Let’s tackle the first. Marsden explains why the 2009 Copenhagen conference failed, and why the 2010 conference in Cancun did not do much better (the book went to press before more of the same happened in Durban). He tries to make the politics of these conferences interesting, with secret drafts and forgeries of treaties flying around the back rooms. But in the end, all of these conferences fail to deal with the main issue: “the refusal of both industrialized and emerging nations to reduce their emissions significantly enough to avoid runaway climate change.” In other words, self-interest trumps climate. Next week’s sale of a barrel of bitumen in Alberta, or container full of junk from China or BMW from Alabama, is more important than the climate change that, in the minds of some, may not be such a terrible thing in the end. There is, after all, a lot of oil and natural gas locked away under that melting Arctic ice!

The chapter where Marsden writes about the opportunity in the Arctic is one of the most fascinating, because it puts paid to the theory that people are simply thinking short term about climate change. The disturbing truth is they are thinking seriously long term about how climate change impacts the Arctic. As the Russian ambassador says, “The 21st century will see a fight for resources, and Russia should not be defeated in this fight.” Norway is buying 48 fighter bombers and planning to deploy more troops in the Arctic. The United States is drawing up an “Arctic roadmap for the navy” and is building icebreakers. Even China is building icebreakers. A melting ice cap borne of climate change is just another golden opportunity to exploit a natural resource.

Marsden’s two narrative arcs meet in the Far North, where he goes to see and report on the effects of climate change, and where Arctic nations are getting ready to divvy up the spoils. He then takes us to political hot spots in California and Cancun. In California, Marsden demonstrates how big oil, the Koch brothers and other corporate forces tried to stop action on climate change, aided and abetted by their purchased delusional politicians. In Cancun, Marsden tells us how appalled he was that China, Brazil and India got a free pass:

“The agreement (struck in Cancun) gave China, India, Brazil and any other country determined to grow its economy a blank check to spew whatever emissions it deemed necessary for economic growth and poverty eradication. When you consider that the poverty in countries such as India and China is largely of their own making, it is difficult to understand why they would get a free ride. Their poverty is intimately linked to overpopulation and poor governance, for which these countries alone are responsible.”

Those are strong words that many would disagree with, particularly when one considers the kind of governance taking place in western democracies these days.

But most troubling is the last chapter, The Trouble with our Brains, “in which we contemplate the human reluctance to change and how to solve the dilemma of global warming.” After pages on the science and psychology of our brains which lead nowhere, Marsden concludes with the purplest of prose: “Climate change is a revolutionary force poised to roll over our capitalist world with a furious vengeance. It was our slavish devotion to the corporate creed and its contempt for human frailty that created global warming and now the monster mocks us and everything we have come to stand for.”

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Even the most hard-nosed and sceptical oil executive about the future of fossil fuels and he (sadly, it’s usually a “he”) will admit the world can’t run on oil, natural gas and coal forever and that the transition to something more sustainable is inevitable.

The question isn’t if fossil fuels will ever lose their dominant status in the world’s energy mix. The question is, when?

“I would guess fossil fuels will be at less than 50 per cent by 2050,” said David Keith, a physics professor at Harvard University’s School of Engineering and Applied Sciences.

“I’d say 50 to 60 per cent fossil fuels by 2050,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance and a member of the United Nations’ Advisory Group on Energy and Climate Change.

And so began a wide-ranging discussion, orchestrated by Corporate Knights, between two of the brightest minds on the topics of energy and climate. Specifically, we asked Keith and Liebreich to give us their best educated guesses to the double-barreled question: When will fossil fuels cease to dominate, and what is the path that will get us there? The International Energy Agency expects that by 2035 fossil fuels will still represent 75 per cent of global primary energy consumption, down only six percentage points from where they are today. That’s based on a scenario in which recent government policy commitments are implemented in a “cautious” manner. Even so, it will require a global investment of $38 trillion in energy-supply infrastructure over the next 25 years.

It’s a modest goal that, for some, may still be too ambitious. After all, the agency expects surging global demand for coal over the next five years to quench the thirst for energy in non-developed countries, particularly China. At the same time, recent climate talks in Durban, South Africa, while being trumpeted as progress from some corners, achieved little more than further delay.

But much can change over 25 years, and certainly by 2050 the world could be a very different place. Subsidies from fossil fuels could be phased out rapidly. Carbon pricing schemes, such as the carbon tax being introduced in Australia, could begin to proliferate.

Capital markets could also become more creative in financing renewable-energy deployment, and the world’s largest corporations could move aggressively to embrace resource efficiency as a means to greater global competitiveness. Of course, there could even be breakthroughs in technology – so-called black swans – that set us on a new course and bust through systemic bottlenecks.

Liebreich, who last year produced a short video on the transition to a low-carbon economy called “First they ignore you,” isn’t one to wait for black swans to save the day. He’s of the view that we can make – and are making – significant progress deploying the technologies we have today, starting with a massive push for energy efficiency in buildings, transportation and industry.

“I’m pretty bullish on what we’re achieving,” Liebreich told Keith. “In peacetime, what we’re experiencing is about as fast a shift as you can get, so I’m more optimistic than pessimistic.”

Solar PV technology, for example, is already close to grid parity with conventional sources of power generation, including coal-fired power, in some regions of the world. It’s a claim recently backed up by peer-reviewed analysis out of Queen’s University in Kingston, Ontario.

Meanwhile, installation of solar PV systems is expected to nearly double to 32.6 gigawatts by 2013 from 18.6 gigawatts in 2010, according to Bloomberg New Energy Finance. Manufacturing capacity worldwide has quadrupled since 2008.

The way Liebreich sees it, deployment of clean energy will begin to significantly accelerate by 2030, to the point where the electricity mix will be 50 per cent renewable by 2050. He admits, however, that fossil fuels will still dominate transportation at that time.

What will get us there? A combination of everything and anything, he says, including geothermal power, mini-hydro, energy from biomass, and widespread deployment of wind and solar.

But technology is only part of the answer, he added. The point will soon come where we’ll have to start adding up the carbon contents of assets that sit on the balance sheets of the world’s corporations. There are enormous “sub-prime fossil assets” that one day will be worth nothing, and eventually the private sector, including the big pension funds, will wake up to the reality, said Liebreich. “A lot of these externalities not currently priced will over time come into the picture.”

He also held out hope that the global citizenry will become more engaged in the issue of climate change, a “game changer” that, even if it didn’t materialize for a decade or two, could significantly shift the balance away from fossil fuels and toward clean energy – the same way smoking went from cool to uncool. “This problem we have will get solved,” Liebreich insisted. “We are on track.”

