So asks Dror Etzion, an assistant professor of strategy and organization at McGill University in Montreal. Etzion has a short essay in the summer edition of the MIT Sloan Management Review (subscription required) proposing that the thousands upon thousands of people losing their jobs in the financial sector may find work as corporations and governments increase environmental sustainability initiatives.

Etzion argues economics can both address and allow companies to profit from our environmental challenges, meaning those casualties of a shrinking financial sector should be able to apply their skills in this field. He’s a little short on examples, but he mentions financing programs that make it affordable for customers to install solar panels, and carbon offset projects as areas where economics and the environment intersect. Carbon offsets and carbon trading could be particularly fruitful. Etzion specifically mentions one such offest project from Royal Dutch Shell that is helping to preserve antelope populations in Qatar in order to counteract the environmental impact of a new natural gas facility the company is building elsewhere in the country.

Of course, Shell also announced earlier this year it would no longer be investing in wind and solar energy, which could presumably do more toward solving the huge problem of climate change than helping antelope in Qatar. Similarly, BP is retrenching on renewable energy and focusing more intensely on fossil fuels. The point is that companies, especially in a recession, will focus on the bottom line first. Boosting environmental sustainability initiatives, which can be costly, may not be top of mind when some corporations are struggling to stay afloat and appease shareholders. That will change as the economy recovers, but then the financial sector will also recover—firms will start hiring again, and for positions that are potentially more lucrative than those associated with the environment.

That makes Etzion’s proposition challenging, but government policy will continue to create opportunities in this area (carbon trading, for example), and he contends the belief that environmental initiatives must come with economic trade-offs is shifting. That could be great for both the economy and the environment. Let’s just hope the financial wizards and speculators don’t wreak subprime-mortgage-style havoc in the environmental realm.

According to Michael Wara, a professor at Stanford Law School, carbon offsets have proved “impossibly difficult to successfully implement without fraud. My work and the work of others who look critically at the existing markets for carbon offsets strongly suggest that in far too many cases it is impossible to separate fraudulent offsets from true reductions.”

Etzion is aware of the potential for manipulation, too. “As became abundantly clear in the financial meltdown in 2008, transparency, simplicity and a clear linkage between financial instruments and underlying assets are important safeguards for keeping financial systems in check,” he writes. “An equivalent, if not greater, degree of prudence must be applied to environment-related markets.”

The annual report grades each G8 country on the progress made on mitigating climate change, and asserts that emissions need to be reduced by more than 80% below 1990 levels by 2050. That would keep the average global temperature from rising more than 2°C each year and avoid the catastrophic impacts of climate change.

Action in all countries is “by far insufficient” to meet that goal, but the report, ironically released on Canada Day, contends our nation has done the least out of its peers. We’re chastised for bailing on our agreements under the Kyoto Protocol—emissions are now 26.2% higher than the base year of 1990—and the federal government is attacked for failing to implement its 2007 “Turning the Corner” climate plan.

Canada scored positively on only one of the 13 indicators used in the report. Canada releases the lowest amount of CO2 per kilowatt-hour of electricity generated, thanks to the country’s large supply of hydropower. Even so, we’ve got the highest emissions per capita of any G8 country after the U.S., at 24 tonnes of CO2 per person.

Meanwhile, former British Chief Scientific Advisor David King told an audience of science journalists in London that “Copenhagen is faltering at the moment” because some countries are refusing to play ball. Chief among them are Canada and Japan, according to King, who said both nations had recently gotten rid of their scientific advisers and are “stepping into the breach and blocking progress.”

On the domestic front, there is currently a bill in the works (Bill C-311) to reduce Canada’s emissions by 80% below 1990 levels by 2050. An earlier version of the bill already passed the House last year but didn’t quite make it through the Senate before the federal election was called.

The Standing Committee on Environment and Sustainable Development finally resumed discussion of it on June 18. Some MPs rightly want the economic impact of the bill to be assessed before it’s presented to the House for a vote. Conservative MP Stephen Woodworth berated Bruce Hyer of the NDP (who drafted the bill) during the last committee meeting for not having assessed the potential costs. Another Conservative MP sent a request in April to Parliamentary Budget Officer Kevin Page to conduct a full cost analysis of bill, but the Hill Times reported he was unable to do so because his small shop is strained for funding. (Page is dealing with his own problems at the moment.)

