Three’s company but four is a party. When I started developing my personal signature in high school math class, I even incorporated the number four into the scribble that is my last name. So perhaps it’s fitting that after four years of leading the small but resourceful editorial team at Corporate Knights – which by the way puts out four issues a year – it’s time for me to move along.

This is my final issue as editor-in-chief of this important magazine, which since 2002 has been the voice of clean capitalism and sustainable development in Canada and beyond. Within the corporate world – through our global and domestic rankings and in-depth analysis – we have shown companies and their leaders how to become more responsible members of the community and recognized those who, after embracing that mission, are achieving results.

I leave this role knowing that the connection between sustainable performance, financial performance, and company value has never been stronger, and that the triple-bottom line imperative is becoming conventional thinking to a new generation of business leaders and students. (See our Better World MBA ranking for the business schools leading on sustainability.)

Could it be that reality is starting to sink in for more organizations, political leaders, educators, citizens and consumers: that we’re a fast-growing species living on a planet with finite resources? Water. Food. Energy. Minerals. Metals. A stable climate. All kind of important stuff. Using our resources more productively, making our energy cleaner, growing our food more efficiently – do it well and we might be able to stick around on this planet a little longer and live comfortable lives.

And at the same time, as I say in most of my editorials, we’ve got a lot of work to do – and need to push harder. Climate change, the mother of all issues, is happening at a rate much faster than expected. The latest studies on melting glaciers in Greenland and Antarctica, and associated sea-level projections, are simply shocking. Extreme drought in California and forest fires in B.C., Alberta and Saskatchewan are some of the latest events this past summer to keep the issue top of mind. There will be more.

Key political leaders seem finally to be getting their act together. President Obama has come out strong on the issue. China’s playing ball. As we march toward the much-anticipated Paris climate summit in December, there’s a lot of hope that a serious international deal will be reached. Are we setting ourselves up for disappointment? You can find out what you should and shouldn’t expect to come out of Paris here.

One certainty: If Paris proves a complete failure Pope Francis will be cursing in multiple languages. Four years on, however, I can give you four reasons to remain hopeful.

• The cost of solar has fallen much faster than anyone expected, and renewable energy in general has become cost-competitive with coal and increasingly natural gas. Energy storage is following the same trajectory, and a turning point for when electric vehicles are less expensive and perform better than conventional cars is all but inevitable. That will be the oil industry’s “Kodak moment,” as Chatham House researcher John Mitchell suggests in my story on how oil companies might transition to a low-carbon economy.

• Young people get it and aren’t tied down to conventional thinking. They are changing corporate culture on the inside. They are choosing companies that align with their values, and those companies that don’t will have a more difficult time attracting good talent. Millennials are driving less, sharing more, and approaching problems with a Silicon Valley-type mindset. “They’re coming at the energy arena, not with a 30 year history at a fossil fuel company, but with entrepreneurial, spirited IT experience and a willingness to make things happen,” says Jules Kortenhorst, CEO of the Rocky Mountain Institute. Young people are taking their cues from Elon Musk, not the Koch Brothers.

• The idea of pricing carbon is gaining momentum worldwide, and even seeing some bipartisan support in the United States. Where federal leaders in some countries are resistant, regional leaders – in provinces and states – are bypassing their federal counterparts (yay Ontario!) and going it alone with support from cities. It’s only a matter of time before such initiatives force federal action where none has previously existed.

• More people are hitting the streets and speaking out. Climate protests continue to grow in size. The divestment movement, symbolic of our growing desire for action, is gathering speed. Getting an oil pipeline built has never been more difficult. As you can read on our Keystone XL story here, environmentalists are hitting fossil fuel companies where it hurts, to great effect.

In this environment, I leave knowing that the magazine is in good hands with managing editor Jeremy Runnalls moving up to editor-in-chief, and with associate publisher Natalie Sorichetti and director of research Michael Yow providing critical support.

Finally, a heartfelt thank you to Corporate Knights co-founder and CEO Toby Heaps, a source of inspiration – and occasional frustration – for all of us. Keep up the fight, Mr. Heaps. Honoured to call you my friend.

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Natural resources are a significant component of Canadian wealth, worth about $1 trillion according to Statistics Canada. Now that this important source of wealth will be included on the official balance sheet, it will be possible to better manage and optimize its long-term benefits for Canadians.

The idea is when natural resource wealth goes down, it is important that other wealth producing assets (financial capital, human capital, built infrastructure) are going up at least as much if not more. While Canada has done a reasonable job at translating natural resource wealth into jobs, valuable clusters of finance and other know-how, enhanced infrastructure and greater tax revenue, building a base of public financial capital as most other resource rich nations have (most notably Norway with its $1.1 trillion sovereign oil fund) has been a point of weakness.

Some provinces have made the explicit link between harvesting non-renewable resources and using the revenue to finance infrastructure that leads to long-term renewable wealth creation. Newfoundland, for instance, is using revenues from its offshore oil resources to build transmission and generation infrastructure to harness its wind and hydro resources for export to power-hungry markets. As former Premier Kathy Dunderdale put it: “When the oil is gone, the water will continue to flow, and that water is power for growth – growth that is sustainable over the long term.”

Expanding the national balance sheet may eventually go beyond natural-capital stocks, or assets, to include liabilities such as costs for greenhouse gas emissions and pollution, which, at some point, may need to be settled by the state.

The initial steps Statistics Canada is taking to account for the value of mineral assets and timber are prudent and commendable; the infrastructure required to account for the physical resources is already in place.
While not everyone agrees on whether integrating natural capital into the national accounts can capture its full market value, there is a strong consensus that if kept invisible, effective tracking and management will remain all but impossible.

Including natural capital on balance sheets is the first step towards ensuring that our forests, rivers, lakes and ecosystems, as well as other natural resources, will endure to meet our future needs.

Compelling companies to disclose their carbon emissions

Moving from the public to the private sector, the recent Corporate Knights assessment of 45 stock exchanges on sustainability disclosure launched at the London Stock Exchange (LSE) this September revealed that Canadian companies listed on the Toronto Stock Exchange (TSX) are not keeping up with investor demand for carbon performance metrics. In the UK, where it is mandatory for large listed companies to disclose their carbon emissions, 100 per cent of the main UK benchmark, the FTSE 100, now disclose their emissions. In Canada, which competes with the LSE for resource company listings, only 59 per cent of large listed companies disclose their emissions.

Ten years ago this was not a problem, but carbon disclosure has grown in importance due to an expanding group of investors who are investing over $500 billion in assets based on reducing their portfolio carbon footprint. The paucity of emissions data provided by TSX-listed companies leaves these investors in the dark.

There is a simple way to fix this. Now that carbon emissions reporting is well understood, the Ontario Securities Commission (OSC) could require companies of a certain size (say $1 billion market value) to disclose their emissions. This would constitute a small reporting burden as most companies of this size are already tracking their carbon, even if they are not yet making it public. It would send a message to leading global investors that Canada is serious about providing the information they require to make prudent investment allocation decisions.

