaps there is justification to toss them a bone. But what about the emerging opportunities? The next GMs and Fords? We’re so focused on keeping dinosaurs alive that we’re ignoring the potential of those Neanderthals swinging clubs, making wheels and using tools. We’re also ignoring the technologies that exist today, are affordable, are relatively easy to implement, and could easily be promoted through creative revenue-neutral tax policies.

This is where the Harper government is most hypocritical. It doesn’t want to provide too much help to new, emerging clean-energy technologies and companies because it believes these technologies and companies should be able to compete on their own in the marketplace. At the same time, it gives hundreds of millions of dollars in subsidies to the same old group of energy guys who, in most cases, aren’t the ones that truly need the helping hand.

Leadership. Vision. A sense of urgency. Not here. Not from the Canadian government.

Perpetual response

Earlier this month I wrote a story on an Ottawa-area inventor named Thane Heins who has developed a way to make electric induction motors more efficient, and possibly more — much more. The article used the words “perpetual motion” to hint at what Heins’ believes that “much more” might be. This, not surprisingly, unleashed a firestorm of criticism. But the critics weren’t the only ones to respond. In fact, a majority of those I heard from praised Heins for his efforts and encouraged him to go on.

I wrote a followup to this story in today’s Toronto Star, which you can find here and here. Click on both links. The second link gives examples of some of the e-mails I received. Some are quite… well, you be the judge.

NOTE: My apologies to the hundreds of people who e-mailed me. Unfortunately, I could not respond to most of you because of the volume.

Biofuels vs. electrification? Why treat them as competing options?

I’m getting tired of the doomsday views being spouted about biofuels lately, as much as there’s an element of truth to them. Yes, biofuels from food or dedicated crops aren’t a sustainable strategy, and yes, biofuels from cellulosic ethanol may be years away before they become economical, but is this reason to completely abandon the idea? To call it a scam? I’m also a little perplexed that people talk about biofuel like we’re pinning the climate’s hopes on it, rather than as part of a much larger solution.

Yes, we’re seeing the hunt for palm oil sources devastating the rainforests of Indonesian. Bad. Bad. Bad. Makes for a great headline, eh? Does this suggest biofuels per se are bad or that we need to pay greater attention to how and where we get them? Is it not the government of Indonesia that’s responsible for strictly regulating this domestic market? It’s like saying we shouldn’t use solar power because factories in China are using child labour. Solar isn’t the problem — it’s the factory owners. Perhaps OECD countries should impose trade sanctions on any country that doesn’t comply with strict environmental standards, as a recent BBC article suggests. A New York Times editorial at least sees the potential for biofuels, pointing out that it can be done if done responsibly.

The same reasoning goes for the energy balance of biofuels. We’ve seen report after report saying that producing ethanol from corn takes more energy than what you get out of it, and that changing lands to biofuel crops releases carbon into the air. This might be the case in some circumstances, but there are some huge assumptions here about irrigation (water use), fertilizer use, transportation, and they are often analyzed out of context — that is, not compared apples-to-apples to the way we go about exploring, producing, refinining and transporting oil. Again, regulation can deal with these issues.

You think there isn’t an army of scientists out there not trying to catalogue the best raw materials for producing biofuels, the best enzymes and bacteria for breaking them down, the best methods of transporting them, ways of growing on depleted lands, etc…? These are early days in the middle of a dramatic transition, and there are going to be some mistakes — and much trial and error along the way. To suggest this isn’t going to happen, and never happened in the early days of oil and coal, is simply naive.

So let’s stop demonizing biofuels. It’s at times like these that I’m ashamed of my own industry for oversimplifying the debate with sensational headlines. But I digress.

On a related note, I’d like to say I’m happy to see Richard Branson — media stunts aside — trying biofuels in airplanes. Virgin Fuels launched the world’s first commercial flight powered by biofuel today and the company appears serious about studying the benefits and, based on that outcome, pursuing the biofuel option. Virgin contends biofuels could be a commercial reality in the airline industry within five years. Personally, I think this is an area we must aggressively pursue. In fact, I think we should devote most of our research and development on biofuels to their use in the airline sector.

Here’s my reason: We can’t run planes on batteries, so electric planes aren’t in the cards. We can run vehicles on electricity, starting with plug-in hybrids as a transition, and there is great momentum at the moment toward this goal. It’s my belief that a biofuel industry devoted strictly to fuelling air travel could be done sustainably without having an impact on food prices and, as cellulosic approaches become more affordable, by depending heavily on agricultural and forest waste.

Maybe I’m oversimplifying things, but it seems to me it makes more sense to target particular approaches to particular problems rather than have all approaches try to be all things to all industries.

On a side note, I’ll point you to a feature I wrote in the Toronto Star on Saturday looking at Canada’s hesitation — refusal? — to legalize the use of low-speed electric vehicles on city streets. It’s a ridiculous situation, bordering on embarrasing, and shows how governments are not prepared (intellectually, or via political will) to move beyond rhetoric to real action when it comes to climate change.