But while Canada needs a clear position on its climate change goals in advance of the Copenhagen talks in December, the committee deferred further discussion of the bill until Parliament resumes in September, leaving a short window of time. “This bill is being given short shrift and has been put at the bottom of the pile,” complained Linda Duncan of the NDP during the standing committee meeting. “Instead of completing a review by now, we are only going to start it in September.”

Bloc Quebecois MP Bernard Bigras echoed her concern. “We cannot study climate change forever and ever amen; the climate change conference is taking place in December. The negotiators need a clear message from the Standing Committee,” he said. “The longer the study of Bill C-311 drags on, the less clear the mandate will be that the government will have to come up with.”

But targets are just a start, and they’re largely symbolic. If they’re not met, as in the case of Canada and the Kyoto Protocol, well, that appears to be no biggie, given the doddling of federal politicians on the issue. At the same time, emissions continue to rise and businesses have little clarity on how best to adapt their operations to a newly CO2-averse world. More important is a coherent plan for how to meet those targets, and that hasn’t been presented by any Canadian political party. Until that time, we’ll likely languish at the bottom of the G8 when it comes to climate change.

Less than two weeks remain to enter the Clean 15 competition, put on by Drayton Weissenfels and Canadian Business magazine. The contest is designed to help aspiring clean tech firms connect with potential customers and become leaders in the field. That kind of success is more than possible for Canadian clean tech companies. Just a few days ago, Ottawa-based Lixar, a low-key energy management company that has nonetheless attracted interest from its peers, had its energy business scooped up by GridPoint in Virginia for an undisclosed amount.

All aspiring firms should enter the competition by July 13. The winning company will win services valued at $60,000—including face time with execs from Fortune 500 companies looking for clean tech opportunities. Full contest details, rules, and more info on the sponsors (which also include Yet2.com, OCETA, and Ricardo McRae) are available here.

The fate of AECL has been a big question mark for a while now. The federal government wants to spin off the Crown corporation’s nuclear division, and it’s never been clear who would want to buy it. AECL needs a firm order for a reactor to increase its attractiveness to potential bidders, and Ontario seemed to be the likeliest customer. But now we’re in a kind of chicken-and-egg scenario: Ontario won’t purchase a reactor until it gets more clarity about AECL’s future ownership.

AECL, and by extension Ottawa, could always give Ontario a better price for its reactor to encourage the province to buy, as Smitherman indicated yesterday, telling reporters the corporation’s proposal was billions more than what the province will pay. But the Stephen Harper government doesn’t seem to be a big fan of AECL. Remember that a couple of weeks ago Harper’s communication director Kory Teneycke called it “one of the largest sinkholes of government money probably in the history of the government of Canada.”

AECL’s last reactor in Canada was completed in the early ’90s in Ontario, and it was years late and billions over budget. The corporation has been waiting for years for a chance to build its newest design, the ACR-1000. The reactor is classified as a Generation III+, which denotes the latest technological, safety and operation standards as defined by the International Atomic Energy Agency. French company Areva is building the first of this new breed of reactors in Finland, but the budget has skyrocketed and the project is so behind schedule that Areva is no longer willing to make predictions about when it will be competed, according to the New York Times. Ken Petrunik, AECL’s former chief operating officer, told me in an interview a couple of years ago the design of the ACR-1000 wasn’t radically different from previous reactors, and he didn’t expect major problems in construction. But given the experience with Areva in Finland (and AECL’s history), that likely doesn’t give potential customers much assurance.

