Alberta's Climate Change Strategy - Some Suggestions

Alberta has already done on a lot about climate change. While most haven’t a clue what we have done and how substantial this work is, it is a fact that Alberta is a progressive jurisdiction. It is appropriate that, with a new government, we take stock. But let us not begin from a starting point which ignores what we have done.

  

Before looking at where we are and what we may need to do next, it is important to understand something about climate change:

1. .         Climate change is real.
2. .         Climate change is in part caused by nature – the climate has always changed – and in part by the actions of humans as a species. The challenge we have is that we are not sure just how much of the change we are seeing, which is not wildly “out of control” or really unusual, is due to human actions versus nature. Its an old debate, but an important one.
3. .         Climate change affects different regions of the world in different ways. Sea level changes both up and down – in some regions it is rising faster than before and in others it is falling. We can see this on the NOAA map – available here. In some places, the climate is definitely moderately warmer and other places cooler. Some scientist predict a significant period of cooling (here).
4. .         The link between climate change and extreme weather events is not strong, at least according to the International Panel on Climate Change (IPCC), who explored this issue in some depth in a special report (here). The rising cost of natural disasters is explained by more wealth in harm’s way and not by increasing frequency or intensity of natural disasters and extreme weather (here).
5. .         The idea that 97% of all scientist agree on all aspects of the claims made about climate change and its impacts is not at all true, at least according to Senate testimony by Dr Richard Tol – a lead IPCC author (here). In fact there is almost universal agreement that humans are a part cause of global warming, after that there is a lot of debate. This is why we need to understand climate change not as a simple problem (e.g. more C02 = warmer climate) but a wicked problem which we do not yet fully understand. Science is, of course, never settled.
6. .         Most of the climate change concerns and anxieties come from models and simulations, which are themselves problematic. In a recent commentary from the UK Met Office – one of the leading centres for climate change research – about why they were not very accurate in predicting the summer which Britain experienced in 2015, Professor Dame Julia Sligo of the UK Met Office said “we all know that forecasting months and seasons ahead is still in its infancy and much more research needs to be done.”  The same models are being used to predict climate for 2100 by the same team of researchers. The models have failed to predict the current pause in warming (here), which has lasted for over eighteen years. They have also been poor at predicting a range of other features of climate (here).
7. .         Most governments are using the precautionary principle – better to anticipate the worst case scenario than be caught off guard – as the basis for public policy. So while the evidence of the direct link between C02 and climate is not as strong as many thought it was some years ago, public policy is still based on this big idea. Even though science has moved on – CO2 is a factor, but may not be as significant as once thought – public policy has not.
8. .       While some think that climate change is the biggest problem facing mankind (John Kerry, for example), it is one of many. Bjorn Lomborg and his colleagues at the Copenhagen Consensus have worked on this issue for some time (here). Their conclusion is that we need to do a better job of looking at the cost-benefit of action on climate change and focus on adaptation rather than prevention: “we don't need action that makes us feel good – we need action that actually does good”. 

These eight points provide context to what Alberta needs to consider. Rather than rushing to look good, what Alberta needs to do is to build on its past work.

What has Alberta done? Here are some key components:

