As Fareed Zakaria has pointed out this week in the Washington Post and on CNN GPS, we now have a Trump foreign policy doctrine, and it is not reassuring for the World. Obviously heavily influenced by Bannon, who many had thought had been relegated to backseat status by McMaster, we have been fooled again. As Trump demonstrates his RealPolitik admiration for authoritarians like Putin, Xi Jinping, Erdogan, and Duterte, more sinister scenarios begin to crystallize. Trump’s speech justifying the withdrawal of the United States from the COP21 Paris Climate Change Agreement is a frightening exposition of this new Trump Doctrine. It is Trump thumbing his nose at the World. It is the United States against the World, led by a coterie of plutocrats and their money. The reality is that the evidence points to an ongoing seizure of executive power by Trump that destroys our Constitution in the name of our national security. The question is what we can do about it.
Trump Blows Off the Rest of the World
Trump Climate Change Speech More About Political Power Than Climate Change
Donald Trump and Philippine President Rodrigo Duterte
Fareed Zakaria has pointed out this week in the Washington Post and on CNN GPS, that we now have a Trump foreign policy doctrine, and it is not reassuring for the World. It is openly declaring its intent to destroy the World as we know it. New York Times Conservative columnist David Brooks reached the same conclusion. Obviously heavily influenced by Bannon, who many had thought had been relegated to backseat status by McMaster, we have been fooled again. As Trump demonstrates his Henry Kissinger RealPolitik admiration for authoritarians like Putin, Xi Jinping, Erdogan, and Duterte, more sinister scenarios begin to crystallize. Trump’s speech justifying the withdrawal of the United States from the COP21 Paris Climate Change Agreement is a frightening exposition of this new Trump Doctrine. It is Trump thumbing his nose at the World. It is the United States against the World, led by a coterie of plutocrats and their money. It was moved along by a campaign carefully crafted by fossil fuel industry players, most notably Charles D. Koch and David H. Koch, the Kansas-based billionaires who run a chain of refineries (which can process 600,000 barrels of crude oil per day) as well as a subsidiary that owns or operates 4,000 miles of pipelines that move crude oil. The reality is that the evidence points to an ongoing seizure of executive power by Trump that destroys our Constitution in the name of our national security. The big rhetorical question is what we can do about it?
We are now seeing the first indications of the consequences of a Trump withdrawal from the international community. China has seen an opportunity to displace the United States and to advance China’s own aspirations to take a more aggressive and visible leadership role in the COP21 agreement. The simultaneous announcement of the de facto death of the TransPacific Partnership (TPP) has also opened a new opportunity for Chinese hegemony in the Asian economic and geopolitical world. Regardless of the Trumpist views on climate change and foreign trade, we are proverbially cutting off our noses to spite our faces.
“Climate change is not, as rumored, a hoax created by the Chinese.” — Liu Zhenmin, China’s deputy minister of foreign affairs
China likely to fill climate change global leadership void on U.S. departure
We are now seeing the first indications of the consequences of a Trump withdrawal from the international community. China has seen an opportunity to displace the United States and to advance China’s own aspirations to take a more aggressive and visible leadership role in the COP21 agreement. The simultaneous announcement of the de facto death of the TransPacific Partnership (TPP) has also opened a new opportunity for Chinese hegemony in the Asian economic and geopolitical world. Regardless of the Trumpist views on climate change and foreign trade, we are proverbially cutting off our noses to spite our faces.
China has warned Donald Trump that he will be defying the wishes of the entire planet if he acts on his vow to back away from the Paris climate agreement after he becomes US president next January. In a sign of how far the world has shifted in recognizing the need to tackle global warming, Beijing — once seen as an obstructive force in UN climate talks — is now leading the push for progress by responding to fears that Mr. Trump would pull the US out of the landmark accord.
“It is global society’s will that all want to co-operate to combat climate change,” a senior Beijing negotiator said in Marrakesh on Friday, at the first round of UN talks since the Paris deal was sealed last December. The Chinese negotiators added that “any movement by the new US government” would not affect their transition towards becoming a greener economy.
India also joined in the warnings, saying Mr. Trump’s appointment would force countries to reassess an accord hailed as an end to the fossil fuel era.
“Everyone will rethink how this whole process is going to unfold,” India’s chief negotiator, Ravi Prasad, told the Financial Times.
Recalling the way support for the earlier Kyoto protocol climate treaty crumbled after it was abandoned by another Republican president, George W Bush, Mr. Prasad said he feared the Paris accord could suffer “a contagious disease that spreads” if the US withdrew.
Mr. Trump’s sweeping victory on Tuesday has shaken what had appeared to be an unstoppable bout of global action to tackle climate change in the run-up to the two-week Marrakesh talks, which began on Monday.
Governments struck the first climate deal for aviation in October, just days before agreeing to phase out planet-warming hydrofluorocarbon chemicals used in air-conditioners.
The Moroccan hosts of this week’s talks had been planning a celebratory meeting to cap this unprecedented bout of activity. Instead, organizers awoke on Wednesday morning to find the world’s wealthiest country had a president-elect who has called global warming a hoax, pledged to “cancel” the Paris agreement and vowed to stop US funding of UN climate programs entirely.