An expedient way to make this happen would be for the Ontario Government to direct the OSC to require large listed companies to report their 2016 carbon emissions in their annual reports.

While members of the Council for Clean Capitalism can speak to the good sense of this policy, it will also be important for some of Canada’s largest investors like OMERS, CPPIB and OTPP to make clear that this would be a welcome development.

Past efforts by the OSC to improve sustainability disclosure have had limited success, in part because the scope of metrics and topics considered have been sufficiently complex to preclude a clear consensus on action.
Requiring large listed companies to disclose carbon emissions is clear and supported by a strong market consensus. It would also be a nice arrow in the quiver for Ontario when it travels to the United Nations Climate Change Conference in Paris this December.

Stay tuned for progress on this file.

The Council for Clean Capitalism is a group of forward-thinking companies that seek public policies in support of an economic system in which prices incorporate social, economic and ecological benefits and costs, and people know the full impacts of their marketplace actions.

Council Members:
Catalyst Paper, The Co-operators Group, Hewlett-Packard Canada, Interface, Mountain Equipment Co- op, Sun Life Financial Canada, Teck Resources, TELUS, Vancity, Brookfield Johnson Controls, and Desjardins.

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Any successful transition to a low-carbon economy will be arduous and disruptive, a journey that is likely to produce a long line of both winners and losers. The business community is itself poised to go through a period of dramatic transformation. Those best equipped to embrace this cleaner form of capitalism will be able to harness private sector capital and ingenuity to succeed under this new paradigm.

Setting up our future business leaders with the skills and training necessary to flourish in the decades ahead is the first step in this process. Business schools remain the training grounds for these future business leaders, with roughly 40 per cent of the S&P 500 CEOs equipped with an MBA.

While there are many business rankings that focus on how they can help graduates make more money, The Better World MBA Ranking aims to identify which MBAs best prepare graduates to change the world for the better and succeed in this shifting business climate. As the march to a more inclusive, socially, and ecologically just form of capitalism gathers steam, it is our hope that these new graduates will not only produce the highest returns for society and the planet, but they will also be handsomely rewarded by the market for doing so.

How to measure the “better world” component of an MBA has proven to be an inexact science. After more than a decade of running MBA rankings on the topic, we have learned three important lessons regarding our methodology.

• Provide a clear vision on the goal of the ranking.
• Keep it simple, transparent, and objective.
• Do not make the ranking dependent on schools having to fill out yet another survey.

The research focus is now oriented around which MBA programs offer the best package of core courses, research and support centres to foster the most comprehensive sustainability-oriented learning experience. These numbers were only taken from publicly available sources.

The Schulich School of Business at York University was the top-ranked program this year, continuing a 12-year reign on top of our rankings. It earned a high grade in all three evaluated categories with a final score of 88 per cent, including a heavy sustainability research focus among the faculty at large.

That was followed by the Desautels Faculty of Management at McGill University, a program that has successfully reorganized itself in recent years around the more holistic concept of “integrated management.”

The Copenhagen Business School rounded out the top three, after finishing 10th in our 2013 ranking. It supports an impressive ecosystem of institutes and centres, including a sustainability-oriented Center for Leisure and Culture Services and a CSR-focused Centre for Business and Development Studies. It is also home to 180 Degrees Consulting, the world’s largest university-based consultancy dedicated to improving the effectiveness of non-profits and social enterprises around the world.

Several notable regional trends did emerge when examining the Top 40 Better World MBA programs. Fifty-five per cent of the schools were from North America, including an impressive nine schools from Canada. European schools made up 33 per cent of the remainder, followed by a handful of schools from Asia, Africa and Australia.

South Korea’s KAIST business school was the top-ranked program outside of North America and Europe, finishing fourth overall.

Future business leaders will be tasked with integrating social and environmental factors into their everyday business decisions, whether it’s how to do full cost accounting, build inclusive leadership and governance structures or practice ethical marketing.

MBA programs have a long way to go, but these top schools are – compared to their peers – tops at teaching corporate leaders of tomorrow how to hit the ground running.

Click here to go back to the ranking landing page.

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Click here to go back to the ranking landing page.

The post 2015 Better World MBA results appeared first on Corporate Knights.

Forrest was appalled and decided that she “really wanted to do something,” as she would later tell the Sydney Morning Herald. And as the daughter of billionaire mining magnate and philanthropist Andrew Forrest, she was in a uniquely privileged position to do just that.

Andrew Forrest decided, in the tradition of Bill Gates, Ted Turner and George Soros, that it was time to throw a lot of money at a big problem and fix it once and for all. Philanthrocapitalism is on the rise, going hand in hand with growing income inequality, greater emphasis on corporate social responsibility and waning government contributions to the international bodies that used to take the lead on such issues.

It has its advocates. They include Michael Green and Matthew Bishop, authors of the 2008 bestseller Philanthrocapitalism: How the Rich can Save the World, who see the practice as the most promising trend in international development. It also has its detractors, including philanthropist Peter Buffett (son of Warren), who has coined the term “philanthropic colonialism” to describe what he considers its dark side: bandaid solutions that fail to address the underlying causes of complex problems. Buffet, who himself supports anti-trafficking programs with his NoVo Foundation, sees his super-rich peers using philanthropy to ease their social consciences, but rarely to tackle fundamental structures of political and economic inequality.

If nay- and yay-sayers agree on one thing, it’s that globally oriented philanthropists and their funder-founded non-governmental organizations (NGOs) are playing an ever greater role in tackling the toughest issues facing the planet. With savvy branding and celebrity support, they’re quick to steal the thunder of the far less sexy national and international institutions that have been hammering away at those issues for decades.

They also gnaw into those institutions’ already dwindling budgets, positioning themselves as a serious, results-oriented alternative, and they attract to their ranks some of the best experts in the field. Andrew Forrest’s quest to end global slavery provides an interesting case study of how this can play out.

Until recently, human trafficking and forced labour were a niche concern of women and human rights groups. The institutional authority on the matter was the UN’s International Labour Organisation (ILO), whose first Forced Labour Convention dates back to 1930 and, since the United States made human trafficking illegal in 2000, the State Department’s Office to Combat Trafficking in Persons.

But in the last decade the “charitable industrial complex,” as Buffett calls it, has embraced the issue, which has been re-branded “modern day slavery” – a much catchier term than the more nuanced terminology of forced labour and human trafficking. As Janie Chuang, professor of international law at the American University in Washington points out, “Put in those terms, it’s the perfect cause that works right across the party aisle. Who could possibly oppose eradicating slavery?”

So when Andrew Forrest launched his crusade to end global slavery in 2012, the field was already crowded with non-state players – from eBay founder Pierre Omidyar’s Alliance to End Slavery and Trafficking foundation, created in 2007, to MTV Exit, a British charity established in 2003 that uses the MTV brand and broadcasting network to raise awareness about trafficking and exploitation.

