As we approach the new year, be prepared for real challenges to our public sector and financial double-think from the Government of Alberta.
Some time ago the Premier of Alberta made two bad decisions. The first was to declare that. “while I am Premier”, there would be no new taxes and no increases in taxes. It was one of those declarations that sounds good at the time but, on reflection. is a terrible mistake. It limits and sets up a requirement for him to resign when taxes inevitably do rise.
His second mistake was to cave into the pressure from the oil and gas sector over royalties – ensuring that Alberta has amongst the lowest regulated royalty rates in the world (in the same league as Yemen).
These too major errors of judgement feed into a philosophic position held by the Premier and the majority of caucus: the principle that government should live within its means and not have deficits or debt. A principle few sensible governments adopt, but always admire in others.
What we are about to see are significant and brutal cuts in Alberta public expenditure of so as to continue to “cover up” the two errors of judgement and sustain a philosophic position, now clearly out dated and inappropriate. Its time for a sea change in thinking – even if the Premier may have to go to make it possible.
The Provincial deficit is growing, due to: (a) a structural change in the economy as it relates to royalty revenues from natural gas – the Province needs to get used to a much lower price for gas (around $4.50 - $5.50 as opposed to $7); (b) the growing strength of the Canadian dollar – oil is priced in US dollars, so the achievement of parity costs the government money; (c) continued relatively high rates of unemployment in some sectors; (d) but a return to inflation for some goods and services.
Estimates of the deficit vary, but let us just assume that its between $5 billion and $6 billion. While this could be covered by a combination of cuts to services and a transfer from the stabilisation fund established by the Government to deal with these situations, we cannot go on doing this. Our key source of revenue in the past – natural gas – is not going to return to “normal” for some considerable time – the new technologies enabling the extraction of shale gas has changed the industry for some time to come. We now rely on modest oil revenues and revenues from casino’s, drink and cigarettes.
Trimming spending is the natural instinct of conservatives – just look at the Wild Rose`s position to see how stark this can be. But they are coy about what this really means. Typically, they protect health care spending, which accounts for the largest single chunk of public expenditure and is a system in need of major reform – but they have already committed to a five year funding formulae and we`re just ending year one.
Education also gets a modicum of protection, especially given that the Minister is seeking a second five year settlement with the teachers union.
So what`s left to cut and how deep? 20-30% would be needed to cover the whole deficit for the remaining departments to balance the budget by March 2012 – another strange commitment made by the Premier.
It i time for Alberta to recogonize that Alberta has a revenue problem. It is time to rethink its tax regime – its time for a 3-5% sales tax. Ted Morton signalled this as an option form review on 25th August, but was quickly told to withdraw this thinking (remember the Premier’s commitment). A sales tax would buy time to rethink our public services – especially health care – and to reposition the Province. The Alberta Advantage of low taxes is no longer a true advantage, and will disappear if, as a result, we have low quality public services.
Its also time to implement in full the recommendations of the royalty review panel which the Premier struck at the time of his appointment. While the industry may sream – they always do – they will also stay and pay. Ask Alaska how it managed to significantly increase royalties (before Palin) and they will tell you that the companies screamed, threatened, offered all sorts of sweeteners, but in the end stayed and paid.
It is also time to commit to modest level of borrowing and debt – something most of us understand, since most people own debt. The idea that governments should be debt free is, frankly, bizarre. The issue isn’t debt or no debt, it is how much debt is reasonable given our understanding of the future patterns of revenue and expenditure. If debt to GDP was at around 4-5% no one would especially be concerned.
Finally, its time for a serious look at the future. The Premiers Economic Council will report in June 2011 and outline a strategy and investments needed for the “next” Alberta. Shifting from a reliance on natural resources, from being debt free and from having a revenue problem to investing wisely in the future is an essential task for the Government. Lets hope they have courage. It doesn’t look promising.
Wednesday, December 29, 2010
Saturday, October 16, 2010
Setting the Context: Energy Challanges for 21st Century
A group of us at the Energy Futures Network and the Renaissance Innovation Network are developing a book Rethinking Energy - here is a working draft of the first chapter...
Introduction
In 2010 the late Hew Crane of SRI International – originally known as the Stanford Research Institute – created a new unit of energy measurement. It is known as the cubic mile of oil . Imagine this: a cube of oil a mile long, a mile wide and a mile deep. Now imagine burning this cube of oil to get energy – whether for electrical power, fuels or other forms of energy. A cubic mile of oil, for those of you technically minded, is equivalent to 26 billion barrels of oil or 6.4 billion tons of coal. A barrel of oil is equivalent to two full tanks of fuel for an SUV.
The reason Crane developed this new measurement was to make clear just what global energy consumption looked like. Each year, the world uses some three cubic miles of oil – some of it with hydrocarbons, some with nuclear and some with wind and bioenergy. Crane is using this measure to capture just how much energy comes from each source, as the following table shows:
Source of Energy Shows as Cubic Miles of Oil per Year
Oil 1.06
Coal 0.81
Natural Gas 0.61
Biomass 0.19
Nuclear 0.15
Hydroelectric 0.17
Geothermal <0.01
Wind and Solar <0.005
Table 1: Sources of Energy (2006)
AS the population of the earth grows – it will exceed eight billion by 2025 – so demand for energy will increase. The best estimate we have is that global energy demand will rise from three cubic miles to six cubic miles by 2050 – energy demand is currently rising at a rate of 2.5% per year.
Meeting Future Energy Demands
The question this gives rise to is simple: how will this demand for energy be met?
Crane and his colleagues have explored this question in some depth. They suggest that a cubic mile of oil can be secured by one of the following:
• 52 nuclear plants developed every year to 2050 – each plant currently requires ten years to construct, has a lifespan of forty years, occupies some four square kilometres of land and costs (at current prices) some $5 billion to build. There is also the problem of disposing of hazardous waste and the growing threat of the use of this waste by terrorists. For each cubic mile of oil from this source, we would require 500 new surface uranium mines; 1,000 new underground uranium mines; and 2,280 nuclear reactor operations.
• 32,850 wind turbines built each year for the next fifty years. A large wind turbine requires a location with a reasonably constant and abundant flow of wind, requires some 0.16 km of land and costs around $2m to build. There are concerns about environmental footprints, aviation and damage to bird life.
• 91,250,000 rooftop solar panels developed and installed each year for the next fifty years. A 2.1killowat solar array requires technical skills for installation, needs a supply of sunshine, covers around 14 m2 and costs around $15,000. Such panels present few, if any, environmental problems.
• 104 coal fired power plants developed each year for the next fifty years. A 500 megawatt coal fired power plant occupies about 2 m2 of land, costs around $650 million and will last while the coal continues to be supplied or thirty five to forty years, depending on national regulations. New regulations in some countries – Canada and the UK included – require such plants to capture and store CO2 emitted by the burning of coal. This adds substantial additional costs. Such plants are major contributors to man-made climate change impacts, acid rain and they give rise to significant environmental land remediation issues.
• 4 Three Gorges Dams developed each year for fifty years. The Three Gorges dam is the world’s largest and it is in China – flooding 632 square kilometers, displacing 1.25 million people and costing $30 billion.
It is worth observing here that it took 200 years (1700 to 1900) for coal to replace wood as the world’s primary energy source. It then took almost 100 years (1870 to 1960) for oil to replace coal. And it took 100 years (1900 to 2000) for natural gas to equal coal in energy usage.
It is also more complicated than this. Take coal fired power plants. To increase the use of coal for energy by one cubic mile each year would require 1,300 new surface coal mines, 2,600 underground mines, some 300,000 new trucks and 2,600 more trains (each consisting of 130 coal cars drawn by three 3,500 horsepower trains. Each mine would leave behind some 750,000 tons of excavated materials sitting some fifty feet deep across twenty square miles.
Wind power is also problematic – it is not windy all the time. In fact, win turbines generally operate at 24-30% of their capacity (never look at installed capacity as a measure of the potential of wind-power – take one third of this capacity and see this as the likely output of a wind turbine). This means that, as wind capacity is increased, additional natural gas fired power plants are needed to “back up” the system so that energy supply meets demand or that ways have to be found of storing energy for use when the wind is low. Given that wind farms are distant from the geographic areas of high demand, there is a need for transmission systems which in turn have environmental consequences.
Biomass – producing energy from landfill waste, wood, alcohol fuels, agricultural crops (including crops grown specially to produce energy) – is also seen by many to have great promise. The global potential is estimated to be no more than 0.5 cubic miles (some suggest it could be as a high as 2 cubic miles), but there is a downside. Most of the biomass in use today is wood. Burning wood may not reduce greenhouse gas emissions – in fact, in some situations, burning biomass can produce more greenhouse gasses than the direct use of fossil fuels. Further, growing crops for energy use will significantly reduce the amount of fertile agricultural land available for food production, thius disrupting the food supply system. We have already seen this. When energy prices were high, farmers sold food crops for energy resulting in bread prices and other food prices rising significantly, causing protests in a number of countries.
Given these observations, it seems likely that the world will be dependent on fossil fuels – oil, gas and coal – for some considerable time.
The question then becomes – do we have enough reserves of carbon based fuels to meet demand?
Global Carbon Energy Reserves
According to several different sources, global conventional oil reserves based on current technologies and normative pricing are some 1,400 billion barrels – equivalent to 46 cubic miles of oil. Additional capacity would be found if the oil price was high – additional exploration and enhanced oil recovery occurs once prices exceed $100/barrel. The best estimate available here suggests that these “additional reserves” could amount to 94 cubic miles of oil. At the current rate of use, proven reserves would supply the worlds energy for some forty years, but at a cost. At the height of the oil boom in 2008 when a barrel of oil sold for $120, a cubic mile of oil would cost US$3 trillion – this is before we add the cost of mitigation the consequences of its use.
Most of this conventional oil (a term used to contrast this kind of oil from oil sands oil, which is seen as unconventional) resides in countries with no or limited democracies: Saudi Arabia (259 billion barrels), Iran (126 billion barrels ), Iraq (115 billion barrels), Kuwait (99 billion barrels ), Abu Dhabi (92 billion barrels), Venezuela (77 billion barrels), Russia (60 billion barrels), Libya (39 billion barrels), Nigeria (35 billion barrels), the USA (22 billion barrels) and Canada (4 billion barrels). Canada in fact currently ranks number nine in world oil production, but by 2015 is expected to be in the top five due to the increasing flow of oil from the oil sands.
The North American oil sands provide a substantial opportunity for energy supply. Colorado, Utah and Wyoming hold oil shale reserves estimated to contain 1.2 trillion to 1.8 trillion barrels of oil, according to the US Department of Energy, half of which is recoverable. Eastern Utah alone holds oil sands reserves estimated at 12 billion to 19 billion barrels. The Canadian oil sands region in Alberta contains recoverable oil reserves conservatively estimated at 175 billion barrels (the industry works on the assumption that there are an additional 125 billion of recoverable barrels in the Alberta oil sands for a total of 300 billion). In total, worldwide, these reserves total 400 cubic miles of oil.
Natural gas reserves are estimated at 42 cubic miles – sixty nine years of supply at current levels of gas consumption. New technologies which enable extraction of gas from shale are significantly adding to the estimates of reserves – an additional 66 cubic miles.
There are also other developments with respect to natural gas – gas hydrates. Gas hydrates represent a very large global reservoir of natural gas and they are estimated to contain more organic carbon than all other known fossil fuel sources combined. They bind immense amounts of methane within sea-floor or Arctic sediments; the breakdown of a unit volume of methane hydrate at a pressure of one atmosphere produces about 160 unit volumes of gas. Gas hydrates exist under large portions of the world's Arctic areas and on deep sea continental slopes in water depths greater than about 600m. All three Canadian continental margins contain gas hydrates. The Mackenzie River delta, in the NWT, contains some of the most concentrated deposits in the world. A number of other countries such as Russia, the United States, India, Japan and China also have substantial marine gas hydrate deposits. The worldwide amount of methane in gas hydrates is considered to contain at least 1x104 gigatons of carbon in a very conservative estimate. This is about twice the amount of carbon held in all fossil fuels on earth. Converting this into our cubic mile of oil measure, there are some 5,000 cubic miles of oil in gas hydrate fields worldwide.
One more observation about oil and gas. In the last few years oil and gas companies have developed a technique known generally as horizontal drilling – rather than drilling straight down, this method drills straight down for a while and then turns and goes sideways. In addition to going sideways, the method also fractures obstacles that get in the way (stubborn rock formations, for example). This combination of actions creates a technology known as horizontal drilling with hydraulic fracturing. According to the US Department of Energy, this is unleashing the ability of oil and gas companies to extract oil and gas hitherto inaccessible to drilling. One field alone - the Barnett Shale located in the Bend Arch-Fort Worth Basin - may have the largest producible reserves of any onshore natural gas field in the United States. The field is proven to have 2.5 trillion cubic feet of natural gas (455 square miles of oil), and is generally estimated to contain as much as 30 trillion cubic feet of natural gas resources (5,460 square miles of oil). Oil also has been found in lesser quantities, but sufficient (with oil prices above $90 a barrel) to be commercially viable. The use of this technology is changing our picture of the state of oil and gas reserves.
Coal is an abundant resource – there are 120 cubic miles of proven and accessible reserves. It is also estimated that and additional 1,500 cubic miles could be accessed by a combination of price attractiveness and new technology: coal remains one the most significant energy asset on the planet.
This brief summary – believe us, there is a lot more we could say – suggests that carbon based energy will be a substantial part of the way in which energy demands are met worldwide for at least a generation.
Some may be surprised at this observation. They will have read about “peak oil”. This is the idea, which has been around for some considerable time, that our ability to find and extract oil has peaked and that oil supplies are in decline. M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. Hubbert initially predicted in 1974 that peak oil would occur in 1995 "if current trends continue." However, in the late 1970s and early 1980s, global oil consumption actually dropped (due mainly to the shift to energy-efficient cars, the shift to electricity and natural gas for heating, and other factors), then rebounded to a lower level of growth in the mid 1980s. Thus oil production did not peak in 1995, and has climbed to more than double the rate initially projected. This underscores the fact that the only reliable way to identify the timing of peak oil will be in retrospect. Indeed, if you read the literature on peak oil, predictions include the possibilities that it has recently occurred, that it will occur shortly, or that a plateau of oil production will sustain supply for up to 100 years. None of these predictions dispute the peaking of oil production, but disagree only on when it will occur. Our observation is that it is not imminent.
The Consequences of Energy Use
Burning carbon based fuels for energy has consequences, not least for the environment and climate. There are three we should review here: climate change, water and land. But before we look at these, it is important to note that all forms of energy use have consequences, as we shall see throughout this book.
Climate Change
Roger Pielke Snr., a well-established scientist who has worked extensively on the climate change file, has suggested that there are basically three core hypothesis at play in the scientific community engaged in work on climate science. These are:
1. The Total Sceptic Position: Human influence on climate variability and change is of minimal importance, and natural causes dominate climate variations and changes on all time scales. In coming decades, the human influence will continue to be minimal. We should therefore not worry about our use of carbon energy sources. It will have little impact on the worlds climate.
2. The Emerging Position: Although the natural causes of climate variations and changes are undoubtedly important, the human influences are significant and involve a diverse range of first- order climate forcings, including, but not limited to, the human input of carbon dioxide (C02) through the use of fossil fuels and intensive agriculture. Most, if not all, of these human influences on regional and global climate will continue to be of concern during the coming decades. We therefore must reduce our use of carbon energy and seek alternative energy forms.
3. The UN’s International Panel on Climate Change Position: Although the natural causes of climate variations and changes are undoubtedly important, the human influences are significant and are dominated by the emissions into the atmosphere of greenhouse gases, the most important of which is C02. The adverse impact of these gases on regional and global climate constitutes the primary climate issue for the coming decades. We therefore must radically reduce our use of carbon energy – some suggest by 80% of higher by 2050 – so as to ensure that the climate does not warm beyond 2 degrees higher than at present.
Most of the peer reviewed scientific literature favours the emerging position over the IPCC position. It is also the case that very little of the literature favours the sceptic position. Scientific analysis therefore needs to take into account and give more serious consideration to the other factors that have a bearing on climate change. These include the role of oceans as “sinks” for CO2, the role of ocean currents, naturally occurring events (earthquakes, hurricanes, volcanic eruptions), the sun and sun spots, other greenhouse gasses (especially water vapour), the tilt of the earth and so on. All are known to have some impact on climate. Nonetheless, using oil, coal and natural gas will have an impact on climate.