Keith, despite predicting fossil fuels would contribute less than half of the world’s primary energy by 2050 – more ambitious than Liebreich’s guesstimate – wasn’t as bullish or confident on how it would all unfold. Indeed, one caveat for his prediction, what he called “the big variable,” is that governments, the public and the private sector had to get truly serious about climate policy.

Generally agreeing with Liebreich that we have many tools at our disposal today to start fixing the problem, Keith argued that we need to be more discriminating with which technologies get supported. Those that offer the best balance of low cost and high impact should get the most attention, and even then, their limitations have to be recognized, he said.

“It’s important to be realistic about how well things scale,” said Keith, demonstrating the kind of healthy scepticism and pragmatism that has endeared him to multibillionaire Bill Gates, who for the past few years has counted on the Harvard professor as one of his trusted energy advisors.

For example, Keith supports the use of wind power, “but only until it bumps up against its environmental limits.” One concern is that too much harnessed wind power could potentially alter our local and global climate in unexpected ways by changing wind patterns and the amount of moisture and heat transported by winds.

Keith also has a less favourable view of technologies that have a large land footprint. “Wind power uses a lot of land by many measures,” he said, adding that geothermal, mini-hydro and biomass energy also have a massive physical footprint when one considers the thousands of terawatt-hours that are needed. On the other hand, Keith singled out solar and nuclear technologies as most capable of scaling to the levels required for a meaningful global impact.

What gives him optimism? Like Liebreich, Keith is convinced there will come a time when humanity demands the kind of changes that are needed, at which point the transition will move much faster – a kind of Arab Spring for climate action. He also points to the Chinese and their competitive embrace of clean energy as a potential agent for global change. “Something is happening there that gives hope,” he said.

Just in case, Keith is also open to geo-engineering as a last-ditch effort to salvage a liveable climate. He has even founded his own company, Calgary-based Carbon Engineering, to work on an industrial-scale technology that could one day capture carbon dioxide from the ambient air. Gates is one of its angel investors.

And we may have to resort to such efforts. Both Keith and Liebreich agreed that no matter what we do going forward, the amount of carbon dioxide in the atmosphere will go past 500 parts per millions (ppm). Today, we are at about 390 ppm, and it’s generally accepted that at 450 ppm, average global temperatures will increase by 2 degrees C. At 500 ppm, it jumps by 4 degrees C. Remarked Liebreich: “Will there be damage? Of course there will be.”

Both men also strongly agreed that the UN-led climate talks that have dragged on for 16 years are doing more harm than good. Better to take a more focused approach, with the world’s top emitters hammering out their own emissions-reduction treaties while carrying on separate negotiations aimed at helping poor nations adapt.

“The idea that we’re going to get a solution through the UNFCCC (UN Framework Convention on Climate Change) process is a joke,” said Keith. “The sooner it collapses the better.”

The post Not if, but when appeared first on Corporate Knights.

It’s that last function – chilling or freezing food – that also makes supermarkets major contributors to global warming due to their reliance on nasty hydrochlorofluorocarbon (HCFC) or fluorohydrocarbon (HFC) refrigerants.

That could soon change. Over the past three years, Sobeys Québec has pioneered the use of a more environmentally friendly, made-in-Canada solution that relies on carbon dioxide (CO2) as the primary refrigerant rather than HCFCs or HFCs.

The push to replace the harmful refrigerants came from Simon Bérubé, Sobeys’ senior director of engineering, who challenged the company’s suppliers to design an HCFC/HFC-free system for its planned new store rollout. “One of the problems in the supermarket industry is the leak of refrigerant,” which is both expensive to replace and acts as a global warming super gas, Bérubé explained.

A standard-size supermarket refrigeration system uses 1,000 to 2,000 kilograms of synthetic HCFC/HFC refrigerants, and leaks are common with hundreds of joints in the piping that carries the refrigerant to various display counters. It is estimated that 20 to 30 per cent of the gas leaks out of systems annually.

Sobeys said the CO2-based system allows it to reduce the environmental footprint of its supermarkets by at least 50 per cent, compared with that of a conventional store. The first system was installed in the company’s Saint-Félix-de-Valois store in Québec in 2009. At last count, 32 of its supermarkets now use CO2-based refrigeration.

The CO2 solution Sobeys selected is actually an upgraded blast (of cold air) from the past. CO2-based refrigeration was standard a century ago and only displaced with the emergence of synthetic refrigerants. The advantages that Sobeys is reaping from its new CO2 plants make one wonder why industry ever abandoned the technology. “It’s a simpler system, a smaller system, it’s cheaper to operate, and with no HFCs inside the system there is [relatively] no pollution when there is a leak,” said Bérubé.

Sobeys’ CO2 system supplier, Trois-Rivières, Québec.-based Carnot Refrigeration, claims that CO2 is “a natural, safe (non-toxic) and inexpensive refrigerant” with 1/1,500 to 1/4,000 the potency – and therefore the climate impact – of synthetic refrigerants. The companies calculate the impact another way: a leak of 10 kilograms of HFC refrigerant R-507 generates 33,000 kilograms of CO2-equivalent emissions, while the same volume of carbon dioxide refrigerant leak will generate 10 kilograms of CO2 emissions.

With better heat-transfer properties than synthetic refrigerants, CO2 systems potentially require less energy to run and, because they operate at higher pressures, take up less space in the store. Sobeys is also reclaiming waste heat from the system to heat water and store areas, further reducing energy costs.

The Canadian-designed and built system not only offers Sobeys a lower-maintenance refrigeration system, but much of that maintenance can be conducted remotely. “Service calls can be achieved by our home office because it is all electronic,” said Marc-André Lesmerises, a co-founder of Carnot Refrigeration. “You don’t need to have someone in place to open the cases and take a screwdriver and modify something.”

These benefits convinced Sobeys, which under a variety of brands already operates 1,300 stores across 10 provinces, to deploy CO2 refrigeration plants in all new stores to be built in Canada. “We are also doing retrofit projects,” said Bérubé, explaining that the smaller size of the systems allows them to be installed inside existing mechanical rooms.

It’s a big exercise in change management, but it also places the company at the forefront of an industry trend. Lesmerises said he’s confident that CO2-based refrigeration systems are the future, pointing out that other supermarket chains are beginning to embrace the approach.

And because the synthetic refrigerants are ozone-depleting gases, switching to CO2 technology also helps companies comply with mandatory phase-outs under the Montreal Protocol.

Click here to view our complete Tech Savvy series.

