I want to return to France to give back my experience, skills, and technical knowledge to the country of my heritage. France’s industrial economy is in the doldrums, but new policies are stimulating innovation, the key to economic growth and productivity, and technology industry leaders in France with strong technology industry backgrounds are looking to contribute to this new economy in France. I want to join them and give back.
In less than 24 hours since our campaign launch, we are nearing 10% of our goal
I am a native-born Californian with French family heritage and a French wife. We are both French citizens preparing to return to France. My university background is in the Humanities and Social Sciences, with a year of graduate study at Oxford University, researching in the Bodleian Library. When I returned to northern California, I eventually landed an entry-level job at Intel Corporation, which proved to be the crucible for my entire career. I eventually rose to be a senior executive in international business development with Intel. I have continued in international business for all of my career, working for a number of tech startups and venture capital investment firms over the years. I have led two tech industry consortia to develop global industry standards. I have been the director of a tech entrepreneurial incubator in Silicon Valley for the government of New Zealand and collaborated on mentoring promising entrepreneurs in locations here and around the world. I was an Adjunct Professor of Management at the University of British Columbia for four years.
I want to return to France to give back my experience, skills, and technical knowledge to the country of my heritage. France’s industrial economy is in the doldrums, but new policies are stimulating innovation, the key to economic growth and productivity, and technology industry leaders in France with strong technology industry backgrounds are looking to contribute to this new economy in France. I want to join them and give back.
I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy.
FundRazr Campaign Story:
We are David Mayes and Isabelle Roux-Mayes, a married couple, who are also French citizens. I am also a native Californian who has spent my career working for a number of Silicon Valley companies and investment firms, beginning with Intel Corporation. I am now semi-retired, but very eager to return permanently to France to donate my technology industry experience and knowledge to assist French entrepreneurs to transform France into an innovation-based economy. I am focusing specifically on building working relationships with three major new initiatives that could benefit from my background and achievements: The Camp in Aix-en-Provence, launched last year, Startup Garage, Paris, and 1kubator in Bourdeaux.
I am more than happy to share my achievements and references to validate my credentials and verify my ability to make a serious contribution. You can start here with my LinkedIn profile and references David Mayes on LinkedIn. You may also contact me here or on FundRazr where we can discuss my crowdfunding project.
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.
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.”
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.
Norway’s Government Pension Fund Global (GPFG), worth $850bn (£556bn) and founded on the nation’s oil and gas wealth, revealed a total of 114 companies had been dumped on environmental and climate grounds in its first report on responsible investing, released on Thursday. The companies divested also include tar sands producers, cement makers and gold miners.
As part of a fast-growing campaign, over $50bn in fossil fuel company stocks have been divested by 180 organisations on the basis that their business models are incompatible with the pledge by the world’s governments to tackle global warming. But the GPFG is the highest profile institution to divest to date.
World’s biggest sovereign wealth fund dumps dozens of coal companies
Norway’s giant fund removes investments made risky by climate change and other environmental concerns, including coal, oil sands, cement and gold mining
The world’s richest sovereign wealth fund removed 32 coal mining companies from its portfolio in 2014, citing the risk they face from regulatory action on climate change.
Norway’s Government Pension Fund Global (GPFG), worth $850bn (£556bn) and founded on the nation’s oil and gas wealth, revealed a total of 114 companies had been dumped on environmental and climate grounds in its first report on responsible investing, released on Thursday. The companies divested also include tar sands producers, cement makers and gold miners.
As part of a fast-growing campaign, over $50bn in fossil fuel company stocks have been divested by 180 organisations on the basis that their business models are incompatible with the pledge by the world’s governments to tackle global warming. But the GPFG is the highest profile institution to divest to date.
A series of analyses have shown that only a quarter of known and exploitable fossil fuels can be burned if temperatures are to be kept below 2C, the internationally agreed danger limit. Bank of England governor Mark Carney, World Bank president Jim Yong Kim and others have warned investors that action on climate change would leave many current fossil fuel assets worthless.
“Our risk-based approach means that we exit sectors and areas where we see elevated levels of risk to our investments in the long term,” said Marthe Skaar, spokeswoman for GPFG, which has $40bn invested in fossil fuel companies. “Companies with particularly high greenhouse gas emissions may be exposed to risk from regulatory or other changes leading to a fall in demand.”