“They were in absolute shock,” said one person who saw Moroccan officials on Wednesday morning.
Adnan Amin, the director-general of the International Renewable Energy Agency, said “a sense of helplessness” had pervaded the Marrakesh talks, and “a certain amount of fear”.
The EU and Japan also reaffirmed their commitment to the agreement, which requires all countries to come up with a plan to curb climate change in order to stop global temperatures from rising more than 2C from pre-industrial times.
But neither they nor China were willing to offer extra cuts in greenhouse gas emissions to fill the vacuum a US withdrawal would create, nor additional money for an agreement requiring billions of dollars in public and private funds to be channeled from rich to poor countries to tackle climate change.
At 3am in the morning I started to hear the [US election] results and I said, ‘No, you’re having a nightmare, go back to sleep’. When I got up and realised it was true, I walked around in a daze
“If the US changes its position that would be very serious for us, especially the aspect of the finance,” said Shigeru Ushio, a Japanese foreign ministry official.
As delegates absorbed the ramifications of Mr. Trump’s sweeping victory, many swapped stories of how the result had hit them.
“At 3am in the morning I started to hear the results and I said, ‘No, you’re having a nightmare, go back to sleep’,” said one developing country participant. “When I got up and realized it was true, this was really, really happening, I walked around in a daze. I think a lot of us were.”
The negotiations have continued nonetheless and some countries have been adamant that the US election result should not interfere with a meeting that is due to start negotiating a raft of important rules for how the Paris agreement will operate.
“We’re talking about the big challenge of climate change,” said Russia’s lead negotiator, Oleg Shamanov. “This issue is bigger than life. This is a long-term issue, longer than any mandate of any president of country X or Z, even if that country is a big one.”
The prospect of the US withdrawing from the Paris agreement has been a topic of endless discussion beneath the sun-shaded walkways in the temporary convention center built for the Marrakesh meeting.
A pullout would take four years unless Mr. Trump chose to take the US out of the accord’s parent treaty, the 1992 UN Framework Convention on Climate Change, in which case it could only take a year.
That would be a highly provocative move, said international climate law expert, Farhana Yamin. “It would escalate non-cooperation to the highest level possible.”
But as the first week of the talks drew to a close, a mood of defiance was emerging among some delegates who said past US retreats from UN climate action had only spurred other countries’ determination to unify and proceed.
“The talk in the corridors is, ‘OK, this is not going to stop us from moving forward, we will just redouble our efforts’,” said Hugh Sealy, a lead negotiator for an alliance of small island countries.
“This is still an existential threat,” he said. “I still want to pass on that little house I have on the coast in Grenada to my children and the rest of us are going to have to step up.”
Leonardo DiCaprio’s extraordinary two-hour National Geographic documentary is now available for viewing free everywhere, including on this page, YouTube, The National Geographic website, and the National Geographic Channel. Everyone should watch it. Equally worthwhile is the series The Years of Living Dangerously on National Geographic. The 2-minute trailer and the full documentary film are below here.
The Urgency of Climate Change Action Made Vividly Real
Leonardo DiCaprio‘s extraordinary two-hour National Geographic documentary is now available for viewing free everywhere, including on this page, YouTube, The National Geographic website, and the National Geographic Channel. Everyone should watch it. Equally worthwhile is the series The Year of Living Dangerously on National Geographic. The 2-minute trailer and the full documentary film are below here.
The Years of Living Dangerously on National Geographic:
Following my recent blog posts on Reid Hoffman, COP21, and an apparent resurgence of Big Ideas in technology, a growing group of venture capitalists are resurrecting their original mission in industry and the economy. Paul Krugman of the New York Times has also noticed and offers his hope that this trend continues. Max Marmer, who wrote his now legendary 2012 Harvard Business Review article, “Reversing the Decline in Big Ideas,” has stimulated a broad rethinking on what we should be focusing. The successful landing of Space X’s Falcon 9 is a hopeful early indication that Elon Musk is one of those on the right track.
Following my recent blog posts on Reid Hoffman, COP21, and an apparent resurgence of Big Ideas in technology, a growing group of venture capitalists are resurrecting their original mission in industry and the economy. Paul Krugman of the New York Times has also noticed and offers his hope that this trend continues. Max Marmer, who wrote his now legendary 2012 Harvard Business Review article, “Reversing the Decline in Big Ideas,” has stimulated a broad rethinking on what we should be focusing. The successful landing of Space X’s Falcon 9 is a hopeful early indication that Elon Musk is one of those on the right track.
Things to Celebrate, Like Dreams of Flying Cars
In Star Wars, Han Solo’s Millennium Falcon did the Kessel Run in less than 12 parsecs; in real life, all the Falcon 9 has done so far is land at Cape Canaveral without falling over or exploding. Yet I, like many nerds, was thrilled by that achievement, in part because it reinforced my growing optimism about the direction technology seems to be taking — a direction that may end up saving the world.
O.K., if you have no idea what I’m talking about, the Falcon 9 is Elon Musk’s reusable rocket, which is supposed to boost a payload into space, then return to where it can be launched again. If the concept works, it could drastically reduce the cost of putting stuff into orbit. And that successful landing was a milestone. We’re still a very long way from space colonies and zero-gravity hotels, let alone galactic empires. But space technology is moving forward after decades of stagnation.