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Canada’s armed forces have huge potential to reduce the country’s reliance on fossil fuels and, by association, its greenhouse gas emissions. As the federal department with the largest carbon footprint, and as its most significant energy consumer, the DND must adapt to maintain operational efficiency. Its over-reliance on oil and other high-carbon fuels occupies ever-larger portions of the military budget, causes fuel logistics pains and continues to negatively impact the environment.

This pressing need to adapt gives Canada’s military an opportunity to lead on innovation. It can help to create a domestic green energy market, promote the early marketability of alternative fuels and boost commercialization of clean technologies. But if the Canadian Forces are to play a catalytic role in a shift to a sustainable future, what steps are needed? How will Canada’s military adjust to this changing landscape? To what degree can it lead the change?

Militaries around the world, including the Canadian Forces, largely stood by throughout much of the past decade as sustainability gained momentum in government circles, business communities and civil society. Even the most environmentally-engaged political party, the federal New Democratic Party, was more interested in using Canada’s military to defend ecological assets than to change the military from within. As a result, when fuel prices began to rise in 2005, eventually peaking at $147.30 a barrel in July 2008, militaries were hit particularly hard. In one infamous incident, the Canadian navy was forced to cancel a scheduled patrol off the east coast due to navy budget constraints brought on by rising fuel costs. It helped expose a broader truth: that the Defence Department was not adequately prepared for a resource-constrained world.

Dr. Sohbet Karbuz, a military energy analyst and former International Energy Agency official, has observed different reactions from armed forces around the world. “Some militaries, like the French and the Portuguese, treated this issue as an inconvenience, and tried to find temporary solutions that didn’t address the problem. Others, including the Canadian military, quickly realized that this was a long-term problem, and took action.”

At least early on. Our military’s first order of business was to create in early 2008 a new office in charge of monitoring fuel utilization, called the Directorate of Fuels and Lubricants. The tracking of fuel use throughout the armed forces had never been a priority before, so the Canadian military had only a vague sense of its total fuel consumption. The directorate inventoried the fuel use and efficiency of different Canadian Forces assets.

Since then, however, “action” from the Canadian military has significantly lagged many of its global peers. The problem, Karbuz says, stems from paying “too much attention to installation energy (energy consumed in buildings and platforms) rather than operational energy (energy used to run tactical vehicles, especially aircraft and ground vehicles). Almost all operational energy involves oil. As mobility energy accounts for the majority of energy consumption in any modern military, reducing its use should be the priority.”

According to National Defence spokesperson Kara Carnduff, the most ambitious efforts over the past several years have been focused on integrating green building concepts into new DND infrastructure. Retrofitting existing facilities is another point of emphasis. Other efforts include Defence Research and Development Canada, the DND’s science and technology wing, which is “studying uses for alternative energies such as wind and solar power.”

Yet little is being done on the operational energy front. The British military, despite facing severe defence cuts, unveiled in 2010 an ambitious Sustainable Procurement Strategy. The minister of strategic acquisition, Lord Drayson, explained at the time that “reducing reliance on fossil fuels and other scarce resources will help the armed forces address the causes of climate change but will also improve their ability to operate in hostile environments, reducing the need for resupply convoys in dangerous territory.” Canada’s Green Procurement Policy, in contrast, is vague and limited in scope. One of its flagship initiatives is one instituted in 2007 – the limited five-per-cent biodiesel blend in some Canadian Forces vehicles.

The American military, as the single largest consumer of energy in the world (consuming over 375,000 barrels a day), has made reducing its reliance on fossil fuels a priority. Many factors are influencing this push, but the urgency of energy security and the lessons of the past decade spent in Afghanistan and Iraq, are two big ones. According to the U.S. Defense Department, one out of eight U.S. army casualties between 2003 and 2007 was a result of having to protect fuel convoys. As a consequence, procurement demands have been altered significantly, and ambitious fuel reduction plans have been instituted. Yet Canada, which experienced the same fuel supply chain and security issues in Afghanistan, is not incorporating the same lessons learned there into its military procurement process.

The Canada First Defence Strategy, designed to build up the Canadian Forces, allocates $490 billion over the next 20 years. It has led to many large procurement contracts being signed for everything from fighter jets to navy ships. Yet the life-cycle cost of these products has not been adequately weighed, says defence expert Stephen Staples, president of the Rideau Institute. “A military like Canada’s tends to hold onto assets longer. We will be operating this capital equipment for decades to come, so factoring in the future scarcity and cost of fuel is paramount to our acquisition process.”

Rick Whittaker, the chief technology officer at Sustainable Development Technology Canada (SDTC), a federally created foundation that funds cleantech development and demonstration, is still waiting for the procurement process to adopt a long-term perspective. “If (the Canadian Forces) take life-cycle costing into account, then that solves it,” he says. “As opposed to just looking at capital cost and in-service support, you need to look at life-cycle cost: total cost of ownership. If you take that viewpoint, new technologies can drive a truck right down the opportunity pathway.”

There’s no doubt that the American military, which spends $80 billion a year on defence research, is the big kid on the block. Canada, like many other NATO countries, buys large amounts of U.S. military equipment, meaning it can take advantage of innovations down south. For example, both Canada and the U.S. use the same transport aircraft, such as Lockheed Martin’s C-130Js Super Hercules and Boeing’s Globemaster III. Canada’s forces can capitalize on American research and development as a partner in joint research projects, such as tests of new synthetic fuel mixtures in different aircraft.

So is Canada destined to play second fiddle to the United States on defence research and development? Not necessarily, says Whittaker. About a year ago, the largest defence contractors in the world got together in Washington, D.C., to determine a path forward for the defence industry. They found that the most promising market adjacencies involved moving into alternate energy and the business of solving environmental problems.

“They came to a strong conclusion that Canada was the best location to start off this transition,” says Whittaker. For one, the Canada First Defence Strategy creates a strong market pull for defence contractors. Canada also is a hotbed for clean technology innovation. “We’re at technology-readiness level six to eight in military terms, which means development and demonstration just before commercialization.”

As well, Canada is an easy market to access and has a deep resource base, making it an attractive partner. “So this is the starting market for these contactors,” adds Whittaker. “All of these same large companies are working with about 25 per cent of our SDTC portfolio (of cleantech companies), so they’re absolutely serious about it. They’re putting their money where their mouth is, and they’re taking action.”

Whittaker emphasizes that the Canadian Forces won’t change for environmental reasons alone. “Clean energy, or greening defence, is not going to convince them. What’s going to drive them is operational effectiveness, cost efficiency on a life-cycle basis, and safety.”