Roger Pielke Jnr, Professor of ¬Environmental Studies at the University of Colorado, in his book the The Climate Fix: What Scientists and Politicians Won’t Tell You About Global Warming , shows clearly that he both agrees with this analysis (not surprisingly, since it his father who offers it) but also he adds a key point. In seeking to mitigate the impacts of the manmade component of climate change by reducing the use of CO2 emitting energy sources, there is a need to balance this change with economic growth. He observes that policymakers who find themselves conflicted, are not confused. They are conflicted because they express a desire to increase the costs of energy so as to reduce the impact of carbon energy use on climate. At the same time these same politicians express a desire to lower those costs so as to sustain economic growth. They are not confused, because when such a trade-off is made, it is inevitably made in the direction of sustaining economic growth. This is Pielke’s law rule of climate change: when environmental and economic objectives are placed into opposition with one another in public or political forums, the economic goals win out. In a recent Financial Post article, Pielke said:
This runs counter to the proposition by many climate campaigners, like Kevin Anderson of the Tyndall Center for Climate Change Research in the UK., who has argued that a "planned recession" would be necessary in the U.K. to reduce emissions in response to the threat of climate change. In practice, this would mean that "the building of new airports, petrol cars and dirty coal-fired power stations will have to be halted in the U.K. until new technology provides an alternative to burning fossil fuels." The UK provides an interesting case study. in coming years the U.K. faces the prospects of an energy shortage due to the closing both of coal plants (in turn due to laws governing their particulate emissions) and of nuclear power plants (as part of a long-term plan to reduce dependence on nuclear power), leaving few short-term options to meet expected demands for power. Possible measures to increase energy supply include building more gas-fired plants (which risks a greater dependence on Russian gas and all of the accompanying insecurities), building new nuclear plants or putting off closure of existing plants (despite significant public opposition), and building new, cleaner coal plants (despite their carbon footprints).
Of the choice, a U.K. government official explained in an interview in The Economist that in "a decision between building a new coal plant and letting the lights go out -- that's a no-brainer." The Economist interpreted that comment to signify that "something has to give, and it will probably be environmental targets."
In the UK At least 43 gigawatts of totally new electrical generation capacity, equivalent to half of Britain’s current total, will be needed by 2020, as all but one of its nuclear plants are retired and coal-fired power stations closed to meet EU air pollution standards. A staggering £200bn ($322 billion) of investment will be needed not only to maintain energy security against price spikes as North Sea oil and gas resources dwindle and energy imports grow, but also to deliver the largest single contribution to a low-carbon economy. Electricity output may need to double by 2020 as domestic heating, industry and transportation electrify, but there are very different ideas as to how this should be done, and the role of energy efficiency has been neglected. And it’s not only electricity that will be at a premium, the UK’s overall energy needs, including heating, transport and industrial processes are increasingly satisfied through importing oil and gas. There could be rolling black-outs in the UK unless a strategy for energy which balances economic growth and climate change can be found.
Water
After agriculture, the energy sector is the largest consumer of water in the developed world. All systems of energy production use water. In the US alone, the energy sector withdraws some 200 billion gallons of freshwater and seawater each day – close to half of the nations water use. Most of this water is used for cooling and a great deal is returned, once cooled, after use. Only solar power and wind power use virtually no water at all.
Most alternative energies—whether renewables like solar thermal and biofuels, or unconventional sources like oil sands—use more water than conventional fossil fuels . For example, biofuels produced from irrigated corn use 650 times more water than oil-derived gasoline. For soybean-based biofuels, that number is around 1,000 . Fossil fuel plants that attempt to bury their CO2 using carbon sequestration will likely consume 40%–90% more water than those who do not .
The conventional generation of electricity uses water to turn turbines for hydropower or produce steam for thermoelectric power; it also uses cooling water to condense the steam produced by thermoelectric generation. For typical thermoelectric power plants used for energy production in the US, for example, the amount of water which evaporates and cannot be reused or returned to its source is 0.47 gal (1.8 L) of fresh water evaporated per kWh of end-use electricity. Hydroelectric power plants evaporated 18 gal (68 L) of fresh water per kWh consumed by the end user. Combined, these values give an aggregate total for the United States of 2.0 gal/kWh (7.6 L/kWh) .
Extracting oil from the oil sands – a significant energy opportunity – uses a lot of water. Surfaced mined bitumen – the basis for the oil– requires between 2 and 5 barrels of freshwater to produce one barrel of oil. Increasingly, producers are finding ways of recycling the water and reusing it. Some of the water used in mining operations (but not in-situ extraction of bitumen) ends up in what are known as “tailings” ponds – vast lakes of water filled with particles which, until recently, took some forty years to settle. Using synthetic biology, these tailings ponds can now be reclaimed much more rapidly (in months rather than years) and the water in these ponds can be cleaned and reused. Nonetheless, there is a challenge about water use for energy production.
Climate change and water are related and have an impact on energy production. In France in 2006, heat waves caused the temperature of river waters to rise significantly. Nuclear plants that used river water to cool their systems could not use the water since it was too ``hot`` and the plants had to be temporarly shut down . Spain also experienced this same challenge. A biorefinery built in Minnesota has been unable to operate, since insufficient water can be found to support it .
It is clear that energy use and water consumption cannot be seen to be distinct from one another, especially if we wish to push towards so-called ``green`` energy. Access to water and seeking methods to reduce water use and loss in energy production will be a key challenge.
Land Use
Extracting oil, coal, oil from the oil sands or increasing our use of biofuels or wind power all have major impacts on how we use land. Land use and the maintenance of the land together with the species that depend on the land is a key challenge for all engaged in the production of energy.
We saw, when looking at what it would take to replace one cubic mile of oil with other forms of energy, just how tough this will be. Look at pictures of oil sands mining and the tailings ponds mining (but not in-situ) create as a result of their process, and you can see the challenge. Remediation of land use from mining operations for oil sands, gas, oil, coal and other forms of extraction (in Canada the Province of Alberta, for example, has 45,000 disuses oil and gas wells that require remediation) is a major challenge. This is leading to many to seek an increase in protected or “set aside” lands which, though they contain oil or gas, cannot be exploited so as to preserve the land and biodiversity.
Wind turbines also occupy a great deal of land and, increasingly, development of wind-farms is being challenged on environmental grounds. Large industrial sized turbines which are installed together to form a wind farm will have a much larger footprint on the land. Depending on the local terrain, wind projects occupy anywhere from 28 – 83 acres per megawatt, but only 2 – 5% of the project area is needed for turbine foundations, roads or other infrastructure. It is in relation to these larger industrial sized wind turbines and wind farms that land use issues become a significant factor in considering the development of wind projects to generate electricity. Successful wind projects require open space and clear access to the wind. This makes them an ideal choice for agricultural areas, grazing lands and the coastline – thus creating a trade-off between different land use options .
Biofuels also create these trade-offs. Unless energy is being produced from landfills or other waste streams from existing processes, land is required to create the feedstock to fuel the energy production system. So as to reduce the impact on food production and biodiversity, those growing fibre for conversion to energy (crops, trees, grasses etc.) are increasingly making use of retired agricultural land or forests (e.g. pine beetle infected forest areas) rather than use quality agricultural land. However, to reach the volumes required for biofuels to begin to replace fossil fuels, a substantial constraint will be access to land.
The Big Challenges
In this chapter we have built the elements of a jig-saw puzzle. So, looking at all of these pieces of the jig saw, we can summarise the challenge for the future of energy as follows:
1. Demand for energy is likely to at least double between now and 2050 – just forty years away. From the history of energy systems, this is not a lot of time in which to change energy production practices. Oil, natural gas and coal will continue to power our energy systems for some time to come.
2. Supplies of energy are sufficient, especially given new technologies for extraction (e.g. horizontal drilling with hydraulic fracturing) and new sources of available energy (gas hydrates) as well as unconventional oil (e.g. Canada`s oil sands).
3. So called “green energy” – biomass, solar, wind – will grow but remain a small portion of the total energy system. Caution needs to be exercised as many of these options use more water than conventional systems and some also create more greenhouses gasses than conventional oil and gas.
4. Energy production uses a lot of water and, as climate change has increasing impacts, water will be a major challenge for energy production.
5. Climate change is impacted by human activity (but it is not the only “cause” of climate change). So as to reduce the threats to various nations of the impact of climate change, systematic attempts need to be made both to conserve energy and reduce emissions.
6. Producing sufficient energy to meet demand while managing environmental impacts on water, land and air will pose a challenge. The iron law is that, when faced with a trade-off between energy for economic growth or constraints to support environmental policy, economics wins.
7. Getting to double energy supply without constantly invoking the iron law will be a tough challenge for all.
The balance of this book will explore these issues in more depth, focusing on Canada as a case study. The challenge being addressed here is simple: how can we balance three competing forces – the need for energy, the need for economic development and growth and the need to be effective stewards of the environment. This we refer to as the new 3xE challenge for Canada and the developed world.
Introduction
In 2010 the late Hew Crane of SRI International – originally known as the Stanford Research Institute – created a new unit of energy measurement. It is known as the cubic mile of oil . Imagine this: a cube of oil a mile long, a mile wide and a mile deep. Now imagine burning this cube of oil to get energy – whether for electrical power, fuels or other forms of energy. A cubic mile of oil, for those of you technically minded, is equivalent to 26 billion barrels of oil or 6.4 billion tons of coal. A barrel of oil is equivalent to two full tanks of fuel for an SUV.
The reason Crane developed this new measurement was to make clear just what global energy consumption looked like. Each year, the world uses some three cubic miles of oil – some of it with hydrocarbons, some with nuclear and some with wind and bioenergy. Crane is using this measure to capture just how much energy comes from each source, as the following table shows:
Source of Energy Shows as Cubic Miles of Oil per Year
Oil 1.06
Coal 0.81
Natural Gas 0.61
Biomass 0.19
Nuclear 0.15
Hydroelectric 0.17
Geothermal <0.01
Wind and Solar <0.005
Table 1: Sources of Energy (2006)
AS the population of the earth grows – it will exceed eight billion by 2025 – so demand for energy will increase. The best estimate we have is that global energy demand will rise from three cubic miles to six cubic miles by 2050 – energy demand is currently rising at a rate of 2.5% per year.
Meeting Future Energy Demands
The question this gives rise to is simple: how will this demand for energy be met?
Crane and his colleagues have explored this question in some depth. They suggest that a cubic mile of oil can be secured by one of the following:
• 52 nuclear plants developed every year to 2050 – each plant currently requires ten years to construct, has a lifespan of forty years, occupies some four square kilometres of land and costs (at current prices) some $5 billion to build. There is also the problem of disposing of hazardous waste and the growing threat of the use of this waste by terrorists. For each cubic mile of oil from this source, we would require 500 new surface uranium mines; 1,000 new underground uranium mines; and 2,280 nuclear reactor operations.
• 32,850 wind turbines built each year for the next fifty years. A large wind turbine requires a location with a reasonably constant and abundant flow of wind, requires some 0.16 km of land and costs around $2m to build. There are concerns about environmental footprints, aviation and damage to bird life.
• 91,250,000 rooftop solar panels developed and installed each year for the next fifty years. A 2.1killowat solar array requires technical skills for installation, needs a supply of sunshine, covers around 14 m2 and costs around $15,000. Such panels present few, if any, environmental problems.
• 104 coal fired power plants developed each year for the next fifty years. A 500 megawatt coal fired power plant occupies about 2 m2 of land, costs around $650 million and will last while the coal continues to be supplied or thirty five to forty years, depending on national regulations. New regulations in some countries – Canada and the UK included – require such plants to capture and store CO2 emitted by the burning of coal. This adds substantial additional costs. Such plants are major contributors to man-made climate change impacts, acid rain and they give rise to significant environmental land remediation issues.
• 4 Three Gorges Dams developed each year for fifty years. The Three Gorges dam is the world’s largest and it is in China – flooding 632 square kilometers, displacing 1.25 million people and costing $30 billion.
It is worth observing here that it took 200 years (1700 to 1900) for coal to replace wood as the world’s primary energy source. It then took almost 100 years (1870 to 1960) for oil to replace coal. And it took 100 years (1900 to 2000) for natural gas to equal coal in energy usage.
It is also more complicated than this. Take coal fired power plants. To increase the use of coal for energy by one cubic mile each year would require 1,300 new surface coal mines, 2,600 underground mines, some 300,000 new trucks and 2,600 more trains (each consisting of 130 coal cars drawn by three 3,500 horsepower trains. Each mine would leave behind some 750,000 tons of excavated materials sitting some fifty feet deep across twenty square miles.
Wind power is also problematic – it is not windy all the time. In fact, win turbines generally operate at 24-30% of their capacity (never look at installed capacity as a measure of the potential of wind-power – take one third of this capacity and see this as the likely output of a wind turbine). This means that, as wind capacity is increased, additional natural gas fired power plants are needed to “back up” the system so that energy supply meets demand or that ways have to be found of storing energy for use when the wind is low. Given that wind farms are distant from the geographic areas of high demand, there is a need for transmission systems which in turn have environmental consequences.
Biomass – producing energy from landfill waste, wood, alcohol fuels, agricultural crops (including crops grown specially to produce energy) – is also seen by many to have great promise. The global potential is estimated to be no more than 0.5 cubic miles (some suggest it could be as a high as 2 cubic miles), but there is a downside. Most of the biomass in use today is wood. Burning wood may not reduce greenhouse gas emissions – in fact, in some situations, burning biomass can produce more greenhouse gasses than the direct use of fossil fuels. Further, growing crops for energy use will significantly reduce the amount of fertile agricultural land available for food production, thius disrupting the food supply system. We have already seen this. When energy prices were high, farmers sold food crops for energy resulting in bread prices and other food prices rising significantly, causing protests in a number of countries.
Given these observations, it seems likely that the world will be dependent on fossil fuels – oil, gas and coal – for some considerable time.
The question then becomes – do we have enough reserves of carbon based fuels to meet demand?
Global Carbon Energy Reserves
According to several different sources, global conventional oil reserves based on current technologies and normative pricing are some 1,400 billion barrels – equivalent to 46 cubic miles of oil. Additional capacity would be found if the oil price was high – additional exploration and enhanced oil recovery occurs once prices exceed $100/barrel. The best estimate available here suggests that these “additional reserves” could amount to 94 cubic miles of oil. At the current rate of use, proven reserves would supply the worlds energy for some forty years, but at a cost. At the height of the oil boom in 2008 when a barrel of oil sold for $120, a cubic mile of oil would cost US$3 trillion – this is before we add the cost of mitigation the consequences of its use.
Most of this conventional oil (a term used to contrast this kind of oil from oil sands oil, which is seen as unconventional) resides in countries with no or limited democracies: Saudi Arabia (259 billion barrels), Iran (126 billion barrels ), Iraq (115 billion barrels), Kuwait (99 billion barrels ), Abu Dhabi (92 billion barrels), Venezuela (77 billion barrels), Russia (60 billion barrels), Libya (39 billion barrels), Nigeria (35 billion barrels), the USA (22 billion barrels) and Canada (4 billion barrels). Canada in fact currently ranks number nine in world oil production, but by 2015 is expected to be in the top five due to the increasing flow of oil from the oil sands.
The North American oil sands provide a substantial opportunity for energy supply. Colorado, Utah and Wyoming hold oil shale reserves estimated to contain 1.2 trillion to 1.8 trillion barrels of oil, according to the US Department of Energy, half of which is recoverable. Eastern Utah alone holds oil sands reserves estimated at 12 billion to 19 billion barrels. The Canadian oil sands region in Alberta contains recoverable oil reserves conservatively estimated at 175 billion barrels (the industry works on the assumption that there are an additional 125 billion of recoverable barrels in the Alberta oil sands for a total of 300 billion). In total, worldwide, these reserves total 400 cubic miles of oil.
Natural gas reserves are estimated at 42 cubic miles – sixty nine years of supply at current levels of gas consumption. New technologies which enable extraction of gas from shale are significantly adding to the estimates of reserves – an additional 66 cubic miles.
There are also other developments with respect to natural gas – gas hydrates. Gas hydrates represent a very large global reservoir of natural gas and they are estimated to contain more organic carbon than all other known fossil fuel sources combined. They bind immense amounts of methane within sea-floor or Arctic sediments; the breakdown of a unit volume of methane hydrate at a pressure of one atmosphere produces about 160 unit volumes of gas. Gas hydrates exist under large portions of the world's Arctic areas and on deep sea continental slopes in water depths greater than about 600m. All three Canadian continental margins contain gas hydrates. The Mackenzie River delta, in the NWT, contains some of the most concentrated deposits in the world. A number of other countries such as Russia, the United States, India, Japan and China also have substantial marine gas hydrate deposits. The worldwide amount of methane in gas hydrates is considered to contain at least 1x104 gigatons of carbon in a very conservative estimate. This is about twice the amount of carbon held in all fossil fuels on earth. Converting this into our cubic mile of oil measure, there are some 5,000 cubic miles of oil in gas hydrate fields worldwide.
One more observation about oil and gas. In the last few years oil and gas companies have developed a technique known generally as horizontal drilling – rather than drilling straight down, this method drills straight down for a while and then turns and goes sideways. In addition to going sideways, the method also fractures obstacles that get in the way (stubborn rock formations, for example). This combination of actions creates a technology known as horizontal drilling with hydraulic fracturing. According to the US Department of Energy, this is unleashing the ability of oil and gas companies to extract oil and gas hitherto inaccessible to drilling. One field alone - the Barnett Shale located in the Bend Arch-Fort Worth Basin - may have the largest producible reserves of any onshore natural gas field in the United States. The field is proven to have 2.5 trillion cubic feet of natural gas (455 square miles of oil), and is generally estimated to contain as much as 30 trillion cubic feet of natural gas resources (5,460 square miles of oil). Oil also has been found in lesser quantities, but sufficient (with oil prices above $90 a barrel) to be commercially viable. The use of this technology is changing our picture of the state of oil and gas reserves.
Coal is an abundant resource – there are 120 cubic miles of proven and accessible reserves. It is also estimated that and additional 1,500 cubic miles could be accessed by a combination of price attractiveness and new technology: coal remains one the most significant energy asset on the planet.
