Bottom rung

170px-Charles_Darwin_by_Julia_Margaret_Cameron_2It is not the strongest or the most intelligent who will survive but those who can best manage change. ― Charles Darwin

As I mentioned in my last post, I traveled to Germany in February and experienced first hand some of the ways that Energiewende – “energy transformation”, the national policy to eliminate fossil fuels and nuclear from the country’s energy mix – has manifested itself. One of the most striking was the way it has sparked innovation. Necessity is the mother of invention, after all. Dramatically rising energy costs have forced German industry, institutions, and governments at all levels to innovate, and in so doing, to adapt.

Energy efficiency is one of these adaptations. Germany is home to a building design standard called Passivhaus (which, as you might expect, translates as “passive house”). This standard uses aggressive insulation, thermally efficient windows, weather stripping, energy-efficient appliances, and heat recovery ventilation to bring the net energy consumption of a house close to zero. In the North Rhine-Westphalia city of Bottrop, I saw my second passivhaus. It was a low-income housing project.

That was a surprise. Here in Canada, I’ve come to associate highly efficient housing with wealth. Perhaps it’s terminology like “LEED gold” or “LEED platinum” that evokes riches by referring to precious metals. Perhaps it’s the reputation that an efficient building is an expensive building.

Perhaps it was the experience of my first passivhaus, the office of a respected and successful architectural firm in Guelph. It is a lovely two-storey Victorian home whose exterior is indistinguishable from neighbouring houses. There is one exception, being the complete absence of icicles – a dead giveaway that little or no heat is escaping into the attic space to melt the accumulated snow on the roof. (This winter in particular, there is plenty of accumulated snow.) Once inside, if you are particularly observant or, as in my case, have it pointed out to you by the owner, you notice that the walls are about a foot thick. I was awed to hear that the light fixtures and human occupants give off enough heat to keep the place comfortably warm. The furnace almost never runs.

Back to Bottrop, where the passivhaus I encountered was intended not for the wealthy, but for the poor.

The wisdom of making social housing hyper-efficient is inescapable. As energy prices rise in excess of the overall rate of inflation, the ones that feel it most keenly are the ones on the bottom rung of the income ladder. Recipients of social assistance, as well as those not dependent on the state but earning an income not far above the poverty line, are hit hard. They are faced with the impossible choice of either keeping their house warm, or feeding hungry mouths.

If the state provides housing that comes with a large and growing burden of energy bills, it will inevitably have to raise the amount of social assistance it delivers. If, on the other hand, the building can be kept at a livable temperature at little or no expense, the somewhat larger initial investment in the building pays for itself.

If, as in the case of the Bottrop building, there is actually an income stream from rooftop solar panels, the logic of energy inflation is turned on its head. The occupants actually benefit from rising prices for energy, since they are using little or none themselves and have an excess to sell to the grid (and, by extension, their neighbours). Higher energy costs actually mean that less social assistance is needed.

Passivhaus is an intriguing technological innovation. Similarly rooftop solar panels for electricity production. However, these are not nearly as fascinating as the social innovation of applying both technologies in the context of affordable housing.

Social Darwinism is a concept that has earned much derision and disdain from those with a social conscience. The idea that those unable to provide for themselves should be abandoned to their fate, thereby strengthening the human species, has been thoroughly discredited. However, the German experience has shown that the environmental stress of rising energy costs can lead to an innovation that helps the most disadvantaged and disenfranchised. Social Darwinism is being reborn, but in a way that promises to offer the “weak” not a cold shoulder, but a warm home and some welcome extra income.

I’ll give the last word to Charles Darwin again:

If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.


I spent this week at the penultimate meeting of the Transatlantic Urban Climate Dialogue (TUCD) in Germany, over and over hearing the term energiewende. Some of our hosts translated this as “energy change”, demonstrating characteristic German modesty. If I bought a Tesla Roadster, installed a solar array on the roof of my home to power it, ever after laughing at the price per litre posted at the local petrol station, and then referred to my accomplishment as changing a tire, it would be a similar understatement. Energiewende is no mere change. It is a revolution.

Visible signs of energiewende abound. Solar panels are a common sight on roofs of homes, factories, and institutions – the Free University of Berlin has several hundred kilowatts-worth of photovoltaics atop many buildings erected or annexed during the Cold War era when the city was hemmed in on all sides by the repressive and utterly democracy-free German Democratic Republic. As our train glided across the countryside at 200 kilometres per hour (120 mph) on the way from Berlin to Essen in the Ruhr valley region, we frequently squinted through the rain dotted windows to see farms of wind turbines rising above the landscape, sleek blades silently rotating with elegance and simplicity. From a hilltop in the Ruhr Valley city of Bottrop, a region once synonymous with coal mining, steel production, and air pollution, the silhouettes of massive power plants are visible on the horizon, their gargantuan stacks belching steam and carbon dioxide no longer, mute relics of a largely bygone carbon economy.

Energiewende makes itself felt in other, more subtle ways. Bathroom faucets often have no manual taps, but sensors that only dispense water when you present your hands – no absent-minded soul will ever leave the water running as they exit. Step off the hotel elevator onto your floor, and the hallway almost instantly lights up, activated by motion sensors that ensure all is dark when no one is there to benefit from the light. Step into your hotel room, and you will find all electricity extinguished – until you slip your access card into a slot on the wall by the door. On entering a Canadian hotel room, by contrast, you would find the lights blazing, as they would have been since the cleaner finished up many hours before. (This card slot has an added practical benefit of making sure I never misplace my room key.)

More subtle is the revolutionary way the room is heated. The hotel has no furnace. Hot water is piped into the building from a plant some distance away, a plant which takes waste heat from industry and puts it to work once more. (More on the idea of District Energy, or DE, in my previous post.) Alternatively, in places not yet served by the District Energy network, buildings are served by micro-CHP (Combined Heat and Power) units. As the name suggests, these devices provide both warmth and electricity. DE and CHP are both largely invisible, their components hidden away in basements or buried under pavement.

Finally, and least conspicuous of all, are the elements of the building envelope – energy-efficient windows, insulation, weatherstripping, and air exchange systems – which together help to make European buildings half as energy intensive as their North American counterparts. Our hosts in the city of Bottrop spoke of a number of housing projects which are “net positive”, meaning that the buildings produce more energy than they use. Some such projects are targeted at members of society on the lowest rung of the economic ladder – low-income earners and beneficiaries of social assistance. These people stand to be hardest hit by rising energy prices, and so stand to benefit the most from a dwelling that receives cheques rather than bills from the local utility.

When I think about my home in Ontario, I realize that the province has really missed the boat with its Green Energy Act. So much of the focus is on green energy generation – wind, solar, and biogas. There is an energy conservation component, but it is the poor cousin. The Feed-In Tariff (FIT) program has more than its fair share of flaws, but it stands head and shoulders above the SaveOnEnergy program.