But if that business case is there, why aren’t they moving faster?

The post Green troops appeared first on Corporate Knights.

Puma, the German shoe and sportswear company, recently concluded an ambitious project to measure its entire ecological footprint – the first major corporation in the private sector to do so. An environmental profit and loss audit found that Puma was in the red to the tune of $185 million. Working with PricewaterhouseCoopers and Trucost, the company measured the impact of its operations and supply chain by determining a price for its externalities, including carbon pollution, water use, land use and the waste it generated. These calculations were not meant to act as a final arbiter, but rather to instigate a broader discussion about the need for companies to quantify ecosystem services as a fundamental way of doing business.

The effort, led by chairman Jochen Zeitz, is only the company’s first step toward establishing an environmental, social and economic profit and loss statement. The Puma parent company, PPR, which owns other popular brands including Yves Saint Laurent, Gucci and Volcom, has decided to repeat the process throughout the organization. As Zeitz explained to Corporate Knights, “Without incorporating externalities into the normal way of doing accounting it will be difficult to achieve tangible results that make businesses more sustainable.” The more investors are aware of the actual findings, “the more they will ask the question and demand companies to publicize and be transparent about their footprint,” he said. “It’s just a matter of time.”

The shift toward an economic system in which prices fully incorporate social, economic and ecological costs and benefits is the vision of clean capitalism that Corporate Knights has long advocated. Progress has started at a national level, with India working to incorporate the economic costs of environmental degradation, along with several World Bank initiatives, but strong support from the private sector will be necessary for garnering widespread support for true-cost accounting. Puma has taken a risk by demonstrating, with a single easily-understood metric, that the company’s actions have a widespread impact on the environment and society. It is a courageous move that acknowledges the need for broader corporate responsibility in the 21st century.

Zero: American Electric Power

American Electric Power (AEP)’s year-long campaign of fear-mongering against the toxic emissions updates to the Clean Air Act, finally announced in December by the Environmental Protection Agency (EPA), merit it a Corporate Knights zero. The Ohio-based company, one of the largest electric utilities in the nation, has argued that the regulations will require the closure of 21 plants, the loss of hundreds of jobs, and spiking electricity costs for consumers. EPA administrator Lisa Jackson testified to Congress that these attacks were “misleading at best, scare tactics at worst.”

Along with preventing 17,000 premature deaths and 120,000 asthma attacks each year, according to the American Lung Association, industry leaders believe implementation will not be overly disruptive or costly. The CEOs of six major utilities, including the largest U.S. provider, Exelon, recently wrote in the Wall Street Journal that “contrary to the claims that the EPA’s agenda will have negative economic consequences, our companies’ experience complying with air quality regulations demonstrates that regulations can yield important economic benefits, including job creation, while maintaining reliability.”

Despite its heated rhetoric in public, AEP has sung a different tune behind doors. During a November conference call with investors, CEO Michael Morris spoke positively about the new regulations, stating that “once you put capital money to work, jobs are created…. On balance, we think that (the plant closures)is the appropriate way to go. As you know, those are high-cost plants and dispatch infrequently.” He added how infrequently these plants had been running recently, due to the low cost of natural gas and other factors.

The regulations will principally impact outdated, inefficient and highly-polluting coal plants, which have remained in operation due to loopholes in previous Clean Air Act rules. The 21 plants the AEP is threatening to shut have been in operation for an average of 50 years, including one that was built during World War II. By fighting to preserve the right to pollute the air with mercury, arsenic and other toxics from Truman- and Eisenhower-era assets, the utility has proved that it is willing to defend obsolete assets from regulation in public, while tacitly acknowledging a more favorable position of the toxic air regulations in private.

Click here to view our complete Heroes & Zeros series.

The post Heroes & zeros: vol. 2 appeared first on Corporate Knights.

Outside of those lenses, it’s important to keep in mind that this Administration has done more to lay the groundwork for a clean energy revolution than any other president in history. However, a number of major factors have dragged Obama’s grades down. Some of them are a direct result of the Administration’s actions and others are just market realities.

Clean Energy Deployment: B-

The still-sluggish economy has made development of energy projects very challenging, even in fast-growing clean energy. Yet the president’s stimulus package, which created the Loan Guarantee Program and the Treasury Grant Program, has kept project deployment levels relatively high during extraordinarily bad economic times.

When the financial crisis struck, tax credits for the industry became much more difficult to monetize. That’s because the number of financial players with enough profits (i.e., tax appetite) to take advantage of tax credits dropped precipitously. As a result, the Administration created a grant program that allowed developers to take a cash payment through the Treasury equal to 30 per cent of a project’s cost. This incentive enabled a range of new banks and financiers to partner with developers, thus keeping project development rates steady.

Through the Loan Guarantee Program, which has leveraged more than $35 billion in private dollars, the Department of Energy has enabled some extremely important first-of-a-kind projects and manufacturing facilities in the United States. Among them are the largest wind farm, the country’s first cellulosic ethanol plant and some of the largest solar projects in the world. This program has also spurred development of numerous advanced battery and electric vehicle manufacturing plants.

Unfortunately, the lack of transparency in the loan guarantee process has attracted sharp criticism and turned a few recent failures – Solyndra being the highest profile example – into a political nightmare, even though a certain degree of failure is inevitable and expected with such a program.

At the same time, the Administration has balked at extending the single most important stimulus program for clean energy, the Treasury Grant Program, which expired at the end of 2011. In all, Obama has done a lot to elevate the industry, but many in the industry are concerned that he’s shifting focus at the wrong time.

Clean Energy Job Creation: B

Grade Job creation is a very sensitive issue, due to the political controversy around the 2009 stimulus package, so it’s important to set the record straight. To say the stimulus was a failure is simplistic and incorrect. The non-partisan Congressional Budget Office found that through the first quarter of 2011 the stimulus created between 1.6 million and 4.6 million jobs and reduced unemployment by between 0.6 and 1.8 percentage points. It also allowed the clean energy industry to grow by 8.3 per cent between 2008 and 2009, adding thousands of needed construction jobs. The recent green jobs report from the Brookings Institution described it as a period of “explosive” growth.

And those jobs are diverse. There are now 100,000 jobs in the U.S. solar industry, according to the Solar Foundation’s Solar Census. There are 661,000 green jobs in the design and construction industry, according to McGraw Hill. And the Administration’s energy efficiency weatherization program hired 25,000 people between April and June of 2011 alone.