A church-going billionaire who has committed to pledge half of his fortune to charity in his lifetime, Forrest needed to rise above the fray. He set a lot of balls in motion. Beginning at home with his company Fortescue, the world’s fourth-largest iron producer with mines across Western Australia, he asked all suppliers to sign affidavits that they made no use of slave labour. Those that couldn’t sign (and there were some) were promptly ousted.

Moving onto the international stage, he set up the Walk Free Foundation with a mandate to “eliminate slavery within a generation.” The foundation’s launch in December 2012, co-sponsored by the American and Australian government’s aid agencies, took place in Myanmar: the first open-air concert in that country’s history, drawing a crowd of some 50,000 and broadcast around the world by MTV.

The foundation, which has secured endorsements from the likes of Bono, Sir Richard Branson and Hillary Clinton, currently claims 8.3 million members who are encouraged to put pressure on large corporations to rid their supply chains of forced labour. “Never underestimate the power of one person taking a stand,” says its website, a bold multimedia platform that feels like cotton candy next to the ILO’s bland porridge of bullet points itemizing its various undertakings: from “assisting governments to develop and implement new laws, policies and action plans” to “capacity building of law enforcement and labour market institutions.”

Putting pressure on companies is one thing. But as Chuang, who worked in international arbitration and litigation before entering academia, points out, “voluntary standards ultimately distract from the real work that needs to be done in the areas of legislation and enforcement.”

Chuang argues that using the term slavery, while a powerful public relations device, damages “the cause” by obscuring its real causes. “Slavery evokes a very particular history – whips and chains, physical force, unwilling victims. But slavery is a very narrow term in international law, and with it you’re setting the threshold very high. It’s not easy to prosecute a case involving trafficking in front of a jury expecting the rhetoric of slavery.”

In fact, forced labour today takes many forms, and exists in many sectors of the economy around the world. It’s found in all forms of domestic work, in the sex trade, agriculture, construction, manufacturing and entertainment. The perpetrators are mainly private enterprises but also states and rebel groups. The method of coercion is rarely physical, and most victims are to some extent complicit in the arrangement. The beleaguered boatloads washing up on southern Europe’s shores are not kidnapped by force, they’re just desperate. They are victims of economic inequality and failed states, their traffickers and middlemen simply exploiting a broken system. “Using the framework of slavery, we target the bad guys, the individual wrong-doers,” says Chuang. “But that’s not getting to the root of the problem.”

Still, Forrest has used the moral opprobrium of slavery to great effect. In 2014, he brought together religious leaders including Pope Francis, the Archbishop of Canterbury and the grand imam of al-Azhar in Egypt to sign a pledge to eliminate slavery by 2020 under the banner of a Global Freedom Network. Claiming that it was the first meeting ever between an Ayatollah and a Pope, Forrest told Australian media that the fund “is set up like a high-achieving, measurement-driven, totally target-oriented company. It’s like a hard-edged business. We are out to defeat slavery, we are not out to feel good.”

Apparently, some of them did not feel good at all. This August, in a clipped statement to the Italian newspaper La Stampa, one of the Pope’s principal aides explained that the Vatican was withdrawing its support of Forrest’s campaign. “We do not want to be used,” Bishop Sanchez said. “A businessman has the right to make money but not by using the Pope.”

Speculation abounds as to what precisely transpired, but the more general point seems clear: that business and universal interests are per se different things. And Forrest’s approach to the problem was unabashedly that of a businessman. Having reportedly been advised by Bill Gates that “if you can’t measure it, it doesn’t exist,” Forrest published the first Global Slavery Index in 2013. A second Index followed in 2014.

Of course, Forrest is not the first to put numbers on a problem for which hard data barely exists – the ILO and the American State Department publish statistics regularly – but it was by far the most audacious. Forrest’s Global Slavery Index, a ranking of 161 countries, made a big splash when it put the number of enslaved people around the world at 30 million, well above the ILO’s most recent estimate of 21 million.

Anne Gallagher, a legal adviser to the UN who has worked in the anti-trafficking field for over 20 years, was prepared to hire statisticians to crunch through the Index to assess its validity until she looked at its methodology and realized it wasn’t worth probing any further. Extrapolating data from 19 countries to cover the remaining 148, the index postulates, for instance, that in the absence of reliable figures, China can be assumed to have similar levels of slavery as other Asian nations; that South Africa’s rate of slavery can be calculated as 70 per cent of western European levels plus 30 per cent African levels; that Singapore’s rate can be assumed to be half Japan’s plus half Sweden’s.

The Index, Gallagher says, is riddled with egregious errors of fact and logic: an attempt “to make a silk purse out of a very tattered sow’s ear,” as she wrote recently in The Guardian, in order to create “an illusion of concreteness.” It’s not just nit-picking or sour grapes; poor data, if taken as fact, leads to poor decision-making and policy.

For Gallagher, the most shocking thing about Forrest’s impact on the field of anti-trafficking is the deafening silence of the very experts who should be his critics, either because they are now working for him or feel they can’t afford to offend him. She understands the temptation. “We’re dealing with an incredibly complex problem, for which nobody has an answer,” she says during a phone interview from Australia. “And then someone charismatic with very deep pockets comes along and says: ‘I can do the impossible’.”

Last year, the ILO entered into a partnership with Walk Free on its most recent initiative, a Global Fund to End Slavery, which will solicit grants from national governments grappling with forced labour and enter into private-public partnerships with them. The collaboration doesn’t surprise Gallagher; cash-strapped like all UN agencies, “the ILO is hardly in a position to bite the hand that feeds.”

There is no question that Forrest has drawn a lot of public attention to an issue that, for decades, existed largely in the shadows. Even his critics are grateful for this. Like many philanthrocapitalists, Forrest has brought a welcome brashness, determination and willingness to take risks to the table, not to mention funds.

But ultimately, forced labour is big business, generating, according to the ILO, $150 billion (U.S.) in illegal profits for the private sector annually. It’s part of a global economic system whose growth depends on the exploitation of poor people’s labour.

That’s a big boat to rock, especially if that very system has served you so very well.

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If your goal is strictly to reduce CO2 emissions, then it could be argued – and is by many – that nuclear power plants fit the bill.

If your goal is to reduce CO2 emissions without creating other problems, such as impacting biodiversity or polluting soil or accumulating toxic waste, then nuclear creates big concerns. Even with large hydroelectric projects, the jury is still out for many people.

Then there are those projects that don’t address climate issues directly but solve very specific environmental problems – water or air pollution, waste production, threatened habitat, and food degradation, to name a few.

Disagreement on what should or shouldn’t make the cut has made it difficult to define what kinds of infrastructure projects should qualify for green bond issues, which are debt instruments designed to raise capital for projects with environmental benefits. Public transit, renewable energy generation and wastewater treatment with methane capture seem like obvious candidates. But some projects are not so obvious.