Coal and oil are becoming ever more scarce and hence ever more expensive, and our environment cannot support their continued use. We need to replace all of our dirty energy generation systems with clean ones, make no mistake. This will be a hard hill to climb. But it will be far easier if the hill is shorter. At the same time as a revolution in green energy generation, North America needs a revolution in energy efficiency. District energy systems, combined heat and power, and building envelope improvements are all critical to shrinking the hill.

Our German TUCD hosts often spoke of everything they have yet to accomplish. They haven’t solved every problem – far from it. But they have made incredible progress. They have developed the technologies, the businesses, the public programs, and the social structures to make it happen. Through TUCD, they have been showing us how – we simply needed to ask.

In Germany, I’ve seen the hill. I’ve seen the way the German people are shrinking the hill at the same time as they are climbing it. And I am completely confident that North Americans can follow their lead.

We need our own energiewende. Our German friends are showing us the way.

The real China Syndrome

Welcome <cough> to <cough> Beijing

Dark clouds are gathering in the east.

We depend on China for all manner of manufactured goods. Consumer electronics, cookware, children’s toys, and virtually any other item you can name – or purchase – all come with the familiar “Made in China” label. In 2009 the country overtook Japan to claim the #2 spot on the World Bank rankings for Gross Domestic Product (GDP), second only to the United States. And with an annual growth rate that has hovered around 10% for the last four years, it won’t be long before China tops the charts.

The energy it takes to keep all that industry running is astounding. In 2009 China used 2,257 Mtoe (million tonnes of oil equivalent), making it the world’s top energy consumer. The International Energy Agency estimates that in 25 years, China will consume 70% more energy than the United States.

Where will all that energy come from?

The answer is enough to any environmentalist blanch. The country’s 12th Five-Year Plan, encouragingly, calls for lower carbon intensity and more diversification of energy sources. Despite this, two of the most significant sources of energy that will drive Chinese growth are nuclear and coal.

A burgeoning Chinese nuclear energy sector should be unsettling news both within the country and without. The Chinese people will have to bear the high cost of nuclear power and the near-eternal commitment to safeguard radioactive waste. Likewise, they will have to accept the risk of nuclear disasters. There are more stakeholders beyond the country’s borders; nearby countries like Korea, India, and Japan will also have to live with the danger of a Fukushima-style catastrophe.

The effects of coal will reach even further. A 2007 MIT report stated that China was building new coal-fired generation facilities at a rate equal to two 500MW plants per week. Olympians surveyed with dismay the dirty Beijing skyline, as much a result of the country’s addiction to coal as it is the massively polluting two-cycle engines of countess mopeds and motorcycles. While particulates and acid precipitation from burning coal take their toll on the Chinese, the carbon dioxide will be felt across the globe as temperatures rise and weather patterns increase in chaotic intensity.

Were China a democracy, there is at least a chance that the people might demand change. North American democracies are hardly a model for decisive action against climate change, but Europe has taken a firm stand. Germany has become a leader in renewable energy technologies and has made huge strides towards reducing its dependence on fossil fuels. Denmark has done likewise. All this because the voters have demanded it. There is no such pressure on Beijing – politburo members are accountable neither to the international community nor to the Chinese citizenry.

The term “China Syndrome” is used to describe an extreme-case nuclear disaster. In this scenario, the core of a nuclear reactor melts down, burning through the containment vessel and the secondary containment building, and continues right through the earth’s crust. In a stroke of childish hyperbole, the radioactive mass eventually emerges on the other side of the planet – China.

A more modern version of the China Syndrome would be this. The authoritarian regime ruling the world’s most populous country is bent on acquiring wealth for its elite members (and perhaps, through economic trickle-down, the rest of the citizenry). It pursues this agenda in spite of international pressure to clean up its environmental act. It rationalizes that the developed nations had their turn at the messy carbon trough, so why can’t the up-and-coming economies? Resources are consumed and greenhouse gases are emitted at an eye-watering rate. Global CO2 levels rise relentlessly. The world rides an express elevator to complete ecological meltdown.

The original China Syndrome has never happened (Fukushima may be the exception). However, the modern China Syndrome is taking place at this very moment.

Can anything stop it?

The avenue of formal, binding, global, multilateral agreement has failed. The Kyoto Protocol offered some hope, but that evaporated last year at the Durban Climate Change Conference. The so-called Durban Platform amounts to nothing more than hitting the snooze bar until 2015. Few are optimistic that anything meaningful will be accomplished then either.

As I pointed out at the beginning of this post, China did not get to where it is by catering to the needs of its own population. Its growth has been, and continues to be, fuelled by exports. China consumes coal, but we consume the products that the coal creates. If we want to know the real culprit, we have only to look in the mirror.

Consumers in developed countries have demanded more and more for less and less. To retain market share, manufacturer after manufacturer has been forced to relocate operations to locations with the lowest cost. All that we have demanded is that the products we buy be cheap – we don’t give a tinker’s cuss about the environmental impact. Heck, we don’t even care much about the quality. Who cares if it breaks, if it’s so cheap that you can just buy another one?

The only way the China Syndrome can be stopped is if we change our mindset, and our purchasing patterns. Manufacturers provide us with crappy merchandise produced in an utterly unsustainable way for one simple reason – we haven’t demanded anything different. If we demand products that are manufactured in an environmentally responsible way, producers have no choice but to supply them.

The most innovative players will identify environmental responsibility as a differentiator. Such products will, at first, be able to command a premium. With time, competitors will get in on the act. Hopefully, before too long, sustainability will be table stakes – producers simply won’t be able to sell goods that were created in a way that depleted the earth.

The clock is ticking. China’s trade balance took a sharp dip into deficit recently, meaning that the value of imports exceeded that of exports. The domestic Chinese market is growing as more and more citizens reap the benefits of economic advancement, and the middle class becomes larger and larger. Soon, Chinese firms will be able to profit without exporting. And any leverage the outside world has over Chinese environmental direction will vanish.

We’ve got the power to avert the modern China Syndrome. But we won’t have it for long.

Frankenstein again

Let me be your servant

It gets a little bigger every year. From its humble origin in Australia in 2007, an estimated 1.8 billion people participated in the 2011 event. The before-and-after images of cityscapes and landmarks are striking. Perhaps more noteworthy is the way that more and more major corporations are exploiting the event to garner some green for their brands.

Earth Hour has its detractors, but only one nemesis.

The critics have a number of gripes. The most common is that the event does not make an appreciable impact on global CO2 emissions. That much is true, but it’s missing the point – like saying the Prius is not the sportiest car on the road. Reducing carbon emissions and cutting energy use are not the purpose; awareness, solidarity, and momentum are.

Another objection is that Earth Hour trivializes the efforts that individuals and organizations must make to have a meaningful impact on carbon emissions. Participants may feel they’ve done their bit, and can go back to their profligate ways the other 8759 hours of the year. If so, Earth Hour does more harm than good.