So where could an order come from? Internationally, companies like Areva, Westinghouse, and Babcock & Wilcox dominate, which really only leaves the Canadian market for AECL. Saskatchewan premier Brad Wall expressed enthusiasm for nuclear power last year (the province is home to a big chunk of the world’s uranium) and New Brunswick premier Shawn Graham is a supporter, as well. That province is already home to one reactor, and AECL and its industry partners conducted a $2.5-million feasibility study two years ago to examine the possibility of building another reactor. There has been little action since then. In fact, New Brunswick and AECL are still grappling with a refurbishment of the existing Point Lepreau reactor, which is months behind schedule. It was supposed to be completed in September, but that’s been pushed back to sometime in 2010, according to a spokesperson for New Brunswick Power. And there’s always the chance of nuclear in the oilsands. The Canadian Energy Research Institute released a study in April providing an overview of the possibilities, although it seems like a distant prospect.

Some environmentalists, meanwhile, are encouraged by Ontario’s decision to delay. The Pembina Institute is hoping the government will allow time for its newly passed Green Energy Act to spur development of renewable energy in the province, and forgo spending on nuclear power. That would mean a significant build-out of renewable energy, of course. A single ACR-1000 can produce 1,200 megawatts of electricity—slightly more than all of Ontario’s currently installed wind power capacity.

Electrovaya will launch 10 of its Maya 300 electric vehicles in Baltimore as part of the car-sharing program, allowing residents and tourists to zip around the city in an EV, albeit at low speeds. The vehicle frame is manufactured in China, but Electrovaya is responsible for the all-important lithium-ion battery pack. Exxon Mobil designed the “separator film” in the battery, which supposedly boosts its power and capacity. The oil company also put up US$500,000 for the program, and to establish an exhibit about clean transportation technologies at the Maryland Science Center in Baltimore.

The project is very small, and you have to wonder about how serious Exxon Mobil is about electric vehicles, and how much of this is an attempt to boost its image. The half million dollars the company is spending is a mere drop in the bucket compared to the US$45.2 billion in profit it made last year, but at least it provides good exposure for Electrovaya’s car.

The Maya 300 is designed to be a low-speed city vehicle, and it can travel up to 190 kilometres on a single charge. Its top speed can be regulated to either 40 or 56 kilometres per hour, depending on regulations. Electrovaya announced the creation of the Maya 300 back in January of last year (including the use of Exxon Mobil’s separator film), but this will be its first deployment in a fleet. The company is also launching a similar vehicle in Norway this September in partnership with Indian auto firm Tata Motors.

In North America, the Maya 300 faces stiff competition. The car is targeted at the more mature city vehicle market segment, and it looks expensive in comparison to other vehicles. Its base price is somewhere around US$25,000, whereas Toronto-based ZENN Motor’s low-speed electric car can sell for less than US$20,000.

Analysts were speculating yesterday that the partnership with Exxon Mobil could be a precursor to the oil company investing in Electrovaya, although Tata could just as easily make a similar move, by that logic. Whatever happens, teaming up with battery makers could prove to be a smart decision for any company in the future. The battery is the major roadblock to the adoption of electric vehicles, and whichever firm figures out how to mass-produce batteries that are inexpensive, long-lasting and quickly rechargeable will find itself with a very lucrative product on its hands.

Suncor, which has been self-reporting its climate change initiatives for years, says it reduced greenhouse gas emissions intensity (a meaure of emissions per unit of production) at its oilsands operations by 45% since 1990. Sounds impressive, but this does not mean a reduction in absolute emissions, as the report itself clearly indicates: Suncor will release 26% more CO2 by 2011, for a total of about 14 million tonnes. But the company then predicts emissions will drop in both 2012 and 2013, precisely when it will be producing more oil.

The company produced 228,000 barrels of oil in 2008, spewing out 9 million tonnes of CO2 from its oilsands operations. By 2012, Suncor wants to more than double production to 550,000 barrels per day, a 141% increase. Its sustainability report predicts emissions from the oilsands will increase by only 23% during the same time period, and will actually fall by 3.5% between 2011 and 2012. (This is in contrast to last year’s report on climate change, which shows emissions increasing beyond 2011.)