The Climate Bonds Initiative is working to formalize a climate bonds taxonomy, which helps categorize projects that are likely to qualify for certification. The litmus test: is a project consistent with the emissions signature of a low-carbon economy – i.e. that required to avoid dangerous climate change?

As mentioned, some categories – solar, wind, transit – are pretty straightforward. Others are more nuanced with finer details still being worked out. Rail tracks and trains generally qualify, but rail tracks and trains meant primarily to transport fossil fuels do not. Small hydro does, but big hydro (projects larger than 20 megawatts) is still being explored.

Early indication is that most large hydro projects in tropical zones will not qualify on account of their high lifecycle emissions, primarily associated with methane emissions from the decomposition of organic matter in flooded lands. Big hydro in temperate zones where there is less decomposition, however, is expected to pass the climate-friendly litmus test.

Power lines that enable fossil-fuel electricity trade do not qualify, whereas power lines primarily aimed at transporting renewables do. Nuclear power is a big question mark at the moment. Uranium mining does not qualify but nuclear power plant eligibility is being studied. A solar farm built by an oil company counts, but an energy efficiency investment in an oil company’s operations do not. Generally, the Climate Bonds taxonomy excludes anything that extends the life of fossil fuels.

Taking this into account, Corporate Knights has gone ahead and compiled a list of the top 10 climate-friendly infrastructure projects in Canada, ranked by investment size. We made some decisions, and one was to include big hydro and exclude nuclear, though we recognize some of the projects below have been highly controversial and carry with them legitimate concerns that need to be addressed.

Based on the research we’ve seen, however, the emission-reduction benefits of large hydro development in northern countries, such as Canada, far outweigh the potential emissions that might result from decaying organic material.

If planned properly and designed for minimal impact on biodiversity, big hydropower can – and should – play a much larger role in the fight against climate change.

Site C Clean Energy Project
British Columbia – B.C. Hydro
$8,775,000,000

The Site C project represents the third dam and hydroelectric station on the Peace River in northeastern British Columbia. When completed, it will generate 5,100 gigawatt-hours of electricity annually, or enough to power the equivalent of nearly half a million homes with an emission-free resource for more than 100 years. It’s not expected to be completed until 2024, but it would carry B.C. into the 22nd century.

This is probably one of the more controversial hydroelectric projects in Canada at the moment. That’s because building the Site C dam would require flooding 83 kilometres of river and potentially an area of 52,000 square kilometres. The expected impact on wildlife habitats, First Nations territories and some farmland has created much backlash, particularly from aboriginal groups in the area. Others, such as the Canadian Geothermal Association, have argued that B.C. should pursue geothermal power combined with other renewable energy options in the province.

Is the clean power that will come from Site C for more than a century an adequate tradeoff? Of all options, is it the best for B.C.? Depends on who you ask.

Muskrat Falls Project
Newfoundland & Labrador – Nalcor Energy
$6,990,000,000

The Muskrat Falls hydroelectric development is located on the lower Churchill River in Labrador. It will include an 824-megawatt hydroelectric dam and more than 1,500 kilometres of associated transmission lines. That transmission will deliver emission-free electricity to homes, businesses and industry in Newfoundland & Labrador and into Nova Scotia and beyond.

About 40 per cent of the power generated at Muskrat Falls will be used in-province, while 20 per cent will be earmarked for use by Nova Scotia in exchange for 20 per cent of the project costs. Nalcor Energy expects to export the rest – about 40 per cent – to provinces and states in Atlantic Canada and throughout New England, and potentially even Ontario. Over time, Newfoundland & Labrador is expected to need 80 per cent of all power from Muskrat Falls by 2036.

Once built, 98 per cent of the province’s electricity will come from renewable sources. Despite some setbacks, the project is expected to be complete and operational in 2017, on schedule. The first of 3,300 transmission towers connecting Muskrat Falls to a switchyard near St. John’s was erected in April. The high-voltage, direct-current (HVDC) line will stretch 1,100 kilometres.

Keeyask Hydroelectric Project
Manitoba – Manitoba Hydro/Keeyask Hydropower
$6,500,000,000

Manitoba is a hydropower giant that keeps getting bigger. Its latest project – a partnership between Manitoba Hydro and four First Nations – is the Keeyask development located in the northern part of the province, about 725 kilometres northeast of Winnipeg on the lower Nelson River. Construction began in July 2014 and is expected to continue until 2020.

The generating station will be Manitoba’s fourth largest, with a capacity of 695 megawatts and producing an estimated average of 4,400 gigawatt-hours of electricity annually. That electricity will be used within province and exported, mostly across the border to the United States.

Like all big hydro projects, flooding of existing land is required. With a total planned reservoir of 93 square kilometres – equal to about 30 Central Parks in New York City – half of that is expected to be newly flooded. But an environmental review determined that it would take 100 years for Keeyask to emit the same amount of GHGs that a natural gas-fired plant emits in just 177 days.

Romaine Complex
Quebec – Hydro-Québec
$6,500,000,000

Hydro Québec’s 1,550-MW hydroelectric complex is on the majestic Romaine River, north of the municipality of Havre-Saint-Pierre. It’s called a complex, not a station, because it will consist of four hydropower generation facilities. Together, they’ll have an average annual output of 8,000 gigawatt-hours as the water flows toward the Gulf of St. Lawrence.

One station, Romaine-2, began operation in late 2014. Romaine-1 and Romaine-3 are under construction and expected to be in service by 2016 and 2017, respectively. It will be 2020 by the time the entire project is finished.

Plenty of clean power will be delivered from this project, but like others of similar scale, not everyone is happy. The Nutashkuan Innu community, for one, accuses Hydro Québec of plundering the environment and not working with the community to minimize local impacts in wildlife, traditional hunting and fishing. A total of 279 square kilometers of land will be flooded to create all four reservoirs.

Eglinton Crosstown LRT
Ontario – Metrolinx
$5,300,000,000

This project is part of a larger, $50-billion investment spanning 25 years, with a goal of easing traffic congestion in the Greater Toronto and Hamilton Area (GTHA). The Eglinton Crosstown is an east-west light rail transit line along a 19-kilometre corridor. About 10 kilometres of that will be located underground.

It’s no secret that traffic in Canada’s largest city is crazy, and getting worse. This LRT represents the biggest transit investment in Toronto’s history, and with 25 stations and stops will make commuting that much more convenient and alluring.

Construction began in 2011 and work will continue to at least 2020. By 2031, it’s expected about 5,400 passengers will use the LRT per hour during rush periods, but up to 15,000 can be accommodated at capacity. That’s a lot of people potentially staying out of their cars and burning less fuel.

Last fall, Ontario raised $500 million through the issue of its first green bond. Most of the proceeds from the offering will go toward funding the Eglinton Crosstown LRT.

Bipole III Transmission Line
Manitoba – Manitoba Hydro
$4,600,000,000

The clean power generated from hydroelectric projects means little if you can’t reliably get that electricity to where it’s needed. When it enables the strategic movement of clean energy, transmission counts as climate-friendly infrastructure.