I don’t see much evidence that this is happening. If you dig into the social responsibility section of most corporate websites, you’ll find that their Earth Hour participation is accompanied by extensive internal sustainability initiatives. More and more people are using online resources to check their own carbon footprints, and are joining social networks that inspire members to take their green endeavours further and further. Governments are implementing programs to encourage green behaviours. If a significant segment of society is treating Earth Hour as its sole contribution to saving the planet, I’m not seeing it.

A third complaint is that by shutting off electric lamps and lighting up candles instead, we are actually increasing carbon emissions. Burning enough candles to replace the amount of light from a compact fluorescent bulb emits forty times more carbon dioxide. However, during Earth Hour itself, its obvious that people aren’t replacing the lumens from bulbs with an equivalent number from candles. Were it so,  you wouldn’t see any impact on the amount of light emitted from buildings and landmarks. Instead, during the course of that single hour, people teach themselves that they can get by with far less light. Earth Hour participants are not swapping electric lights for candles on a day-in-day-out lumen-for-lumen basis, and nobody is suggesting they should.

One more concern – and the only that I will not refute – is that Earth Hour sends a message that carbon emissions can only be achieved by sacrifice. Do we have to give up the safety and esthetic benefits of artificial light to make a difference? Taking the idea a step further, do we have to accept a lower standard of living if we are to save the planet?

No. Conservation measures are the most effective way to reduce carbon emissions. They are far cheaper than, say, building renewable energy generation capacity. When you compare the initial investment to the cost savings, the net value of conservation is often positive – certainly a more secure investment than the stock market. What’s more, conservation measures may well increase rather than reduce our physical comfort.

For example, if you curl up on the couch with your favorite book in a poorly insulated house, you’ll feel a draft blowing across your toes or down your back. You’ll also be spending more than you should to heat the place. By replacing old windows and doors, improving insulation, and replacing the clapped-out furnace with a high-efficiency model, you find that your sofa reading experience is more comfortable and your investments soon pay for themselves in reduced utility bills. All without you making the sacrifice of turning down the thermostat or lighting any candles.

That said,  some idiotically wasteful behaviours have to go. Like the guy across the street that lets his souped-up spoiler-sporting Mitsubishi idle with a window-rattling bass rumble for maddening lengths of time. If he must stop this antisocial habit, he may consider it a sacrifice. I definitely won’t.

So Earth Hour has its opponents. However, it only has one implacable enemy: Nuclear power.

Let’s take a look at the distinguishing characteristics of nuclear power. The electricity from a nuclear plant is referred to as “base load”, meaning that the amount of energy remains constant and is not adjusted to reflect fluctuating demand. By contrast, dispatchable generating facilities such as gas-fired plants are used to deal with demand peaks. As the level of electricity consumption rises and falls, a dispatchable plant can be turned on or off, and the output can be dialed up or down to match demand.

Nuclear plants are very difficult and expensive to turn on and off, and there is not much leeway to adjust their output. This is evident from the fact that when demand drops below a certain threshold – often in the middle of the night – the amount of electricity being drawn from the grid may be less than the amount that the nuclear plants are pumping into it. At present, there’s no way to store the extra juice for later. This leads to the absurd situation where the utility actually pays customers to sop up the excess power. Doing so is cheaper than throttling back the output from the nuclear plants. Any rational person should find this to be outrageous.

Earth Hour casts a candle-lit spotlight on this absurdity. If individuals, businesses, and institutions are all jumping on the bandwagon, demand drops through the floor. But it’s only for one hour. The utility knows full well that demand will creep right up again as soon as the hour is over. What options does it have?

Shutting down the nuclear plants for just sixty minutes would be hideously expensive. However, it may well be the only choice. Local customers won’t pay to take the excess power off the utility’s hands – most of them are doing their best to be visibly consuming little or no electricity. Export customers can’t help either, for the same reason (unless they happen to be in a different time zone). For the moment, at least, there’s no way to store the surplus electricity.

Any utility with substantial nuclear generation capacity is caught between the Scylla of an inflexible technology and the Charybdis of a transient downward demand spike. If I was in charge of such a utility, I would hate – hate – Earth Hour.

Technology is supposed to serve the needs of society. However, Earth Hour shows us that society is in thrall to the needs of our technology. We are not free to make the simple, well-meaning gesture of shutting off the lights for an hour in the name of saving ourselves from a global ecological catastrophe. Doing so actually costs us more than doing nothing at all. Make no mistake: If your utility depends on nuclear power, Earth Hour will have a cost. It will be high. You and I will pay it on our next electricity bill. No good deed goes unpunished.

This is all thanks to our misguided decision to invest in a technology that demands as much from us as we demand from it. What kind of monster have we created?

Tilting at windmills

One of the first Landscape Guardians

In Cervantes’ novel, Don Quixote catches sight of thirty or forty windmills towering over the Spanish grasslands. Mistaking them for foul and dangerous giants, he sets out to slay them. He is convinced that the valour and honour of his quest is sure to warrant divine blessing. Quixote’s motives are pure. However, his perception of the nature of the objects before him is so off base it is laughable.

Half a millennium later, the successors of Don Quixote are alive and well and fighting to save the world from the scourge of industrial wind turbines. Some, like Don Quixote, have pure motives. Others, not so much. However, both the proponents and the opponents are failing to see the forest for the trees.

An example of questionable motivations is the long-standing linkage between wind energy protest groups and the nuclear industry. The most obvious such connection is Sir Bernhard Ingham, who serves as secretary of Supporters of Nuclear Energy as well as vice president of the UK anti-wind campaign group Country Guardian. There are similar links with Australia’s Landscape Guardians.

It’s not hard to figure out why those who financially benefit from the nuclear sector have a problem with wind energy. As countries the world over grapple with global climate change, nuclear has been repeatedly promoted as our salvation as it is far less carbon-intensive than fossil fuels. Industry advocates predicted that this would bring about a nuclear renaissance. However, it hasn’t happened – industry growth rates remain stagnant. With an annual capacity growth rate of more than 30% over the past decade, wind energy poses a serious alternative, and therefore a serious threat.

This raises some critical questions. First, can an objection have merit even if it comes from a biased objector? Second, if the objection has apparent merit, what must be done to confirm its validity? Third, even if an objection is valid, could other considerations eclipse it?

A common tactic in public discourse, especially in the political arena, is to attack the person rather than the argument. If the person presenting an argument is suspect, then their argument is weakened in the court of public opinion. However, it should not be so. The argument is the argument, and must be evaluated according to the evidence on both sides.

So any argument, even one that may appear absurd at first glance, must be evaluated. Healthy scepticism is a crucial tool in this endeavour. Not everyone can be trusted to collect, analyse, interpret, and present data – they may not be competent to do so, or they may deliberately distort the information. This is why science, with its time-tested tool of peer review to root out bias, shoddy work, and woolly thinking, is trusted above rhetoric.