•            Alberta has one of the most progressive pieces of land use legislation in the world. It requires community based engagement for regional land use plans. Such plans enable Governments at all levels to determine what uses land in a region can be used for, what the controls and constraints will be and what needs to be tracked so as to protect the land, maintain biodiversity and support social and economic development. Land use is always a set of trade-off’s.
•            To support effective land use and maintain eco-systems, Alberta is developing one of the most sophisticated monitoring systems in the North America. We already have efficient and effective measures of air quality, water flow and quality and biodiversity. But we could do better. We need more sophisticated sensors, better analytics and real time geospatial data which permits real-time review of eco-system conditions. The Alberta Environmental Monitoring Agency is charged with a responsibility to develop, use and make available the best environmental monitoring data possible with current technology.
•           Alberta was the first jurisdiction in North America to place a tax on carbon emitted by large emitters – energy companies. While the decision to use intensity measures and not to implement a wholesale tax on all carbon emissions has been criticised, Alberta collects $30 a tonne over and above an agreed level of permissible emissions. These funds go to the Climate Change and Emissions Management Corporation (CMEC) which invests in clean energy technologies. The $30/tonne is a recent decision – it was $15 for a long time. It is worth noting that the EU’s price per tonne is currently Î8 ($11.83).
•            Alberta has CO2 emissions trading – companies who emit can purchase offsets from those who store CO2 or use it. Forestry companies sell emissions offsets, for example.
•           Alberta has made investments in carbon capture and storage. Shell’s Quest project will be the first commercial-scale CCS project in the world for an oil sands operation. The Albertan and Canadian governments have been strong investors in CCS.
•            Alberta has invested in companies which have commercial uses for CO2. A Calgary based company turns CO2 into energy and others which have significantly improved CO2 “scrubbers” for industrial plants, which reduce emissions at the surce.
•            Oil sands companies, which are predominantly SAGD companies, have significantly reduced their water consumption through co-generation and have accelerated the pace for land-reclamation.
•           The Province is also experimenting with eco-system service offsets, which enable companies to invest in land reclamation and remediation in areas of greatest need. A systematic approach to market based ecosystem services has not yet been adopted by Government, but a roadmap for such an approach is available (here).
•            All Alberta pulp mills are off the electricity grid and most now are green energy producers.
•           Alberta has encouraged the significant expansion of renewable energy resources – mainly wind-power, but also some solar. Alberta is home to over 1.4 GW of installed wind capacity and ranks third among Canadian provinces.
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So  what should the focus be on now? There are five big areas where the Province could do more:

1. .         Stop using coal for electricity generation – phase out coal as a primary source of energy and replace coal-fired power with natural gas. Once this
2. .         Invest in infrastructure improvements for flood protection, water use and transportation which would have the effect of creating better defense against extreme weather events and reducing traffic congestion and aiding traffic flow. David Dodge has been asked to develop a five year plan for infrastructure, which we should see as part of the climate change plan.
3. .        Adopt market based eco-system services as a way to accelerate land reclamation and improve land use. Terrestrial sequestration of CO2 through forests, grasses and other ecosystems are important. What is also important is maintaining Alberta’s eco-system and biodiversity while reducing the risks associated with invasive species.
4. .         Make more investments in environmental monitoring – lead the world in technological developments for this work, which requires the systematic collaboration of researchers in nanotechnology, genomics and ICT with firms and government.
5. .         See regional land use plans as the primary process by which Alberta will monitor the impact of climate change and act to adapt to these changes. Strengthen the planning process by putting in place permanent regional Stewardship Councils reporting to the Alberta Land Commissioner, who should be independent of Government.

You will notice that I do not suggest a carbon tax, other than that already in place. Unilateral action by Alberta on CO2 through taxation makes little sense. Few have been able to estimate the environmental impact of Alberta taxing CO2 (the US Congressional Budget Office could not produce an impact value for the US – here). Further, the suggestion that reducing emissions will lead to a change in climate, even over a long period of time, is not supported by current observations from satellite data – emissions have risen significantly (despite commitments by many Governments to reduce them) but temperature has not (hence the pause). Given the deadlock over these issues amongst the global community – deadlock which has reduced the value of global approaches to climate change and which will likely be seen again in Paris this fall – it is unlikely that a functioning CO2 emissions strategy “with teeth” will emerge anytime soon. 

What Governments seeking to tax CO2 are doing is making excessive use of the precautionary principle (see here). While a tax may demonstrate to others that Alberta has joined an elite club of CO2 taxing jurisdictions, its impact on the environment and climate have yet to be proven. Remember: “we don't need action that makes us feel good – we need action that actually does good”.

Nor do I suggest significant targets for renewable energy – water, wind, solar, nuclear or fusion – as part of Alberta’s energy mix. We already have some significant “green” energy from these sources. But we should encourage the greater use of co-generation by firms and municipalities, more intensive recycling and activities aimed at energy efficiency in homes, workplaces and transportation.