The problem is not that the Administration didn’t create jobs, because it created a substantial amount. It’s that Obama and other clean energy advocates touted figures for job creation that were extraordinarily high – based largely on the assumption that we would get a comprehensive energy bill including a serious price for carbon dioxide that in turn would pay for major clean energy investments. So even though we’ve seen slow and steady growth in this sector, clean energy job creation is wrongly being held up as a failure.

The Administration could be doing more to accelerate clean energy job creation, but it must also be recognized that millions of jobs can’t be created overnight.

Clean Energy Regulations: B

In 2009, the industry was very close to getting a comprehensive climate and clean energy bill that would have busted the market wide open. After that bill went down in flames in 2010, the president stopped pursuing a price on carbon or a national clean energy standard. We’ve seen very little movement on the issue since.

Why a decent grade then? This Administration has undertaken a considerable number of regulatory efforts that don’t have as much political flair, but do have an enormous impact on spreading clean energy technologies.

Last summer, the Administration negotiated aggressive fuel standards for light and heavy vehicles – a move that will bring a new generation of fuel-efficient cars and trucks on the road in the coming decade and create thousands of jobs in the struggling auto sector.

At the Interior Department, Secretary Ken Salazar has streamlined the regulatory approval of numerous renewable energy projects on public lands, including the largest concentrating solar power plant and the nation’s first offshore wind farm. As well, the department facilitated approvals by creating a “zones” approach to siting clean energy facilities on public lands.

The Administration has also improved the transmission siting process. The Federal Energy Regulatory Commission issued a final rule last summer that gives priority to those transmission corridors that help bring clean energy online, while also clarifying who must pay for transmission upgrades. Not very sexy, but it’s billed as one of the most progressive pieces of clean energy regulation coming out of the Administration.

Finally, the Environmental Protection Agency has actualized rules for regulating carbon emissions, air toxins and mercury from dirty power plants. Last fall, the Administration dropped a rule for regulating smog, infuriating environmental groups. The EPA has also delayed other rules for regulating greenhouse gas emissions from oil drilling rigs. But the agency, having successfully implemented rules for carbon and mercury from power plants, will be responsible for spurring a major transition away from coal and toward more renewables and natural gas.

Clean Energy R&D: A-

Obama has come out very strong in support of clean energy R&D, calling for a 70 per cent increase in research in his 2012 budget, even in the face of massive budget cuts. He explained: “Our focus cannot just be on the short term.”

The Administration has set aside more than $1 billion for grants to national labs and academic institutions for research on new solar materials, next-generation batteries, biofuels and bio-based materials development, and new manufacturing techniques for a variety of renewables.

One of the Administration’s hallmark programs is the SunShot Initiative, which is aimed at lowering the cost of utility-scale solar PV and concentrated solar power by 75 per cent in the next decade. The Administration recently announced $60 million in grants for research into new storage mediums, heat transfer technologies and engineering techniques in concentrated solar power. And the Advanced Research Projects Agency for Energy (ARPA-E) is playing an important role in the program by helping develop new integrated power electronics for clean energy facilities, with the goal of halving power conversion costs by 2020.

This Administration has done more for clean energy R&D than any previous administration, and deserves a high grade as a result.

Climate Change: D/Incomplete

A lot of people in the climate community would say Obama deserves an F in climate. Given all the Administration has done to set the stage for a massive uptake of renewables and other clean technologies, it’s unfair to give him an outright F. Instead, he gets an incomplete or conditional D.

In the face of the most vicious and well-funded attacks on climate science, this president has not stood up to the climate-denial machine. Since the completely bogus 2009 “climategate” scandal and the defeat of a cap-and-trade bill in Congress, Obama has fallen silent on the issue, even while the science continues to prove how dire the situation is. As a leader with one of the loudest megaphones in the world, Obama should be doing far more to defend the science.

There are still many unknowns that may impact whether this Administration’s grade goes up or down. The first is the future of the proposed 1,700-mile Keystone XL pipeline, which would bring carbon and water-intensive tar sands crude from the Canadian province of Alberta to refineries in Texas. Leading climate scientist James Hansen calls the project “game over for climate.” After a strong and vocal protest movement pressured the State Department to delay a decision until 2013 and demand another environmental review, congressional Republicans set a 60-day deadline which forced the Administration to deny the pipeline application to TransCanada. However, the state department insisted at the time that “denial of the permit application does not preclude any subsequent permit application or applications for similar projects.” TransCanada could reapply with an alternate route, which is a likely scenario. Obama deserves an F if he ultimately approves the project.

The other unknowns involve a few of the regulations mentioned above that are currently in the works: two aggressive fuel standards for light and heavy vehicles, and the Environmental Protection Agency regulation of carbon emissions. If both of these are finalized, they could prove to be a very effective tool for substantially reducing greenhouse gases in the transportation and electricity sectors – perhaps even better than the original carbon cap-and-trade program proposed in Congress.

In conclusion, when grading the Obama Administration across this range of issues, it fares above average. But the political pressure from Republicans to drop strong support for clean energy has the Administration on the ropes.

The post Obama’s energy report card appeared first on Corporate Knights.

Conventional environmental wisdom holds that Cheney’s task force, largely informed by secret meetings with fossil fuel executives, was simply a mechanism which “turned coal and oil company wish lists directly into national policy,” as Sharon Buccino, senior attorney at the Natural Resources Defense Council, once put it.

While it is certainly true that Cheney’s trademark domestic legislation legacy is marinated in oil, he also deserves credit for his clear-minded diagnosis of the biggest barrier to bringing more energy security to the United States: an interconnected national energy grid.

Inadvertently, this hard-headed solution, meant originally to empower his dirty-energy allies, may turn out to be the key catalyst for an American green energy grid in the 21st century. There is a widespread consensus among green energy advocates — from former U.S. vice-president Al Gore to NASA scientist James Hansen — that the main thing holding back a rapid transition to abundant low-carbon electricity and, by extension, low-carbon electrified transport, is the inability to get energy from where it blows (up from Texas through the Dakotas) and shines (the deserts of the Southwest) to where people live and drive.

The Cheney-led task force identified the “antiquated and inadequate transmission grid” as a key inhibitor to getting more reliable, secure and affordable electricity to the markets that need it most. They traced the root cause back to an outdated federal law from 1935. This law assigned responsibility for siting transmission lines to states rather than the federal government. This was in stark contrast to the siting of other interstate facilities, such as natural gas pipelines, oil pipelines, railroads and interstate highways.