How is this possible? The company doesn’t specifically address how it intends to abate absolute emissions while boosting production, and a spokesperson wasn’t any more specific with me over the phone:

“The majority of the improvements that we project are going to come from improved performance efficiencies, and efficiency gains through our internal operational excellence initiatives that we’re doing. Then on top of that, Suncor is in the process of constructing a sulphur recovery unit. It’s an $800-million investment up at our Firebag operation. So in addition to the efficiency gains we expect to achieve, we would also expect that we would realize some gains in our GHG reductions coming from that sulfur recovery unit.”

The construction of the recovery unit stems from a 2007 enforcement order by Alberta Environment about hydrogen sulphide emissions (which produce that rotten egg smell) exceeding air quality guidelines, not so much to do with CO2. The spokesperson said carbon capture and storage was not a factor in the company’s CO2 projections, so Suncor must have one heck of an efficiency program underway.

But another challenge to widespread adoption is setting international standards for EVs and charging infrastructure. At Better Place, this task falls upon Ziva Patir, vice-president of international standardization. I spoke briefly with Patir yesterday, and she explained why standards are so important not only for Better Place, but for all players in EV industry. “There’s a big difference between mass deployment and having small city cars,” she said. “We’re not talking about that. We want to change the world.”

Grandiose statements aside, adoption of EVs will be hindered if there is no standardization, says Patir. For example, will the socket be on the car, or on the charge spot? You’ll be quite frustrated if you can charge your car in one jurisdiction but not another. Or if you, as a Better Place customer, cannot re-juice at a competitor’s charging station.

But what makes Better Place unique (and what presents an added challenge) is it’s the only company proposing to build battery swap stations, which it unveiled for the first time last month in Japan. Batteries need to be roughly of the same size and, more importantly, in the same location in each electric vehicle model. Some have questioned the logic. Henrik Fisker, founder of hybrid sportscar manufacturer Fisker Automotive, has said not all carmakers might want to locate the battery along the bottom of the vehicle, which is necessary to be compatible with a Better Place swap station. A representative from Toyota’s advanced technology vehicle group has also said battery packs are not typically designed to be taken on and off frequently.

Nevertheless, Patir said Better Place can still expand (and is indeed doing so) even without everything finalized. “But if Better Place wants to mass deploy quickly, the best solution is to create internationally recognized standards to be accepted everyone,” she says, adding it can take two to three years to work out these issues in each country.

As for the company’s plan in Canada, Better Place is in part waiting on a report from the Ontario government on how to speed up the adoption of EVs in the province, such as offering incentives to consumers. It was supposed to be released last month, but has been delayed. A spokesperson from the Ministry of International Trade and Investment told me yesterday it could be ready in a matter of weeks.

But a study released this week from the U.S. helps shed light on the kind of growth that’s possible. The Pew Charitable Trusts, based in Washington, D.C., claims to have produced the first “hard count” of jobs that can be considered green in the U.S. Between 1998 and 2007, the number of “traditional” jobs grew by 3.7%, while green employment expanded at a rate of 9.1%. That amounts to 770,000 jobs—still only half a percent of all current jobs in the U.S.

Pew defined these jobs as those that boosted clean energy production and energy efficiency, and worked toward reducing greenhouse gases, conserving water and other natural resources. That includes a broad swath of tasks: engineers developing energy-efficient lighting, chemists working on environmentally friendly cleaning products, plumbers and technicians installing smart irrigation systems, and so on.

The job examples listed in the report are primarily skilled positions requiring degrees and training—engineers, scientists, financial analysts and lawyers—and have little to do with the manufacturing sector. That’s why I’m somewhat skeptical of the Ontario government’s claim that its Green Energy Act will create 50,000 jobs within three years. The legislation introduced this year, which is partly designed to spur renewable energy development, is also a job creation initiative targeted at the manufacturing sector. Canada  lost 58,000 manufacturing jobs in May alone, mostly in Ontario. A report commissioned by the Green Energy Act Alliance (a coalition of various environmental groups) says the act has the potential create an astounding 90,000 jobs per year—with an investment of $47.1 billion over a decade.