The Bipole III project is Manitoba Hydro’s insurance policy of sorts, though critics call it an overly expensive one. Right now, about three-quarters of the hydropower delivered from northern to southern Manitoba is through a single HVDC corridor called Interlake and one converter station. Forest fires and severe weather such as ice storms and extreme wind – happening more frequently as a result of climate change – puts the corridor at risk and increases the likelihood of power outages.

Bipole III will be a 500-kilovolt line linking the utility’s northern power-generating complex on the Lower Nelson River with the conversion and delivery system in southern Manitoba, where most of the province’s population resides.

The Nelson River has only been developed to half its hydroelectric generation potential. The second corridor will bring both reliability and room to grow system capacity, whether that means to satisfy in-province demand or export demand from the likes of Minnesota and Wisconsin – and maybe Ontario down the road.

Scarborough Subway Extension
Ontario – Toronto Transit Commission
$3,300,000,000

It’s still early days for the Scarborough Subway Extension, and Toronto politicians have been known to change their minds on a dime. The exact underground route, three station locations and construction methods are still to be determined, and opinion polls suggest the public isn’t completely on side.

Many, in fact, would prefer that the city invest in a much cheaper, seven-stop LRT system that would extend the most eastern side of Toronto’s Bloor-Danforth subway line further into Scarborough. But Toronto Mayor John Tory and Ontario Premier Kathleen Wynne consider the matter closed.

A final plan is expected to come down next year, and it will take several years to complete the project. When done, the new line is expected to carry 9,500 to 14,000 riders during peak hour and direction by the year 2031. Like the Eglinton Crosstown LRT, the Scarborough subway extension is expected to take thousands of cars off the road, both easing downtown congestion and reducing GHG emissions and air pollution.

Spadina Subway Extension
Ontario – Toronto Transit Commission
$2,760,000,000

Unlike the Scarborough subway extension, construction of Toronto’s Spadina extension is well underway with service expected to begin at the end of 2017.

This is an 8.6-kilometre extension and the first to cross the Toronto city boundary, in this case reaching into the regional municipality of York. There will be six stations in total, including one at York University that will support student commuting.

Most stations will feature green roofs, high-efficiency LED lighting systems, increased used of natural sunlight, plenty of parking for cyclists, and high-efficiency heating, cooling and water systems.

As is the case with all Toronto subway and LRT projects, electricity used to power vehicles will be low-carbon, as Ontario has phased out coal power and depends predominantly on hydro, nuclear and wind generation. And, of course, it will reduce city emissions and congestion by encouraging people to leave their cars at home.

The province estimates that the new line extension will add 36 million transit trips and eliminate 30 million car trips per year.

Lower Mattagami Hydroelectric Complex
Ontario – Ontario Power Generation
$2,600,000,000

This hydroelectric project was completed in January, half a year ahead of schedule. It has been described as the largest project of its kind in Northern Ontario over the past 50 years, and has not faced the same kind of resistance as other recent large projects, such as Site C or the Romaine Complex.

Part of the reason is that the project, located about 70 kilometres north of Kapuskasing, was not a virgin development. Four Ontario Power Generation (OPG) hydroelectric stations built in 1931, 1963, 1965 and 1966, respectively, already existed at the site.

OPG completely replaced the oldest station with a larger three-unit facility and added a new unit to each of the other three stations. The effect is that it brings 438 megawatts of new renewable power capacity to Ontario’s northern grid.

Another unique feature is the partnership OPG struck with Moose Cree First Nation, which owns a 25-per-cent equity stake in the project. It was considered a groundbreaking deal that improved government-aboriginal relations. Moose Cree businesses benefitted from $300 million worth of sub-contracting work and more than 250 First Nation and Métis workers were employed at the peak of construction.

“A typical hydro station remains in service for 100 years or more, so the Moose Cree community will have a revenue stream for many years,” OPG said. The project has been described as a model partnership between government and First Nations.

Confederation Line
Ontario – (Ottawa) OC Transpo
$2,130,000,000

Toronto isn’t the only Canadian municipality trying to get its transit house in order. Ottawa, the nation’s capital, is in the middle of phase 1 of a new LRT system that will include a 2.5-kilometre tunnel through the downtown core.

Construction began in 2013 and will continue until about spring 2018. The system will come with an integrated pedestrian and cycling network and lots of public spaces. Once finished, it will carry 10,700 passengers per hour in each direction during peak times, with the ability to handle more than 18,000 by 2031.

It’s expected it will help traffic flow by eliminating half the buses from the downtown core, reducing the city’s own fuel consumption by 10 million litres annually. An estimated 9 per cent increase in ridership will also keep cars off the roads – the equivalent of 7,300 cars based on anticipated GHG reductions of 38,000 tonnes a year by 2031.

Contract engineering firm SNC Lavalin, which has been working on the project, says the environmental benefits could be larger with annual GHG reductions of 94,000 tonnes and air contaminant levels lowered by 4,600 tonnes. “Ottawa’s updated modelling analysis calculated that the project would result in 13,750 fewer vehicles on the road, leading to a saving of 232,700 vehicle-kilometres travelled in 2031 during the morning peak hours,” the engineering firm says on its website.

The post Big green projects to help the climate appeared first on Corporate Knights.

So-called fugitive emissions are a big contributor to total U.S. greenhouse-gas emissions. Compared to carbon dioxide, methane is anywhere from 34 to 86 times more potent as a heat-trapping gas depending on how long it remains in the atmosphere. Generally, the gas becomes less potent in the atmosphere over time.

The new rules were put forward by the U.S. Environmental Protection Agency, which has set a broad goal of lowering the country’s methane emissions by up to 45 per cent from 2012 levels by 2025. If passed, these particular regulations would get the EPA roughly halfway to its goal.

Janet McCabe, the agency’s acting assistant administrator for its office of air and radiation, estimated that complying with the new rules would cost the industry up to $420 million (U.S.) over the next 10 years. That said, savings due to efficiencies and the ability to capture more methane for sale is expected to reach $550 million over the time period.

In other words, the EPA argues there will be a net benefit for the industry if it complies with the new standards.

Studies suggest that regulators in both the United States and Canada have dramatically underestimated the amount of fugitive methane emissions, partly because of a lack of reliable monitoring.

The post U.S. EPA starts long-overdue crackdown on fugitive methane emissions appeared first on Corporate Knights.

One of the single most important factors relates to the amount of methane and carbon dioxide that gets released into the atmosphere, either deliberately through venting or by accident as so-called fugitive emissions. Fugitive emissions are the result of valves and meters that release, by design, small quantities of gas. But they can also come from faulty equipment and from operators that fail to follow regulations.

According to the B.C. Greenhouse Gas Inventory Report 2012, there were 78,000 tonnes of fugitive methane emissions from the oil and natural gas industry that year. B.C. produced 41 billion cubic metres of gas in 2012. This means about 0.28 per cent of the gas produced was released into the atmosphere.