All other things being equal, the burden of proof should rest upon whoever advocates a change from the status quo. This is called the precautionary principle. Sadly, it has not been followed as strictly as it should, and often it seems that the general public is on the hook to show that something is dangerous – and their task is harder and harder the more money is on the line.

The wind energy debate is often framed as a question of whether wind turbines are a good or a bad thing, and therefore whether society should accept or reject them. However, this is not the real debate. Without ample supplies of energy, society will grind to a halt, with the world as we know it ending in chaos, anarchy, and devastation on a scale never seen in human history. Hydro energy is largely tapped out, fossil fuels are causing global climate change, and nuclear faces huge public opposition in the wake of Fukushima Daiichi. The only way forward is a massive shift toward renewable energy, but no one such source is enough – we need a mix of every kind. So the question is not “Wind energy: Yes or no?” Rather it is, “Wind energy: How do we make it work?”

There are many arguments against wind energy, but at the end of the day, none of them is serious enough to overshadow the apocalyptic issue of climate change.

This is where the urban-rural divide comes into stark focus. City dwellers have long looked down upon their country cousins, or disregarded them entirely. When rural-based wind opponents raise issues such as Wind Turbine Syndrome, shadow flicker, bird strikes, and property devaluation, the urbanite response is to dismiss or debunk the concerns. This is thoroughly missing the point. The arguments are just the visible exterior of the problem. Behind them is something entirely different.

Nobody likes to be pushed around. Americans don’t like the UN telling them what to do. Canadians don’t like the US telling them what to do. The Canadian provinces don’t like Ottawa telling them what to do. And rural Ontarians don’t like Queen’s Park (the seat of the provincial government) telling them what to do. People are people, at all levels, and they rankle at being treated with disrespect.

Cities are in a constant state of change. Urbanites accept this. New high-rise condo complexes spring up seemingly overnight, highway bypasses are pushed through, derelict warehouses are gutted and replaced with studio apartments and trendy restaurants. City limits sprawl outward inexorably.

Change is far more gradual in the country, and those that live there are more likely to view it with suspicion and hostility. Wind turbines change the landscape, no question. Where there was once stillness and tranquility, a wind farm brings a view that is in near-constant motion. Trees, the odd grain silo, and the village church once dominated the vista; now turning turbines tower over them. And some corporation from the city is raking in the cash thanks to the rotating blades. What benefit does that bring the nearby farmer or cottager? The outrage is not just understandable, it is inevitable.

For wind energy to succeed, an entirely new approach is needed. Proponents of wind energy need to accept that, for the most part, the resource is located in rural areas. The inhabitants of these rural areas are the custodians and owners of the resource, just as surely as a farmer with an oil reservoir beneath his back 40 is the custodian and owner of that resource. They must be treated as such, and not as nobodies to be steamrollered.

Rural dwellers need to be engaged in an open, honest, and two-way dialogue. This conversation must recognize that although climate change and rising fossil fuel costs are everyone’s problem, urban dwellers will bear a disproportionate share of the pain just because there are more of them. Hence it is those from the city, not the country, on whom the social problem is most pressing.

What’s more, city folk are not the ones that that have to give up something they value – the very countryside that has remained largely untouched for time out of mind – to solve the problem. Urbanites need an attitude adjustment. They must accept rural sovereignty over the precious resource. They must respect the rural dwellers that hold that sovereignty. They must recognize what country folk will be sacrificing in the name of solving the problem. And they must explore appropriate compensation for that sacrifice.

That compensation could take many forms. As I suggested in my previous post, offering ownership stakes to residents is a powerful tool. So is working with village councils to identify new public goods funded from the proceeds of a local wind farm – perhaps a new public library, sports complex, or nicely landscaped green space. Another possibility would be to partner with a local school, training youth so they may take full advantage of the opportunities of green energy.

In the end, the arguments are beside the point. Beating someone in a debate does not make a friend of them. To bring them around, you must seek to understand why they are unhappy, and work collaboratively to find ways to right the wrong.

Blue sky mining

Energy out of the blue

Wind energy has a certain cachet – clean, technologically advanced, ingenious, and nearly magical in its ability to pull electricity out of thin air. Mining, on the other hand, seems its very antithesis – dirty, primitive, and reliant on the brute force of explosives and massive, pollution-spewing machines. All the same, the mineral extraction industry has some important lessons for the wind energy sector.

The mining industry has learned the hard way. Firms have scoured the globe in search of rich ore deposits, and have often found these in developing countries. In these nations, their dealings with local communities have often been ham-fisted, insensitive, blundering, and self-defeating. But they are learning the right way and the wrong way to do it.

The first lesson is the role of central government, and its limitations. The power brokers in the national capital grant mineral extraction rights. However, the mine won’t be located in the capital city. It will be off in the backcountry somewhere, in a place the suit-clad bureaucrats and their burly henchmen never visit. The fact that the central government has sanctioned the mining activity won’t carry much weight with the locals. Getting the concession is only half the battle – the other half is winning the hearts and minds of the nearby community.

Regardless of what the central government may think, the local community believes that they are the true and rightful owners of the resource. The extraction equipment must travel along the roads that the local people have traveled for generations. The mine will be placed on land with a long history. Once the mine is played out, the land will be less than it was. The mineral will be gone. The local environment will be changed, dramatically in the case of an open-pit mine. Most spillover economic benefits from the presence of the foreign mine operators will disappear overnight.

Regardless of the voice of law and central government authority, the local community has an ownership claim over the mineral resource. They have the means to enforce this claim. Road blockages, vandalism, and threats of violence against expatriate employees can render continued operations impossible. The company must recognize this claim, and follow it to its logical conclusion – ensuring that meaningful benefits accrue to the local population.

If the community feels that the operation yields them no benefits, any perceived costs will be inflated and magnified. Side effects that would otherwise have been dismissed as inconsequential will take on great significance. The company will be called on the carpet to address even the most minor accident, leak, or other problem. Firefighting will become the order of the day, draining the ability of company leadership to focus on keeping the operation running smoothly.

If, however, the community receives direct and tangible benefits, they will have a much higher tolerance. They will even jump to the defense of the company in the face of external criticism. I’ve seen this in my own hometown when visitors remarked in disgust about the sulfurous smell wafting over from the nearby pulp mill, only to be told pointedly by the locals, “That’s the smell of prosperity.”

All of this is laid out in Getting it Right: Making Corporate-Community Relations Work, by Luc Zandvliet and Mary B. Anderson. The book provides examples the world over of companies – mostly in the mineral extraction business – either making significant mistakes or chalking up major successes in the ways they deal with the local community. The wind energy business would do well to learn some of the lessons this book has to offer.

Let’s look at Ontario, Canada as a case study. With its Green Energy and Green Economy Act (GEGEA) of 2009, the Ontario government set out to make the province a leader in renewable energy. It offered lucrative Feed-In Tariff rates as a means to encourage individuals and organizations to generate their own electricity and sell it to the utility. One of the supported forms of renewable energy was wind.