I have an article in the current issue of Canadian Business about an important element of the act (feed-in tariffs), but didn’t get a chance to talk much about the job creation aspect. The government hasn’t been forthcoming in explaining how exactly these 50,000 jobs will be created. The Progressive Conservative Party of Ontario commissioned a report from London Economics International on the act, and the study casts doubt on the job creation numbers, pointing out there were 38,000 people employed directly in auto manufacturing in the province in 2008, and 56,000 architects, engineers and related professionals. “The magnitude of the numbers suggests that attaining the level of jobs estimated by the government could be challenging, and would require several years to achieve,” according to the report.

I spoke with Tony Verrelli, president and CEO of small-wind turbine developer Cleanfield Energy, based in Ancaster, Ont. He had some questions about where those jobs would come from, too, and didn’t get many answers from government in workshops leading up to the implementation of the act. “It’s a huge number and I’d love to see them double that, but realistically, it could be a challenge,” he says, “unless they’re including every spin-off job from the clean tech industry, from the cafeteria that’s set up down the street, to security personnel.”

Any private sector job creation is a good thing in times like these, of course, but the danger in over-promising is that it misrepresents the enormity of the challenge. Building an entirely new industry takes time. John MacDonald, CEO of solar module manufacturer Day4 Energy in British Columbia, told me, “It will, in the long run, be good for manufacturing jobs. The politicians are right in that sense. The problem is their time scale. A politician’s foresight is about four years.”

The money has been collected in the Climate Change and Emissions Management Fund since last year, when emissions caps for heavy emitters took effect. Facilities that produce more than 100,000 tonnes of GHGs must scale back emissions “intensity” by 12%, or pay $15 into the Fund for each tonne over their reduction targets. (Companies can also purchase carbon offsets.)

I spoke with Newell shortly after his appointment—an appointment that raised a few eyebrows in the environmental community. Newell spent 15 years at oilsands giant Syncrude, as CEO and then as chair. He sits on the board of Nexen today, received more than $230,000 in compensation last year from the energy company, and owned more than $1 million worth of shares as of March. The optics aren’t exactly great: a guy with strong ties to an industry that is one of the worst offenders in terms of emissions is now responsible for doling out cash in an attempt to curb those emissions.

And so Newell will have a lot to prove. He is still in the process of assembling a board, which will then take submissions from companies hoping to secure some of the cash to fund emissions-reduction projects. Newell wants to start accepting submissions by the end of the year.

So what does Newell have in mind? He is a big supporter of carbon capture and storage, for one, despite the ample funding both provincial and federal governments are providing for the technology. The Alberta government is already pledging $2 billion, and the federal government is committing $650 million from its Clean Energy Fund, established earlier this year as part of the stimulus package. (Federal Environment Minister Jim Prentice is also now saying carbon capture and storage has limited applications in the near-term in the oilands, the fastest growing source of emissions in Canada.)

Newell is going to have to be careful about the makeup of the board. He wants to include a broad section of industry and academia, but the plan so far calls for a large presence from heavy emitting industries—coal-fired power generation, the oilsands and conventional oil and gas production. My initial reaction is that a board consisting of representatives from the traditional fossil fuel industries could have a hard time making a meaningful impact. After all, these are not businesses known to have taken bold action when it comes to the environment.

I discussed this (and more) with Newell below:

What interested you about this position?
First of all, I think technology is critical to the future of the energy industry and we need technology solutions to keep making our fossil fuels more sustainable, but also to “green” the energy mix and develop an appropriate portfolio of renewable energy alternatives.

How big of an impact do you think the fund can have?
I don’t think our role is to try to allocate money depending on what each individual industry sector or company puts in. I think our role as a board—and I’ll encourage people—is you want people to leave their hats at the door. And really we’re going to be picking the projects that are going to do the most to reduce our carbon footprint. That’s with the fossil fuels, but also with the renewables. If you went with the other philosophy, where people were in there to support their industry sector, you’d never get any renewables going. Fundamentally, my philosophy is we’ve got tremendous energy resources, but the world is going to need every form of energy it can find. Even when I ran Syncrude, I didn’t think of renewables as competitors.… But I don’t have rose-coloured glasses on here. Most of the energy growth is gonna have to be picked up by the fossil fuels—oil, gas and coal—and so we want to put a lot of effort into making them more sustainable and reduce their carbon footprint. At the same time, we gotta look longer-term and start developing an appropriate portfolio of renewables.