And to my amateur eye, this seems to be part of a broader trend, which is making me more hopeful for the future than I’ve been in a while.
You see, I got my Ph.D. in 1977, the year of the first Star Wars movie, which means that I have basically spent my whole professional life in an era of technological disappointment.
Until the 1970s, almost everyone believed that advancing technology would do in the future what it had done in the past: produce rapid, unmistakable improvement in just about every aspect of life. But it didn’t. And while social factors — above all, soaring inequality — have played an important role in that disappointment, it’s also true that in most respects technology has fallen short of expectations.
The most obvious example is travel, where cars and planes are no faster than they were when I was a student, and actual travel times have gone up thanks to congestion and security lines. More generally, there has just been less progress in our command over the physical world — our ability to produce and deliver things — than almost anyone expected.
Now, there has been striking progress in our ability to process and transmit information. But while I like cat and concert videos as much as anyone, we’re still talking about a limited slice of life: We are still living in a material world, and pushing information around can do only so much. The famous gibe by the investor Peter Thiel (“We wanted flying cars, instead we got 140 characters.”) is unfair, but contains a large kernel of truth.
Over the past five or six years, however — or at least this is how it seems to me — technology has been getting physical again; once again, we’re making progress in the world of things, not just information. And that’s important.
Progress in rocketry is fun to watch, but the really big news is on energy, a field of truly immense disappointment until recently. For decades, unconventional energy technologies kept falling short of expectations, and it seemed as if nothing could end our dependence on oil and coal — bad news in the short run because of the prominence it gave to the Middle East; worse news in the long run because of global warming.
But now we’re witnessing a revolution on multiple fronts. The biggest effects so far have come from fracking, which has ended fears about peak oil and could, if properly regulated, be some help on climate change: Fracked gas is still fossil fuel, but burning it generates a lot less greenhouse emissions than burning coal. The bigger revolution looking forward, however, is in renewable energy, where costs of wind and especially solarhave dropped incredibly fast.
Why does this matter? Everyone who isn’t ignorant or a Republican realizes that climate change is by far the biggest threat humanity faces. But how much will we have to sacrifice to meet that threat?
Well, you still hear claims, mostly from the right but also from a few people on the left, that we can’t take effective action on climate without bringing an end to economic growth. Marco Rubio, for example, insists that trying to control emissions would “destroy our economy.” This was never reasonable, but those of us asserting that protecting the environment was consistent with growth used to be somewhat vague about the details, simply asserting that given the right incentives the private sector would find a way.
But now we can see the shape of a sustainable, low-emission future quite clearly — basically an electrified economy with, yes, nuclear power playing some role, but sun and wind front and center. Of course, it doesn’t have to happen. But if it doesn’t, the problem will be politics, not technology.
True, I’m still waiting for flying cars, not to mention hyperdrive. But we have made enough progress in the technology of things that saving the world has suddenly become much more plausible. And that’s reason to celebrate.
Le Bourget airport just north of Paris is the place where Charles Lindbergh landed the Spirit of St. Louis. That event 88 years ago could now be interpreted as foreshadowing the era of globalization. Tomorrow, the world’s nations will meet there under the banner of the UN Framework on Climate Change (UNFCCC). COP21, also known as the 2015 Paris Climate Conference, will, for the first time in over 20 years of UN negotiations, aim to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.
Le Bourget airport just north of Paris is the place where Charles Lindbergh landed the Spirit of St. Louis. That event 88 years ago could now be interpreted as foreshadowing the era of globalization. Tomorrow, the world’s nations will meet there under the banner of the UN Framework on Climate Change (UNFCCC). COP21, also known as the 2015 Paris Climate Conference, will, for the first time in over 20 years of UN negotiations, aim to achieve a legally binding and universal agreement on climate, with the aim of keeping global warming below 2°C.
In 1992, more than 150 nations agreed at a meeting in Rio de Janeiro to take steps to stabilize greenhouse gases at a level that would “prevent dangerous anthropogenic interference with the climate system” — United Nations-speak for global warming.
Many follow-up meetings have been held since then, with little to show for them. Emissions of greenhouse gases have steadily risen, as have atmospheric temperatures, while the consequences of unchecked warming — persistent droughts, melting glaciers and ice caps, dying corals, a slow but inexorable sea level rise — have become ever more pronounced.
On Monday, in Paris, the signatories to the Rio treaty (now 196), will try once again to fashion an international climate change agreement that might actually slow, then reduce, emissions and prevent the world from tipping over into full-scale catastrophe late in this century. As with other climate meetings, notably Kyoto in 1997 and Copenhagen in 2009, Paris is being advertised as a watershed event — “our last hope,” in the words of Fatih Birol, the new director of the International Energy Agency. As President François Hollande of France put it recently, “We are duty-bound to succeed.”
Paris will almost certainly not produce an ironclad, planet-saving agreement in two weeks. But it can succeed in an important way that earlier meetings have not — by fostering collective responsibility, a strong sense among countries large and small, rich and poor, that all must play a part in finding a global solution to a global problem.