By North American standards, this is a very low estimate. The U.S. Environmental Protection Agency (EPA) uses a figure of 1.5 per cent leakage, more than five times higher. Recent research led by the U.S. non-profit group, Environmental Defense Fund (EDF), shows that even the EPA estimates may be too low by a factor of 1.5. B.C.’s estimate, in other words, would be about one-eighth of what has been estimated for the American gas industry.

Although the amounts of methane released are small compared to carbon dioxide emissions, methane matters because it packs a much bigger global warming punch. Determining the effect of methane emissions is complicated because molecules of methane only last in the atmosphere for a decade or so and the warming effect from its release depends on the time interval it is measured over. Compared to a given mass of carbon dioxide, the same mass of methane will produce 34 times as much warming over 100 years, or 86 times as much over 20 years.

There are reasons why B.C.’s methane emissions might be low relative to American operations. Much of the conventional natural gas in B.C. is sour – that is, it contains hydrogen sulphide in small but dangerous concentrations. The need to handle this gas with great care before it is processed has produced strict regulations and a culture of compliance among operators. In addition, B.C. does not have the ancient and often leaky iron pipes installed as much as a century ago to distribute gas in some U.S. cities. Nevertheless, differences in the industry practices between the two countries are likely insufficient to explain the factor-of-10 variance in leakage estimates.

The B.C. government estimates its fugitive emissions by using a combination of inventory methods and detailed field reporting from industry. Inventory methods involve taking, for example, the expected leakage from a certain type of valve and multiplying that factor by the number of such valves employed in the field. The reports provided by industry record emissions from combustion, leaks and venting of all greenhouse gases. These two methods are known as bottom-up approaches and they depend on equipment working as designed and on the operators fully reporting emissions.

Entirely lacking in B.C.’s approach, however, are so-called top-down measurement approaches that the EDF researchers have used in the United States. These techniques measure the methane concentrations in the atmosphere around gas industry operations, using sensors mounted on towers as well as on ground and airborne vehicles.

A major 2014 survey by Stanford professor Adam Brandt and colleagues in the journal Science shows that top-down methods almost invariably reveal more emissions than the bottom-up, inventory methods. One important reason for the discrepancy seems to be the presence of “super-emitters” – for example, unreported leaks from pipelines or rogue operators flouting regulations. One study found that 58 per cent of emissions came from merely 0.06 per cent of the possible sources.

A recent Canadian example of a super-emitter would be the operations of Murphy Oil, which was recently shut down by the Alberta Energy Regulator. The regulator conducted an unannounced compliance sweep and discovered that U.S.-controlled Murphy, contrary to regulations, was allowing associated gas produced with their oil operations to vent to the air rather than be flared or conserved.

Another example would be a recent spill of 31,500 barrels of bitumen in the oil sands of northeastern Alberta at a project operated by Nexen, now owned by the Chinese company CNOOC. Despite use of the latest technology, the leak went undetected perhaps for as long as two weeks until, by chance, a contractor spotted it. If this had been a leak from a gas pipeline in a remote area of B.C., it would have been far harder to detect by casual inspection.

Wanted: credible numbers

EDF funded its $18 million, 16-study methane-leak research program with grants from private and industry donors, including a large one from the Cynthia and George Mitchell Foundation. George Mitchell is widely credited as one of the pioneers of gas-fracking technology. Two industry donors to the EDF project were Canadian companies Encana and TransCanada Corporation, both active in the B.C. natural gas business. The EDF research project involved the participation of industry, universities, environmental non-profit organizations and government agencies.

Environmental scientist Ann-Lise Norman of the University of Calgary has estimated that a top-down methane measurement research program in B.C. would cost less than $10 million. Complementary studies and audits could also be conducted at relatively low cost. The time to start any such studies is now, since they would provide an emissions baseline prior to the greatly expanded development activity that will happen once the B.C. LNG projects get underway.

For any study in B.C. to be as credible as counterparts in the U.S., the participation of industry, government, university researchers and environmental groups would be required.

Transparency is a must because the current B.C. government is an unabashed cheerleader for the LNG industry while the provincial regulator, the B.C. Oil and Gas Commission, has been described by journalist Andrew Nikiforuk as more of an industry funded and controlled facilitator rather than what it ought to be: an independent watchdog and an arbiter between the industry and the people of the province. For example, the B.C. regulator could, following the recent lead of its Alberta counterpart, step up compliance sweeps. Unfortunately, it has shown no inclination to do so.

Canada’s energy industry has in recent years gained a tarnished international reputation due to well-publicized pipeline failures and the scrutiny given to production practices in the oil sands. The U.S. has taken seven years to examine the Keystone XL pipeline application, and approval is still not granted or assured. The European Union wanted to label oil sands bitumen as “dirty oil” and impose extra taxes until pressure from the Canadian government on some EU states forced them to back down.

The customers for Canada’s energy exports are not likely to be persuaded any longer by blithe assurances that the country’s energy products are clean or ethical. No longer, after what is shaping up to be the hottest year on record, can we assume that the buyers of Canada’s energy exports will be indifferent to the upstream emissions involved in making that product.

Many countries will be making difficult commitments to reduce their emissions at the Paris climate conference in December. They will not look kindly upon trading partners who are set to break their own domestic commitments and who show little inclination to properly measure and manage their emissions.

Three years ago at the World Economic Forum in China, B.C. Premier Christy Clark claimed that British Columbia would produce “the cleanest LNG in the world” – a promise that was later redefined to exclude greenhouse gas emissions associated with the production, processing and overland transportation of the gas.

In contrast, the Gorgon LNG project in Australia – a competitor to B.C.’s gas in Asian markets –disposes of four million tonnes per year of excess carbon dioxide at its processing and liquefaction site by injecting it deep into geological reservoirs, significantly reducing the overall emissions of the LNG process, from wellhead to ship.

Other things being equal, and in an over-supplied Pacific market, LNG customers may prefer suppliers with a genuine and demonstrable claim to producing the cleanest LNG in the world.

The post B.C. lowballing fugitive methane emissions from natural gas industry appeared first on Corporate Knights.

In Sweden’s Lule River Valley, a venture called Treehotel offers rooms that are suspended up to six metres from the ground within a tall pine forest, while Tubohotel in Tepoztlán, Mexico, uses massive recycled concrete pipes as the housing for its 20 rooms, stacked in pyramids of three.

These are all neat ideas – and great for eco-tourist types, the ones who research their destinations and seek out places that will connect them with nature and ease the guilt of consumerism in overdrive, otherwise known as the world in which we live.

More important than these boutique hotels, however, is how more mainstream options for travel accommodations are embracing the sustainability imperative, either because they recognize efficiency equals cost savings or that more of their customers are demanding it – or both.