As the report notes, 80 years ago this made sense, as “transmission facilities were not interstate, and there was virtually no interstate commerce in electricity.” In typically blunt Cheney fashion, the report sums up: “Much has changed since 1935. The transmission system is the highway for interstate commerce in electricity. Transmission constraints are ­resulting in higher prices for consumers and lower reliability. The siting process must be changed to reflect the interstate nature of the ­transmission system.”

The reason siting matters so much is that in today’s climate of NIMBYism (“not in my backyard”), it would be impossible to build the kind of $400-billion unified national smart grid that Gore called for in a New York Times editorial in 2008. There are too many different local actors who could effectively veto such an effort.

The solution to modernizing the balkanized U.S. electricity grid is simple, but highly controversial: trump state rights by giving the federal government the power to override local and state opposition to strategic power-grid corridors that are clearly in the national interest.

The legendary and sometimes contrarian venture capitalist Vinod Khosla maintains that there is more than enough private sector capital to build a national electricity grid, assuming the federal government provides right-of-way and eminent domain rights.

Never one to be accused of bashfulness, Cheney tackled the solution head on with the Energy Policy Act of 2005 in the form of a provision for “National Interest Electric Transmission Corridors.” The provision allows the federal government to override states in cases where interstate transmission facilities are held up for more than a year.

It remains to be seen how this provision will be built upon. Should it inadvertently open the way for a national electricity highway that unleashes America’s green energy potential, Cheney may, unintentionally, go down as one of the great green vice-presidents. This would place him in a similar category to a previous Republican, Ronald Reagan, who helped accelerate the demise of the Soviet Union and its subsequent economic collapse, causing annual greenhouse gas emissions to plunge by over a billion metric tons per year. This did more to pull back the throttle on climate change than any act to date.

Unlike Reagan’s green contribution, which was in response to an economic implosion, the happy green outcome in Cheney’s case could lead to an economic renaissance.

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China’s aviation overseer vows its airlines won’t co-operate. Legislation before the U.S. Congress would make it illegal for American carriers to comply. Along with India and several other countries, they threaten lawsuits or trade retaliation. Canada has expressed disappointment.

The EU, though, is hanging tough on a plan it estimates will eliminate 70 million tonnes of annual emissions by 2020. “We will not back down from our legislation, and we will not modify it,” says Isaac Valero-Ladron, spokesperson for EU climate action commissioner Connie Hedegaard.

All this over a measure that environment groups describe as a modest first step, and one that will boost ticket prices by far less than airlines’ fuel surcharges or baggage fees.

The groups accuse the industry of hypocrisy: “Negotiations at ICAO have dragged on without result for 14 years … the airlines have tried at every turn to make sure nothing happens,” says Bill Hemmings, program manager at Brussels-based Transport & Environment, which campaigns for sustainable transportation. “The ETS will add no more than 15 euros (about $20) to long-haul flights. That’s less than the daily variations in price. No one worries about them, but along comes an environmental measure and we have an international case.”

The ETS has its origins in the 1997 Kyoto Protocol, which instructed the industry to develop a strategy for reducing emissions – now just three per cent of the global total but rising fast – via the United Nations’ International Civil Aviation Organization, or ICAO.

Seven years later, seeing no progress, the EU decided to add aviation to its emissions trading system, which already covers about 12,000 factories and power plants.

The scheme caps total annual emissions from all flights. This year, the ceiling is 97 per cent of the 2004-2006 average, or about 215 million tonnes. For 2013 to 2020, it drops to 95 per cent. From this pot, credits, each worth one tonne, are allocated among the 900 airlines that must participate – in effect, setting an upper limit on the emissions they’re allowed.

This year, the ETS gives each carrier 85 per cent of its credits; they must purchase the rest. From 2013, the free portion drops only slightly to 82 per cent. Those that emit less than their limit can sell unneeded credits; those over must buy enough to cover their excess.

The credits’ value is set through trading on Europe’s carbon market. In theory, since air traffic is certain to increase while credits stay constant, demand will increasingly exceed supply, raising their value and prompting polluters to reduce emissions.

How that works in practice remains uncertain given the depressed carbon market, where credits fetched about eight euros, or roughly $10.50, at the end of January – close to half the level a year ago.

Even so, the airlines estimate that by 2020 they’ll have bought 700 million credits. That expense, they complain, will force fare hikes, which will make them less competitive and further threaten an industry hurting from overcapacity. The money would be better spent on more efficient aircraft, alternative fuels (see “Green Shades of Jet Fuel”) and other measures that cut emissions, they say.

A study by researchers at the Massachusetts Institute of Technology and Germany’s Muenster University recently generated headlines by concluding U.S. airlines could actually reap windfall profits of up to $2.6 billion from the ETS over the next nine years.

That would occur only if they charge their customers for all the emission credits they require, ignoring the fact they’ll get most of them for free – as some European electricity generators and oil refiners did when they were brought into the ETS.

On the other hand, if the airlines pass through only the costs of allowances that they actually purchase there would be no windfall, and in the unlikely event they don’t pass on any costs their profits would decrease, argues the study, published in the Journal of Air Transport Management.

The EU, meanwhile, dismisses airlines’ complaints of competitive hardship, arguing that since all carriers are impacted none will be disadvantaged. The number of passengers who balk at higher fares will be undetectable among the other fluctuations in demand, it maintains. And if the airlines become more efficient, they’ll need fewer credits.

But opponents also allege the ETS violates international law since it applies to flights over other nations and the open seas, and amounts to an illegal tax. “It’s not so much a financial question or about climate change, but that it was imposed on states outside the EU,” says ICAO spokesperson Denis Chagnon.

In December, the European Court of Justice dismissed a U.S. lawsuit, which Canada backed, based on those claims.

ICAO urges patience, noting its 191 member states have endorsed three of their own measures: 1.5-per-cent annual fuel-efficiency improvements from 2009 to 2020; a cap on carbon emissions after 2020; and a 50-per-cent reduction from 2005 levels by 2050. The members are now to propose how they’d hit these targets.

But ICAO won’t confront the issue until at least 2013 and, critics say, its track record offers no assurance of results, especially since any measures would be “aspirational,” not mandatory.

Europe says conflict isn’t inevitable. The ETS exempts flights from countries with equivalent pollution-fighting measures. And, since it doesn’t require airlines to calculate this year’s emissions or buy credits until March 2013, there’s time to negotiate a wider plan.

While opposing the ETS, the United States might be forced into action. Last summer, a Federal Court judge agreed with environment groups that the Environmental Protection Agency has a legal responsibility to determine whether aviation emissions endanger public health and, if so, to regulate them. The EPA was to respond in February.