Kyoto failed because it imposed emissions reduction targets only on developed countries, giving developing nations like China, India and Brazil a free pass. That doomed it in the United States Senate. Copenhagen attracted wider participation, but it broke up in disarray, in part because of continuing frictions between the industrialized nations and the developing countries.
The organizers of the Paris conference have learned a lot from past mistakes. Instead of pursuing a top-down agreement with mandated targets, they have asked every country to submit a national plan that lays out how and by how much they plan to reduce emissions in the years ahead. So far, more than 170 countries, accounting for over 90 percent of global greenhouse emissions, have submitted pledges, and more may emerge in Paris.
Will these pledges be enough to ward off the worst consequences of global warming? No. Scientists generally agree that global warming must not exceed 2 degrees Celsius, or 3.6 degrees Fahrenheit, from preindustrial levels. Various studies say that even if countries that have made pledges were to follow through on them, the world will heat up by 6.3 degrees Fahrenheit by the end of this century. That would still be much too high, and it would be guaranteed to make life miserable for future generations, especially in poor low-lying countries. But it would at least put the world on a safer trajectory; under most business-as-usual models, temperature increases could reach 8.1 degrees or higher.
Eventually, of course, all nations will have to improve on their pledges, especially big emitters like China, India and the United States. If the Paris meeting is to be a genuine turning point, negotiators must make sure that the national pledges are the floor, not the ceiling of ambition, by establishing a framework requiring stronger climate commitments at regular intervals — say, every five years. This should be accompanied by a plan for monitoring and reporting each country’s performance. Earlier meetings have done poorly on this score.
Other important items dot the agenda. One is how rich nations can help poorer ones achieve their targets. Another is stopping the destruction of tropical forests, which play a huge role in storing carbon and absorbing emissions. The meeting also seeks to enlist investors, corporations, states and cities in the cause. Michael Bloomberg, who made reducing emissions a priority as mayor of New York, will join the mayor of Paris in co-hosting a gathering of local officials from around the world.
The test of success for this much-anticipated summit meeting is whether it produces not only stronger commitments but also a shared sense of urgency at all levels to meet them.
My biggest complaint with venture capital and the current entrepreneurial landscape is the lack of Big Ideas— the superficiality of the technology sector. “We were promised flying cars and we got 140 characters” –Peter Thiel. We also got corporate greed masquerading as “the sharing economy.” Many other well-known observers of this industry share my complaint. Some argue that these Big Ideas are too big for private investment, and can only be funded by governments with the resources and vision to accomplish such large long term projects. I disagree.
My biggest complaint with venture capital and the current entrepreneurial landscape is the lack of Big Ideas— the superficiality of the technology sector. “We were promised flying cars and we got 140 characters” –Peter Thiel. We also got corporate greed masquerading as “the sharing economy.”
Many other well-known observers of this industry share my complaint. Some argue that these Big Ideas are too big for private investment, and can only be funded by governments with the resources and vision to accomplish such large long term projects. I disagree. The semiconductor industry, on the bleeding edge of quantum mechanics, was funded almost exclusively by private venture investors. Another example may be nuclear fusion. Large-scale projects, like ITER, funded by the European Union at the Cadarache facility in southern France, and the National Ignition Facility in Livermore California, funded by the U.S. Department of Energy are being seriously challenged by Canadian and U.S. startups funded by private venture capital, and seeking to beat the large projects to the goal of renewable solar energy.
Tim Draper of Draper Ventures at General Fusion
Start-Ups Take On Challenge of Nuclear Fusion
Michl Binderbauer of Tri Alpha Energy, a fusion start-up.
A group of start-ups is promising a new and virtually unlimited source of power, one that produces none of the gases scientists say contribute to global warming.
The only problem? A way to harness the energy source, nuclear fusion — the reaction that gives birth to sunlight — still needs to be invented.
Such an achievement has long evaded government scientists and university researchers, despite decades of work and billions of dollars in research. But backed by hundreds of millions in venture capital and some of the wealthiest people in the technology industry, a handful of young companies say they can succeed where government has fallen short.
Nuclear fusion is one of many areas of science and energy now getting the backing of venture capitalists. The investor dollars coming into fusion start-ups, like those in many areas of science, still pale in comparison with the money spent by governments. But signs of progress, including some results that have eclipsed government projects, have generated hope among some scientists that the companies could help develop a fusion reactor within their lifetimes.
Photo
The C-2U machine at Tri Alpha Energy
At the very least, they talk a confident game — even though the history of fusion science is littered with frustration and false starts. Some fusion scientists, unable to evaluate the start-ups’ unpublished scientific results, doubt the companies’ chances.
“The fusion era is here and coming,” said William D. Lese, a managing partner at Braemar Energy Ventures, a venture capital firm with a stake in General Fusion, one of the leading start-ups in the field. “The increase in activity in this space is perhaps a sign of that.”
Nuclear fusion occurs when two atoms are squeezed together so tightly that they merge. That single, larger atom releases a tremendous amount of energy.