“Over the last few years some hotels and many of the biggest hotel chains are trying to distinguish themselves as environmental-friendly players within the tourism sector,” wrote Tiago Diniz, a graduate student at the University of Edinburgh Business School in a 2012 study.

Diniz found in a survey that – price and service being nearly equal – virtually all customers would prefer a “green” hotel, and half described it as important to them. Probed further, only a “residual part of respondents” have actually sought out or stayed at a green hotel, but the overarching trend is clear. Customers, argued Diniz, “expect the hotel industry in general to have embedded tools such as waste recycling, water and energy saving systems or the reuse of towels.”

Indeed, other studies support this. According to the 2012 Canadian Travel Intentions Survey, 42 per cent of business travelers who took part said evidence of energy efficiency or recycling influences where they choose to stay. That figure was up significantly from just five per cent the previous year.

The Hotel Association of Canada’s 2014 Travel Intentions Survey found that 44 per cent of Canadian business travelers felt eco-certification of hotels was important, up from 18 per cent in 2013.

The rise and measurable benefits of Leadership in Energy and Environmental Design (LEED) certification for hotel buildings suggests the hospitality industry is beginning to take consumer expectations seriously. The certification is an independent, third party verification that the hotel or motel achieves high performance when it comes to energy and water use, indoor environmental quality, and materials selected during construction.

Of note is that Canadian hotels appear to significantly lag their America cousins when it comes to LEED certification. According to the U.S. Green Building Council (USGBC), there were only six certified hotels in Canada as of June 2015, compared to 212 in the United States.

Use of LEED by hotels is fairly new, but enough U.S. hotels have been certified to give an early sense of whether it makes both environmental and economic sense. A 2014 study out of Cornell University’s School of Hotel Administration compared the financial performance of 93 LEED-certified hotels with 514 non-certified competitors. “Certified hotels obtained superior financial performance,” concluded the study.

The revenue boost could be seen across all hotel types, though the researchers conceded that most of the hotels in their study were upscale or luxury properties in urban or suburban settings. “This makes sense, because many of the LEED standards involve a hotel’s connection to public transit or other resources typical of urban areas,” said study co-author Rohit Verma.

But even within particular locations, there can be huge differentiation between properties, according to another piece of Cornell research, which looked at monthly utility usage of more than 2,000 hotels across 30 geographic areas and analyzed them based on six energy and carbon key performance indicators.

“For hotels with similar attributes and in the same city, energy per square meter can vary by more than a factor of five,” wrote researchers Howard Chong and Eric Ricaurte in their 2014 hotel sustainability benchmarking study.

LEED and beyond

Evidence of the LEED impact will become clearer as more hotels embrace the standard. The Marriott chain and Starwood Hotels and Resorts’ Element brand, for example, have both made LEED standards mandatory for all new construction, and they’re not the only major chains to do so.

Of course, LEED isn’t the only eco-rating in town either, and many hotels are at least attempting to go above and beyond. Back to Marriott: it has pledged to lower its energy and water consumption by 20 per cent by 2020. On top of that, it uses its influence in the industry to not just educate guests, but also to nudge hotel developers to build sustainability into projects from the start.

Starwood, whose global headquarters has earned the highest LEED certification, has a similar water-reduction target, and aims to cut carbon emissions by 30 per cent in all of its properties globally within the next five years.

Others are participating in specific initiatives or partnerships that help give them green bragging rights. More hotels are retrofitting to LED lighting, using eco-friendly cleaning products, purchasing biodegradable toiletries, and sourcing sustainable seafood and organic fruits and vegetables.

W Hotels Worldwide, a part of Starwood, recently announced a partnership with music artist will.i.am and Coca Cola that will see bed sheets made of recycled plastic used in rooms across the chain, starting in North America. Each king size sheet contains the equivalent of 31 recycled 20 oz. plastic bottles. Applied to all beds at U.S. locations alone, that works out to 268,000 plastic bottles.

To draw attention to these efforts, many hotels are becoming members of Ottawa-headquartered Green Key Global, an eco-labeling initiative based on a self-auditing system and random verification. Through its eco-rating program, hotels can earn up to five “green keys.”

The more keys held the higher the rated environmental performance, with each key “unlocking” guidance on how to obtain another key. Nearly 2,000 hotels now participate in the program, slightly more than half from Canada.

“The industry is embracing sustainable initiatives on multiple levels,” managing director Tony Pollard stated earlier this year. Green Key Global is now working with the United Nations Environment Programme to get a better sense of what kind of sustainability information corporate travel agents and meeting planners are requesting from hotels.

The motivation to engage in eco-initiatives and eco-labeling programs may, in part, be coming from the business world’s desire for “green meeting” places. Research shows that a growing number of corporate meeting planners are demanding that hotels used for conferences and business gathering meet minimum environmental standards.

That’s where performance diverges from goals. Marriott and Starwood are making some gains and big commitments on the ambition front, but of nine major hotel chains that ranked on Newsweek’s “America’s Greenest Companies 2015” list, both hotel brands were in the bottom half of the pack (keeping in mind that many hospitality companies didn’t even make the list).

The list, a ranking of 500 publicly traded U.S. corporations developed in partnership with Corporate Knights Capital, assesses companies based on eight key performance sustainability indicators, including waste generation, water use, energy consumption and emissions.

Las Vegas Sands, ranking 60 out of 500, was the highest-scoring company in the hospitality category, followed by Wynn Resorts (100), MGM Resorts International (112) and Wyndham Worldwide (114). (See chart for all hotel companies and their rank)

Las Vegas Sands has taken on some unique challenges. Its Sands Bethlehem property in Pennsylvania, opened in 2009, was built atop the largest brownfield site in the United States and home to the former Bethlehem Steel plant. The company helped the community restore the area, including cleaning up an adjacent river and nearby neighbourhoods with the help of volunteers.

Others at the top of the list have pursued renewable energy, energy-efficiency projects, and worked to recycle toiletries so they can be sent to developing countries. Last year, MGM finished installation of a massive five-megawatt rooftop solar PV system at its Mandalay Bay Resort and Casino in Las Vegas. Wyndham has already reduced energy use at its North American properties by 12 per cent since joining the U.S. Department of Energy’s Better Buildings Challenge, launched in 2011.

The power of sharing

Hotels will be motivated to push harder on sustainability as competition with home sharing services intensifies. Airbnb, for example, argues that staying at a stranger’s home when on a trip is greener than going to a hotel. (As an aside, one guy even threw a mattress in the back of his Tesla Model S and listed it as a “private room” for $85 a night, though it turned out to be a hoax).

The basis of this claim is a 2014 study commissioned from the Cleantech Group consultancy, which analyzed over 8,000 survey responses from hosts and guests across Airbnb’s global network. It then compared those responses with traveler statistics gathered on hotels, and to be fair, it only used hotels that performed in the top 5th percentile with respect to energy use.

The resulting report found that by using existing resources – that is, someone else’s paid-for, fully-equipped home – Airbnb users simply tend to consume lower amounts of water and energy and generate less waste. Is this out of respect for the host? One can only speculate.