What should be the test of Alberta’s climate change strategy? It should be that it actually helps communities adapt to changing conditions and aid the response to any extreme weather events. The measures should be focused on eco-systems indicators (biodiversity, water and air quality, land status) and public health. Put this another way – if our only measure is the volume of CO2 emissions then what does that tell us? Very little.

The Government is asking for ideas with respect to climate change. Let us base the strategy which emerges from an understanding of where we are, what the issues really are and what impact any actions are likely to have.

All public policy involves trade off’s. In this case, we are trading off economic values with social and political values – all of which impact the environment. Caution is appropriate. There is no need to adopt a radical approach which has little real impact on climate and the environment but a big impact on the economy and communities.

Broadening Alberta's Economic Base

Since oil and gas were discovered in Alberta, which was already mining coal, Alberta has been a fossil fuel petro state. We’ve done well from carbon. But since Premier Peter Lougheed, we have been trying to diversify our economy – find new forms of wealth generation which make us less dependent on the ebb and flow of the oil price. The reason is obvious – Alberta is a land locked, big place with mountains between here and the nearest sea port. Getting our goods to global markets is expensive. At some point, we price ourselves out of global markets due to the costs of transport and labour. Worse, our biggest potential is in heavy oil and oilsands – both expensive to get out of the ground and to market. We will find it increasingly tough to compete on price and value.

We have other goods and services. In the 1970’s Alberta opened its forests to forest companies. This led to Alberta as the home of North America’s largest pulp mill (Athabasca’s ALPAC) and several other mills, including North Americas largest supplier of quality newsprint (Whitecourt’s ANC). Our mills and lumber firms are efficient, productive and significant players in the Alberta rural economy – some 18,000 jobs and significant exports ($2.7 billion in 2014). It is a $5.4 billion industry.

Our agriculture sector is also a player on the world stage. With significant food, fibre and livestock systems, Alberta agricultural sector generated $12.9 billion in 2014 and represents some 22% of Canada’s agricultural output. The value added sector  - food and beverages – generated close to $14 billion. Our largest single employer (Sobeys – Safeway) is a significant food manufacturer.

Our ICT sector is also strong, with Canada’s leading geospatial companies clustered here and some smart companies doing great work in big data analytics, simulation, serious gaming and RF/wireless technology. The ICT sector employs some 43,000 people and generates some $13 billion in revenues.

We also have a robust creative industry sector – great theatre, ballet, music, art and film. Nurtured by the Banff Centre and good creative arts programs at our colleges and universities, a host of small companies have built a global reputation for excellence. Alberta Ballet being a great example. Its productions of creative ballet – ballets based on the music of Joni Mitchell, Elton John, Sarah McLachlan and Mozart’s Requiem – have been seen in many parts of the world, in part through the medium of television.

But none of these either individually or together are equal to our energy sector in terms of employment, GDP contribution or tax revenues. Alberta remains a fossil fuel state. It will be for a considerable time to come.

Even with a different royalty regime which produces a better return to the owners of the natural resources (the people of Alberta) from their assets and new regulations on climate change and land restoration, Alberta’s energy industries will continue to be the primary engine of our economy for many years to come. The only thing that will change this is the emergence of what is known as a “black swan” – a new form of energy which is so cheap, accessible, efficient and easy to install in homes, transport systems and other places that it displaces fossil fuels. There are many players looking for this black swan – few are likely to find one in the lifetime of my three grandchildren.

So what should Alberta do?

We should recognize that our primary asset is land and the uses we put land to. One use is tourism – already a major employer (135,000 people) and generator of wealth ($7.5 billion in 2013). This is likely to grow as more and more wealth retired people chose to travel and explore the world. The Rockies are an attractive place to visit, walk and explore. But so too are many other parts of Alberta.

The land has other values. We need to develop strategies and mechanisms for increasing the value of these lands to Albertan’s – finding new products and services which derives either from the land itself or from products grown or found on the land. New agri crops which produce higher value nutrition or health value, new ways of livestock breeding, new ways of responding to climate change (drought resistant crops), new forms of land remediation after spills, floods or drought.