How much of a role can renewable energy can play then?
It will grow with time, but between now and 2030, if I look at what the International Energy Agency is saying, 80% of the growth during that period will have to come from fossil fuels. So yeah, renewables will grow, but they’re not going to replace fossil fuels, not in our lifetime. I’m sorry, I just have to say that. It doesn’t mean I’m against them. People just don’t understand. Mr. Obama in the south, saying he’s going to double renewables in three years, he’s leading people astray as to what they think is going to happen.

How so?
Even doubling it, it’s still a very small percentage. That doesn’t mean you don’t do it. I spent a lot of my career in the oilsands and it took 40 years from the time Karl Clark figured out how to separate the oil from the sand until Great Canadian Oil Sands was built in 1967. And then my company started up in 1978. So these things do take a long time to develop and get to a real significant level. But it’s important that we start now.

Where are the board members going to come from?
This is a bit of a debate. I do think that even though it should be predominantly industry, I think it would be critical to have a deputy minister of environment or someone like that from the government. But then, who are the big contributors to this fund? The biggest are the coal-fired power stations. They are the biggest generators, so we want to have very good representation from coal-power areas, but I also will get someone very senior from the electricity generation end, because that will bring renewables in, like solar and wind. The other key areas are of course the oilsands and conventional oil and gas.

Is this just giving money back to heavy emitters?
There is the view, and I don’t totally share it, that this is the industry’s money and they should therefore get to spend it the way they want to. That’s not quite what I’m saying. I know we’ll get criticism. But I’d rather do it this way, where you have that strong knowledge base with people actually making the best picks, so that we do a good job and get a good end result in terms of the impact of this technology fund.

How do you get people to leave their hats at the door, as you said?
People are quite willing to work together. In fact, what you find is a lot of the technology platforms cross over. If you think about whether it be clean coal or the oilsands, it’s all about carbon capture and stuff like that.

How are you going to decide how to allocate the money?
There was work done by Alberta Environment, and the way they think the fund will likely break down is about 20% would go to energy efficiency projects, and maybe 30% will get directed to carbon capture and storage—because that’s so expensive, we just have to find ways to do it cheaper. But about 50% of it would be to greening the energy mix, and that includes more fundamental breakthroughs in the fossil fuel areas, as well as developing an appropriate portfolio of renewables.

What do you mean by fundamental breakthroughs?
There are some areas in which applying genomics to the oil business will lead you to fundamentally different technology paths to upgrade the product, and it would be a lot less energy intensive if we make them successful. But the one that has the biggest potential in the short-run is carbon capture and storage. The reality is it’s very, very expensive. So we need to think up better ways of doing it that are more cost effective.

But is carbon capture really any closer to being a commercial reality than renewable energy?
Yeah, it is closer. If you use the big fund that the Alberta government put in place, the $2 billion, they’re looking at trying to come up with 5 million tonnes of reduction by 2015, and not that that’s a panacea, but if we could actually demonstrate that, that would give people a lot of base to move that technology a lot faster from there.

The Alberta government is using “intensity” targets, which means overall emissions can rise if production increases. Is that really doing enough?
The answer to that is no, and that’s what’s driven carbon capture. It’s the only thing on the plate that can make a significant overall reduction in the short run.… These things are going to take time. I’m not just trying to get the monkey off the back of industry. Industry has to perform too, but people have to realize that if we’re going to really be successful with the targets that have been set, the whole society is going to have to rally together and find ways to reduce our use of energy.

Here’s an excerpt from my interview with Robertson:

How did the project with Ford come about?
We’ve been working on hybrids and electric vehicles for years, and we’ve been in constant dialogue with Ford on our developments for the last one or two years. When we developed this particular vehicle, Ford was very interested. We had electric vehicles 10 or 15 years ago at Magna. The big difference now is that technology continues to progress, and we’ve got viable technologies—new motor technologies, software and hardware, and high energy density lithium-ion batteries. And it takes all three of those technologies to come together [to have a viable electric vehicle].