She said GPFG had divested from 22 companies because of their high carbon emissions: 14 coal miners, five tar sand producers, two cement companies and one coal-based electricity generator. In addition, 16 coal miners linked to deforestation in Indonesia and India were dumped, as were two US coal companies involved in mountain-top removal. The GPFG did not reveal the names of the companies or the value of the divestments.
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“One of the largest global investment institutions is winding down its coal interests, as it is clear the business model for coal no longer works with western markets already in a death spiral, and signs of Chinese demand peaking,” said James Leaton, research director at the Carbon Tracker Initiative, which analyses the risk of fossil fuel assets being stranded.
A report by Goldman Sachs in January also called time on the use of coal for electricity generation: “Just as a worker celebrating their 65th birthday can settle into a more sedate lifestyle while they look back on past achievements, we argue that thermal coal has reached its retirement age.” Goldman Sachs downgraded its long term price forecast for coal by 18%.
On Wednesday, a group of medical organisations called for the health sector to divest from fossil fuels as it had from tobacco. The £18bn Wellcome Trust, one of the world’s biggest funders of medical research , said “climate change is one of the greatest challenges to global health” but rejected the call to divest or reveal its total fossil fuel holdings.
In January, Axa Investment Managers warned the reputation of fossil fuel companies were at immediate risk from the divestment campaign and Shell unexpectedly backed a shareholder demand to assess whether the company’s business model is compatible with global goals to tackle climate change.
Note: The first line originally said 40 coal mining companies had been dropped, instead of the correct number of 32. A further eight companies were dropped due to their greenhouse gas emissions: five tar sand producers, two cement companies and one coal-based electricity generator.
Those following international events have probably already seen the stories on Putin’s Russia, and the combined impact international economic sanctions, and now, the unexpected and unwelcome plummet in World oil prices. The Russian economy in 2015 will likely see a budget deficit of $20 Billion or more as the ruble collapses and oil prices plummet. The problem is global and expected by analysts to persist for the foreseeable future. Lesser developed countries like Venezuela and Nigeria, which are more dependent on their oil economies, are expected to see even greater impacts. Economists commonly refer to this as the “natural resource curse.”
Oil’s “new normal” will be global oil prices at or below $70 per barrel, say John Mauldin of equities.com, and many other analysts. Western Canadian Select (WCS) closed at $55 per barrel this week. The impact on the Canadian economy will be ugly and prolonged. Fasten your seatbelts.
Suncor’s Fort McMurray Facility
Those following international events have probably already seen the stories on Putin’s Russia, and the combined impact international economic sanctions, and now, the unexpected and unwelcome plummet in World oil prices. The Russian economy in 2015 will likely see a budget deficit of $20 Billion or more as the ruble collapses and oil prices plummet. The problem is global and expected by analysts to persist for the foreseeable future. Lesser developed countries like Venezuela and Nigeria, which are more dependent on their oil economies, are expected to see even greater impacts. Economists commonly refer to this as the “natural resource curse.” Put simply, it means that national economies that elect to depend on their natural resources for economic prosperity, have consistently underperformed economies that emphasize greater economic diversity and prepare for the wild swings of commodity prices. A key missing element in these economies is a lack of investment in innovation which causes a deterioration of productivity.
Canada’s involvement in this same scenario is getting limited attention. As the other major industrialized country with a “natural resource exploitation” based economy, fueled by the support of the current federal government which includes known climate change skeptics, Canada is running into the same buzz saw as Russia. The Prime Minister is keen to put a brave face on all of this, which to many seems to have the feeling of “whistling in the graveyard.” Last week, the government announced a program to allegedly fight the higher prices many Canadians pay for goods priced much more cheaply in the United States. Long a thorn in the side of Canadians, the move is seen as political arm waving with no teeth. The declining Canadian dollar and economic impact of our “natural resource curse” will make Harper’s plan to eliminate higher Canadian prices a sad joke on Canadians. The full impacts of these economic realities will be far wider: significant loss of jobs, chronic government budget deficits, a decline in industrial investment. Canada’s OECD productivity has fallen sharply behind the other industrialized countries. There will most certainly be a further decline in productivity due to Canada’s decades long failure to invest in innovation, preferring instead to offset poor productivity with windfall dollars from natural resource exploitation.