One key development is the development of effective markets for eco-systems services. That is, trading in land remediation and development permits, CO2 and GHG emissions, wetlands protection and other eco-systems features. A roadmap for this work exists and should provide a strong focus for action. Such development would stimulate economic activity in rural Alberta, create a demand pull for innovative technology and new solutions (new soils which respond better to drought conditions, such as those developed from waste by the Eden Project in the UK) and new forms of eco-systems management and monitoring using advanced sensors and big data analytics.

Some see the demand for better environmental management and monitoring as a threat to the oil and gas industry and our energy companies. It is in fact an opportunity. Imagine if Nexen – now in the middle of dealing with the largest spill in Alberta history – had a rapid solution which not only cleaned up the spilled emulsion but did so in a way that enhanced the environment using synthetic biology solutions and nano materials. Imagine if it then installed a coating on all of its pipes that would enable rapid detection of future spills. Wouldn't there be a global demand for this solution and coating? Nexen could create what we might call a “spill-over” company focused on getting these responses and materials to market.

Linked to tourism, but also distinct in its own right, are our creative industries – film, television, theatre and so on. In other countries – notably the UK – these creative industries are real engines of the economy. The fashion industry in the UK generated some £26 billion ($52.6 billion) in economic impact last year and is growing quickly. Indeed, these creative industries – which includes gaming, serious play, simulation and ICT as well as design, architecture and other disciplines using design – are growing faster than any other sector of the UK economy. This requires young people to be taught design, encouraged to be creative and have opportunities to work with design related firms as part of co-operative programs. We should note that two of our most successful IT companies – BioWare and Smart – were not energy linked but were more aligned with these creative industries. We should be doing much more to incubate and support design related start-ups and enable their growth.

Finally, we have an excellent health care system in Alberta. While many see the health care system as problematic – sustainability of public health systems is always a challenge, wait times are not as we would like them and there are specific issues too numerous to mention here – it is in fact robust, responsive and focused. Within this health care system we have some world-class innovators – Dr. James Shapiro at the University of Alberta has a world-class reputation, for example, for his work on surgery and diabetes. He is one of many (and a fellow Yorkshireman). We have pockets of excellence in health innovation in Alberta, but a collection of pockets do not make a suit. We need to champion these pockets of innovation and leverage them to a new level, elevating the work to produce solutions to health challenges which the world needs to see. Alberta’s Strategic Clinical Networks (SCN’s) provide a vehicle for doing just that and should continue to be seen as engines designed to translate innovation into practice quickly and effectively. We should do more to promote these and ensure their effectiveness.

A colleague suggests that we should stop talking about diversifying the economy, since it is both unlikely to happen and sets up false expectations. Instead, he suggests, we should talk about broadening the economic base. He is right. Alberta’s firms are predominantly small – 95% of them are small or medium sized firms. We need to find the gazelles (firms growing at 20% each year from a base of $1 million or more) and nourish them in whatever sector or location they are. We also need to make sure that the infrastructure they need – like the Alberta Supernet – continues to be available to them to support their development. We need a focuses strategy for broadening the base of Alberta’s economy. We need this sooner rather than later.

A David Dodge for Education in Alberta?

Premier Notley is making some smart moves. One of them was to ask former Governor of the Bank of Canada, David Dodge, to work with her on a financial strategy, especially given the challenging infrastructure needs of a fast growing Province.

Dodge, together with others, did something similar for Ontario some time ago. He proposed sound fiscal management through outcome based budgets and real investments in infrastructure.

More recently, he was a member of Premier Stelmach’s Council on Economic Strategy which produced a bold, creative and inspiring blueprint for the economic future of Alberta – still available here for those wishing to understand what opportunities have been missed over the last few years.

More recently, he has been clear: austerity is not a way to solve deficits, growth is – do what you can to stimulate economic activity by developing infrastructure (especially given that the costs of capital borrowing are so low), raising minimum wage and stimulating economic growth. Jobs create wealth through tax revenue and wealth creates opportunity. Expanding those on a living, paying which stimulates spending.