And where do Canadian airlines stand? The National Airlines Council of Canada – representing Air Canada, WestJet, Air Transat and Jazz – says voluntary measures to date have been working. For now, the airlines are unhappily complying with the new EU rules, but the council continues to urge the EU to suspend its scheme and wait for global consensus on an international plan.

The EU, having reached for the sky, is showing no sign that it plans to back.

The post Will EU airline tax fly? appeared first on Corporate Knights.

Nothing about my priorities has changed. I still want an economy that is sustainable and just, but I have since internalized Einstein’s wisdom: insanity is doing the same thing over and over again and expecting different results.

That’s why I was a bit ticked last month at the eco-triumphalism surrounding President Barack Obama’s decision to deny the application for the construction of the Keystone XL pipeline, following a concerted campaign that included 12,000 protesters forming a human chain around the White House.

I recognize that temporarily delaying this highway for oil sands was the culmination of a great deal of hard work and campaigning by dozens of North America’s top environmental groups. Also, that it holds symbolic value for a movement that has been handed some savage defeats since the collapse of the Copenhagen climate talks.

But the math is really depressing, and the euphoria over such a small and likely Pyrrhic victory hurts more – it gets to the root of the increasing irrelevance of an eco-movement bent on tearing down small parts of the problem rather than building up big parts of the solution.

Even if we killed the oil sands, it would wipe out just 50 to 100 million tonnes of greenhouse gases per year at their projected height. No small beans, but with two billion tonnes of carbon pollution coming out of North American coal-fired power plants every year, it wouldn`t be even close to good enough.

So why are environmental groups – with the exception of the David Suzuki Foundation’s Trottier Energy Futures Project – spending so much time stopping this oil highway, and so little time starting the clean electricity highway that will enable Canadian green energy to replace American brown energy?

Canada is far more than just another petro-state. Canada’s annual oil exports to the U.S. currently total about $70 billion, or 17 per cent of U.S. oil consumption, while Canada has enough economic clean electricity generation potential (via hydro and wind with pumped storage) to meet the continent’s electricity needs many times over. However, Canada’s clean electricity exports to the U.S. currently total just $4 billion per year, or one per cent of U.S. electricity consumption.

Why are these numbers so far apart? The disparity is not due to a lack of U.S. hunger for clean electricity. The North American Electric Reliability Corporation (NERC) projects that over 260,000 megawatts of new variable power will be needed for the continent`s bulk power system in the next decade – with the vast majority being consumed in the United States. The big reason is that, in contrast to the extensive network of oil pipelines, there are almost no electricity pipelines to get the electrons to market.

There are several barriers to building a clean energy pan-Canadian highway with multiple north-south chutes, but the biggest one is red tape. New grid roll-outs are so bogged down in red tape that the timescales would test the patience of the pharaohs who used to build pyramids – whoever starts a project is unlikely to be alive by the time it comes to fruition.

The U.S. has already recognized this problem and moved to cut some of this red tape with the Energy Policy Act of 2005, which has a provision to invoke so-called National Interest Electric Transmission Corridors. Here’s how it works: the U.S. Department of Energy is mandated to conduct periodic studies on national electric transmission congestion and to designate National Interest Electric Transmission Corridors if deemed appropriate.

Under this law, the Federal Energy Regulatory Commission (FERC) can issue, in certain circumstances, permits for new transmission facilities within a designated national corridor. If an applicant has not received approval from a state regulatory body to site a proposed new transmission project within a year of application, FERC may consider whether to issue a permit and authorize construction of the project.

Invoking such transmission superhighways for Canada to maximize its clean electricity generation potential, with defined provisions that ensure affected local aboriginal peoples are provided a fair stake, makes a lot of sense. This would raise some constitutional and trade issues, but nothing that couldn’t be resolved by some smart lawyers, and smoothed over with some creative financial sweeteners (via access to partial loan guarantees). Such sweeteners would have to come at minimal cost to the treasury, especially in this deficit-challenged era.

The good news is that, for all his green foibles, we currently have a prime minister who seems to get it. In line with Sir John A. Macdonald’s bold vision to connect Canada with the national railway in the 19th century and the network of fossil fuel pipelines laid down in the 20th century, Stephen Harper is sympathetic to a staged pan-Canadian HVDC electricity highway. Such a power highway would unlock what he has identified as an “unprecedented economic opportunity” for getting our abundant clean electrons to the hungry U.S. market.

In fact, probably the most significant federal contribution to reducing greenhouse gases in the past decade was Harper’s pre-election announcement of a federal loan guarantee for the Newfoundland government to support the $6.2-billion Lower Churchill hydroelectric project. Once built, much of the clean electricity from this project is expected to flow through Nova Scotia into the U.S. market, where it would replace dirty power currently generated from coal-fired plants.

In this instance, Ottawa effectively co-signed a $4.2 billion loan, guaranteeing that if either province defaults, the federal treasury would be responsible for the bank payments. Because there is almost no chance of this happening, the loan guarantee is considered cost-free, although a small percentage of it will be recorded on the federal books, according to finance department officials.

Some may wonder why this should not all be left to the private sector. While capital markets can be incredibly efficient at financing certain types of transactions (recall sub-prime mortgages), the plumbing is significantly plugged when it comes to renewable energy projects and grids that cross-cut jurisdictions.

At least in the early stages of grid development and renewable energy deployment, this kind of support is essential for many economically viable projects to go forward, due to the highly conservative Canadian banking culture that has many other opportunities to earn healthy rates of return.

Harper said this type of federal financial support will be considered for projects that meet three key criteria: they must be of “national or regional importance, have economic and financial merit, and significantly reduce greenhouse gas emissions.” He might consider one more: make availability of these loan guarantees conditional on provincial support for national interest electricity corridors.

This brings us to another big barrier standing in the way of a pan-Canadian electricity grid. Parochial by nature, the provinces have short-sightedly clung to their little pieces of the electricity export pie. The 21st century grid will require transcending historical cleavages and reframing the notion of an east-west grid in the context of a pan-Canadian enabler – a grid capable of supplying the vast U.S. electricity market.

Leadership from the federal government will be essential here. Ottawa must demonstrate to the provinces the potential for an electricity export market that is 10 times bigger than it is today. Instead of fighting over crumbs, provinces must come to realize that a pan-Canadian grid with multiple north-south chutes is a means to enhancing access to U.S. electricity markets.

At the same time, the federal government would be wise to expand the scope of Canada`s foreign policy from its whole-hog focus on oil pipelines to the opportunity of building cross-border electricity highways. According to the National Energy Board, 49 states do not count large hydro from Canada toward their renewable portfolio mandate. Our U.S. foreign policy should ensure that U.S. markets are as open to Canadian clean electricity as they are to our oil.