There is one industrialized nation that has recognized the reality of this Doomsday scenario: Norway. Norway has taken bold national action to protect the nation from the whipsaw impacts of the “natural resource curse.” I have previously written about Norway’s plan to protect its economy, as has The Globe & Mail, while the Harper government prefers to do nothing.
As if to underscore my previous posts on the extraordinary rapidity of disruptive change for the utility industry, This is turning out to be potentially more significant than the smart mobile phone revolution. Issues here include the utility industry’s failure to recognize a strategic change caused by disruptive technological change, and to respond to it, and the rapid acceleration in Adizes’ corporate life cycle model. Citibank is now predicting severe consequences for utility companies if they do not grasp the massive changes confronting them.
Industry Analysis
Citibank: Utilities are dinosaurs waiting to die
As if to underscore my previous posts on the extraordinary rapidity of disruptive change for the utility industry, This is turning out to be potentially more significant than the smart mobile phone revolution. Issues here include the utility industry’s failure to recognize a strategic inflection point caused by disruptive technological change, and to respond to it, and the rapid acceleration of the Adizes’ corporate life cycle model, as is now occurring routinely in the high tech industry: Blackberry for example.
Citibank is now predicting severe consequences for utility companies if they do not grasp the massive changes confronting them. My fear, is that the traditional mindset of these companies is like that of the telecommunication companies in the face of the mobile and Internet onslaught. The telecom carriers reaction was dismissive and disdain. The current reactionary behavior of the energy utilities is foreshadowing the same sorry saga.
Tony Seba, MGMT 450 Guest Lecturer and Stanford University Lecturer on Entrepreneurship, will be discussing this topic tomorrow, Thursday, October 10th, at 2:30PM in EME 2181.
Quick Take: A new report authored by prominent Citibank analysts claims the global energy mix is shifting more rapidly than realized. If true – and these are some smart, smart people – it has major implications for generators, consumers, and most of all utilities. In fact, the study says utilities are most at risk because their business model is likely to change.
I’ve been arguing for years that utilities should either evolve to become “wires only” companies. Or else get busy offering additional services, such as rooftop solar and microgrids. For instance, in my “Electronomics” series, I explained why utilities MUST change their business model (and one way to get started).
This Citibank report suggests that the problem is even more urgent than we realized.
Today’s electric power utilities could lose half their addressable market to energy efficiency, solar and storage, and other distributed generation, according to “Energy Darwinism – the evolution of the energy industry,” a new report from the investment banking arm of Citibank.
“Consumers face economically viable choices and alternatives in the coming years which were not foreseen 5 years ago,” the analysts write. According to REneweconomy, the price fall of solar panels has exceeded all expectations, resulting in cost parity being achieved in certain areas much more quickly. “The key point about the future is that these fast ‘learning rates’ are likely to continue, meaning that the technology just keeps getting cheaper. At the same time, the alternatives of conventional fossil fuels are likely to gradually become more expensive.”
This is not a ‘tomorrow’ story. We are already seeing utilities altering investment plans, even in the shale-driven U.S., with examples of utilities switching plans for peak-shaving gas plants, and installing solar farms in their stead,” the report says.Even wind may cut into traditional approaches, despite its intermittency. Citi says that while wind’s intermittency is an issue, with more widespread national adoption it begins to exhibit more baseload characteristics (i.e. it runs more continuously on an aggregated basis). “Hence it becomes a viable option, without the risk of low utilisation rates in developed markets, commodity price risk or associated cost of carbon risks.”
Citi admits that storage is still a nascent industry, but so was solar 5 to 6 years ago. “The increasing levels of investment and the emergence of subsidy schemes which drive volumes could lead to similarly dramatic reductions in cost as those seen in solar, which would then drive the virtuous circle of improving economics and volume adoption.”
How fast will the changeover take place? Citi says history tells us that such changes are never gradual, citing the graph below as evidence.
mayo615 