This brief summary – believe us, there is a lot more we could say – suggests that carbon based energy will be a substantial part of the way in which energy demands are met worldwide for at least a generation.
Some may be surprised at this observation. They will have read about “peak oil”. This is the idea, which has been around for some considerable time, that our ability to find and extract oil has peaked and that oil supplies are in decline. M. King Hubbert created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. Hubbert initially predicted in 1974 that peak oil would occur in 1995 "if current trends continue." However, in the late 1970s and early 1980s, global oil consumption actually dropped (due mainly to the shift to energy-efficient cars, the shift to electricity and natural gas for heating, and other factors), then rebounded to a lower level of growth in the mid 1980s. Thus oil production did not peak in 1995, and has climbed to more than double the rate initially projected. This underscores the fact that the only reliable way to identify the timing of peak oil will be in retrospect. Indeed, if you read the literature on peak oil, predictions include the possibilities that it has recently occurred, that it will occur shortly, or that a plateau of oil production will sustain supply for up to 100 years. None of these predictions dispute the peaking of oil production, but disagree only on when it will occur. Our observation is that it is not imminent.
The Consequences of Energy Use
Burning carbon based fuels for energy has consequences, not least for the environment and climate. There are three we should review here: climate change, water and land. But before we look at these, it is important to note that all forms of energy use have consequences, as we shall see throughout this book.
Climate Change
Roger Pielke Snr., a well-established scientist who has worked extensively on the climate change file, has suggested that there are basically three core hypothesis at play in the scientific community engaged in work on climate science. These are:
1. The Total Sceptic Position: Human influence on climate variability and change is of minimal importance, and natural causes dominate climate variations and changes on all time scales. In coming decades, the human influence will continue to be minimal. We should therefore not worry about our use of carbon energy sources. It will have little impact on the worlds climate.
2. The Emerging Position: Although the natural causes of climate variations and changes are undoubtedly important, the human influences are significant and involve a diverse range of first- order climate forcings, including, but not limited to, the human input of carbon dioxide (C02) through the use of fossil fuels and intensive agriculture. Most, if not all, of these human influences on regional and global climate will continue to be of concern during the coming decades. We therefore must reduce our use of carbon energy and seek alternative energy forms.
3. The UN’s International Panel on Climate Change Position: Although the natural causes of climate variations and changes are undoubtedly important, the human influences are significant and are dominated by the emissions into the atmosphere of greenhouse gases, the most important of which is C02. The adverse impact of these gases on regional and global climate constitutes the primary climate issue for the coming decades. We therefore must radically reduce our use of carbon energy – some suggest by 80% of higher by 2050 – so as to ensure that the climate does not warm beyond 2 degrees higher than at present.
Most of the peer reviewed scientific literature favours the emerging position over the IPCC position. It is also the case that very little of the literature favours the sceptic position. Scientific analysis therefore needs to take into account and give more serious consideration to the other factors that have a bearing on climate change. These include the role of oceans as “sinks” for CO2, the role of ocean currents, naturally occurring events (earthquakes, hurricanes, volcanic eruptions), the sun and sun spots, other greenhouse gasses (especially water vapour), the tilt of the earth and so on. All are known to have some impact on climate. Nonetheless, using oil, coal and natural gas will have an impact on climate.
Roger Pielke Jnr, Professor of ¬Environmental Studies at the University of Colorado, in his book the The Climate Fix: What Scientists and Politicians Won’t Tell You About Global Warming , shows clearly that he both agrees with this analysis (not surprisingly, since it his father who offers it) but also he adds a key point. In seeking to mitigate the impacts of the manmade component of climate change by reducing the use of CO2 emitting energy sources, there is a need to balance this change with economic growth. He observes that policymakers who find themselves conflicted, are not confused. They are conflicted because they express a desire to increase the costs of energy so as to reduce the impact of carbon energy use on climate. At the same time these same politicians express a desire to lower those costs so as to sustain economic growth. They are not confused, because when such a trade-off is made, it is inevitably made in the direction of sustaining economic growth. This is Pielke’s law rule of climate change: when environmental and economic objectives are placed into opposition with one another in public or political forums, the economic goals win out. In a recent Financial Post article, Pielke said:
“Countries worldwide have expressed a commitment to sustaining economic growth, and these commitments are not going to change any time soon, no matter how much activists, idealists, or dreamers complain to the contrary. People will pay some amount for environmental goals, but only so much before drawing the line. That is just the way it is, regardless of whether economic growth measures what matters most to a country's well-being, and regardless of other metrics that might better capture quality of life” .
This runs counter to the proposition by many climate campaigners, like Kevin Anderson of the Tyndall Center for Climate Change Research in the UK., who has argued that a "planned recession" would be necessary in the U.K. to reduce emissions in response to the threat of climate change. In practice, this would mean that "the building of new airports, petrol cars and dirty coal-fired power stations will have to be halted in the U.K. until new technology provides an alternative to burning fossil fuels." The UK provides an interesting case study. in coming years the U.K. faces the prospects of an energy shortage due to the closing both of coal plants (in turn due to laws governing their particulate emissions) and of nuclear power plants (as part of a long-term plan to reduce dependence on nuclear power), leaving few short-term options to meet expected demands for power. Possible measures to increase energy supply include building more gas-fired plants (which risks a greater dependence on Russian gas and all of the accompanying insecurities), building new nuclear plants or putting off closure of existing plants (despite significant public opposition), and building new, cleaner coal plants (despite their carbon footprints).
Of the choice, a U.K. government official explained in an interview in The Economist that in "a decision between building a new coal plant and letting the lights go out -- that's a no-brainer." The Economist interpreted that comment to signify that "something has to give, and it will probably be environmental targets."
In the UK At least 43 gigawatts of totally new electrical generation capacity, equivalent to half of Britain’s current total, will be needed by 2020, as all but one of its nuclear plants are retired and coal-fired power stations closed to meet EU air pollution standards. A staggering £200bn ($322 billion) of investment will be needed not only to maintain energy security against price spikes as North Sea oil and gas resources dwindle and energy imports grow, but also to deliver the largest single contribution to a low-carbon economy. Electricity output may need to double by 2020 as domestic heating, industry and transportation electrify, but there are very different ideas as to how this should be done, and the role of energy efficiency has been neglected. And it’s not only electricity that will be at a premium, the UK’s overall energy needs, including heating, transport and industrial processes are increasingly satisfied through importing oil and gas. There could be rolling black-outs in the UK unless a strategy for energy which balances economic growth and climate change can be found.
Water
After agriculture, the energy sector is the largest consumer of water in the developed world. All systems of energy production use water. In the US alone, the energy sector withdraws some 200 billion gallons of freshwater and seawater each day – close to half of the nations water use. Most of this water is used for cooling and a great deal is returned, once cooled, after use. Only solar power and wind power use virtually no water at all.
Most alternative energies—whether renewables like solar thermal and biofuels, or unconventional sources like oil sands—use more water than conventional fossil fuels . For example, biofuels produced from irrigated corn use 650 times more water than oil-derived gasoline. For soybean-based biofuels, that number is around 1,000 . Fossil fuel plants that attempt to bury their CO2 using carbon sequestration will likely consume 40%–90% more water than those who do not .
The conventional generation of electricity uses water to turn turbines for hydropower or produce steam for thermoelectric power; it also uses cooling water to condense the steam produced by thermoelectric generation. For typical thermoelectric power plants used for energy production in the US, for example, the amount of water which evaporates and cannot be reused or returned to its source is 0.47 gal (1.8 L) of fresh water evaporated per kWh of end-use electricity. Hydroelectric power plants evaporated 18 gal (68 L) of fresh water per kWh consumed by the end user. Combined, these values give an aggregate total for the United States of 2.0 gal/kWh (7.6 L/kWh) .
Extracting oil from the oil sands – a significant energy opportunity – uses a lot of water. Surfaced mined bitumen – the basis for the oil– requires between 2 and 5 barrels of freshwater to produce one barrel of oil. Increasingly, producers are finding ways of recycling the water and reusing it. Some of the water used in mining operations (but not in-situ extraction of bitumen) ends up in what are known as “tailings” ponds – vast lakes of water filled with particles which, until recently, took some forty years to settle. Using synthetic biology, these tailings ponds can now be reclaimed much more rapidly (in months rather than years) and the water in these ponds can be cleaned and reused. Nonetheless, there is a challenge about water use for energy production.
Climate change and water are related and have an impact on energy production. In France in 2006, heat waves caused the temperature of river waters to rise significantly. Nuclear plants that used river water to cool their systems could not use the water since it was too ``hot`` and the plants had to be temporarly shut down . Spain also experienced this same challenge. A biorefinery built in Minnesota has been unable to operate, since insufficient water can be found to support it .
It is clear that energy use and water consumption cannot be seen to be distinct from one another, especially if we wish to push towards so-called ``green`` energy. Access to water and seeking methods to reduce water use and loss in energy production will be a key challenge.
Land Use
Extracting oil, coal, oil from the oil sands or increasing our use of biofuels or wind power all have major impacts on how we use land. Land use and the maintenance of the land together with the species that depend on the land is a key challenge for all engaged in the production of energy.
We saw, when looking at what it would take to replace one cubic mile of oil with other forms of energy, just how tough this will be. Look at pictures of oil sands mining and the tailings ponds mining (but not in-situ) create as a result of their process, and you can see the challenge. Remediation of land use from mining operations for oil sands, gas, oil, coal and other forms of extraction (in Canada the Province of Alberta, for example, has 45,000 disuses oil and gas wells that require remediation) is a major challenge. This is leading to many to seek an increase in protected or “set aside” lands which, though they contain oil or gas, cannot be exploited so as to preserve the land and biodiversity.
Wind turbines also occupy a great deal of land and, increasingly, development of wind-farms is being challenged on environmental grounds. Large industrial sized turbines which are installed together to form a wind farm will have a much larger footprint on the land. Depending on the local terrain, wind projects occupy anywhere from 28 – 83 acres per megawatt, but only 2 – 5% of the project area is needed for turbine foundations, roads or other infrastructure. It is in relation to these larger industrial sized wind turbines and wind farms that land use issues become a significant factor in considering the development of wind projects to generate electricity. Successful wind projects require open space and clear access to the wind. This makes them an ideal choice for agricultural areas, grazing lands and the coastline – thus creating a trade-off between different land use options .
Biofuels also create these trade-offs. Unless energy is being produced from landfills or other waste streams from existing processes, land is required to create the feedstock to fuel the energy production system. So as to reduce the impact on food production and biodiversity, those growing fibre for conversion to energy (crops, trees, grasses etc.) are increasingly making use of retired agricultural land or forests (e.g. pine beetle infected forest areas) rather than use quality agricultural land. However, to reach the volumes required for biofuels to begin to replace fossil fuels, a substantial constraint will be access to land.
The Big Challenges
In this chapter we have built the elements of a jig-saw puzzle. So, looking at all of these pieces of the jig saw, we can summarise the challenge for the future of energy as follows:
1. Demand for energy is likely to at least double between now and 2050 – just forty years away. From the history of energy systems, this is not a lot of time in which to change energy production practices. Oil, natural gas and coal will continue to power our energy systems for some time to come.
2. Supplies of energy are sufficient, especially given new technologies for extraction (e.g. horizontal drilling with hydraulic fracturing) and new sources of available energy (gas hydrates) as well as unconventional oil (e.g. Canada`s oil sands).
3. So called “green energy” – biomass, solar, wind – will grow but remain a small portion of the total energy system. Caution needs to be exercised as many of these options use more water than conventional systems and some also create more greenhouses gasses than conventional oil and gas.
4. Energy production uses a lot of water and, as climate change has increasing impacts, water will be a major challenge for energy production.
5. Climate change is impacted by human activity (but it is not the only “cause” of climate change). So as to reduce the threats to various nations of the impact of climate change, systematic attempts need to be made both to conserve energy and reduce emissions.
6. Producing sufficient energy to meet demand while managing environmental impacts on water, land and air will pose a challenge. The iron law is that, when faced with a trade-off between energy for economic growth or constraints to support environmental policy, economics wins.
7. Getting to double energy supply without constantly invoking the iron law will be a tough challenge for all.
The balance of this book will explore these issues in more depth, focusing on Canada as a case study. The challenge being addressed here is simple: how can we balance three competing forces – the need for energy, the need for economic development and growth and the need to be effective stewards of the environment. This we refer to as the new 3xE challenge for Canada and the developed world.
Apologies and I am Back.
Apologies to my followers and occasional readers. I have been somewhat hectic, but will be back from now on.
My new collection of fiction - short stories and poems is just published: Beyond Words Short Fiction and Poems and the other book I developed with Don Simpson - Renaissance Leadership is doing well. You can find both listed at lulu.com or here.
Lynne and I celebrated our 40th wedding anniversary and we look forward to the birth of our first grandchild this month as well as my 60th birthday.
My new collection of fiction - short stories and poems is just published: Beyond Words Short Fiction and Poems and the other book I developed with Don Simpson - Renaissance Leadership is doing well. You can find both listed at lulu.com or here.
Lynne and I celebrated our 40th wedding anniversary and we look forward to the birth of our first grandchild this month as well as my 60th birthday.
Tuesday, August 31, 2010
The Prince of Darkness Sheds Light on the Labour Leadership Race
Lord Mandelson, who used to be known as the Prince of Darkness, is now seeking to be the Giver of Light. In a series of comments on the coming election for a new leader of the British Labour Party, Mandelson has cautioned the party not to become over enthralled with its history as a socialist party. Noting the mood and character of British politics has changed, he calls for a centre right candidate to win the race and warns of the dangers of moving to the left.
Widely interpreted as support for David Miliband and a caution against his brother Ed Miliband, the front runners in the race to succeed Gordon Brown, it is also a hard knock against the only other serious candidate, Ed Balls, who has moved to the left as the campaign has progressed. Mandelson is positioning himself as the sage of “new” Labour following the publication of his book The Third Man which describes his pivotal role as the “piggy in the middle” between Tony Blair and Gordon Brown. He reminds the candidates that Britain needs careful and conservative management of its economy, a cautious social policy and real reform of health care. He dismisses two of the candidates – Andy Burnham and Dianne Abbot – as left and gone.
Tony Blair, Mandelson’s former colleague and occasional tormentor – he sacked Mandelson from the British cabinet twice - has clearly decided to support David Miliband. In several reported remarks, he has echoed Lord Mandelson concerns and has also spoken about intelligence, eloquence and courage – all things he attributed to David Miliband and not Ed Miliband.
Early polls showed Ed Balls winning, as the two Miliband brothers effectively split the vote, but betting at Paddy-Power – the world’s leading novelty online betting company - suggests otherwise. The money is going to the Miliband brothers, with David being favourite at 1:3 and Ed a close second at 2:1. Ed Balls is running a distant third at 50:1 and Diane Abbot is still wandering around the paddock at 125:1.
There is just under a month to go and, as Harold Wilson the former British Prime Minister said, “a week is a long time in politics”. Ed Balls is complaining that watching the Miliband Brothers campaign against each other is like watching Big Brother, while Diane Abbot is simply complaining. Balls laid out a social housing and social welfare program which he knows Britain cannot afford. Diane Abbot has demanded a restoration of welfare services which even her own Labour Government scrapped due to ineffectiveness and cost.
The serious focus is now on David Miliband. It should be. Labour just lost the last election and still have a large number of seats in the House of Commons – 258 seats to the Conservatives 301. The Conservative-Liberal Democratic coalition, though starting out strongly, has a long road ahead of difficult decisions and potentially divisive issues. The next leader of the Labour Party could be positioned to win a slight majority if a general election is called over a fragmented coalition in the next three years. While some think that the coalition will last for some time, others take the view that, in the end, British politics are tribal: people like clarity and the coalition will become increasingly “fuzzy” as the days go by.
David Miliband, if elected leader, could find himself fighting an election sooner rather than later. The question is: does he have what it takes to win? He is clearly intellectually able to develop policy and strategy appropriate for the times. He is articulate, if over precise. But he is what the British think of as “a bit of an egg-head” – a policy wonk and a little effete. He comes across more like a University Professor than a passionate, committed and yet serious leader of a party of the people. In contrast, his brother, Ed Miliband, has a little more fire and brimstone, but seems to have less depth. Most critical of all is the question in the mind of the electoral college which will elect the new leader – does David Miliband have courage.
When a number of former cabinet members rebelled against Gordon Brown early in 2010, they did so on the basis of promised support from key members of Brown’s cabinet. One of these was David Miliband, also the last cabinet member to offer support to Brown during this crisis – albeit tepid support with a hint of malice. Earlier in his time as Foreign Secretary, he failed to respond to the plea from a close colleague and political ally, James Purnell, then Secretary of State for Work and Pensions, to join him in resigning from government to force Gordon Brown out of the position of Prime Minister on the grounds that he was a failure as a leader and could not win a general election. Purnell has since suggested that Miliband dithered, first agreeing and then reneging, suggesting a lack of decisiveness when the right thing to do conflicts with the strong ambitions and need for recognition which many see David Miliband as having.
We will know at the end of September when the election results are announced at the Labour Party conference in Manchester. All of a sudden, the race is beginning to stir.