As Canadians, clean electricity corridors represent an opportunity to transform energy from something that divides us to something that unites us, with an estimated annual $70 billion boost to our economic prosperity that slays almost one billion tonnes of U.S. coal emissions in the same fell swoop.

Can someone please pass this message on to our eco-warriors?

This article is adapted from a Manning Centre presentation.

The post The red green show appeared first on Corporate Knights.

But for some projects new options are emerging, including innovative social finance tools called community bonds.

Community bonds are essentially debt instruments, or small loans from a non-profit’s network of supporters, used to advance a specific project. The loans are interest bearing and the bonds can be structured to be RRSP eligible. They are different from other bonds because they can only be issued by a non-profit and are accessible to unaccredited investors. Non-profits can use them to fund infrastructure projects, including community power installations and green retrofits, where there is both collateral and a revenue stream. This makes them the ultimate impact investment.

The concept was created by Toronto’s Centre for Social Innovation (CSI) to finance the $6.8-million purchase and retrofit of its second “shared workspace” building. In a four-month flurry of activity CSI offered members the chance to secure a 4 per cent annual return over five years on a minimum $10,000 community bond purchase. The bond issue, secured against the value of the building, allowed CSI to raise $2 million.

Fast forward a year and community bonds are now being adapted by social enterprises of all stripes to get a wide range of community clean energy projects off the ground.

The ZooShare Biogas Co-operative in Ontario, for example, is awaiting approval of what could be an RRSP-eligible bond offering to finance a 500-kilowatt biogas plant at the Toronto Zoo. The biogas – from the anaerobic digestion of animal manure, such as tiger and elephant dung, mixed with local restaurant grease – will generate electricity that will be sold (at a generous rate of 16 cents per kilowatt-hour) into the Ontario grid as part of the province’s feed-in tariff program.

An added benefit is that fertilizer “by-products” from the plant will be sold in stores under the “Zoo Poo” brand, and waste heat from the process will allow year-round growing at a nearby greenhouse. If all goes as planned, investors in this $5-million project can expect an attractive 7 per cent annual return.

Another Ontario co-operative, SolarShare, is following in CSI’s footsteps with plans to use community bonds – or what they’re calling “solar bonds” – to build 600 kilowatts of solar photovoltaic capacity. Clean electricity will be generated via 18 small-scale and community-owned solar installations spread across the province. The bonds also have the potential to be RRSP-eligible.

For both ZooShare and SolarShare to proceed with their projects as initially envisioned, they still require approval from Ontario’s financial services regulator.

The payback of SolarShare bonds, like the ZooShare offering, is alluring – 5 per cent annually over five years. Given current volatility in the stock market and the low yield of government bonds and GICs, community bonds represent a secure and attractive alternative for individuals who want to see their investments have a positive social and environmental impact. Moreover, by enabling infrastructure projects like these, community bonds are creating green jobs and accelerating the transition to a low-carbon economy. Perhaps most importantly, they do this by transforming citizens of average means from volunteers or occasional donors into committed investors.

“This idea of massive public involvement in the ownership and economic benefit of these projects is what we’ve all been working towards for the past 15 years,” says Deb Doncaster, executive director of the Community Power Fund. “All it will take is for one or two of these projects to be successful and the approach will take off.”

The challenge, however, for impact investors wanting to “buy local” is that financial institutions don’t offer community bonds. At the moment, interested investors must identify individual community bond offerings and purchase a bond directly through the issuing organization or, in the case of a self-directed RRSP, bring the investment to the attention of their financial institution.

Over time, the hope is that more financial institutions looking to distinguish themselves and build up goodwill in the marketplace will see value in making community bonds more easily accessible to their customers.

The right fit?

One challenge for social enterprises lies in determining whether a community bond is the right financing tool for them and, if so, how best to structure their offering for maximum uptake.

First, only certain types of bonds can be held within an RRSP account. One such example includes a bond backed by an interest in a mortgage, as in the case of CSI’s offering. Second, non-profits can generally avoid the lengthy and expensive prospectus process when issuing debt (bonds), due to an exemption for charities and “benevolent” societies. This is the case in Ontario and with legislation in most other provinces.

There are exceptions, however, particularly when the non-profit is structured as a cooperative instead of a corporation. If so, and once again using Ontario as the example, the enterprise must comply with additional regulations under the Co-Operative Corporations Act (CCA). This is the case with both ZooShare and SolarShare cooperatives in southern Ontario. Both have adapted the concept of community bonds for community power projects and are awaiting regulatory approval of their respective offering statements.

In such cases, size clearly matters. When the debt offering is relatively large, the CCA requires that the co-operative submit an offering statement to the Financial Services Commission of Ontario, a process that can significantly delay the sale of bonds by several months or longer.

It’s not so much an issue if the co-operative’s offering is small, such as if the debt obligations don’t exceed $1,000 per member annually and total outstanding securities does not exceed $200,000. This is the case with SolarShare, which for now has been limited to selling $1,000 bonds until it receives approval – which is far from certain – of a larger offering that would permit the sale of multiple solar bonds to individual investors.

If the co-op gets that green light, it aims to eventually make those bonds RRSP-eligible. “We are working with the banks to build a process but we’re not there yet,” said SolarShare member relations coordinator Julie Leach.

Regardless of the organizational structure a social enterprise chooses, or the type of community bond it favours, the offering must ultimately be associated with business models that generate sufficient revenue to pay for the operating expenses associated with the capital project and to repay investors’ principal and interest over the course of the specified term.

Realizing the potential of community bonds for community cleantech projects and other initiatives will also require greater social finance literacy among financial institutions, particularly in the case of RRSP-eligible bonds.

The potential is too great to ignore, said Tonya Surman, founding executive director of CSI. “Just imagine a theatre company banding its audiences together to refurbish its stage, or a recreation centre using a bond to build a new skating rink with a solar panelled roof, repaying investors with income from ice-time rentals and solar power, and creating young athletes and renewable energy at the same time.”

Surman is convinced that community bonds can bring back a do-it-yourself culture to co-creating community assets in our own backyards. “They represent a newer, more humane, more collaborative kind of capitalism, one in which we pool our resources for the common good as well as shared gain,” she said.

We are still figuring out how to “scale” this innovation, and certainly there remain regulatory hurdles to overcome, but it is clear that community bonds are here to stay and poised to have a meaningful impact on the world of social finance. K

The Centre for Social Innovation will be releasing a Do-It-Yourself Guide to Community Bonds in February 2012.

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