To jump-start the initiative, the GEGEA streamlined the approval process for new wind energy projects. One of the ways this was accomplished was by largely cutting out the local community, bypassing a patchwork of inconsistent local bylaws and agencies. A couple of public consultations were required, but these tended not to get much attention. Typically, by the time it became common knowledge that a new wind farm was going in, it was too late for people to do much about it.

Unfortunately, the large wind farm developers assumed that whatever consultation process the government specified would be enough to ensure their success. They did their wind resource studies, conducted their mandatory public consultations, and got on with the job. Wind farms began springing up all over the province, and the GEGEA appeared a rousing success.

But seeds of discontent had been sown. The only local beneficiaries of these projects were the landowners that sold or leased the property where the turbines would be located. Little attention was paid to the immediate neighbours or the broader community. People watched the landscape they had known from childhood transformed by tall towers and rotating blades. And they got mad.

Stories began to appear that tarnished the clean, inspiring, and hopeful image of the wind business. Stories of property values dropping in the vicinity of wind farms. Stories of flocks of birds struck from the sky by spinning turbines. Stories of epileptic seizures induced by light flickering through turning vanes. Stories of sleep disruptions and knock-on health impacts from turbine noise. Discontent in the countryside of Ontario grew.

In the October 2011 election, the Liberal party lost its majority, due primarily to rural ridings rejecting the GEGEA and the candidates that espoused it. And earlier this year, the Ontario Federation of Agriculture demanded a moratorium on new wind energy projects until the interests of farmers and rural dwellers were protected. The issue has become such a political hot potato that the future of the Liberal government may well hang in the balance.

It could have been so different. If only the industry had recognized that the local community is a resource every bit as valuable as the wind itself.

In the community of Saint Agatha, a more inspiring story is unfolding. A local co-operative has been formed, with the intent of constructing one wind turbine that will provide electricity equivalent to that consumed by the entire town. Residents are encouraged to buy in to the co-op, and in return they will receive a share of the revenue from the sale of the electricity to the utility.

You can bet that when their dividend cheques start arriving in the mail, they will cast a more skeptical eye on claims that wind turbines cause all manner of harm. Rather than taking such claims at face value, they will rightfully note that they are based on junk science and financed by unions representing workers in the nuclear energy business (which has the most to lose if wind energy really takes off). And you can bet that it won’t be long before someone points out that if one turbine cuts their net electricity bills to zero, two will yield a tidy profit. A community of wind barons is in the making.

If the wind energy sector has a little patience, abandons its habit of doing the bare minimum consultations that the government requires, lets communities take the lead, and shares the benefits with those communities, it will do more than restore its soiled image. It will re-establish itself as one of the best paths toward a clean, sustainable, and profitable energy future.

Divide and conquer

20th century tech for a 21st century world

Our electricity infrastructure was once our society’s greatest asset. It brought light where there was darkness, heat where there was cold, and motion where there was stillness. It powered our entire economy, and still does. However, it has become a liability.

Like the baby boomers, it grew up in a different era. At that time massive, centralized bureaucratic organizations were the norm. Fuel was cheap. Much of it came from domestic sources. The primary threats to security were the nuclear arsenals and massive armies of NATO and the Warsaw Pact.

The electricity production, transmission, and distribution reflected that society. Electricity was produced in massive, centralized facilities. The principal fuel sources were oil, coal and uranium. Little of that was imported.

That world is gone. While massive organizations still exist, the engine of economic innovation is small business. Increasingly, individuals are free agents, contracting their services out to the highest bidder and resisting the allure of “going corporate”. More and more people work out of their homes instead of commuting to an office.

At the same time, fuel has become more and more expensive. Partly because of steadily increasing demand, and partly because of declining domestic reserves, much comes from overseas.

The cold war is long over, and few now worry that our world will end in an all-out nuclear war followed by nuclear winter. Instead, the prevailing security concern is terrorism. Since 9/11, our entire society has reworked itself to defend against an enemy that is not on the other side of the globe, but potentially next door. Critical infrastructure assets are protected in a way they never were in the last century.

Because of our legacy electricity infrastructure, we remain vulnerable. Nuclear power plants present a tempting terrorist target. A successful strike on one of these would not just release radioactive material into the environment, it would also leave a gaping hole in regional generation capacity. This could lead to rolling blackouts and economic chaos while the utility fought to restore the lost capacity.

A hydroelectric dam is similar. These massive structures would be difficult to destroy, but not impossible. The instantaneous release of all the water stored in the reservoir would cause a wave of destruction worthy of a Hollywood disaster flick. The loss of the generation capacity would have a similar impact to that of our hypothetical strike on a nuclear plant.

Less consequential, hence less well-defended, and hence more vulnerable, are thermal plants like coal-fired generating stations. A successful terrorist strike would be unlikely to inflict physical destruction on the surrounding area, at least not on anything approaching the scale of a nuke plant strike or a dam burst. However, it would cause comparable economic damage.

With the advent of renewable energy technologies like wind and solar, the logic behind large-scale, centralized generation facilities has been largely eliminated. Wind and sun are everywhere. In spite of that, wind and solar developers have persisted in perpetuating the centralized model. Large wind farms, with turbines covering a huge area, are commonplace. Ditto large solar farms. Like the coal-fired generating station example, these facilities are vulnerable to terrorist attack. What’s more, they fail to address one of the largest challenges to renewable energy – its transience.

The wind doesn’t always blow, and the sun doesn’t always shine. However, if generating capacity is spread out instead of concentrated, it spreads out the risk. The sun may not be shining here, but it probably is somewhere else. Today may not be windy there, but it is here. On average, the risk of cloudy skies and feeble breezes is mitigated, but only if solar arrays and wind turbines aren’t all in one place.

Big wind and solar farms are not the way to go. They are vulnerable to terrorist attack – albeit with little or no knock-on effects to the surrounding area. They fail to mitigate the risk of variable sun and wind. What’s more, they necessitate upgrades to transmission infrastructure in remote locations – a costly and unattractive proposition – and because they are remote, an appreciable amount of their electricity is lost as heat as it passes through transmission lines on the way to market.

Far better to site generation facilities close to the point of use. Solar panels are a natural fit for many buildings. Parking lots are an ideal location for large dual-axis trackers, and offer the added bonus of potentially being coupled with charging stations to supply power for electric vehicles. Even wind turbines – the vertical axis variety – are perfect for mounting on rooftops of tall buildings, where winds are high, birds are few, and what little noise there is will go unheeded.

Thermal plants also offer significant potential for distributed generation. Legacy thermal generation facilities are grossly inefficient, as they produce a phenomenal amount of waste heat. If the plant were located in an industrial park or a high-density housing development, the heat would no longer be wasted – instead, it could warm all of the buildings in the area through a district heating system.