Widely interpreted as support for David Miliband and a caution against his brother Ed Miliband, the front runners in the race to succeed Gordon Brown, it is also a hard knock against the only other serious candidate, Ed Balls, who has moved to the left as the campaign has progressed. Mandelson is positioning himself as the sage of “new” Labour following the publication of his book The Third Man which describes his pivotal role as the “piggy in the middle” between Tony Blair and Gordon Brown. He reminds the candidates that Britain needs careful and conservative management of its economy, a cautious social policy and real reform of health care. He dismisses two of the candidates – Andy Burnham and Dianne Abbot – as left and gone.
Tony Blair, Mandelson’s former colleague and occasional tormentor – he sacked Mandelson from the British cabinet twice - has clearly decided to support David Miliband. In several reported remarks, he has echoed Lord Mandelson concerns and has also spoken about intelligence, eloquence and courage – all things he attributed to David Miliband and not Ed Miliband.
Early polls showed Ed Balls winning, as the two Miliband brothers effectively split the vote, but betting at Paddy-Power – the world’s leading novelty online betting company - suggests otherwise. The money is going to the Miliband brothers, with David being favourite at 1:3 and Ed a close second at 2:1. Ed Balls is running a distant third at 50:1 and Diane Abbot is still wandering around the paddock at 125:1.
There is just under a month to go and, as Harold Wilson the former British Prime Minister said, “a week is a long time in politics”. Ed Balls is complaining that watching the Miliband Brothers campaign against each other is like watching Big Brother, while Diane Abbot is simply complaining. Balls laid out a social housing and social welfare program which he knows Britain cannot afford. Diane Abbot has demanded a restoration of welfare services which even her own Labour Government scrapped due to ineffectiveness and cost.
The serious focus is now on David Miliband. It should be. Labour just lost the last election and still have a large number of seats in the House of Commons – 258 seats to the Conservatives 301. The Conservative-Liberal Democratic coalition, though starting out strongly, has a long road ahead of difficult decisions and potentially divisive issues. The next leader of the Labour Party could be positioned to win a slight majority if a general election is called over a fragmented coalition in the next three years. While some think that the coalition will last for some time, others take the view that, in the end, British politics are tribal: people like clarity and the coalition will become increasingly “fuzzy” as the days go by.
David Miliband, if elected leader, could find himself fighting an election sooner rather than later. The question is: does he have what it takes to win? He is clearly intellectually able to develop policy and strategy appropriate for the times. He is articulate, if over precise. But he is what the British think of as “a bit of an egg-head” – a policy wonk and a little effete. He comes across more like a University Professor than a passionate, committed and yet serious leader of a party of the people. In contrast, his brother, Ed Miliband, has a little more fire and brimstone, but seems to have less depth. Most critical of all is the question in the mind of the electoral college which will elect the new leader – does David Miliband have courage.
When a number of former cabinet members rebelled against Gordon Brown early in 2010, they did so on the basis of promised support from key members of Brown’s cabinet. One of these was David Miliband, also the last cabinet member to offer support to Brown during this crisis – albeit tepid support with a hint of malice. Earlier in his time as Foreign Secretary, he failed to respond to the plea from a close colleague and political ally, James Purnell, then Secretary of State for Work and Pensions, to join him in resigning from government to force Gordon Brown out of the position of Prime Minister on the grounds that he was a failure as a leader and could not win a general election. Purnell has since suggested that Miliband dithered, first agreeing and then reneging, suggesting a lack of decisiveness when the right thing to do conflicts with the strong ambitions and need for recognition which many see David Miliband as having.
We will know at the end of September when the election results are announced at the Labour Party conference in Manchester. All of a sudden, the race is beginning to stir.
Monday, August 30, 2010
Change at the IPCC
In a report commissioned by the Ministers of the Environment who are party to the United Nations climate change process, significant change is proposed for how the Intergovernmental Panel on Climate Change (IPCC) works.
Three major changes are proposed in a report issued on Monday, 30th August. The first is that the term of the Chairman of the IPCC should be shorter. Currently, the incumbent, Dr Rajendra Pachauri, can serve two six year terms and he was renewed for his second term in 2008. It is suggested that the next Chairman should serve to produce a single report and then pass the leadership role to a new Chairman. What would help is if the incumbent resigned to make way for the reforms, but this looks unlikely to happen. Dr Pachauri has already said he will stay in place to see the reforms through.
The second change also relates to the alleged conflicts of interest between the business interests of the Chairman and his role as the lead authority on climate change on behalf of the UN – the role of Chairman is unpaid. The Daily Telegraph (UK), amongst others, had accused Pachauri of using his connections and office to secure funds for organizations of which he was a Director and could benefit directly. Pachurai has vehemently denied these allegations. The report released this week suggests that the IPCC needs to have a robust and thorough conflict of interest policy that deals with such issues. While the allegations concerning Dr Pachurai are one area of possible conflict of interest, another is the affiliation and allegiance of some of the scientific reviewers with environmental organizations.
The final set of recommendations, and perhaps the most important, concern the way in which the scientific reviews are undertaken – especially focused on what counts as legitimate in terms of appropriate science and analysis. The concern, highlighted by the admitted error over the future of the Himalaya’s (the IPCC said that the ice covering the Himalayas would be gone by 2035, but could adduce no evidence to support this view),was with the use of so called “grey literature” (magazine articles, newsletters, monographs) which were not subject to peer review. The review committee said that the review and analysis procedures needed tightening to minimise errors. It also urged the editors of each section of the periodic assessments to ensure genuine controversies were reflected and alternative views were accounted for. This counters the Climategate emails which appeared to suggest that there was a systematic attempt to minimise doubt and alternative views and to declare a “scientific consensus”, even though one did not exist.
More specifically, where climate change models are used to present a scenario (the IPCC does not make predictions, it does suggest what might happen under certain “what if” assumptions), the review committee recommends that the cautions and risk associated with these models should be given more emphasis and that the “concreteness” of these models be cautioned by the uncertainties of simulations.
The report of the Ministerial assessment group will be considered at the next meeting of Ministers in October in South Korea.
Three major changes are proposed in a report issued on Monday, 30th August. The first is that the term of the Chairman of the IPCC should be shorter. Currently, the incumbent, Dr Rajendra Pachauri, can serve two six year terms and he was renewed for his second term in 2008. It is suggested that the next Chairman should serve to produce a single report and then pass the leadership role to a new Chairman. What would help is if the incumbent resigned to make way for the reforms, but this looks unlikely to happen. Dr Pachauri has already said he will stay in place to see the reforms through.
The second change also relates to the alleged conflicts of interest between the business interests of the Chairman and his role as the lead authority on climate change on behalf of the UN – the role of Chairman is unpaid. The Daily Telegraph (UK), amongst others, had accused Pachauri of using his connections and office to secure funds for organizations of which he was a Director and could benefit directly. Pachurai has vehemently denied these allegations. The report released this week suggests that the IPCC needs to have a robust and thorough conflict of interest policy that deals with such issues. While the allegations concerning Dr Pachurai are one area of possible conflict of interest, another is the affiliation and allegiance of some of the scientific reviewers with environmental organizations.
The final set of recommendations, and perhaps the most important, concern the way in which the scientific reviews are undertaken – especially focused on what counts as legitimate in terms of appropriate science and analysis. The concern, highlighted by the admitted error over the future of the Himalaya’s (the IPCC said that the ice covering the Himalayas would be gone by 2035, but could adduce no evidence to support this view),was with the use of so called “grey literature” (magazine articles, newsletters, monographs) which were not subject to peer review. The review committee said that the review and analysis procedures needed tightening to minimise errors. It also urged the editors of each section of the periodic assessments to ensure genuine controversies were reflected and alternative views were accounted for. This counters the Climategate emails which appeared to suggest that there was a systematic attempt to minimise doubt and alternative views and to declare a “scientific consensus”, even though one did not exist.
More specifically, where climate change models are used to present a scenario (the IPCC does not make predictions, it does suggest what might happen under certain “what if” assumptions), the review committee recommends that the cautions and risk associated with these models should be given more emphasis and that the “concreteness” of these models be cautioned by the uncertainties of simulations.
The report of the Ministerial assessment group will be considered at the next meeting of Ministers in October in South Korea.
Thursday, August 26, 2010
A New Kind of School Trustee
A group of candidates are running for office as school trustees in Edmonton who intend to change the nature of the trustee role and exercise their role as democratically elected oversees of the work of schools. Mostly under forty – and several just around thirty – it is a different generation from the “established” trustees and those they have hired as Superintendents of Schools. We can expect change.
While they accept their fiduciary responsibilities, they see their role in terms of educational outcomes and the development of educational strategy. They understand that they are not professional educators – they don’t need to be. What they are is important: they are the people’s representatives ensuring that educational processes are working and that they are effective in doing what they say they will do. In others words, they understand that their primary accountability is to the electors and the students in their jurisdiction. They are they to ensure that the schools in their constituency are providing the best and most appropriate education.
Superintendents will not like this. In some school jurisdictions, trustees are not permitted to visit schools, yet they are accountable for them. In others, all the reports they receive concerning education are always “positive” and “glowing” – it is as if drop out and the low rate of transition to post-secondary or our abject failure to provide a world-class education to aboriginal students did not exist. Trustees must be connected to the schools in their wards directly, must understand the strengths and weaknesses of those schools, must understand how they are doing – warts and all.
Older trustees will not like this next generation. They will challenge the model of governance which overly focuses on fiscal issues at the expense of teacher quality, student opportunity and educational achievement. They will see the shift from the “hands off” the real work of schools model of governance to a strategic governance role as a challenge. For example, Michael Janz, who is a candidate in Ward F in Edmonton, wants to establish a Ward Council – “a chance to bring together school councils, community leagues, MLAs, City Councillors and other interested citizens tri-annually to discuss our public education system”, engaging the community in the work of schools. Michael also favours direct engagement of trustees in the process of implementing the new strategy being pursued by Alberta Education – Inspiring Education. He is a big believer in “hands on” trusteeship. Many of the “old guard” will be challenged by this approach.
Superintendents – the CEO’s of the education system in your area – are appointed by Boards and the Minister. They have dual accountability. The Alberta Teachers Association, in a document entitled Courage to Choose – Emerging Trends and Strategic Possibilities for Informed Transformation in Alberta Schools, 2010-2011, are calling for an end to this dualism and are asking that the accountability be simple and clear – Superintendents should be locally accountable for the performance and development of the education services in a particular area. Trustees hire and can dismiss them. Superintendents report to them. This same document also suggests that each school, together with their stakeholder community, develop a school development plan which commits the school to a certain level of educational performance and activities – such a plan could be the work of the school in partnership with a Ward Council.
But they key suggestion from this document is for school boards to stop seeing themselves as trustees for the Government of Alberta funding for their school system, but instead to return to the idea that they are trustees for their local community – the people who elected them – for the work of the schools in that community. They are not answerable to the Minister of Education, but to the electors.
What this new generation of school trustee candidates stands for is a return to democracy. Shocking isn’t it.
While they accept their fiduciary responsibilities, they see their role in terms of educational outcomes and the development of educational strategy. They understand that they are not professional educators – they don’t need to be. What they are is important: they are the people’s representatives ensuring that educational processes are working and that they are effective in doing what they say they will do. In others words, they understand that their primary accountability is to the electors and the students in their jurisdiction. They are they to ensure that the schools in their constituency are providing the best and most appropriate education.
Superintendents will not like this. In some school jurisdictions, trustees are not permitted to visit schools, yet they are accountable for them. In others, all the reports they receive concerning education are always “positive” and “glowing” – it is as if drop out and the low rate of transition to post-secondary or our abject failure to provide a world-class education to aboriginal students did not exist. Trustees must be connected to the schools in their wards directly, must understand the strengths and weaknesses of those schools, must understand how they are doing – warts and all.
Older trustees will not like this next generation. They will challenge the model of governance which overly focuses on fiscal issues at the expense of teacher quality, student opportunity and educational achievement. They will see the shift from the “hands off” the real work of schools model of governance to a strategic governance role as a challenge. For example, Michael Janz, who is a candidate in Ward F in Edmonton, wants to establish a Ward Council – “a chance to bring together school councils, community leagues, MLAs, City Councillors and other interested citizens tri-annually to discuss our public education system”, engaging the community in the work of schools. Michael also favours direct engagement of trustees in the process of implementing the new strategy being pursued by Alberta Education – Inspiring Education. He is a big believer in “hands on” trusteeship. Many of the “old guard” will be challenged by this approach.
Superintendents – the CEO’s of the education system in your area – are appointed by Boards and the Minister. They have dual accountability. The Alberta Teachers Association, in a document entitled Courage to Choose – Emerging Trends and Strategic Possibilities for Informed Transformation in Alberta Schools, 2010-2011, are calling for an end to this dualism and are asking that the accountability be simple and clear – Superintendents should be locally accountable for the performance and development of the education services in a particular area. Trustees hire and can dismiss them. Superintendents report to them. This same document also suggests that each school, together with their stakeholder community, develop a school development plan which commits the school to a certain level of educational performance and activities – such a plan could be the work of the school in partnership with a Ward Council.
But they key suggestion from this document is for school boards to stop seeing themselves as trustees for the Government of Alberta funding for their school system, but instead to return to the idea that they are trustees for their local community – the people who elected them – for the work of the schools in that community. They are not answerable to the Minister of Education, but to the electors.
What this new generation of school trustee candidates stands for is a return to democracy. Shocking isn’t it.
Tuesday, August 24, 2010
Rethinking Schooling in Alberta
Alberta is about to transform its school system. The Alberta Teachers Association, School Boards and Minister of Education appear aligned on basic intent and will seek to reach a new three year Province wide teacher labour settlement to create the stable base for this work.
At the heart of this transformation will be a new emphasis on learning rather than instruction. That is, reduce the sheer volume of content requirements (there are over 1300 objectives in the Grade 7 curriculum for example) and focus more on the competencies and skills required in each subject to be knowledgeable and able to use that knowledge intelligently. While the Minister talks of this in terms of
“personalizing” learning, the focus is really on shifting the emphasis to knowledge in use and knowledge assessed through competency, rather than time on task.
A second key feature is a rethink of the teaching profession. Under discussion is the idea that teachers, like lawyers and doctors, will be certified by the profession and will be required to undertake continued professional development to sustain that certification. As teachers take on more responsibility for curriculum and competency based assessment and will increasingly be responsible for student assessment, it is critical that they update their skills and enhance their knowledge. A reform of initial teacher education will also be desirable.
A third key feature of the informed transformation relates to the use of technology. In the last decade, Alberta Education has invested close to $2 billion in technology for schools – not all of it smart investment. It is important to look carefully at the role technology can play and what the limits to its use can be – while we need to leverage technology, it is not a substitute for effective learning by problem solving or being taught by a person in real time. While some school boards have interpreted “personalizing” education in terms of making the Provincial curriculum available online so that students can study anytime and anywhere, the real meaning of “personalizing” is that means are found to build a stronger sense of student engagement with their learning. If technology can help, then fine – but the real challenge is to make the learning interesting and challenging.
The final feature of the transformation is to permit schools more independence from the top down control regime which has gradually overwhelmed the system. Not all schools have the same resource base, the same kind of students, the same kind of parental support or the same quality of teachers – not all schools are equal. Schools need room to manoeuvre so as to give the students the best chance of success. Some experiments are already taking place – there are designated flexible high schools, for example – but more is needed.
There will be changes to the School Act - students will be required to stay at school until they are seventeen, adding an additional year; there will be changes to school governance; changes will also be made to the accountability regime – but these are the symbols of change. What really needs to be different is how students think about their education and how engaged they are in pursuing it.
At the heart of this transformation will be a new emphasis on learning rather than instruction. That is, reduce the sheer volume of content requirements (there are over 1300 objectives in the Grade 7 curriculum for example) and focus more on the competencies and skills required in each subject to be knowledgeable and able to use that knowledge intelligently. While the Minister talks of this in terms of
“personalizing” learning, the focus is really on shifting the emphasis to knowledge in use and knowledge assessed through competency, rather than time on task.
A second key feature is a rethink of the teaching profession. Under discussion is the idea that teachers, like lawyers and doctors, will be certified by the profession and will be required to undertake continued professional development to sustain that certification. As teachers take on more responsibility for curriculum and competency based assessment and will increasingly be responsible for student assessment, it is critical that they update their skills and enhance their knowledge. A reform of initial teacher education will also be desirable.
A third key feature of the informed transformation relates to the use of technology. In the last decade, Alberta Education has invested close to $2 billion in technology for schools – not all of it smart investment. It is important to look carefully at the role technology can play and what the limits to its use can be – while we need to leverage technology, it is not a substitute for effective learning by problem solving or being taught by a person in real time. While some school boards have interpreted “personalizing” education in terms of making the Provincial curriculum available online so that students can study anytime and anywhere, the real meaning of “personalizing” is that means are found to build a stronger sense of student engagement with their learning. If technology can help, then fine – but the real challenge is to make the learning interesting and challenging.
The final feature of the transformation is to permit schools more independence from the top down control regime which has gradually overwhelmed the system. Not all schools have the same resource base, the same kind of students, the same kind of parental support or the same quality of teachers – not all schools are equal. Schools need room to manoeuvre so as to give the students the best chance of success. Some experiments are already taking place – there are designated flexible high schools, for example – but more is needed.