This happens naturally at the center of the sun, where gravity easily crushes hydrogen into helium, spewing forth the sunlight that reachesEarth. But on Earth, making hydrogen hot and dense enough to sustain a controlled fusion reaction — one that does not detonate like a thermonuclear bomb — has been a challenge.
The potential upsides of the power, though, provide a huge incentive. Fusion reactions release no carbon dioxide. Their fuel, derived from water, is abundant. Compared with contemporary nuclear reactors, which produce energy by splitting atoms apart, a fusion plant would produce little radioactive waste.
The possibilities have attracted Jeffrey P. Bezos, founder of Amazon.com. He has invested in General Fusion, a start-up in British Columbia, throughBezos Expeditions, the firm that manages his venture capital investments. Paul Allen, a co-founder of Microsoft, is betting on another fusion company, Tri Alpha Energy, based in Foothill Ranch, Calif., an hour south of Los Angeles, through his venture arm, Vulcan Capital.
Peter Thiel — the co-founder of PayPal, who once lamented the superficiality of the technology sector by saying, “We were promised flying cars and we got 140 characters” — has invested in a third fusion start-up,Helion Energy, based near Seattle, through Mithril Capital Management.
Government money fueled a surge in fusion research in the 1970s, but the fusion budget was cut nearly in half over the next decade. Federal research narrowed on what scientists saw as the most promising prototype — a machine called a tokamak, which uses magnets to contain and fuse a spinning, doughnut-shape cloud of hydrogen.
Today’s start-ups are trying to perfect some of the ideas that the government left by the wayside.
After earning his doctorate from the University of California, Irvine, in the mid-1990s, Michl Binderbauer had trouble securing federal funds to research an alternative approach to fusion that the American government briefly explored — one that adds the element boron into the hydrogen fuel. The advantage of the mixture is that the reaction does not fling off neutrons that, like shrapnel, can wear down machine parts and make them radioactive.
Mr. Binderbauer, along with his Ph.D. adviser, Norman Rostoker, founded Tri Alpha Energy, eventually raising money from the venture capital arms of Mr. Allen and the Rockefeller family. The company has raised over $200 million.
“We basically said, “What would an ideal reactor look like?’ ” said Mr. Binderbauer, who is now the company’s chief technology officer. Mr. Rostoker died late last year.
General Fusion is pursuing an approach that uses pistons to generate shock waves through the hydrogen gas. Compressed hard enough, the hydrogen atoms will begin to fuse. General Fusion has raised about $74 million from private investors and another $20 million from the Canadian government.
Its reactor concept, like that of Tri Alpha Energy, would yield power plants much smaller than a commercially viable tokamak, which would need to be larger than many stadiums are in order to work. General Fusion’s idea to compress a ball of hydrogen, too, is borrowed from a government project aborted decades ago. The company’s innovation on that approach is to use cannon-size pistons for the compression.
Critics in the nuclear physics field say it is unlikely start-ups will succeed with these alternative approaches.
“They just keep pounding on the same dead horse,” said Edward C. Morse, a nuclear physicist at the University of California, Berkeley. “What happens in fusion is that the same ideas pop up every two decades. It’s like a game of whack-a-mole.”
In addition, private funds cannot match those of the most ambitious government fusion energy project, the International Thermonuclear Experimental Reactor, or ITER, a stadium-size tokamak being built in France by the European Union, along with the United States and five other nations, for about $14 billion. The United States is committed to funding about 9 percent of the project.
Still, the Energy Department is also hedging its bet, granting $30 million to alternative fusion projects, including Helion Energy, which received $4 million.
“In all of our selections, it’s not about a start-up versus something else,” said Eric A. Rohlfing, deputy director for technology of the Advanced Research Projects Agency-Energy, the government agency that made the grants. “It’s about the quality of the idea.”
The start-ups counter critics by saying that they can be more efficient than government projects.
When Tri Alpha Energy’s panel of outside advisers visited the construction site of the company’s lab in 2007, the concrete was still being poured. Some advisers doubted the company would be conducting experiments within a year, as Mr. Binderbauer said they would.
But by the following year, the machine was ready. “When I walked these guys out there to see that, their jaws dropped,” Mr. Binderbauer said.
“I do recall being surprised by how fast they said they would get the facility ready,” said Burton Richter, a professor emeritus at Stanford and Nobel laureate in physics who advised Tri Alpha Energy.
This past June, Tri Alpha reached a new milestone: Its machine superheated a ball of hydrogen to 10 million degrees Celsius and held it for five milliseconds — much longer than government projects achieved using the same method.
“You may ask: ‘Five milliseconds? That’s nothing.’ Certainly, that’s the blink of an eye to a layperson,” Mr. Binderbauer said. “But in our field, that’s half an eternity.” His next goal is to increase that temperature tenfold.
Other fusion efforts have set even more ambitious goals. When Lockheed Martin announced its own fusion project last year, the company said it expected to build a prototype within five years.
But history would suggest that struggles lie ahead. For example, the American government’s other major approach to fusion, used by a California lab that fires 192 giant lasers at a container holding hydrogen to compress and fuse it, missed a 2012 deadline for producing more energy than the lasers put in.
That checkered past is not stopping the start-ups.