As for a fuel source, the best-established choice is natural gas. The price of this fuel has dropped precipitously of late with the advent of shale gas. It has the added bonus that it can be replaced or supplemented by renewable biogas produced by running organic waste (sewage, compost) through an anaerobic digester. It could also burn hydrogen. A gas turbine would produce both electricity and heat.

Another option would be, believe it or not, nuclear. Traditional uranium-fuelled reactors are a non-starter, because nobody would want them in their neighbourhood, and they’re much too large anyway. However, a Molten Salt Reactor (MSR) fuelled by thorium could, in theory, be built small enough to supply combined heat and power to a neighbourhood. The high-grade heat from the reactor spins a turbine for electricity, and the low-grade leftover heat supplies the district heating system.

It’s time our utilities ditch their mindset that bigger is better. Big generation facilities are big targets. Big wind and solar farms are big risks for when the sun don’t shine and the wind don’t blow. And big heat means big waste.

Power generation needs to be small. And it needs to be everywhere. It eliminates targets, reduces risk, and gives more bang for our buck.

Is nuclear renewable? Does it matter?

Renewable or not, here I come: Image courtesy Wikimedia Commons

Human use of fossil fuels is changing the climate of our planet. Fossil fuels are running out, but not fast enough. Long before oil and natural gas reserves are exhausted, climate change will be catastrophic and irreversible. We cannot rely on the law of supply and demand to price fossil fuels out of the market. We need to take decisive action, and we need to take it now.

As the sense of impending doom becomes stronger, and more and more people cry out for a solution, one voice has been coming through loud and clear. Advocates for nuclear energy are putting their technology forward as the answer to the climate change problem. When energy is produced from fission, no carbon dioxide is emitted, say the nuclear promoters. It is a proven technology with a half-century track record. Why grasp around frantically at wind, solar, and biomass when we already have the answer at our fingertips?

Often, this leads to a philosophical debate. Is nuclear energy renewable? Opponents say it is not. They base their argument on one key point: To be renewable, an energy source must not require continual addition of any fuel.

Wind, solar, hydroelectric, tidal, biomass, and geothermal energy sources do not require fuel. Virtually all of them are ultimately derived from the sun. The cause-effect relationship is obvious in the case of solar photovoltaic arrays, solar concentrators, and solar thermal systems.

In the case of wind, hydroelectric, and biomass, the relationship is indirect. The sun heats the earth, the earth releases this heat into the air, the heated air column rises, cooler air rushes in to replace it, and the energy of that moving air is harvested with wind turbines. The sun warms water bodies and causes evaporation, the water vapour moves to cooler areas and condenses into rain, the rainfall fills rivers, and the flowing river water turns hydroelectric turbines. The sun shines on plants, the plants use photosynthesis to convert the solar energy into sugars, and man-made chemical processes convert the sugars into biofuels. As long as the sun continues to shine, these energy sources will be inexhaustible.

Tidal and geothermal are a bit different, but are similarly inexhaustible. As long as the earth continues to revolve around the sun, and the moon around the earth, there will be tides, and tidal energy that can be harvested through a variety of means. As long as the radionuclides in the Earth’s crust continue to decay, there will be geothermal energy.

By contrast, nuclear energy, at least that supplied by conventional reactors, requires fuel – uranium, plutonium, or thorium. As the plant runs, the fuel is consumed. The spent fuel is unusable and must be stored indefinitely (unless more exotic means to extract additional energy from the fuel are available, such as reprocessing or fast breeder reactors).

So, philosophically at least, it is not possible to argue that nuclear energy is renewable. It isn’t. But that is answering the wrong question. Renewable or not, is it desirable? In other words, our current energy infrastructure is in crisis. We cannot simply stop using it, without causing a global economic collapse. But if we continue to use it as-is, we risk a global economic collapse. So the real question is, can nuclear energy lift us out of this Catch-22?

This is a three-part question. First, does nuclear solve the climate change problem? Second, is it sustainable, at least over a viable time frame? Third, does it create more problems than it solves?

The first question appears simple. A nuclear power plant produces electricity, waste heat, and spent fuel, but no CO2. That looks like a promising solution. However, the start and end of the reactor lifetime and the fuel life cycle are not nearly as innocuous. The plant must be built, and nuclear plants require a great deal of concrete. Manufacturing the cement in that concrete produces a lot of carbon dioxide – globally about 5% of CO2 emissions come from cement manufacturing, either directly from calcination of limestone or from the fuel that is burned in the kiln. Then there’s the emissions arising from manufacturing and transporting all the steel reinforcing bars, building and operating all the heavy construction vehicles, producing and shipping all the exotic materials used in the reactor itself, not to mention mining, milling, refining, enriching, forming, and ultimately storing the uranium fuel, and storing the low-level waste after plant decommissioning.

According to National University of Singapore research fellow Benjamin K. Sovacool, it all adds up to about 66 grams of CO2 equivalent per kilowatt-hour. That’s a huge improvement over coal-fired power generation, which produces 14 times the amount of greenhouse gases. However, that’s twice the carbon footprint of solar photovoltaic power, and six times as much as land-based wind power. From a carbon footprint perspective, nuclear does not have an advantage over the leading renewable energy technologies.

What about sustainability? The International Atomic Energy Agency estimates that proven uranium reserves are enough to supply current levels of demand for 85 years. If nuclear proponents are successful, nuclear power usage would expand significantly above its current level of 6% of global energy supply, reducing the lifetime of uranium stocks. However, an increase in uranium demand would lead to greater exploration efforts, likely extending reserves significantly. In any case, technologies like fast breeder reactors could make the supply last up to 2,500 years. That’s a lot less than the 5 billion years that the sun is expected to continue to shine, but for practical purposes, the availability of fuel does not represent a real constraint.

Finally, there is the question of whether the cure is worse than the disease. Nuclear disasters such as Fukushima have produced significant fears in the minds of the public. The difficulty is that the harm caused by nuclear disasters is front-page news. By contrast, fossil fuel usage causes ongoing damage to property and public health which is much more significant, and grossly under-reported. By virtually any health, safety, or environmental measure – including worldwide release of radioactive materials – nuclear power is a significant improvement over fossil fuels.

However, we’ve already established that fossil fuels need to go. We’re not making a choice between them and nuclear. The choice is between nuclear and renewable energy technologies in the strictest sense. There is little or no credible, peer-reviewed evidence of negative health impacts from wind turbines – although the industry needs to make a dramatic change to the way it engages with communities, to avoid breeding the discontent that provides a fertile field for the anti-wind lobby. End-of-life solar panels may suffer the same environmental problems as obsolete consumer electronics like cell phones and MP3 players, but the problem is hardly immediate given that they last more than 20 years. Other renewable technologies are similarly benign.

The Achilles heel of nuclear is waste. A recent newsletter from the Ontario Clean Air Alliance had the eye-catching subject line, “You don’t build a house without a toilet”. That is precisely what the nuclear industry has done. Globally it produces 10,000 m3 of high-level radioactive waste per annum; this remains deadly for tens of thousands of years. As yet there is no solution to this problem. Until that changes, the nuclear sector will continue to have one shortcoming that outweighs all of its advantages.