The idea of having such expert advice is sound and reflects a maturity in Government. The question I have is who will provide this for our education system?

In an open letter to the Minister of Education I released on the day of his appointment (here), I suggested that there were some key challenges that needed to be addressed, the most important of which was trust. So far, the Minister has done what the NDP said they would do – restore funding for growth, invest in new schools and enable School Boards to plan 2015/16 on a sound footing. But that is all.

Worrying, the Government is going ahead with the ill-fated Grade 3 Learning Assessments but has decided to make them worse by making them mandatory for all students and insisting that they be digital in form.While teachers have been given more time to mark these, it is not clear that any real improvements are being made to their design. It is also unclear just how these are intended to help learning, especially given how vague the Government continues to be on the use of the resultant data for accountability. All in all, a bad move that has removed teachers’ professional judgement from what could have been a very good program to support students.

Before making other similar bad moves, the Minister needs his equivalent of David Dodge to take a cold, hard look at where we are and what matters most. This person needs to look at assessment, accountability, curriculum, conditions of practice and identify pathways for the future. They should not be asked to specify the curriculum or the measures we can use to shift from accountability to public assurance – just the routes to these solutions. Just as David Dodge will not specify which roads need to be widened, where traffic lights should be and what should happen to Calgary’s Cancer hospital dilemma, so our education advisor should describe strategy and journey, not detail.

I have suggested Andy Hargreaves (Boston College) or Pasi Sahlberg (Harvard) or Dennis Shirley (Boston College) or Simon Breakspear (Australia) – all of whom have undertaken significant work in Alberta, know the players and are respected for their contribution. They have also undertaken this kind of advising before for the OECD and / or for specific Governments.

Now is the exact time for the Minister to make the call to one of these individuals and say “I want to our system to continue to be amongst the leading systems in the world and I need your advise before I really start to act in my capacity as Minister”. Do it now,  Minister. Make the call.

Greece, Democracy and Social Action

The people of Greece have just done something remarkable. They have defied the dictates of the oligarchs and bankers and said “no” – we actually want to live decent, meaningful lives out of poverty – especially a poverty imposed on the basis of failed policies, acknowledged as failed by the very people who imposed them – the IMF.

Think about this: over 50% of the young people of Greece aged between 16 and 24 are long term unemployed; overall unemployment is at 25%; food consumption in Greece has fallen by a quarter over the last five years and there is a sense of growing despair about whether or not there is a future.

The options before the Greek people were: (a) reject the deal offered by the EU/IMF/ECB and face dire consequences now; or (b) accept the offer by the EU/IMF and ECB and face dire consequences for a really long time with a growing loss of control. The Greek chose to challenge the system.

What happens next is anyone’s guess. The sensible thing to do would be for Greece to exit the Euro, devalue its currency and default on all of its loans. That is “do an Iceland”. Getting control back of their currency and their economic levers is key to their future. Leaving with the EU/IMF/ECB would be a disaster.

It will all be very messy for a while. But in the end, Greece can come out of the other side of this.

It has made a good start: using democracy to make decisions. While this is an anathema to Mrs. Merkel and her allies, it starts to raise questions about just how decisions get made. If Spain elects its own anti-austerity party and follows a similar course, we will see the end of the Euro and a shift of substance in Europe.

David Cameron, the British Prime Minister, will be watching carefully. He has promised an in/out referendum on EU membership for  the UK. He is campaigning for reform of the EU and all of this may just be helpful to his cause. It certainly creates spaces in which he can weave a plan or plot.

What happens in the next few days will be crucial, not just for Greece but for the Eurozone and the EU. Keep a keen eye.

The Alberta Provincial Budget and Truth Seeking

Premier Notley signalled yesterday that the financial situation she inherited on Sunday afternoon when she became Premier was not "as advertised" either during the election campaign by the outgoing Wildrose Prentice Government or as documented in the Provincial budget. "We have already found a few skeletons in the closet" said Brian Mason, House Leader, "and this is before we have done a deep dive into the financial situation". Quite.