“We’re moving very quickly,” said Michael Delage, vice president for strategy at General Fusion. “Is it two years away? Three years away? Four years away? Maybe. We’ll let you know when we get there.”
This issue has driven me absolutely nuts since I first arrived in Canada from Silicon Valley. It did not take me long to figure out that things did not work they way they did in California, and that there wasn’t much of a true entrepreneurial economy here. Since then, I have also been appointed to the Canada Foundation for Innovation grant process, providing me with insight into how R&D funding works in Canada. I have seen many issues in Canada that have impaired the nation’s ability to develop an entrepreneurial culture, among them is the inherent Canadian conservatism and short term horizon of investors unfamiliar with technology venture investment. But none has been worse than Canada’s decades-long neglect of adequate funding for research and development nationwide.
UPDATE: May 21, 2015. As if to drive home the Canadian economic crisis, Goldman Sachs has just released an oil price forecast suggesting that North Sea Brent crude will still be $55 in 2020, five years from now. As Alberta Western Canadian Select (WCS) bitumen is valued lower on commodity markets this is extremely bad news for Canada. Further, the well-known Canadian economic forecasting firm, Enform is predicting that job losses across all of western Canada, not only Alberta, could reach 180,000.
This issue has driven me absolutely nuts since I first arrived in Canada from Silicon Valley. It did not take me long to figure out that things did not work they way they did in California, and that there wasn’t much of a true entrepreneurial economy here. Since then, I have also been appointed to the Canada Foundation for Innovation grant process, providing me with insight into how R&D funding works in Canada. I have seen many issues in Canada that have impaired the nation’s ability to develop an entrepreneurial culture, among them is the inherent Canadian conservatism and short term horizon of investors unfamiliar with technology venture investment. But none has been worse than Canada’s decades-long neglect of adequate funding for research and development nationwide. A review of the OECD data on Canada’s investment in R&D compared to other industrialized nations paints a sorry picture. This has led directly to a poor showing in industrial innovation and productivity. This is further compounded by the current government’s myopic focus on natural resource extraction, Canada’s so-called “natural resource curse.” The result now is an economic train wreck for Canada. The fossil fuel based economy has collapsed and is not forecast to recover anytime in the near future. During the boom time for fossil fuel extraction, there has been essentially no rational strategy to increase spending on R&D and innovation, and hence no increase in economic diversification. Now the problem is nearly intractable, and may take decades to reverse.
ASLEEP AT THE WHEEL, by Bruce Smardon, McGill-Queens University Press
ASLEEP AT THE WHEEL explains that since 1960, Canadian industry has lagged behind other advanced capitalist economies in its level of commitment to research and development. Asleep at the Switch explains the reasons for this underperformance, despite a series of federal measures to spur technological innovation in Canada. It is worth noting that Arvind Gupta, President of The University of British Columbia, and former head of MITACS, the organization at UBC tasked to promote R&D, has also been an outspoken proponent for increased R&D, at one point editorializing in the Vancouver Sun, that Canada needed an innovation czar, to promote innovation in the same manner as the 2010 Seize the Podium program to enhance gold medal performance for Canada.
Also, as a member of the 2012 Canada Foundation for Innovation Multidisciplinary Assessment process, and the University of British Columbia 2015 CFI grant preparation process, I can say without reservation that the Canada suffers from inadequate R&D funding and its consequences.
ANALYSIS From CBC News
Canada’s research dilemma is that companies don’t do it here
Ten-year study says repairs needed for rebound will be costly and difficult
REBLOGGED: By Don Pittis, CBC NewsPosted: May 15, 2015 5:00 AM ET Last Updated: May 15, 2015 6:31 AM ET
Northern Electric was a domestic Canadian technology success story that became the telecom equipment giant Nortel Networks. But when Nortel failed, the lack of an R&D hub meant there were no startups to replace it. (The Canadian Press)
As Stephen Harper handed out more tax breaks for Canadian manufacturers in Windsor, Ont., yesterday, you might ask, “With that kind of support, why is Canada’s industrial economy in such bad shape?” Political economist Bruce Smardon thinks he has the answer.
Smardon says companies operating in Canada just aren’t spending enough on domestic research and development, and the Harper government is only the latest in a long line of governments, stretching back to that of John A. Macdonald, that have contributed to the problem.
As China’s resource-hungry economy goes off the boil, taking Canada’s resource producers with it, everyone including Bank of Canada governor Stephen Poloz, has been waiting for a rebound in Canada’s industrial economy.
But there are growing fears such a Canadian rebound is not on the cards. As the Globe and Mail’s Scott Barlow reported last week (paywall), despite having the top university for generating new tech startups, Canada has repeatedly failed to become a hub for industrial innovation.
Best in North America
Interviewed by the New York Times, the president of the startup generator Y Combinator, Sam Altman, called the University of Waterloo the school that stood out in North America for creating new ideas that turned into companies.
But as Barlow reported, there is statistical evidence that Waterloo’s success has not translated into R&D success, as Canadian industrial innovation continues to decline.