In summary, nuclear energy has a significantly smaller carbon footprint than fossil fuels, but still much higher than wind and solar. There is enough fuel on the planet to keep the reactors going for a very long time. However, in that time those reactors will produce a vast amount of deadly waste.

If the nuclear industry can reduce its carbon intensity across the entire life cycle of the fuel and the reactors, and if it can solve the waste problem, it will indeed be a solution.

It will also be a miracle.

Snake oil

Step right up, and have your cash in hand.

“Our children will enjoy in their homes electrical energy too cheap to meter,” predicted Lewis Strauss, Chair of the US Atomic Energy Commission in 1954. The fusion power that inspired his comment remains only experimental to this day, and the best guess is that commercial fusion generation facilities will not be online before 2050. An entire industry should not be condemned for the hubris of one person, but this particular industry has a long history of over-promising and under-delivering, whether the technology in question is fission, thermonuclear fusion, or cold fusion. Members of the public, and their elected representatives, would do well to take the claims of nuclear proponents with a grain of salt.

Comparing nuclear power to competing technologies such as fossil fuel-fired thermal generation and renewable generation is nightmarish. The reasons are the fundamentally different characteristics of cost of capital, initial capital outlay, demand risk, design risk, accident risk, externalities, and sheer project scale. Still, each of these factors can be broken down and quantified, and intrepid experts have done so. For simplicity’s sake I’ll stick to a qualitative comparison.

First, nuclear power is now and ever will remain a state-owned enterprise during construction, and will retain a heavy level of state support during operation and final decommissioning. The state has a different cost of capital than the private sector; it is meaningless to make a direct comparison between a project undertaken with public funds and one financed by the private sector.

A new nuclear power plant requires a massive amount of capital for initial construction, and that capital generates zero return until the build is complete. The timeframe of construction is long, and can have significant variances (more on this below). A project requiring a huge investment that sits idle for an unknown period of time before it produces the first dollar of revenue is a project that will send private investors running in the opposite direction. A new plant must be financed using taxpayer dollars, because the private sector won’t touch it.

Then there is the risk that electricity demand will shift dramatically during the course of construction. The longer the construction timeframe, the greater the risk that the facility will turn out to be too much or not enough. Of all energy generation technologies, nuclear has the longest timeframe between committing to the project and producing the first kilowatt. What’s more, the construction process is extremely sensitive to any mid-stream changes. If it becomes clear that demand predictions are off base, it is hugely expensive to change course partway along. The final construction cost of Canada’s Darlington Nuclear Generating Station was nearly double the original estimate, principally because two of the four reactors were postponed. It is almost better just to build according to the original plan come what may.

However, a damn-the-torpedoes approach may well be impossible. In addition to demand risk, there is also design risk. This the possibility that, partway through construction of the new facility, the government may be forced to respond to new public concerns. A major nuclear disaster like Chernobyl or Fukushima can lead to huge outcry, a significant tightening of standards, extensive design changes, and staggering cost increases. It is like trying to change a tire on a car that is still barrelling down the highway.

Once the plant is built and in production, there is the risk of catastrophic accident. No private company can secure the amount of insurance necessary to offset this risk. This means that the state must assume the role of insurer, with taxpayers paying the bill if something terrible happens.

Another consideration during plant operation is fuel. Uranium must be found, mined, processed, and transported. After it is used up, the spent fuel must be stored – more on that below. Like oil, uranium deposits tend to be found in countries with a nasty political climate. These countries have yet to band together to squeeze prices in the way that the OPEC nations have, but you can bet it will happen if industrialized nations make a significant new commitment to nuclear power. This will significantly increase operating costs for nuclear plants, and may necessitate military intervention to secure supplies in the same way that we have seen repeatedly with petroleum.

A final operational factor is responsiveness. Starting up and shutting down nuclear plants is very costly, not to mention potentially dangerous – it was experimentation with emergency shut-down procedures that led to the Chernobyl disaster. Hence, nuclear reactors are best left running even when demand isn’t there. This leads to the perverse situation where the utility actually pays its customers to consume power, to avoid having to dial back output from nuclear generators during off-peak periods.

No plant lasts forever. Once its usable life has ended, a nuclear plant must be decommissioned. The high level waste, such as spent fuel, is relatively small in quantity but astoundingly dangerous and remains so for thousands of years. Low-level waste, such as plant structural components and worker safety equipment, is less dangerous but there is a lot more of it. Plant operating companies are mandated to set aside a reserve fund to pay for storage of this waste for mind-boggling timeframes, but the evidence is that they are failing to do so. Once again, that cost will eventually fall on the taxpayer.

Let’s look at how each of these factors stack up for fossil fuels and renewables.

Fossil fuel-fired thermal plants require a much more modest capital outlay and have far shorter construction timeframes than nuclear, and the private sector finances these projects with enthusiasm. These projects rarely appear on the radar of the public at all, and if they do they can be re-jigged or delayed with comparatively minor costs (as was seen recently in Ontario, where construction of a natural gas plant was halted in response to public outcry).

Geothermal plants have a similar capital profile, so too large wind and solar farms. Wind projects can scale right down to a single turbine owned by a village co-operative and erected in a few weeks, while solar installations are within reach of an individual homeowner and can be built in a day or two. Wind has seen some public opposition in North America, but these issues have nowhere near the financial impact of delays and design changes in the nuclear sector. In any case, the costs are borne by the private developer and not the taxpayer.

Thus, thermal and renewable power do not require the implicit subsidy of long-term state financing. Further, the short construction timeframes and small project scale mean that projects can be initiated and completed in almost direct response to changing electricity demand, and the shifting winds of public opinion are rarely a consideration. Nuclear is a ponderous, clumsy, lumbering beast by comparison.

Fossil fuel plants and renewable generation facilities diverge where fuel, responsiveness, and decommissioning are concerned. The cost of fossil fuels is rising, with the notable but temporary exception of natural gas. The price of these fuels does not reflect their total cost, as the damage caused by respiratory disorders, acid rain, and global climate change is borne by the public at large rather than the consumer of the fuel. Fossil fuels – principally coal – are thought to be responsible for thousands of premature deaths annually, exacting a human toll far higher than anything that can be attributed to nuclear energy, even considering the effects of major nuclear accidents.

Renewable energy, by definition, requires no fuel. It does have a carbon footprint associated with initial construction and operation, but this is orders of magnitude smaller than that of fossil fuels. It will decrease further in a “breeder” scenario where renewable energy is used to power the manufacturing of renewable energy technologies. There is no credible evidence linking renewable energy technologies to human health issues.

Fossil fuel plants have the most attractive characteristics of responsiveness. They can generally be fired up and shut down in real-time to address fluctuations in demand. Wind and solar, by comparison, provide power intermittently – when the wind blows or the sun shines. This means that large-scale integration of renewable energy must go hand-in-hand with deployment of energy storage technologies. Geothermal energy is the notable exception, which provides base load similar to that of nuclear without the exorbitant start-up and shut-down costs.