There will be changes to the School Act - students will be required to stay at school until they are seventeen, adding an additional year; there will be changes to school governance; changes will also be made to the accountability regime – but these are the symbols of change. What really needs to be different is how students think about their education and how engaged they are in pursuing it.
The UK Labour Leadership - How to Watch Paint Dry
The British Labour Party has debts of £20 million ($33 million) and no imaginable way of securing financial support to pay down this bank loan. The newly ennobled Lord Prescott suggests that bankruptcy is inevitable – this despite donations of over £10 million to help fight the election last May. But the bankruptcy of the Labour Party relates to more than money – they are also short on ideas.
This is surprising. With the departure of Gordon Brown from the front ranks of the Labour Party and an election for a new leader in full swing, one would think that ideas would be in abundance and that the party would be in a period of real renewal. A solid left wing candidate – Diane Abbot – and a feisty moderniser – Ed Balls – should provide the canvas for a robust and thorough debate about the politics of the left and the nature of “new” Labour. But the election, now widely seen as a choice between one of the two Milliband brothers, David and Ed, has been as dull as dishwater and is exciting as watching paint dry. There is no doubt that the Miliband brothers are the most talented Labour figures of their generations – it just was not a very inspiring generation of Labour leaders in the first place. At the moment, it is too close to call between them. The election results will be announced at the Labour Party Conference in Manchester at the end of September.
At stake is not just the nature of left wing politics in Britain, but also the quality of political debate. As the Conservative-Liberal coalition continues to demonstrate its ability to tackle the key issues in innovative ways, disaffecting of the centre-left in both governing parties (especially the Liberals) is strong. The opportunity for Labour is to provide an ideological base for a centre-left analysis of Britain and the opportunity to rethink solutions to the challenges which Briton’s face. These challenges – the out of control welfare state, an unsustainable health care system, an education system which shows few improvements over time and a sluggish economy – all have the appeal of requiring radical solutions while at the same time costing less money.
Labour is currently damaged goods. There is no doubt that Gordon Brown’s inability to govern Britain honestly and effectively will taint any attempt to reposition Labour and Blair’s duplicity in the Iraq conflict continues to harm the reputation of the party. But Briton’s can be very forgiving, especially if the party has fresh thinking and new solutions to offer.
Yet nothing imaginative or creative has appeared in the four months of campaigning already completed. Diane Abbot, clearly playing her status as a left winger, has used rhetoric and polemic to argue a left wing stance on University admission (guaranteed places for the poor), policing (stop racism), the war in Iraq and Afghanistan (exit timetables) and social housing (we need more). But on substance – foreign policy, the economy, the reform of welfare – she is quiet.
Andy Burnham, a centre-left candidate based in Manchester, is campaigning by criticising the recently defeated Labour Government – of which he was an integral part – and offering a few choice policy positions. One of these is a new National Care Service –aimed at helping those in need stay at home through the provision of home based care. On key issues he too is all talk and no detail – a characteristic of all in this leadership race.
Ed Balls, the former Minister of Education, is outspoken and bold in his use of language, even though he appears to have little to say of substance, other than that he disagrees with the Millibands. He now thinks that the war in Iraq was a mistake and that seeking to halve the deficit in four years (the commitment of the Labour government of which Balls was a senior minister) was a “mission impossible”. He is vague on what he would in fact do on the economy.
Ed and David Milliband, while expressing familial affection, are fighting similar but subtly different campaigns. David, the former Foreign Secretary, is committed to a broad ethical foreign policy and a radical rethink of the social policies of Britain – broadly in line with the ideas behind the Big Society, launched by the Prime Minister in July. He has defended the war in Iraq and supports fiscal responsible economic policies which minimize the impact on the most vulnerable. He is thought by many to be the likely winner.
His younger brother Ed, who was Energy and Climate Change Secretary in the last administration, takes a similar view of the challenges and has subtle differences with David on the response to these challenges. More of a common man than David – who is seen by many to be overly analytical and intellectual – Ed has a more passionate way of presenting ideas than his brother and, as the campaign unfolds, has been moving increasingly to the left. He has spoken of a four or five year plan to remodel the British economy by tackling the gap between rich and poor and creating a broader industrial base – focusing on personal and regional disparities. But he too has been short on detail.
By the time the Labour Party conference ends on 30th September, the party will have a new leader and the infighting will begin. Failed candidates will continue to vie for position and former grandees will look for front bench opposition places. Meanwhile, the coalition Government will continue to rule with authority and expediency and get on with the business of reinventing Briton, whether or not the Labour Party has anything new to say, which looks doubtful.
This is surprising. With the departure of Gordon Brown from the front ranks of the Labour Party and an election for a new leader in full swing, one would think that ideas would be in abundance and that the party would be in a period of real renewal. A solid left wing candidate – Diane Abbot – and a feisty moderniser – Ed Balls – should provide the canvas for a robust and thorough debate about the politics of the left and the nature of “new” Labour. But the election, now widely seen as a choice between one of the two Milliband brothers, David and Ed, has been as dull as dishwater and is exciting as watching paint dry. There is no doubt that the Miliband brothers are the most talented Labour figures of their generations – it just was not a very inspiring generation of Labour leaders in the first place. At the moment, it is too close to call between them. The election results will be announced at the Labour Party Conference in Manchester at the end of September.
At stake is not just the nature of left wing politics in Britain, but also the quality of political debate. As the Conservative-Liberal coalition continues to demonstrate its ability to tackle the key issues in innovative ways, disaffecting of the centre-left in both governing parties (especially the Liberals) is strong. The opportunity for Labour is to provide an ideological base for a centre-left analysis of Britain and the opportunity to rethink solutions to the challenges which Briton’s face. These challenges – the out of control welfare state, an unsustainable health care system, an education system which shows few improvements over time and a sluggish economy – all have the appeal of requiring radical solutions while at the same time costing less money.
Labour is currently damaged goods. There is no doubt that Gordon Brown’s inability to govern Britain honestly and effectively will taint any attempt to reposition Labour and Blair’s duplicity in the Iraq conflict continues to harm the reputation of the party. But Briton’s can be very forgiving, especially if the party has fresh thinking and new solutions to offer.
Yet nothing imaginative or creative has appeared in the four months of campaigning already completed. Diane Abbot, clearly playing her status as a left winger, has used rhetoric and polemic to argue a left wing stance on University admission (guaranteed places for the poor), policing (stop racism), the war in Iraq and Afghanistan (exit timetables) and social housing (we need more). But on substance – foreign policy, the economy, the reform of welfare – she is quiet.
Andy Burnham, a centre-left candidate based in Manchester, is campaigning by criticising the recently defeated Labour Government – of which he was an integral part – and offering a few choice policy positions. One of these is a new National Care Service –aimed at helping those in need stay at home through the provision of home based care. On key issues he too is all talk and no detail – a characteristic of all in this leadership race.
Ed Balls, the former Minister of Education, is outspoken and bold in his use of language, even though he appears to have little to say of substance, other than that he disagrees with the Millibands. He now thinks that the war in Iraq was a mistake and that seeking to halve the deficit in four years (the commitment of the Labour government of which Balls was a senior minister) was a “mission impossible”. He is vague on what he would in fact do on the economy.
Ed and David Milliband, while expressing familial affection, are fighting similar but subtly different campaigns. David, the former Foreign Secretary, is committed to a broad ethical foreign policy and a radical rethink of the social policies of Britain – broadly in line with the ideas behind the Big Society, launched by the Prime Minister in July. He has defended the war in Iraq and supports fiscal responsible economic policies which minimize the impact on the most vulnerable. He is thought by many to be the likely winner.
His younger brother Ed, who was Energy and Climate Change Secretary in the last administration, takes a similar view of the challenges and has subtle differences with David on the response to these challenges. More of a common man than David – who is seen by many to be overly analytical and intellectual – Ed has a more passionate way of presenting ideas than his brother and, as the campaign unfolds, has been moving increasingly to the left. He has spoken of a four or five year plan to remodel the British economy by tackling the gap between rich and poor and creating a broader industrial base – focusing on personal and regional disparities. But he too has been short on detail.
By the time the Labour Party conference ends on 30th September, the party will have a new leader and the infighting will begin. Failed candidates will continue to vie for position and former grandees will look for front bench opposition places. Meanwhile, the coalition Government will continue to rule with authority and expediency and get on with the business of reinventing Briton, whether or not the Labour Party has anything new to say, which looks doubtful.
Sunday, August 22, 2010
Should We Rethink Alberta?
The Rethink Alberta campaign is clearly having an impact in the media and is helping organizations raise funds to continue their campaigning against the oil sands and in favour of a specific social and political agenda for the twenty first century. While there is no real impact likely on tourism – a similar campaign to boycott the Maritimes on the basis of seal-hunting actually had so little impact that tourism numbers in the Maritimes have grown significantly – they do bring out the environmentalist in large numbers.
The campaigning is very smart. It uses images and messaging which are emotional and controversial – oil coated ducks. Facts are presented as “truths”, even though they are incomplete and not subject to a systematic review by peers. While some are extracted from peer reviewed materials, they do not reflect a comprehensive review of the total situation – for example, in-situ extraction of bitumen does not use water from the Athabasca River and does not produce tailings ponds, only certain processes do. Pictures of reclaimed tailings ponds, such as those from the Syncrude operation, are not shown.
But this campaign cannot be countered by facts or “better” public relations. The Government of Alberta’s budget of $25-$30 million for public relations to improve the understanding of the oil sands world-wide may change a few minds, but is unlikely to counter the powerful images of oil coated ducks or pelicans or open cast mines. The Government of Alberta cannot win a public relations battle with the funds available to it – the environmental lobby has deeper pockets for this kind of work.
The only response – and this was the strategy adopted by other sectors facing environmental challenges – is action. Alberta oil companies and the Government of Alberta needs to make explicit commitments to changing how the industry operates over the next twenty five years so as to change the debate from its current winner or looser game to a win-win for all concerned.
What does this require? Three things, all of which are already happening. The first is the close cooperation of the leading oil sands companies with the intention of resolving these environmental challenges over time in effective and powerful ways. Some time ago five of the leading companies working in the oil sands created a cooperative network known as the Oil Sands Leadership Initiative (OSLI). They are working together to reduce the environmental footprint of the combined oil sands operations, reduce water use, reduce CO2 emissions and ensure air quality. This group also has teams working to reclaim the tailings ponds. While it is early days, OSLI can already point to some success.
The second action that is needed is for the relationship between government and the oil sands companies to become focused on balancing the economic value of the oil sands with the responsibility the government has, as managers of the resource on our behalf, for environmental stewardship. The Land Use Framework, now in place thanks to the work of the former Minister of Sustainable Resource Development, Ted Morton, has kick started the systematic approach to regional land use and will make explicit the strategy for remediation and reclamation for the oil sands regions. We already can see that this plan will set aside land which can only be used for recreation – some twenty per cent of the land in the Fort McMurray region.
The third action is to accelerate investments in environmental technologies which reduce water use, speed up reclamation and remediation (including of the tailings ponds) and, over time, green the oil so that it can meet the standards set by legislation in the US for well-to-wheel emissions and environmental impacts. Significant investments by Alberta Innovates Energy and Environment, Climate Change and Emissions Management Corporation of Alberta, Natural Resources Canada and other organizations are already having an impact.
Related actions are also needed. A new relationships with First Nations Communities based on shared and agreed information and an agreed vision for the future would help. Ready access to reliable, independent information about what is actually happening through the Oil Sands Research and Information Network would help journalists and citizens have access to verified information. Full disclosure of sources of funding for environmental groups campaigning against the oil sands may also create greater transparency.
The best way to counter Rethink Alberta is to demonstrate by deeds that this is exactly what is happening. We are rethinking Alberta – its just that many are unaware that we are doing so, or that they are more interested in campaigning than actually making a difference.
The campaigning is very smart. It uses images and messaging which are emotional and controversial – oil coated ducks. Facts are presented as “truths”, even though they are incomplete and not subject to a systematic review by peers. While some are extracted from peer reviewed materials, they do not reflect a comprehensive review of the total situation – for example, in-situ extraction of bitumen does not use water from the Athabasca River and does not produce tailings ponds, only certain processes do. Pictures of reclaimed tailings ponds, such as those from the Syncrude operation, are not shown.
But this campaign cannot be countered by facts or “better” public relations. The Government of Alberta’s budget of $25-$30 million for public relations to improve the understanding of the oil sands world-wide may change a few minds, but is unlikely to counter the powerful images of oil coated ducks or pelicans or open cast mines. The Government of Alberta cannot win a public relations battle with the funds available to it – the environmental lobby has deeper pockets for this kind of work.
The only response – and this was the strategy adopted by other sectors facing environmental challenges – is action. Alberta oil companies and the Government of Alberta needs to make explicit commitments to changing how the industry operates over the next twenty five years so as to change the debate from its current winner or looser game to a win-win for all concerned.
What does this require? Three things, all of which are already happening. The first is the close cooperation of the leading oil sands companies with the intention of resolving these environmental challenges over time in effective and powerful ways. Some time ago five of the leading companies working in the oil sands created a cooperative network known as the Oil Sands Leadership Initiative (OSLI). They are working together to reduce the environmental footprint of the combined oil sands operations, reduce water use, reduce CO2 emissions and ensure air quality. This group also has teams working to reclaim the tailings ponds. While it is early days, OSLI can already point to some success.
The second action that is needed is for the relationship between government and the oil sands companies to become focused on balancing the economic value of the oil sands with the responsibility the government has, as managers of the resource on our behalf, for environmental stewardship. The Land Use Framework, now in place thanks to the work of the former Minister of Sustainable Resource Development, Ted Morton, has kick started the systematic approach to regional land use and will make explicit the strategy for remediation and reclamation for the oil sands regions. We already can see that this plan will set aside land which can only be used for recreation – some twenty per cent of the land in the Fort McMurray region.
The third action is to accelerate investments in environmental technologies which reduce water use, speed up reclamation and remediation (including of the tailings ponds) and, over time, green the oil so that it can meet the standards set by legislation in the US for well-to-wheel emissions and environmental impacts. Significant investments by Alberta Innovates Energy and Environment, Climate Change and Emissions Management Corporation of Alberta, Natural Resources Canada and other organizations are already having an impact.
Related actions are also needed. A new relationships with First Nations Communities based on shared and agreed information and an agreed vision for the future would help. Ready access to reliable, independent information about what is actually happening through the Oil Sands Research and Information Network would help journalists and citizens have access to verified information. Full disclosure of sources of funding for environmental groups campaigning against the oil sands may also create greater transparency.
The best way to counter Rethink Alberta is to demonstrate by deeds that this is exactly what is happening. We are rethinking Alberta – its just that many are unaware that we are doing so, or that they are more interested in campaigning than actually making a difference.
Friday, May 28, 2010
What a Difference a Year Makes - Environmentalism in 2010
What a difference a year makes. This time last year the environmental movement was gearing up for a major breakthrough at the Copenhagen Climate Change Summit. With a combination of “doom and gloom” soothsayers – Ban ki Moon, Al Gore, Prince Charles, James Hansen, David Suzuki – and optimistic negotiators, it was clear that Copenhagen was being positioned as “the last chance” we had to save the planet but there was optimism that we might just do it. We know what happened. Polluters couldn’t agree with the small islands and the developing world and the negotiations fell apart, with a compromise “lets look as if we might save the planet” deal being signed off by a few countries at the end of a tough ten days of negotiation.
Since then the environmental movement appears to have gone through a period of loss – grieving the loss of an ideal, finding a new reality in the prospect of additional talks in 2010 culminating in a new global climate change negotiation in Brazil in December, and then realizing that the game is up. There will not be a meaningful commitment to climate change mitigation which involves all of the leading polluters, especially the US, China, India and Canada. What is more, the general public in Canada, the US and Britain are all signalling that climate change is less of a priority for them now as it was five years ago.
Just as the language has gone through significant change – from “global warming” through “climate change” and “climate catastrophe” to the “climate challenge” – so now the environmental movement is going through a change. According to The Guardian (UK), “the economic case for global action to stop the destruction of the natural world is even more powerful than the argument for tackling climate change, a major report for the United Nations will declare this summer” – a fact reinforced by the psychological, social and economic impacts of the BP oil spill in the Gulf of Mexico.
One reason for this shift is money. Groups such as Conservation International (CI) and the Nature Conservancy (TNC) are among the most trusted environmental "brands" in the world, pledged to protect and defend nature. Yet many of the green organisations meant to be leading the fight are busy securing funds from those who are also destroying the environmental through mining and exploration. Sierra Club – the biggest green group in the US – was approached in 2008 by the makers of Clorox bleach, who said that if the club endorsed their new range of "green" household cleaners, they would give it a percentage of the sales. The club's Corporate Accountability Committee said the deal created a blatant conflict of interest – but took it anyway. Money talks. Right now the money is saying that biodiversity and environmental impacts of pollution, deforestation, land use changes and other matters are more important than climate change.
A second reason is public opinion. The public are disaffected by all the talk about the need for a response to climate change and both the lack of action and the costs of the actions that need to be taken. In the UK, where energy rationing over the next decade is a real possibility due to the now defeated governments dithering on environmental policy, many are now balking at the rising costs of energy and the ugliness of the countryside blighted by wind turbines. In the US, public support for action on climate change is down from 46% of the population to 36% in just one year. Environmental groups no longer enjoy the wide support of the people when they focus on climate change.