B.C. takes important lead with carbon tax

The Canadian province of British Columbia announced yesterday that it will introduce a carbon tax that will apply to nearly all fossil fuels sold in the province, including gasoline and home heating fuel. The tax will start at $10 (Canadian) per tonne of carbon emissions in 2008 and be increased by increments of $5 annually over the next few years until it reaches $30. The tax will be complemented by a carbon cap-and-trade system that will be introduced as part of B.C.’s alliance with several U.S states and Canadian provinces.

Finally: Leadership.

The province said the tax will be revenue-neutral. About $1.8 billion raised from the tax over the next three years will go toward personal income and business tax cuts. A $100 climate action dividend will also be given to citizens once a year, with the idea being that the money saved from income-tax cuts and returned through the dividend will go toward conservation and improving energy efficiency. Citizens will also get more tax breaks for purchasing fuel-efficient vehicles and appliances.

Now, I should point out that Quebec introduced a carbon tax last year, but the money collected from it goes back to the government and is eventually targeted at green technology initiatives. It’s not clear to me whether this approach is more effective or not. I like the idea of a revenue-neutral tax that benefits people who reduce their environmental footprint and penalizes those who increase it, but an income tax cut needs to come with some strings attached or at least some kind of program that encourages investment of those savings into energy efficiency and renewables.

What I like about B.C.’s approach — and Quebec’s before it — is that they’re ignoring the rhetoric coming out of our federal government that a carbon tax will hurt the economy. The Conservative government of Stephen Harper has consistently dismissed the idea of introducing a national carbon tax, and has warned against burdening business with a patchwork of provincial rules and carbon taxes.

The B.C. government’s response: “We made the decision to not wait for consensus.”

Consensus is the killer. Consensus is what the United Nations is about, and all the international climate meetings that lead to nothing. Consensus is a tool of delay. It’s nice to see a government realize that breaking away from the pursuit of consensus is what Canadians — and I venture to argue most Americans — truly want. B.C. Premier Gordon Campbell said he won’t pressure other provinces to follow, but he hopes that B.C.’s move will demonstrate to others that it’s the right move and that it will create economic opportunities.

So do I. The fact is, a carbon tax is the quickest and most efficient way to influence change in the market. Cap-and-trade, while effective if designed properly, in my view should only be considered afterward as a complement. The problem with cap-and-trade is that it’s complicated and tends to reward lawyers, accountants and bureaucrats the most.

My only reservation about B.C.’s carbon tax? While it is expected to hit 70 per cent of all greenhouse gas emission sources in the province, the tax won’t immediately apply to industry and power producers, including oil/gas industry and cement makers. The province argues it needs more time to figure out a proper model. I think this is a mistake — if a government wants its citizens to accept a tax on personal consumption they have to show they’re equally ready to apply the same rules to industry.

That said, here’s hoping that the decision to impose carbon taxes in Quebec and now B.C. will infect other parts of the continent. Mr. McGuinty, now is the perfect time for Ontario to step up to the plate.

As for the feds, here’s hoping the White House and Parliament Hill wake up and realize this is real, and that now is the time to harmonize with the provinces and states that appear leap years ahead.

ZENN gears up for jump to highway speed cars

This is basically an FYI. Low-speed electric car maker ZENN Motor Co. released its first-quarter results last week and provided an update on plans to introduce a highway-speed vehicle based on EEStor’s energy storage system. Here’s what the company said:

In anticipation of the EEStor technology being successfully commercialized, the Company is readying its plans to incorporate the technology in its ZENN product offerings. In addition, the Company has begun investigation of options for developing its future generation of longer-range, highway-capable vehicles. Two of the more promising opportunities being examined are retrofit kits and a small to mid-size automobile (curb weight less than 1400 Kg/3087 lbs) with highway capable speeds and range. The retrofit kits would be designed for mass conversion of specific existing automobiles from internal combustion to an electric drive train. On the new car front, while the final specifications have yet to be confirmed, the Company is exploring the development of small and mid-size cars that have a top speed of 65 to 75 MPH (105 to 120 KPH) and a single-charge range of 200 to 400 miles (325 to 650 Km). Subject to satisfying local homologation requirements, these new vehicles would be distributed to major markets globally. The Company estimates that global annual sales units for this size of new car to be in excess of 30 million. Third party discussions have been initiated to assess possible manufacturing and distribution scenarios.

So, seems ZENN is quite confident it’ll get delivery of the EEStor units, though it doesn’t say when. I’m curious to know where it plans to set up manufacturing. Given the difficulties it has had trying to get its low-speed vehicles approved for use in Canada, it would be sweet revenge of it decided to locate manufacturing of its higher-speed EV outside of Canada.