Finally, decommissioning of a clapped-out thermal power plant has modest costs. Some site remediation of local soil contamination is likely, but the risk is miniscule compared to the millennia-long liability of nuclear waste. Renewable energy systems can be decommissioned at near-zero cost and environmental impact.

To sum up:



Fossil fuel


Initial capital outlay

Very high; public financing only

Moderate; funded by capital markets

Moderate to very low; funded by capital markets, co-ops, individuals

Construction timeframe/demand risk

Very high


Moderate to very low

Design risk

Very high


Moderate to low

Operational accident risk

Very high; taxpayer-insured

Moderate; privately insured

Moderate to low; privately insured

Fuel commodity price risk


Very high




Moderate to high

Non-existent; requires energy storage technology

Public health cost




Decommissioning risk

Very high; waste must be stored for thousands of years


Low to non-existent

From a risk perspective, nuclear is a bad bet. Fossil fuels are better, but my money is on renewable energy. So when the nuclear power industry makes the claim that it can solve the world’s energy problems, we have every right to be sceptical.

Turn this ship around

She don’t corner so good, does she?

On Friday, January 13th, the cruise ship Costa Concordia struck a rock and capsized off the shores of Italy, at the tragic cost of 16 lives. A modern cruise ship is an impressive technological accomplishment. It takes huge numbers of tourists on voyages to beautiful parts of the world and makes a lot of money in doing so. But it doesn’t turn on a dime.

The large oil companies are similar. Since their rise to economic prominence in the late nineteenth century, they have accomplished some amazing feats of engineering. In 1862 the Shaw Gusher of Oil Springs, Ontario produced a flow of 3,000 barrels of oil per day from a reservoir only 60 metres (200 feet) below the surface. Today, oil is extracted in the harsh arctic conditions of the Beaufort Sea and Sakhalin Island, and using offshore structures such as Shell Oil’s Perdido platform which operates in a water depth of 2,438 metres (7999 feet) in the Gulf of Mexico.

But for all its mastery of modern technology, the oil industry cannot escape two facts. The first is that oil supplies are finite and shrinking – we are using up petroleum faster than we can discover more (see peak oil). The second is that the burning of fossil fuels is causing global climate change – an ecological catastrophe which could endanger the survival of most species, including our own.

The writing is on the wall. Sooner or later, the oil will run out. Though their stock may be trading at all-time highs (except for that of BP, which has foundered since the Deepwater Horizon disaster), in the long run, every oil company is doomed.

The various players in the industry have a stark choice: Reinvent or die.

What of the second option? Why not stick to the core business, ride the oil wave into the ground, extract every last drop of petroleum from every last reservoir, and then close up shop?

Companies are made up of people, and people facing oblivion are immune to logic. They are well aware of the proud history of the edifice their forefathers built. The idea that such a legacy could disintegrate on their own watch is unbearable. As the end nears, and the field narrows following a long string of mergers and acquisitions, the surviving players will create an exit strategy rather than letting their respective ships sink. They will not go gentle into that good night.

Reinvention can be done. IBM did it in the 1990s, recognizing that its future as a blue chip, Fortune 500 player depended on letting go of its self-image as a hardware company and embracing a new future as a services company. As of this writing, its stock is trading at a ten-year high.

The trouble with reinvention is that it isn’t always easy to see the next wave. It’s even harder to know whether the next wave is one that you’re equipped to ride. If you don’t have anything to offer, your best course of action is to hand as much cash as possible back to shareholders, and let them invest it as they see fit while you explore retirement options.

In the global market for energy, the next wave is clear. There are only two ways forward in the post-oil era. The first is nuclear energy. The second is renewable energy such as wind, solar, biomass, hydroelectric (including wave and tidal energy), and geothermal. This is not a dichotomy – both forms of energy can and will coexist, it’s just a question of how much of each. My money is not on nuclear, but I’ll save that for a future post.

The oil companies that choose reinvention can pick either nuclear or renewables. Nuclear is a non-starter – the oil business has nothing to offer other than capital, and as I mentioned above, it is more economically efficient to distribute that capital back to shareholders through dividends and share buy-backs. As for renewable energy, oil companies don’t appear to offer any synergy at first glance. BP got it wrong by investing in solar, as I wrote in last month’s post The Law of Conservation of Bad Ideas.  Wind, waves, and biomass look similarly alien to the petroleum business. Does this mean that there are no opportunities left, and that big oil will go the same way as the Costa Concordia?

Perhaps not.

One of the core competencies of the oil sector is drilling deep wells into the Earth’s crust. Another is the use of hydraulic fracturing, or “fracking”, to free natural gas from shale rock. The know-how associated with these technologies happens to be directly applicable to one of the most promising renewable energy options – geothermal.

Geothermal energy, through the technology of ground source heat pumps, has been gaining popularity for heating and cooling of buildings.  These systems simply use the mass of the earth as a heat source or sink. However, geothermal energy can also be extracted directly from the planet’s hot interior to generate electricity, through technologies such as flash steam, dry steam, or binary cycle plants.

Perhaps the most attractive aspect of geothermal plants is that they provide a  constant flow of power. As such, their power generation profile is very much like nuclear plants, and hence they present a credible competitor and alternative to nuclear power. Wind, solar, and even to some extent hydroelectric cannot provide so-called “base load” power without development of energy storage technologies. Geothermal is free of this limitation. The Geysers, a complex of 22 geothermal power plants in California, has provided the state with base load power since 1960.

Geothermal energy is most readily harvested along the fault lines where tectonic plates rub together and produce such geological features as geysers, hot springs, and volcanoes (not to mention earthquakes).  People living in these areas can console themselves that their dangerous environment also offers a plentiful source of energy. Geothermal plants provide over 10,000 MW of electricity worldwide.

Not everyone lives near a fault line. However, even far from tectonically active areas, the Earth’s crust still gets 1°C warmer for every 45 metres of depth (1°F per 70 feet). Deep drilling and fracking can be used to extend the regions that can be served by geothermal energy.

Fracking has its critics. It has been blamed for groundwater contamination, release of greenhouse gases, and even tremors. However, the most serious of these issues only occur when fracking in a fossil fuel reservoir. Take oil and natural gas out of the equation, and you remove most of the environmental issues associated with the technology. You also, as it happens, remove one of the primary motivations of environmentalists for resisting the technology – that it extends and expands the available reserves of fossil fuels, prolonging their impact on global climate. Fracking for geothermal energy production will never provoke the same ire as fracking for oil and natural gas extraction.

The petroleum industry has produced many impressive accomplishments over the last 150 years. Long after the oil is gone, that technology and expertise will still be needed. The sooner the oil companies start taking advantage of that, the sooner they can move beyond their past, turn their ship around, and chart a future for all of us.