A third reason is political reality. Climate change as a policy strategy in the US and Canada is stuck and likely to be so for some time. The US Senate has the Kerry-Lieberman bill to debate, but it is unlikely to pass. Canada has indicated it will follow the US lead to create a single north American strategy, so Canada is also unlikely to do anything until the US passes appropriate legislation. However, major changes are taking place with respect to conservation, water, land use and air quality on both side of the US-Canada divide and serious attention to conservation and clean-up can be expected on both sides of the border following the BP spill. Environmental groups are already gearing up to lobby on these issues, dusting off old policies and approaches from the early 1990’s. Both the US and Canada are more likely to enact legislation on these issues than on transformative changes required to “stop” climate change.
The final reason that the environmental groups are shifting ground is that the science of climate change remains problematic. While some would argue that the core science demonstrating that the climate is changing and that this is due largely to the actions of people remains unchanged, the sceptics have gained sufficient ground over the last year to plant large trees of doubt. Worse, data from real world observations (as opposed to data from climate change models) provide opportunities for varying interpretations of the current state of the planet. The science is becoming a tough sell.
For all these reasons, the environmentalist will now focus more and more on environmental degradation and clean-up than on climate change – deforestation, water and land use will be the new focus for their work. Not a bad thing either.
Since then the environmental movement appears to have gone through a period of loss – grieving the loss of an ideal, finding a new reality in the prospect of additional talks in 2010 culminating in a new global climate change negotiation in Brazil in December, and then realizing that the game is up. There will not be a meaningful commitment to climate change mitigation which involves all of the leading polluters, especially the US, China, India and Canada. What is more, the general public in Canada, the US and Britain are all signalling that climate change is less of a priority for them now as it was five years ago.
Just as the language has gone through significant change – from “global warming” through “climate change” and “climate catastrophe” to the “climate challenge” – so now the environmental movement is going through a change. According to The Guardian (UK), “the economic case for global action to stop the destruction of the natural world is even more powerful than the argument for tackling climate change, a major report for the United Nations will declare this summer” – a fact reinforced by the psychological, social and economic impacts of the BP oil spill in the Gulf of Mexico.
One reason for this shift is money. Groups such as Conservation International (CI) and the Nature Conservancy (TNC) are among the most trusted environmental "brands" in the world, pledged to protect and defend nature. Yet many of the green organisations meant to be leading the fight are busy securing funds from those who are also destroying the environmental through mining and exploration. Sierra Club – the biggest green group in the US – was approached in 2008 by the makers of Clorox bleach, who said that if the club endorsed their new range of "green" household cleaners, they would give it a percentage of the sales. The club's Corporate Accountability Committee said the deal created a blatant conflict of interest – but took it anyway. Money talks. Right now the money is saying that biodiversity and environmental impacts of pollution, deforestation, land use changes and other matters are more important than climate change.
A second reason is public opinion. The public are disaffected by all the talk about the need for a response to climate change and both the lack of action and the costs of the actions that need to be taken. In the UK, where energy rationing over the next decade is a real possibility due to the now defeated governments dithering on environmental policy, many are now balking at the rising costs of energy and the ugliness of the countryside blighted by wind turbines. In the US, public support for action on climate change is down from 46% of the population to 36% in just one year. Environmental groups no longer enjoy the wide support of the people when they focus on climate change.
A third reason is political reality. Climate change as a policy strategy in the US and Canada is stuck and likely to be so for some time. The US Senate has the Kerry-Lieberman bill to debate, but it is unlikely to pass. Canada has indicated it will follow the US lead to create a single north American strategy, so Canada is also unlikely to do anything until the US passes appropriate legislation. However, major changes are taking place with respect to conservation, water, land use and air quality on both side of the US-Canada divide and serious attention to conservation and clean-up can be expected on both sides of the border following the BP spill. Environmental groups are already gearing up to lobby on these issues, dusting off old policies and approaches from the early 1990’s. Both the US and Canada are more likely to enact legislation on these issues than on transformative changes required to “stop” climate change.
The final reason that the environmental groups are shifting ground is that the science of climate change remains problematic. While some would argue that the core science demonstrating that the climate is changing and that this is due largely to the actions of people remains unchanged, the sceptics have gained sufficient ground over the last year to plant large trees of doubt. Worse, data from real world observations (as opposed to data from climate change models) provide opportunities for varying interpretations of the current state of the planet. The science is becoming a tough sell.
For all these reasons, the environmentalist will now focus more and more on environmental degradation and clean-up than on climate change – deforestation, water and land use will be the new focus for their work. Not a bad thing either.
Tuesday, May 18, 2010
Making Green Oil Happen
Alberta’s oil sands are the world’s largest energy project, with $200 billion in funds committed from the world’s leading oil producers, including BP, ExxonMobil and Shell. The lifetime value of the oil locked in the bitumen around Fort McMurray is $17.5 trillion. The companies currently produce 1.3 million barrels a day and their strategic intent is to triple this production over the next decade.
A recent report, written by Ceres - a coalition of investors, environmental groups and public interest groups working with companies to address sustainability challenges such as climate change – and widely publicized around the world, suggests that the oil sands risk assessment is such that the potential profitable of the oil extracted from the oil sands will decline over time unless the environmental issues associated with its extraction are addressed. These issues include increasing C02 emissions, water use, tailings ponds, land reclamation, biodiversity, the state of the Athabasca river and its watershed and biodiversity impacts.
One key issue, dramatized by the death of over 1,500 ducks, is the tailing ponds – already so large that they cover an area equivalent to Washington DC (US) and require the world’s second largest damn to prevent leakage into the water system. The Government of Alberta, which issued Directive 74, is now requiring the oil companies to speed up their restoration of the tailings ponds and solve this problem once and for all. A related problem is water. It takes approximately twelve barrels of water to extract one barrel of oil, but eight of these barrels of water can be recycled in the process, leaving four to be “lost” to production or become part of the tailings ponds. If the current use continues to grow at the current rate, then the oil sands companies could be at the limit of their water quota’s by 2014, causing production to be delayed, slowed or postponed. These represent real financial risks to the industry, but also call upon the managers of the resource (the Government of Alberta) to act on behalf of the owners of the resource (the people of Alberta) to engage in effective stewardship.
But what should be done? What does a greening of the oil sands and a mitigation of these real industry risks look like?
The first step is to put a realistic price on CO2 emissions and provide for a trading scheme which will permit emitters to buy time while they find appropriate technological solutions to the emissions challenge. When the industry came together two years ago to look at the value chain for oil from the oil sands, it was clear that this price needs to be set at around $40 - $70 a tonne of CO2, which will be enough of a penalty to drive innovation. If CO2 is allowed simply to float on the market like any other commodity, it could sell for below the current Alberta penalty price of $15 a tonne (it has been as low as $13 on the European CTS market).
The second step is to invest heavily in research and development on oil sands technologies which will green the oil sands. The Government of Alberta might want to look at recreating AOSTRA – a public private R&D partnership which had access to significant public:private funds so that key challenges in the sector could be overcome. Its time for the industry and government to enter into a real partnership to leapfrog past the current “tit for tat” politics of green energy and get to grips with the problem in a serious way. A $1 billion fund for R&D against a clear plan of action would send a powerful signal to firms, investors and the public that we are serious about green oil.
As part of this R&D work, the Government of Alberta should create an X Prize (called the Alberta Challenge) to see if somewhere in the world there is a method for extracting oil from bitumen in a way that halves water use. The X Prize is a method of setting a real issue in front of the world, creating specifications for the solution and standing back waiting for solutions to emerge. A prize of $25 million would be a small price to pay for a new approach to extraction and this approach has produced results in the past.
The third step is to use the power of regulation to stimulate development. Shell has asked for this and many other companies are making the point that they require tough Government regulations so that they can legitimately expend investors capital on meeting these regulatory requirements. Directive 74, the land use framework, Water for Life strategy and other measures are all steps in the right direction, but much more needs to be done to demonstrate that the Government is on top of its stewardship responsibilities.
The final step involves transparency – publishing performance data on an independent website, such as that being developed by the Oil Sands Research and Information Network (OSRIN) at the University of Alberta. Seeing what each mining site is doing to reduce CO2 emissions, water use, improving air quality, land restoration, tailings and biodiversity would be an important part of any strategy to green the oil sands.
Until we demonstrate to the world that Alberta is leapfrogging past the current issues and challenges and creating a new industry – how to make dirty oil green – then we will continue to be challenged in the courts, legislatures, investor community and shareholder groups around the world. The “green” issue will not go away – in fact, it is a massive opportunity to diversify the Alberta economy and we should be really pushing the managers of our resource to make green oil happen now.
A recent report, written by Ceres - a coalition of investors, environmental groups and public interest groups working with companies to address sustainability challenges such as climate change – and widely publicized around the world, suggests that the oil sands risk assessment is such that the potential profitable of the oil extracted from the oil sands will decline over time unless the environmental issues associated with its extraction are addressed. These issues include increasing C02 emissions, water use, tailings ponds, land reclamation, biodiversity, the state of the Athabasca river and its watershed and biodiversity impacts.
One key issue, dramatized by the death of over 1,500 ducks, is the tailing ponds – already so large that they cover an area equivalent to Washington DC (US) and require the world’s second largest damn to prevent leakage into the water system. The Government of Alberta, which issued Directive 74, is now requiring the oil companies to speed up their restoration of the tailings ponds and solve this problem once and for all. A related problem is water. It takes approximately twelve barrels of water to extract one barrel of oil, but eight of these barrels of water can be recycled in the process, leaving four to be “lost” to production or become part of the tailings ponds. If the current use continues to grow at the current rate, then the oil sands companies could be at the limit of their water quota’s by 2014, causing production to be delayed, slowed or postponed. These represent real financial risks to the industry, but also call upon the managers of the resource (the Government of Alberta) to act on behalf of the owners of the resource (the people of Alberta) to engage in effective stewardship.
But what should be done? What does a greening of the oil sands and a mitigation of these real industry risks look like?
The first step is to put a realistic price on CO2 emissions and provide for a trading scheme which will permit emitters to buy time while they find appropriate technological solutions to the emissions challenge. When the industry came together two years ago to look at the value chain for oil from the oil sands, it was clear that this price needs to be set at around $40 - $70 a tonne of CO2, which will be enough of a penalty to drive innovation. If CO2 is allowed simply to float on the market like any other commodity, it could sell for below the current Alberta penalty price of $15 a tonne (it has been as low as $13 on the European CTS market).
The second step is to invest heavily in research and development on oil sands technologies which will green the oil sands. The Government of Alberta might want to look at recreating AOSTRA – a public private R&D partnership which had access to significant public:private funds so that key challenges in the sector could be overcome. Its time for the industry and government to enter into a real partnership to leapfrog past the current “tit for tat” politics of green energy and get to grips with the problem in a serious way. A $1 billion fund for R&D against a clear plan of action would send a powerful signal to firms, investors and the public that we are serious about green oil.
As part of this R&D work, the Government of Alberta should create an X Prize (called the Alberta Challenge) to see if somewhere in the world there is a method for extracting oil from bitumen in a way that halves water use. The X Prize is a method of setting a real issue in front of the world, creating specifications for the solution and standing back waiting for solutions to emerge. A prize of $25 million would be a small price to pay for a new approach to extraction and this approach has produced results in the past.
The third step is to use the power of regulation to stimulate development. Shell has asked for this and many other companies are making the point that they require tough Government regulations so that they can legitimately expend investors capital on meeting these regulatory requirements. Directive 74, the land use framework, Water for Life strategy and other measures are all steps in the right direction, but much more needs to be done to demonstrate that the Government is on top of its stewardship responsibilities.
The final step involves transparency – publishing performance data on an independent website, such as that being developed by the Oil Sands Research and Information Network (OSRIN) at the University of Alberta. Seeing what each mining site is doing to reduce CO2 emissions, water use, improving air quality, land restoration, tailings and biodiversity would be an important part of any strategy to green the oil sands.
Until we demonstrate to the world that Alberta is leapfrogging past the current issues and challenges and creating a new industry – how to make dirty oil green – then we will continue to be challenged in the courts, legislatures, investor community and shareholder groups around the world. The “green” issue will not go away – in fact, it is a massive opportunity to diversify the Alberta economy and we should be really pushing the managers of our resource to make green oil happen now.
A Green Future for Canada?
Britain’s continuing challenge to supply energy to its people over the coming twenty five years provides an interesting backcloth to the debates about the environment, energy and climate change.
Here is the challenge: energy demand in Britain will soon outstrip energy supply. There are several reasons for this, but one is that several coal fired power plants cannot meet CO2 emissions target and remain profitable, so they will close. Another is that, for ideological reasons, the Government of Britain has not invested in nuclear energy but instead placed most of its bets on wind power and hydro power, neither of which can come on stream fast enough with sufficient capacity to meet demand. In 2008, the British Government policy was to ensure that renewable energy accounted for 38% of energy supplies by 2020. At the current rates of construction and development, this target cannot be achieved. Going green and carbon free will lead to energy supply challenges in the near future. If the new British government does as it says it will do, that is place a floor price on CO2 emissions trading certificates of £35, then the energy consumers of Britain will pay considerably more for an unreliable energy supply than they do now and this too will reduce energy supply as more coal fired power stations will become unprofitable.
This takes us then to the strategy being proposed in the Kerry-Lieberman climate change bill, which combines “cap and trade” with “pork barrel spending”, at least according to Investors Business Daily – an investor trade magazine. The bill now before the Senate proposed a $7 billion CO2 tax to improve transport infrastructure and efficiency and $2 billion a year in public spending on carbon capture and storage and a systematic approach to carbon trading with the aim of reducing emissions by 85% on 2005 levels by 2050 (the US is already 10% below the 2005 level due to the recession and other measures). The program’s cap starts in 2013 for the electricity and transportation sectors, which together constitute an estimated 66 percent of total domestic emissions. The industrial sector joins in 2016, bringing the total up to almost 85 percent. The remaining 15 percent of U.S. emissions are treated separately from the cap-and-trade program with a range of targeted policies and regulations.
The global temperature “savings” of the Kerry-Lieberman bill is astoundingly small—0.043°C (0.077°F) by 2050 and 0.111°C (0.200°F) by 2100. In other words, by century’s end, reducing U.S. greenhouse gas emissions by 83% will only result in global temperatures being one-fifth of one degree Fahrenheit less than they would otherwise be. That is a scientifically meaningless reduction.
The costs of this will be higher energy and transport costs and challenges to meet growing demand. However, the US is confident that its energy supplies – partly driven by the low cost of shale gas and the ability to secure low cost oil from offshore and Canada – will meet its energy needs to 2025.
The Kerry-Lieberman bill is not likely to pass the Senate anytime soon. Many see it as already dead in the water, since it does not have the support of the Republicans in the Senate. More importantly, its provisions for offshore drilling (including environmental conditions and responsibilities) are now in doubt, given the offshore oil challenges now being faced by BP off the coast of Louisiana.
In Canada, the commitment is to match the US provisions whenever these emerge. The principle here is that there should be a single set of standards and policies for the whole of North America, rather than a patchwork quilt of local provisions (State by State, Province by Province, country by country) – a kind of NAFTA Energy and Environment policy. While many criticize this, the argument is economic – why create competitive disadvantage for Canada with the US?
Environmental policies cannot be separated from policies for economic and community development. In Canada, there is a need to strengthen environmental stewardship in anticipation of eventual US actions – regulations governing tailings ponds, land use and restoration, air quality and water quality as well as sustaining biodiversity could all be introduced pending the joint Canada-US strategy on emissions.
As these conversations take place, some scientists are now suggesting that we prepare for global cooling. Professor Don Easterbrook of Western Washington University has suggested that three scenarios are emerging, based on known patterns of climate and current temperature data for North America. These are: (1) global cooling similar to the global cooling of 1945 to 1977, (2) global cooling similar to the cool period from 1880 to 1915, and (3) global cooling similar to the Dalton Minimum from 1790 to 1820. He is placing his bets on the second of these scenarios, but suggests that all of these options present a worse case than any of the implications of the global warming view of the climate.
Whether he is right or not, it is clear that action on climate change is not likely to be quickly forthcoming. The UN process is stalled and the actions in the US and Canada are awaiting the right political climate for a Senate decision. The science is still being challenged and the arguments about appropriate actions are taking second place to recession and austerity issues faced by many European countries and other jurisdictions around the world.
Alberta could chose to lead by focusing on greening the oil sands and ensuring that it shifts its reputation from being a producer of “dirty oil” to being a leader in “green oil”. It would be a challenge, but it would position Alberta as a leading jurisdiction with a new view of stewardship for its future.
Here is the challenge: energy demand in Britain will soon outstrip energy supply. There are several reasons for this, but one is that several coal fired power plants cannot meet CO2 emissions target and remain profitable, so they will close. Another is that, for ideological reasons, the Government of Britain has not invested in nuclear energy but instead placed most of its bets on wind power and hydro power, neither of which can come on stream fast enough with sufficient capacity to meet demand. In 2008, the British Government policy was to ensure that renewable energy accounted for 38% of energy supplies by 2020. At the current rates of construction and development, this target cannot be achieved. Going green and carbon free will lead to energy supply challenges in the near future. If the new British government does as it says it will do, that is place a floor price on CO2 emissions trading certificates of £35, then the energy consumers of Britain will pay considerably more for an unreliable energy supply than they do now and this too will reduce energy supply as more coal fired power stations will become unprofitable.