Political science professor Bruce Smardon’s book, Asleep at the Switch, examining Canada’s R&D failure, has been short-listed for one of Canada’s most prestigious academic prizes. (McGill-Queen’s University Press)
And, believe it or not, Smardon traces the chain of events back to Canada’s first prime minister and his tariff policy of 1879. Paradoxically, those rules were put in place to protect Canadian manufacturers from cheap U.S. goods, that were in turn protected by U.S. tariff walls.
Central Canadian boom
For the industries of central Canada, the tariff barriers worked. In the years before the First World War, says Smardon, Canada was second only to the United States in creating an economy of mass production and mass consumption, where workers could afford to buy the products they produced.
However, prevented by tariffs from exporting U.S. goods to Canada, American companies did the next best thing. They started, or bought, branch plants north of the border, wholly- or partly-owned subsidiaries that used U.S. technology in Canadian factories.
Smardon says that started a trend that continues today. The majority of R&D was being done in the home country of the industrial parent, not in the Canadian subsidiaries. And in the Mulroney and Chrétien era of free trade, he says, relatively high-tech branch plants, such as Inglis and Westinghouse, started to close as products were supplied more efficiently by the U.S. parent factories.
There were Canadian R&D stars such as Nortel and Blackberry, says Smardon. But they were exceptions. And when those stars began to set, the lack of a traditional R&D hub in Canada meant there were few young research-based companies ready to come up and replace them.
Tax credit paradox
The paradox, he says, is that Canadian taxpayers have spent a fortune on R&D tax credits. The 2011 Jenkins report showed that as a percentage of GDP, Canadian R&D tax incentives were higher than anyplace else. But as Barlow showed, Canadian R&D still lags behind.
The reason, Smardon concludes, is that while taxpayers fork out for R&D, industrial R&D doesn’t happen here but in traditional R&D hubs abroad. He says that free trade agreements and a longstanding view by Canadian governments that business knows best mean it’s very difficult to put conditions on how that money is spent.
“If we are concerned with developing a manufacturing base in the more advanced research intensive sectors, we’re going to have to have incentive programs at the very minimum, that are clear in insuring that any incentives are used to develop products and processes in Canada,” says Smardon. “They’ve got to think through how that can be done.”
But Smardon is not optimistic. He says that free trade and the free market philosophy has become so entrenched in Canadian thinking that it’s impossible to change.
Market rules
He says that is why the Harper government became so enamoured with the business of pumping and exporting unprocessed oil and gas while the Canadian industrial economy crumbled. It was exactly what the global free market wanted.
It may indeed be that global market forces decide Canada is an icy wasteland that is best at producing raw materials. It may decide that the best way to use our brilliant young people is to send them to California to develop their business ideas there.
But if we want more than that, perhaps handing out ineffective tax incentives is not going to be enough.
The evidence of a Canadian economic train wreck just keep rolling in. This report from CNN Money mentions last week’s Bank of Canada dismal report on the Canadian economy, and goes on to add additional economic data and comment from respected investment banks around the World. The one glaring omission is any political discussion of how Canada got into this mess, and who is responsible for it.
The evidence of a Canadian economic train wreck just keep rolling in. This report from CNN Money mentions last week’s Bank of Canada dismal report on the Canadian economy, and goes on to add additional economic data and comment from respected investment banks around the World. The one glaring omission is any political discussion of how Canada got into this mess, and who is responsible for it.
Canada’s economy is a disaster from low oil prices
By Nick Cunningham for Oilprice.com @CNNMoneyInvest
Low oil prices are threatening the health of Canada’s oil and gas sector, which in turn, is causing turmoil in Canada’s economy as a whole.
The fall in oil prices is forcing billions of dollars in spending reductions for Canada’s oil and gas industry. In February, Royal Dutch Shell (RDSA) shelved plans for a tar sands project in Alberta that would have produced 200,000 barrels per day. Last year, Petronas put off plans to build a massive LNG export terminal on Canada’s west coast.
Moody’s recently predicted that very few of the 18 proposed LNG projects in Canada will be constructed. Most will be canceled. The oil industry is expected to lose 37% of its revenues in 2015, or a fall of CAD$43 billion.
That is bad news for Canada’s oil and gas sector. But even worse, Canada’s overdependence on oil and gas will threaten its broader economy now that the sector has gone bust.
The severe drop in oil prices has made the Canadian dollar one of the worst performing currencies in the world over the past year. The “loonie” used to trade at parity to the U.S. dollar, and even appreciated to a stronger level a few years ago, but now a Canadian dollar gets you less than 80 U.S. cents.
Disaster levels: While a weaker currency has complicating effects on the economy (it will also boost exports, for example), on balance low oil prices have been an unmitigated disaster for Canada’s economy.
Canada’s GDP “fell off a cliff” in January of this year, according to a report from Capital Economics, a consultancy. Canada’s economy could be shrinking by 1% on an annualized basis. For the full year, Capital Economics predicts growth of 1.5%, followed by a weak 1% expansion in 2016.
“Overall, unless oil prices rebound soon, the economy is likely to struggle much longer than the consensus view implies, even as the improving US economy supports stronger non-energy exports,” Capital Economics concluded. Other economic analysts agree.