Some have dismissed this as "the NDP trying to lower the already high expectations". I dont think so. This new government is developing a habit of telling the truth. We had all better get used to it. It will be a new experience.

Almost all of our Universities and many colleges are in debt. You wouldn't know it from anything that was said either during the budget or by reading the financial statements associated with the Provincial budget. There are many other activities which are underfunded relative to their legal obligations - look at the whole range of disability measures and supports established by law and the available budget for them. Alberta has a substantial fiscal problem.

We are not delivering the level of service either required by law or expected by Albertan's, especially those lured here by the promise that Alberta would be a great place to "work, live and play". This was the basis of Prentice's "look in the mirror" comment. While inept politically, he was saying that the expectations of service we all have outstrip the ability of the Government to fund these services.

So how come we didn't know? More significantly, how come politicians on all sides of the house didn't know? What's missing from our system of government that leads our new Ministers and Premier to be so surprised?

Some clearly did know that things were not all that they seemed. Our financial public servants in treasury know what they are doing. I worked with them and they are very clear and very focused. Within many departments, the financial analysis and cost analysis are thorough and [generally] well done. Budgets are built carefully with a great deal of internal scrutiny. But we never get to see this detailed work. Published business plans pass through a political filter before being released and do not contain the detailed assumptions behind the financial analysis that leads to the budget. Nor do they contain a thoroughgoing risk analysis which looks at the risks of these assumptions.

Our Auditor General is a very decent man. Thorough, thoughtful and highly regarded in the audit community - we are lucky to have him. But his team can only look at so many things each year - in March 2015 he looked at school attendance in the Northland's school division (unacceptably low), at ESRD's oversight of certain activities and several other specific things. What he did not do was to report on the overall state of Alberta finances. Too political. But this is what we need.

In fact, I suggest we need three things to improve our collective knowledge of our current state on the financial side of Government:

1. We need an independent office of budget responsibility. This would look at the budget proposals by government and assess these against the actual activities being proposed and see if the implicit assumptions make sense. Most governments now have an independent office of budget and I think the current state of affairs suggests we need one too. It would take the budget proposal, review it and offer an independent assessment of its reasonableness and risk. You can see the terms for such an office here - this is the UK office for budget responsibility.
2. We need a whistleblower protection arrangement for public servants. When they know that what is being said in public (e.g. there will be no impact on front line services from budget reductions in education) they can blow the whistle and share their analysis through a system of whistleblowing (e.g. by reporting their concerns to the office of budget responsibility) and not fear consequences. Notice I am not suggesting they call David Staples or Paula Simons at the Edmonton Journal - but that a mechanism is established to enable truth telling. Take a look at the OECD's review of whistleblower protection arrangements - its here.
3. Finally, we need to develop further the work on results based management started by Doug Horner as Minister of Finance. While this will take some time - the first round of this work showed just how far we have yet to go - we each need to know that we are getting the outcomes we are paying for. Too much of the funding in government is focused on process management and not enough focus is paid to outcomes. Budget development should begin with strategic intention (what are we seeking to achieve in the long-term?), then document the implications of this strategy in terms of outcomes (what specific things will we achieve when) and then show what is needed to achieve these outcomes (money, people, infrastructure, time, supports, etc.).  We also need to know more about the risks of the plan - especially financial risk. Showing results based budgets and risks assessments will give us all a more honest view of the situation.

Public servants have lived through a difficult time since Lougheed passed the mantle to Getty. There has been an erosion of confidence and a culture of fear - heightened under some regimes (Redford, for example), but ever present. We have some very able and capable public servants. They live and work in a culture that has been agnostic to evidence, reluctant to hear analysis and relentless in prosecuting those who spoke truth to power. Fear not evidence and analysis have dominated their work for too long. We need to build a culture in which the work of public servants are valued not vilified, sought after not rejected out of hand.

I would also like to see Premier Notley and her small team spend time spelling out the situation to Albertans. Dont wait until you have "solved all of the problems". Go out and show us the situation - "sell the problem, not the solution". We can all then help with the solutions.  Crowdsource solutions through collaborative, participative networks. You can do this in a way that our previous Governments could not.