This takes us then to the strategy being proposed in the Kerry-Lieberman climate change bill, which combines “cap and trade” with “pork barrel spending”, at least according to Investors Business Daily – an investor trade magazine. The bill now before the Senate proposed a $7 billion CO2 tax to improve transport infrastructure and efficiency and $2 billion a year in public spending on carbon capture and storage and a systematic approach to carbon trading with the aim of reducing emissions by 85% on 2005 levels by 2050 (the US is already 10% below the 2005 level due to the recession and other measures). The program’s cap starts in 2013 for the electricity and transportation sectors, which together constitute an estimated 66 percent of total domestic emissions. The industrial sector joins in 2016, bringing the total up to almost 85 percent. The remaining 15 percent of U.S. emissions are treated separately from the cap-and-trade program with a range of targeted policies and regulations.
The global temperature “savings” of the Kerry-Lieberman bill is astoundingly small—0.043°C (0.077°F) by 2050 and 0.111°C (0.200°F) by 2100. In other words, by century’s end, reducing U.S. greenhouse gas emissions by 83% will only result in global temperatures being one-fifth of one degree Fahrenheit less than they would otherwise be. That is a scientifically meaningless reduction.
The costs of this will be higher energy and transport costs and challenges to meet growing demand. However, the US is confident that its energy supplies – partly driven by the low cost of shale gas and the ability to secure low cost oil from offshore and Canada – will meet its energy needs to 2025.
The Kerry-Lieberman bill is not likely to pass the Senate anytime soon. Many see it as already dead in the water, since it does not have the support of the Republicans in the Senate. More importantly, its provisions for offshore drilling (including environmental conditions and responsibilities) are now in doubt, given the offshore oil challenges now being faced by BP off the coast of Louisiana.
In Canada, the commitment is to match the US provisions whenever these emerge. The principle here is that there should be a single set of standards and policies for the whole of North America, rather than a patchwork quilt of local provisions (State by State, Province by Province, country by country) – a kind of NAFTA Energy and Environment policy. While many criticize this, the argument is economic – why create competitive disadvantage for Canada with the US?
Environmental policies cannot be separated from policies for economic and community development. In Canada, there is a need to strengthen environmental stewardship in anticipation of eventual US actions – regulations governing tailings ponds, land use and restoration, air quality and water quality as well as sustaining biodiversity could all be introduced pending the joint Canada-US strategy on emissions.
As these conversations take place, some scientists are now suggesting that we prepare for global cooling. Professor Don Easterbrook of Western Washington University has suggested that three scenarios are emerging, based on known patterns of climate and current temperature data for North America. These are: (1) global cooling similar to the global cooling of 1945 to 1977, (2) global cooling similar to the cool period from 1880 to 1915, and (3) global cooling similar to the Dalton Minimum from 1790 to 1820. He is placing his bets on the second of these scenarios, but suggests that all of these options present a worse case than any of the implications of the global warming view of the climate.
Whether he is right or not, it is clear that action on climate change is not likely to be quickly forthcoming. The UN process is stalled and the actions in the US and Canada are awaiting the right political climate for a Senate decision. The science is still being challenged and the arguments about appropriate actions are taking second place to recession and austerity issues faced by many European countries and other jurisdictions around the world.
Alberta could chose to lead by focusing on greening the oil sands and ensuring that it shifts its reputation from being a producer of “dirty oil” to being a leader in “green oil”. It would be a challenge, but it would position Alberta as a leading jurisdiction with a new view of stewardship for its future.
The End of New Labour
When the monarch dies, the cry goes up “The King is Dead, Long Live the King!”. At Labour Party headquarters in Britain the new cry appears to be “New Labour is Dead, Long Live the Labour Party!”.
With Gordon Brown’s resignation, the race is on to succeed him as Leader of the Labour Party and the first two into the race – Ed and David Milliband – have made it clear that they wish to return to the heart and soul of the party and have done with the idea of “new” Labour. Ed Balls, who is likely to announce his candidacy shortly has also said that this will be a battle about returning to the true roots of the party and to fight the next election from a progressive position, not as “red Tories” (the name given to left of centre conservatives). John Cruddas, who famously resigned from the Brown cabinet in the hope of triggering a rebellion in 2009, has also indicated that the challenge will be to bring Labour back to square one and rebuild the party as a party of the progressive left, though he has ruled himself out of the race.
The fact that some key figures – Harriet Harman, Alan Johnson, Jack Straw – who have been associated for a considerable time with the “new” Labour “brand” have made clear that they will not be candidates, also indicates that the “new” Labour motif is to be sidestepped in favour of a more progressive, left of centre stance.
There are two major reasons for this shift of thinking within the Labour party. The first and most obvious is arithmetic: Labour was roundly rejected in the recent general election by the people. Though it did better than some expected, it was Labour’s worse showing in terms of popular vote for eighty years. The party was not humiliated, but roundly defeated and will now spend at least five years if not a decade in opposition.
Second, there is clear evidence that throwing money at problems and setting centrally determined targets for health, education and social programs – state centralism – does not work. The history of new Labour will be written sometime in the future. It will focus on how Blair and Brown sought to “control” the levers of the State through money, targets, quango’s and inspection and how this failed to create any major improvements in health, education and other fields. What this did do was turn Britain from a nation of shopkeepers and entrepreneurs into a nation of bookkeepers and idea inhibitors who work for the public sector. Wages in the public sector are 7-9% higher than in the private sector and Britain is primarily a public sector economy with some entrepreneurial activity.
The next Labour leader needs to explain how Labour will transform communities and public organizations in such a way that they are once again effective means of securing fairness, meritocracy and empowerment. They will need to show how their thinking differs from that of the progressive arm of the Conservative party who appear to be pursuing policies closer to “old” Labour than Labour itself. They also have to explain how Labour will return pride, dignity and respect to communities, schools, health care and other public sector services. It is a tall order.
What we will witness in the Labour Party’s leadership struggle between now and the start of the party conference in September is a struggle for the ideological grounding of the party. The Milliband brothers are likely to provide the conversations, debates and writing that will articulate this ideology and lead to significant policy shifts – John Cruddas could also provide ballast to thinking, even though he will not be a candidate. Ed Balls, in contrast, is a lightweight thinker with heavyweight credentials – an enforcer and proclaimer rather than a thinker and imaginer. It will be an interesting time, but not the best of times for Labour.
With Gordon Brown’s resignation, the race is on to succeed him as Leader of the Labour Party and the first two into the race – Ed and David Milliband – have made it clear that they wish to return to the heart and soul of the party and have done with the idea of “new” Labour. Ed Balls, who is likely to announce his candidacy shortly has also said that this will be a battle about returning to the true roots of the party and to fight the next election from a progressive position, not as “red Tories” (the name given to left of centre conservatives). John Cruddas, who famously resigned from the Brown cabinet in the hope of triggering a rebellion in 2009, has also indicated that the challenge will be to bring Labour back to square one and rebuild the party as a party of the progressive left, though he has ruled himself out of the race.
The fact that some key figures – Harriet Harman, Alan Johnson, Jack Straw – who have been associated for a considerable time with the “new” Labour “brand” have made clear that they will not be candidates, also indicates that the “new” Labour motif is to be sidestepped in favour of a more progressive, left of centre stance.
There are two major reasons for this shift of thinking within the Labour party. The first and most obvious is arithmetic: Labour was roundly rejected in the recent general election by the people. Though it did better than some expected, it was Labour’s worse showing in terms of popular vote for eighty years. The party was not humiliated, but roundly defeated and will now spend at least five years if not a decade in opposition.
Second, there is clear evidence that throwing money at problems and setting centrally determined targets for health, education and social programs – state centralism – does not work. The history of new Labour will be written sometime in the future. It will focus on how Blair and Brown sought to “control” the levers of the State through money, targets, quango’s and inspection and how this failed to create any major improvements in health, education and other fields. What this did do was turn Britain from a nation of shopkeepers and entrepreneurs into a nation of bookkeepers and idea inhibitors who work for the public sector. Wages in the public sector are 7-9% higher than in the private sector and Britain is primarily a public sector economy with some entrepreneurial activity.
The next Labour leader needs to explain how Labour will transform communities and public organizations in such a way that they are once again effective means of securing fairness, meritocracy and empowerment. They will need to show how their thinking differs from that of the progressive arm of the Conservative party who appear to be pursuing policies closer to “old” Labour than Labour itself. They also have to explain how Labour will return pride, dignity and respect to communities, schools, health care and other public sector services. It is a tall order.
What we will witness in the Labour Party’s leadership struggle between now and the start of the party conference in September is a struggle for the ideological grounding of the party. The Milliband brothers are likely to provide the conversations, debates and writing that will articulate this ideology and lead to significant policy shifts – John Cruddas could also provide ballast to thinking, even though he will not be a candidate. Ed Balls, in contrast, is a lightweight thinker with heavyweight credentials – an enforcer and proclaimer rather than a thinker and imaginer. It will be an interesting time, but not the best of times for Labour.
Sunday, May 16, 2010
Coalition Challenges
Stories are beginning to emerge of profligate spending decisions made in the dying days of the British Labour Government. A committee of inquiry, a sub committee of cabinet, will look at spending decisions made in the final twelve months of the Labour party regime and examine their rationale. It is part of the new Lib-Con Government’s systematic attempt to reduce spending. It is the kind of thing one expects to hear from any new Government. They will also start halting decisions in progress – issuing identity cards for UK citizens, building a third runway at Heathrow, spending significant amounts of unproven technology.
So far so good. The new coalition has survived its first week with only one major rebellion. It relates to the decision, made by Cameron and embodied in the Lib-Con pact, for a fixed term parliament. A significant number of MP’s are concerned that a weak Government could survive repeated votes of no-confidence until such time as the Commons could muster a 55% majority for dissolution. The tradition has been that a vote of non-confidence on a finance related bill or a bill said by Government to be a critical bill for its agenda would lead to an election. Cameron is likely to ensure that the legislation for a fixed term enables this tradition to continue.
But the coalition has just found out where the washrooms are and are discovering for the first time what their colleagues are really thinking – the real work has yet to begin.
Three big issues confront the new Government. The first is the issue of deficits and debt. The British government is spending much more than it brings in tax and other revenues. The deficit sits at £163 billion and is likely to rise, once the final figures are in at the end of the year, to £178 billion – 12.4% of GDP. The target is to have no more than 3% of government spending funded by borrowing. Total UK government debt in the UK is 68.6% of GDP – higher than the debts of Ireland and Spain, but much lower than those of Greece (113%) and Italy (115%). Britain’s inflation rate, targeted to be no more than 2% in any year, is currently running at an annual rate of 3.4% - Britain is in serious economic peril.
To achieve the EU target of no more than 3% of GDP deficits, massive cuts in social and other programs are needed – in the order of £20 billion a year of new cuts for each of the next ten years. Targets include major capital projects (especially health care and defence), social benefits, pension allowances and public sector pay. Public sector pay is running ahead of private sector pay in a significant way – the average hourly wage paid to public sector workers is 7% higher than that in the private sector and bonuses are paid against criteria which are so soft that almost all eligible for performance bonuses get them. Pay cuts, pay freezes and pay restraints of other kinds are clearly on the cards.
The Government has ruled out, at least for now, significant tax rises. Most commentators agree, however, that a rise in sales tax (known in Canada as GST and in the UK as VAT) from its current 17% to 20% or higher (some suggest as high as 25%) is certain at some point in the near future. Other tax changes are also likely, including taxes on inheritance. The banks are also likely to be taxed on profits.
The second challenge facing the Government is a simple one. Britain does not have a sufficiently robust power supply to fuel its future. With both nuclear and coal fire power stations being decommissioned due to age, it is possible that Britain will face rolling energy black outs within the next ten to fifteen years unless significant new capacity is added. The Labour Government invested heavily in wind power and hydro power as a response to this challenge and avoided the tough decisions it needed to make on nuclear. It will fall to this coalition government to make the commitment to nuclear – the only way in which Britain’s real energy demands can be met. The coalition has made clear it will not directly subsidize the nuclear sector. It will, however, do so indirectly. The Government indicated last week that it intends to set a “floor” price for CO2 certificates needed for carbon trading – the cost of which is borne by consumers. The suggested floor price is £35 – some £23 higher than the lowest price carbon trades have reached in the last twelve months. Since nuclear developers do not have to buy carbon credits – nuclear is CO2 free – it will create a cost advantage for nuclear which should encourage and enable investors. One challenge – the new Energy and Climate Change Minister is a long time opponent of nuclear power.
The third challenge is to change the statist culture of Britain. Since Labour came to power in 1997, the role of the private sector in the British economy has declined as the role of the public sector has expanded. Over 50% of the UK’s GDP is derived from public sector activity, up from 39% in 2001 and 29% when Labour took office. Parts of the UK have become so dependent on public spending that it can crowd out private enterprise in these regions and countries. It is partly a chicken and egg situation - public spending in these regions is high because they are doing less well economically, but on the other hand a high public spending share can make a revival of the private sector difficult to achieve. And the latest data suggests that this problem is getting worse. What this has done is create a culture of dependency and a centralist, statist and bureaucratic nation. A key challenge for the coalition government is to rekindle entrepreneurship, stimulate local accountability and reduce the power of the state. It’s a tough challenge.
These three challenges alone, never mind challenges over foreign policy – Britain’s place in Europe, the military role in a modern world and defence spending – and political reform, will test the coalition to the full.
The coalition is full of young people, mainly male, with no experience of government. Some old hands – Ken Clark (Conservative – Justice Secretary), William Hague (Conservative – Foreign Secretary) and Vince Cable (Liberal – Business Secretary) – will be called upon to provide sage counsel when things get tough. A lot will depend on the relationship between David Cameron and Nick Clegg and their ability to see past the interests of party and look at the interests of the country. Right now they appear convinced that they can work their way through the challenges ahead. We will see.
This is all new to most of the electorate of Britain, many of whom have no real recollection of earlier coalition or supply and support arrangements of the past. There is a strong level of naiveté about what the Government is facing and even less of an understanding of just how tough the next decade in Britain will be. The word “austerity” is starting to be used, but this hardly conveys the level of severity associated with what this Government will have to do. The coalition will need to declare war on debts and deficits.
It is far too soon to tell if this coalition will last for five years, but it will certainly last until next year. The Throne Speech on 25th May and the first coalition budget in June will pass comfortably, but it’s the spending review and subsequent budget that will challenge the temperaments of all concerned. Tensions will be continuous, but the deep cuts and energy policy will likely be the source of fractious policy issues between the coalition partners. An election in 2011 is still a high probability.
So far so good. The new coalition has survived its first week with only one major rebellion. It relates to the decision, made by Cameron and embodied in the Lib-Con pact, for a fixed term parliament. A significant number of MP’s are concerned that a weak Government could survive repeated votes of no-confidence until such time as the Commons could muster a 55% majority for dissolution. The tradition has been that a vote of non-confidence on a finance related bill or a bill said by Government to be a critical bill for its agenda would lead to an election. Cameron is likely to ensure that the legislation for a fixed term enables this tradition to continue.
But the coalition has just found out where the washrooms are and are discovering for the first time what their colleagues are really thinking – the real work has yet to begin.
Three big issues confront the new Government. The first is the issue of deficits and debt. The British government is spending much more than it brings in tax and other revenues. The deficit sits at £163 billion and is likely to rise, once the final figures are in at the end of the year, to £178 billion – 12.4% of GDP. The target is to have no more than 3% of government spending funded by borrowing. Total UK government debt in the UK is 68.6% of GDP – higher than the debts of Ireland and Spain, but much lower than those of Greece (113%) and Italy (115%). Britain’s inflation rate, targeted to be no more than 2% in any year, is currently running at an annual rate of 3.4% - Britain is in serious economic peril.
To achieve the EU target of no more than 3% of GDP deficits, massive cuts in social and other programs are needed – in the order of £20 billion a year of new cuts for each of the next ten years. Targets include major capital projects (especially health care and defence), social benefits, pension allowances and public sector pay. Public sector pay is running ahead of private sector pay in a significant way – the average hourly wage paid to public sector workers is 7% higher than that in the private sector and bonuses are paid against criteria which are so soft that almost all eligible for performance bonuses get them. Pay cuts, pay freezes and pay restraints of other kinds are clearly on the cards.
The Government has ruled out, at least for now, significant tax rises. Most commentators agree, however, that a rise in sales tax (known in Canada as GST and in the UK as VAT) from its current 17% to 20% or higher (some suggest as high as 25%) is certain at some point in the near future. Other tax changes are also likely, including taxes on inheritance. The banks are also likely to be taxed on profits.
The second challenge facing the Government is a simple one. Britain does not have a sufficiently robust power supply to fuel its future. With both nuclear and coal fire power stations being decommissioned due to age, it is possible that Britain will face rolling energy black outs within the next ten to fifteen years unless significant new capacity is added. The Labour Government invested heavily in wind power and hydro power as a response to this challenge and avoided the tough decisions it needed to make on nuclear. It will fall to this coalition government to make the commitment to nuclear – the only way in which Britain’s real energy demands can be met. The coalition has made clear it will not directly subsidize the nuclear sector. It will, however, do so indirectly. The Government indicated last week that it intends to set a “floor” price for CO2 certificates needed for carbon trading – the cost of which is borne by consumers. The suggested floor price is £35 – some £23 higher than the lowest price carbon trades have reached in the last twelve months. Since nuclear developers do not have to buy carbon credits – nuclear is CO2 free – it will create a cost advantage for nuclear which should encourage and enable investors. One challenge – the new Energy and Climate Change Minister is a long time opponent of nuclear power.