Nomura Securities worries about “contagion,” as the collapse in oil prices lead to less drilling, declining demand for supporting services, falling housing prices, a sinking stock market, and weakness in other sectors like construction and engineering. The pain could be concentrated in Alberta in particular, where household debt averages CAD$124,838, compared to just CAD$76,150 for the rest of Canada. Now with the rug pulled out beneath the economy, there could be a day of reckoning.
High-cost oil: Much of Canada’s oil production comes from high-cost tar sands. When they are up and running, tar sands operations can produce relatively more stable outputs than shale, which suffers from rapid decline rates. But, nevertheless, tar sands are extremely costly, with breakeven prices at $60 to $80 per barrel for steam-assisted extraction and a whopping $90 to $100 per barrel for tar sands mining.
Even worse, Canada’s heavy oil trades at a discount to WTI, which makes it all the more painful when oil prices are low. The discount is nearly $12 per barrel below WTI right now. Some of that discount is the result of inadequate pipeline capacity, trapping some tar sands in Canada. The stalled Keystone XL pipeline is the most controversial, but not the only pipeline that has been blocked. The head of Canada’s Scotiabank recently warned that the inability to build enough energy infrastructure, plus Canada’s near total dependence on the U.S. market, puts Canada’s economy at risk.
The Bank of Canada surveyed the top executives at Canada’s 100 largest businesses found that two-thirds of them think it is critical to diversify the economy away from oil. With such a dependence on commodities, the oil bust has rippled through the economy, forcing layoffs and increasing unemployment. Consumer confidence is low, and hiring is at its lowest level since 2009, during the immediate aftermath of the global financial crisis.
Of course, diversification can only be achieved over the longer-term. In the near-term Canada’s fate is tied to the price of oil.
Imagine if Canada was implementing environmental policies like those proposed by one of its own, author & filmmaker Naomi Klein. What if Canada were to restore its historical image as a progressive country leading the World with its policies? In the following video published on the UK Guardian website, Ms. Klein argues that making policy moves now to increase investment in renewable energy make sense, while oil prices are at very low levels, and likely to remain low for the longer term.
Imagine if Canada was implementing environmental policies like those proposed by one of its own, author & filmmaker Naomi Klein. What if Canada were to restore its historical image as a progressive country leading the World with its policies? In the following video published on the UK Guardian website, Ms. Klein argues that making policy moves now to increase investment in renewable energy makes economic sense, while oil prices are at very low levels, and likely to remain low for the longer term.
The University of British Columbia is following the lead of faculty and students at Harvard University, the University of California, Stanford University and many other universities across North America. Also of note, Norway’s sovereign investment fund, the largest in the World @ $1.3 Trillion, has already made the decision to divest. The current fossil fuel market collapse and likely long term instability is prima facie evidence of the need for divestment, and to prevent further increases in carbon emissions.
The University of British Columbia is following the lead of faculty and students at Harvard University, the University of California, Stanford University and many other universities across North America. Also of note, Norway’s sovereign investment fund, the largest in the World @ $1.3 Trillion, has already made the decision to divest. The current fossil fuel market collapse and likely long term instability is prima facie evidence of the need for divestment, and to prevent further increases in carbon emissions.
This Big Idea is sweeping public and private institutional investment funds globally in the belief that it is overdue to begin more demonstrative action against human caused climate change. Canadians have a particularly important role to play in this. Current government policy has focused the economy on fossil fuels, at the expense of a broader based economy, and is now experiencing the wrath of the “natural resource curse. Canadian innovation and productivity have plummeted on the OECD scale, and Canada is entering a highly volatile and uncertain recessionary period, as forecast by The Conference Board of Canada, the International Monetary Fund, and numerous Canadian banks.
From the Canadian Broadcasting Corporation:
Faculty at the University of British Columbia have voted in favour of the institution divesting its existing fossil fuel holdings and forgoing further investments in companies connected with fossil fuels.
“Students have spoken. Faculty have spoken. It’s time for UBC to act,” George Hoberg, professor in forest resources management, said in a statement. “Climate change presents an urgent crisis for humanity.”
The results of the referendum were released Tuesday, with 62 per cent of voters supporting divestment.
A fossil-free portfolio
Of UBC’s $1.2-billion endowment fund, more than $100 million is invested in oil, natural gas and coal. The faculty vote is calling on the university to divest completely from those holdings within five years.
“Just as UBC has pledged to use its campus as a ‘living laboratory’ for sustainability, we call on our university to apply its expertise with the same vigour to the endowment,” said Kathryn Harrison, professor of political science and a climate policy expert.
“UBC should devise a profitable, fossil-free portfolio that can serve as an inspiration for sustainable investing by other institutions.”
The faculty will now put their proposal to the university’s board of governors.
“UBC is a place of academic dialogue and debate, and we welcome our faculty members’ interest in our investment policies,” the university said in a statement responding to today’s result. “As the trustee of the endowment, UBC has a fiduciary obligation to ensure that it is managed prudently.”
A growing movement
The fossil fuel divestment movement started in the United States and has spread across North America and Canada.
Last year, UBC students held their own referendum on the issue, with an almost four-to-one vote in favour of divestment.
Today’s vote comes just before Global Divestment Day on Friday when, the UBC campaigners say, a divestment campaign will be launched at the University of Calgary.
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