“In North America alone, Airbnb guests used 63 per cent less energy than hotel guests,” said Airbnb’s chief product officer when the study was released. “That’s enough energy to power 19,000 homes for one year.”
Among Airbnb’s other North America claims:

• In a year, Airbnb guests saved the equivalent of 270 Olympic-sized pools of water compared to the hotel benchmark;

• Nearly 83 per cent of Airbnb hosts reported owning at least one energy efficient appliance;

• Less than half of hosts provide single-use toiletry products for their guests, which reduces waste generated;

• When staying with an Airbnb host, guests are up to 15 per cent more likely to use public transit, walk, or cycle as their primary way of getting around than if they had stayed at a hotel.

Airbnb acknowledged that its service might encourage people to travel more and stay away longer on trips, but argued that any increased environmental impact from this was offset by the benefits of home sharing.

It’s tough to know for sure if there’s substance to these claims. The study was not scientifically rigorous and was based on many assumptions. However, one could make the argument that an online service such as Airbnb – having booked 40 million guests in 34,000 cities to date – has more capacity to influence green behaviour, and therefore outcomes. That influence is expected to extend into the corporate world with a program for business travelers launched in July that has signed up about 1,000 companies.

As a single point of contact for millions of hosts and travelers, Airbnb can easily reach out to that community – whether it’s to educate, nudge or incent more sustainable behaviour. Such a powerful constituency can be harnessed to influence public policy and draw wider public awareness to environmental issues like climate change, as demonstrated by its “Make Every Day Earth Day” campaign.

Last September, Airbnb teamed up with Nest and began offering free smart thermostats and energy monitoring services to select hosts in its network. “Airbnb wants to help hosts on their quest to be green,” said head of business development Lex Bayer when the partnership was announced.

As part of a similarly structured deal announced in August, Tesla will supply discounted charging stations to certain Airbnb hosts as a way to accommodate Model S owners who may need an overnight charge-up.

These are opportunities for Airbnb to green its brand, but also to experiment with ways to spread sustainable technologies and ideas throughout its community. That it recently hired Democratic political strategist Chris Lehane as head of its global policy and public affairs team is a sign of where it might take those experiments.

Lehane is former press secretary to U.S. vice-president Al Gore, the Nobel-winning climate activist, and most recently has been leading California billionaire Tom Steyer’s climate action and anti-Keystone XL campaigns.

It was a key hire, and given Lehane’s background on climate advocacy, it could lead to a bigger sustainability push for Airbnb as the company learns to better harness the influence of its broad and deep sharing community.

The post Hotels, Airbnb battle for green cred appeared first on Corporate Knights.

I imagine the pioneers from Sun Company of Canada and Syncrude felt a similar sense of gratification after hanging on for so many years to finally realize the dream of making the oil sands a commercial success.

But the sands are shifting, and so too is the recipe for Alberta’s economic success.  Rip-and-ship seemed like a great model while it worked, but it also surrendered a lot of power to other market participants. With limited capacity to add value to the billions of barrels of bitumen and only one market to sell into, it dealt environmentalists a trump card they played by blocking pipelines (see here) and empowered American refiners to hold us over a barrel. Scotiabank estimates Alberta producers have given away $10 billion a year in oil discounts for each of the past two years, because they had no option but to sell to price-making U.S. refiners. To put this number in perspective, that’s about 10 times more than a British Columbia-style carbon tax would generate from the oil patch.

Add into this mix a supply glut driven by the shale revolution and the Saudis turning on the taps, and we are living in a different world entirely.

Environmentalists have been effective in their campaign to brand Alberta’s carbon-intensive oil sands as dirty, and it will take grand actions to change this perception. Until it cleans up the industry, Alberta will continue to face effective opposition to new pipelines, as well as low-carbon fuel standards in key markets and even border measures from countries that have tougher climate rules, cautions former Syncrude Canada chief executive Eric Newell.

For its part, the recently elected Alberta NDP government is openly linking market access with climate leadership. The government is currently evaluating a host of measures under the steady hand of University of Alberta economist Andrew Leach.

The Alberta government would do well to take the $18 per tonne (or, 4-cent-a-litre increase in the gas tax) contained in Jim Prentice’s pre-election budget, bump it to $30 to match B.C.’s continent-leading carbon price, and extend it economy-wide over the next two years, subject to oil prices holding above a minimum of $50 (U.S.) per barrel. Part of the proceeds could go into the province’s tech fund to help finance “moonshot” technologies (such as cold solvents for in situ extraction or converting CO2 emissions into new carbon-based products) and part could be paid out as a carbon dividend to offset the small pocketbook increase at the pumps (2.7 cents a litre on top of Prentice’s 4 cents) and for power bills (estimated to rise by $6 per month).

In combination with the coal phase-out, this would substantially boost Alberta’s climate bonafides while being sensitive to the oil patch’s current economic situation. But it would not be enough.

Making the transition to a resource-based low-carbon economic powerhouse will require significant infrastructure investments.

The good news on this front is that there has never been a better time for Alberta to invest in infrastructure. The province’s AAA credit rating combined with a low interest rate environment provides access to cheap money at a time when a dollar invested in Alberta goes a lot further than it would have previously.

Alberta could fill the hole left by dried-up private sector investment to lead a green economic stimulus financed with the largest package of green bonds issued to date by a subnational actor. Such a stimulus would do well to focus on four areas: transit, power, energy efficiency, and infrastructure to support an eco-industrial cluster in the Greater Edmonton region designed to fully tap the value of Athabasca’s hydrocarbons.

There is $12 billion of mostly transit projects ready to roll in Edmonton and Calgary, which would substantially boost productivity in those two economic hubs.

Alberta could decarbonize its power grid by forging genuine partnerships with First Nations, untying some of the regulatory Gordian knots and co-investing with private sector partners to create a green power corridor by tapping abundant hydro power potential on the Peace (1,500 MW), Athabasca (1,500 MW) and Slave rivers (1,800 MW). This would allow for the storage of intermittent wind energy and also serve as an important water management tool allowing for better flood control during periods of high flow.

Alberta could create an energy efficiency revolving fund to provide zero-interest capital for profitable energy efficiency investments in homes, buildings and industry.

And finally, Alberta could lay down a plan and capital to build a world class eco-industrial cluster in Greater Edmonton that would incent private sector investment to go beyond basic upgrading and refining of oil sands feedstock into making valuable materials such as plastic pellets and carbon fibre resin, potentially adding as much as $25 billion a year to the provincial economy. These value-added materials also have economics that run countercyclical to oil prices and which can be safely and efficiently transported by train to U.S. and global markets. Rather than being limited to the option of selling heavily discounted barrels of crude, Fort McMurray could be the feedstock for the carbon fibre in the Ford GT Supercar.

The saying “It’s the crude, dude” would take on a whole new meaning.

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