The third challenge is to change the statist culture of Britain. Since Labour came to power in 1997, the role of the private sector in the British economy has declined as the role of the public sector has expanded. Over 50% of the UK’s GDP is derived from public sector activity, up from 39% in 2001 and 29% when Labour took office. Parts of the UK have become so dependent on public spending that it can crowd out private enterprise in these regions and countries. It is partly a chicken and egg situation - public spending in these regions is high because they are doing less well economically, but on the other hand a high public spending share can make a revival of the private sector difficult to achieve. And the latest data suggests that this problem is getting worse. What this has done is create a culture of dependency and a centralist, statist and bureaucratic nation. A key challenge for the coalition government is to rekindle entrepreneurship, stimulate local accountability and reduce the power of the state. It’s a tough challenge.
These three challenges alone, never mind challenges over foreign policy – Britain’s place in Europe, the military role in a modern world and defence spending – and political reform, will test the coalition to the full.
The coalition is full of young people, mainly male, with no experience of government. Some old hands – Ken Clark (Conservative – Justice Secretary), William Hague (Conservative – Foreign Secretary) and Vince Cable (Liberal – Business Secretary) – will be called upon to provide sage counsel when things get tough. A lot will depend on the relationship between David Cameron and Nick Clegg and their ability to see past the interests of party and look at the interests of the country. Right now they appear convinced that they can work their way through the challenges ahead. We will see.
This is all new to most of the electorate of Britain, many of whom have no real recollection of earlier coalition or supply and support arrangements of the past. There is a strong level of naiveté about what the Government is facing and even less of an understanding of just how tough the next decade in Britain will be. The word “austerity” is starting to be used, but this hardly conveys the level of severity associated with what this Government will have to do. The coalition will need to declare war on debts and deficits.
It is far too soon to tell if this coalition will last for five years, but it will certainly last until next year. The Throne Speech on 25th May and the first coalition budget in June will pass comfortably, but it’s the spending review and subsequent budget that will challenge the temperaments of all concerned. Tensions will be continuous, but the deep cuts and energy policy will likely be the source of fractious policy issues between the coalition partners. An election in 2011 is still a high probability.
Friday, May 14, 2010
All Aboard the Coalition Express
(Written on 11th May)
In a dramatic evening, Gordon Brown resigned as British Prime Minister and, with immediate effect, as Leader of the Labour Party. He is returning to private life after a lifetime of service to the Labour Party. Harriet Harman will succeed him as Acting Leader of the Labour Party.
David Cameron became the youngest Prime Minister since Lord Liverpool in 1812. He is to lead a full coalition Government with the Liberal Democrats whose leader, Nick Clegg, becomes Deputy Prime Minister. The two parties have agreed to a set of policy initiatives and to a five year term. Four other cabinet positions will also go to the Liberal Democrats. George Osborne (Conservative) becomes Chancellor – he will introduce an emergency budget within one month. William Hague (Conservative) becomes Foreign Secretary and Vince Cable (Liberal) becomes Business Secretary, replacing Lord Mandelson.
The transfer of power took less than an hour and a half, including the time taken for Gordon Brown and David Cameron to visit with the Queen and kiss hands.
These are radical developments for Britain, which has not had a coalition government of substance since the second world war. Both Cameron and Clegg are positioning this as a new form of government, part of the change they wish to see in British politics. Reform of the voting system may make such arrangements more permanent.
The new Government has a lot to do. Britain has a structural deficit of £119 billion and an actual deficit of £163 billion – 11% of GDP. The famous Brown formulae targeted deficits at no more than 4% of GDP. The agreed policy program sees no significant tax changes or increases, but substantial cuts in public service. It also sees tougher bank regulation, with more power to the Bank of England, and a bank windfall charge.
We will see how long this coalition actually lasts. On paper, there is an agreement to deal with immediate issues and core policy issues, but five years is a long time. All appear committed to making this work, but there is no experience or history of peacetime coalitions between opposing parties working in Britain. The two leaders, who have very similar backgrounds, may get on well together, but the draconian policies they will have to pursue to rebalance Britain’s economy and roll back the nanny state are so substantial that tensions within and between the parties will emerge quickly. It will be a real test of leadership to hold the coalition together and sustain the support of the political parties who have enjoined.
Last Thursday the people spoke and the politicians have now answered. Let us hope the answer is the response the people expected.
In a dramatic evening, Gordon Brown resigned as British Prime Minister and, with immediate effect, as Leader of the Labour Party. He is returning to private life after a lifetime of service to the Labour Party. Harriet Harman will succeed him as Acting Leader of the Labour Party.
David Cameron became the youngest Prime Minister since Lord Liverpool in 1812. He is to lead a full coalition Government with the Liberal Democrats whose leader, Nick Clegg, becomes Deputy Prime Minister. The two parties have agreed to a set of policy initiatives and to a five year term. Four other cabinet positions will also go to the Liberal Democrats. George Osborne (Conservative) becomes Chancellor – he will introduce an emergency budget within one month. William Hague (Conservative) becomes Foreign Secretary and Vince Cable (Liberal) becomes Business Secretary, replacing Lord Mandelson.
The transfer of power took less than an hour and a half, including the time taken for Gordon Brown and David Cameron to visit with the Queen and kiss hands.
These are radical developments for Britain, which has not had a coalition government of substance since the second world war. Both Cameron and Clegg are positioning this as a new form of government, part of the change they wish to see in British politics. Reform of the voting system may make such arrangements more permanent.
The new Government has a lot to do. Britain has a structural deficit of £119 billion and an actual deficit of £163 billion – 11% of GDP. The famous Brown formulae targeted deficits at no more than 4% of GDP. The agreed policy program sees no significant tax changes or increases, but substantial cuts in public service. It also sees tougher bank regulation, with more power to the Bank of England, and a bank windfall charge.
We will see how long this coalition actually lasts. On paper, there is an agreement to deal with immediate issues and core policy issues, but five years is a long time. All appear committed to making this work, but there is no experience or history of peacetime coalitions between opposing parties working in Britain. The two leaders, who have very similar backgrounds, may get on well together, but the draconian policies they will have to pursue to rebalance Britain’s economy and roll back the nanny state are so substantial that tensions within and between the parties will emerge quickly. It will be a real test of leadership to hold the coalition together and sustain the support of the political parties who have enjoined.
Last Thursday the people spoke and the politicians have now answered. Let us hope the answer is the response the people expected.
Deal or No Deal
(Written on 11th May - Two Hours Before the Change of Government)
It is now a five full days since the British election and no new British Government has emerged. While it is looking possible that the Conservatives and Liberal Democrats could secure agreement at a senior level between their two parties, it is not at all certain that the political parties themselves will agree to the coalition that emerges. Meetings later today with the respective parties may raise new roadblocks to the emerging deal and show just how far out in front of their parties their leaders are.
Meanwhile, Prime Minister Gordon Brown has also been in meetings with Nick Clegg, the Liberal Democrat leader, countering the offers being made by the Conservatives and suggesting that, if the process breaks down, then Labour would be willing to enter into discussions with the Liberal Democrats. In particular, Brown has been stressing his willingness to quickly introduce legislation for a referendum on proportional representation – a key issue for the Liberals. He has also resigned as leader of the Labour Party effective after the Party Conference in September so as to remove himself as an obstacle to any workable agreement. (Importantly, he has not resigned as Prime Minister).
The problem with a Lib-Lab pact is arithmetic. Between the two they do not have an overall majority and need the support of some independents and others to enable a stable government to take place. The Scottish Nationalists and the SDLP of Northern Ireland both see this as an opportunity to secure both transfers of powers and new cash investments in exchange for their offers of support. The Scottish Nationalists will only act in the interest of Scotland and for them its about further aspects of independence.
The problems with a Con-Lib pact are more complex. First, David Cameron has been adverse to major electoral reform. His initial offer was for an all party process to define the options – hardly exciting to the Liberals, who have been party to such conversations since 1922. It is now clear that Cameron is offering a referendum, but has indicated his party would oppose any change in the electoral system. Second, there are real identity issues for the Liberals. The Conservatives are seeking to make large and immediate cuts in public spending as means of lowering deficits and debts. Such moves are popular, until their full impact begins to be felt. The Liberals, as coalition partners, will be blamed for not moderating (or worse, fully supporting) the cuts and will suffer electorally. Finally, engineering the Liberal and Conservative parties to constantly vote with an agreed agenda will be a constant challenge for both leaders – it may, in fact, become their preoccupation. Rather than a clear majority (the coalition would, in theory, have over 370 votes when the threshold required for a successful vote is 326), each vote would see defectors on both sides.
Clegg is playing both sides and did so, for a time at least, secretly thus giving the lie to his insistence that transparency is a key value in politics. Also, his behavior raises questions about whether his motives are as direct as they once appeared. Is he seeking the best for the Liberals in terms of political reform – which all of his acolytes stress is the key issue – when Rome is in fact burning. As Conservative acolytes are continuously saying, very few of the British people see electoral reform and reform of the Lords and other aspects of the constitution as being critical when the economy is so fragile.
The elephant is the room in these discussions is the economy. The key difference between the Conservatives on the one hand and the Lib-Labs on the other is the speed at which they think the deficit should be tackled. The very able finance critic for the Liberals, Vince Cable, sees the real immediate challenge to be continuing to support the green shoots of recovery from recession – acting too quickly to cut the deficit and tackle Britains very serious excessive public borrowing and spending may harm this recovery. He wants to wait at least a year before getting serious about cuts. Gordon Brown and his Labour Chancellor Alistair Darling share this view and most of the left of the Labour Party still think it possible to recovery from recession and save a lot of the public services currently slated for cuts – after all, most of them were put in place by Labour since 1997.
The Conservatives take a very different view. They want serious and deep cuts now so as to return confidence to the markets, secure new investment and create a reenergized economy which will spur growth. Reducing government and increasing the focus on the private sector is what they see as essential in returning Britain to being a country which lives off its wits and skills rather than off the teat of taxes and public sector borrowing. Over half of the UK’s GDP is derived from Government activity (its 65% in Wales and 62% in Scotland).
It is these very different philosophies, coupled with the fracas over electoral reform, which is the heart of the Liberal dilemma. Who should they get in bed with?
There are another set of considerations, linked to a particular view of democracy. The British people gave the Conservative party the largest share of the vote and the largest number of seats. If the Lib:Lab pact emerges and the Labour party is kept in power then it looks like the party that had the lowest share of the votes, colluding with parties that hardly anyone could vote for, will be seen to be keeping in power the party that seventy two per cent of the people did not want to Govern – Labour. It will be a gift for the Conservatives. They will use the Lib:Lab pact as a vehicle for demonstrating that, while on the one hand Nick Clegg seems most concerned about democracy, in reality all he is interested in is raw power.
The second set of considerations for Clegg is that he will be doing a deal with a party without a known leader. Gordon Brown, throwing the dice one last time, has resigned as party leader after one of the worst showings for the Labour Party in eighty years. While there are several candidates to replace him – Alan Johnson, Ed Balls, Ed Milliband, David Milliband, Jack Straw to name just a few – the Prime Minister has considerable personal power, whatever deal with the Liberals say. One power he has, unless this is changed by the deal itself, is when to call an election. Another is to make key appointments. Would you enter a long term political relationship with Mr X?
We should known the outcome of all of this very soon – possibly as this “goes to the web”. What is obvious to those of us with memories is that, whatever the deal says in writing, there will be another election in Britain sooner rather than later. Some pundits are suggesting November, but the more common assumption is that it will be this time next year when the coalition or agreement falls apart. What will be critical in that election is the judgment of the people on the Liberals and their current behavior as well as the state of the economy. Its back to the economy and trust.
It is now a five full days since the British election and no new British Government has emerged. While it is looking possible that the Conservatives and Liberal Democrats could secure agreement at a senior level between their two parties, it is not at all certain that the political parties themselves will agree to the coalition that emerges. Meetings later today with the respective parties may raise new roadblocks to the emerging deal and show just how far out in front of their parties their leaders are.
Meanwhile, Prime Minister Gordon Brown has also been in meetings with Nick Clegg, the Liberal Democrat leader, countering the offers being made by the Conservatives and suggesting that, if the process breaks down, then Labour would be willing to enter into discussions with the Liberal Democrats. In particular, Brown has been stressing his willingness to quickly introduce legislation for a referendum on proportional representation – a key issue for the Liberals. He has also resigned as leader of the Labour Party effective after the Party Conference in September so as to remove himself as an obstacle to any workable agreement. (Importantly, he has not resigned as Prime Minister).
The problem with a Lib-Lab pact is arithmetic. Between the two they do not have an overall majority and need the support of some independents and others to enable a stable government to take place. The Scottish Nationalists and the SDLP of Northern Ireland both see this as an opportunity to secure both transfers of powers and new cash investments in exchange for their offers of support. The Scottish Nationalists will only act in the interest of Scotland and for them its about further aspects of independence.
The problems with a Con-Lib pact are more complex. First, David Cameron has been adverse to major electoral reform. His initial offer was for an all party process to define the options – hardly exciting to the Liberals, who have been party to such conversations since 1922. It is now clear that Cameron is offering a referendum, but has indicated his party would oppose any change in the electoral system. Second, there are real identity issues for the Liberals. The Conservatives are seeking to make large and immediate cuts in public spending as means of lowering deficits and debts. Such moves are popular, until their full impact begins to be felt. The Liberals, as coalition partners, will be blamed for not moderating (or worse, fully supporting) the cuts and will suffer electorally. Finally, engineering the Liberal and Conservative parties to constantly vote with an agreed agenda will be a constant challenge for both leaders – it may, in fact, become their preoccupation. Rather than a clear majority (the coalition would, in theory, have over 370 votes when the threshold required for a successful vote is 326), each vote would see defectors on both sides.
Clegg is playing both sides and did so, for a time at least, secretly thus giving the lie to his insistence that transparency is a key value in politics. Also, his behavior raises questions about whether his motives are as direct as they once appeared. Is he seeking the best for the Liberals in terms of political reform – which all of his acolytes stress is the key issue – when Rome is in fact burning. As Conservative acolytes are continuously saying, very few of the British people see electoral reform and reform of the Lords and other aspects of the constitution as being critical when the economy is so fragile.
The elephant is the room in these discussions is the economy. The key difference between the Conservatives on the one hand and the Lib-Labs on the other is the speed at which they think the deficit should be tackled. The very able finance critic for the Liberals, Vince Cable, sees the real immediate challenge to be continuing to support the green shoots of recovery from recession – acting too quickly to cut the deficit and tackle Britains very serious excessive public borrowing and spending may harm this recovery. He wants to wait at least a year before getting serious about cuts. Gordon Brown and his Labour Chancellor Alistair Darling share this view and most of the left of the Labour Party still think it possible to recovery from recession and save a lot of the public services currently slated for cuts – after all, most of them were put in place by Labour since 1997.
The Conservatives take a very different view. They want serious and deep cuts now so as to return confidence to the markets, secure new investment and create a reenergized economy which will spur growth. Reducing government and increasing the focus on the private sector is what they see as essential in returning Britain to being a country which lives off its wits and skills rather than off the teat of taxes and public sector borrowing. Over half of the UK’s GDP is derived from Government activity (its 65% in Wales and 62% in Scotland).
It is these very different philosophies, coupled with the fracas over electoral reform, which is the heart of the Liberal dilemma. Who should they get in bed with?
There are another set of considerations, linked to a particular view of democracy. The British people gave the Conservative party the largest share of the vote and the largest number of seats. If the Lib:Lab pact emerges and the Labour party is kept in power then it looks like the party that had the lowest share of the votes, colluding with parties that hardly anyone could vote for, will be seen to be keeping in power the party that seventy two per cent of the people did not want to Govern – Labour. It will be a gift for the Conservatives. They will use the Lib:Lab pact as a vehicle for demonstrating that, while on the one hand Nick Clegg seems most concerned about democracy, in reality all he is interested in is raw power.
The second set of considerations for Clegg is that he will be doing a deal with a party without a known leader. Gordon Brown, throwing the dice one last time, has resigned as party leader after one of the worst showings for the Labour Party in eighty years. While there are several candidates to replace him – Alan Johnson, Ed Balls, Ed Milliband, David Milliband, Jack Straw to name just a few – the Prime Minister has considerable personal power, whatever deal with the Liberals say. One power he has, unless this is changed by the deal itself, is when to call an election. Another is to make key appointments. Would you enter a long term political relationship with Mr X?
We should known the outcome of all of this very soon – possibly as this “goes to the web”. What is obvious to those of us with memories is that, whatever the deal says in writing, there will be another election in Britain sooner rather than later. Some pundits are suggesting November, but the more common assumption is that it will be this time next year when the coalition or agreement falls apart. What will be critical in that election is the judgment of the people on the Liberals and their current behavior as well as the state of the economy. Its back to the economy and trust.
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