Why didn’t the older electric vehicle models take off?
They were demonstration vehicles. They were using lead-acid batteries or sodium sulphur batteries. It all goes back to how much energy you can contain on board. You need a high energy density so that you don’t have a lot of mass but still get sufficient range. Here you didn’t have very much range, not enough to take you on daily commutes.

What’s the big deal about lithium-ion batteries?
There’s a very famous study that everyone’s quoting that says if you take a look at the average usage of vehicles, 80% of the population goes fewer than 38 miles a day. And so you can satisfy 80% of the population with a vehicle with a 40- to 50-mile range. Lead acid batteries don’t have the range that would give people enough confidence. That’s why you need a higher energy density battery, and the lithium-ion does that.

Is lithium-ion going to be the standard?
You can’t lock in and say that’s the ultimate. Development is going to continue with the batteries. We’re seeing the chemistries continuing to be modified, but we now have a production-viable chemistry. I don’t know that it will be the final answer. My guess will be no. Someone will invent something else. I’m positive of that. It’s just a matter of when, and when will it become commercially available. The question is, do you wait until something else comes along? And at what cost? And how long will it take? But we’re commercially viable now, so it’s time to get going.

How big of a role will hybrids and electric vehicles play in Magna’s future?
I don’t have a sense. It depends on the market and whether electrics and hybrids will take off, whether it’s because people want them or whether legislation will drive us into more of them. It’s hard to tell. But we’re very optimistic about the technology, and we want to be at the leading edge of the technology, especially if they take off.

What do you think personally? Will they catch on?
Hybrids will be required for a large portion of the vehicle fleet to make fuel economy regulations … Electric vehicles, on the other hand, will be more limited because of the range limitations, at least until we find new ways to store energy on board. But there is a great application for electric vehicles, especially in cities and for people who have commutes of relatively short distance. Right now in a standard household with 110 volts and a 15 amp circuit, our vehicle takes in the range of 8 to 10 hours to charge from empty. But electric vehicles can take off even more as we develop our charging systems. We can charge our vehicles with a special charger in 10 to 20 minutes. So if somebody is taking a long trip, you’d be able to pull over get a fill up just like you do at a gas station.

That’s an interesting conclusion, given the heated rhetoric in the U.S. about ending dependence on oil from hostile nations, and the controversy here in Canada about the damaging environmental effects of the oilsands. So what gives?

On the energy security side, the amount of proven reserves in the oilsands is too small in terms of global supply to have much of an impact, argues Michael Levi, director of energy security and climate change with the CFR in New York and author of the report. “The energy security benefits of robust Canadian oil sands production are real, but because oil is essentially traded on a global market, not as large as some might intuitively assume,” he writes. “Oil sands exploitation will not fundamentally change the global oil picture.”

But perhaps the more contentious part of the report concerns the environment. Extracting bitumen from the sands is far more energy intensive and requires more water than conventional oil production. According to the CFR the average well-to-wheels emissions of a single barrel from the oilsands exceeds that of the average barrel of conventional oil consumed in the U.S. by 17%. (The Pembina Institute estimates emissions could be three times higher.)

Levi writes the current oilsands production rate of approximately 1.2 million barrels per day equates to a premium of 40 million tons of CO2 emissions a year compared to conventional oil. That’s 5% of Canadian emissions, amounting to 0.1% globally, which is a “small piece of the emissions picture,” according to the report.

Should production increase and the emissions released per barrel not be reduced, the share of CO2 from the oilsands will triple by 2030, “making the oil sands a huge relative contributor to Canadian emissions, but still a relatively marginal one in the U.S. and global contexts.”

The international context is likely what leads to the conclusion that dealing with the oilsands’ environmental impact is not as pressing as some believe, but Canadians should pay attention to the first part of that previous quote. Domestically, the oilsands are indeed an environmental problem. Increasing emissions at precisely the time when countries need to be reducing them is, of course, counterproductive. China’s emissions may dwarf Canada’s, but that shouldn’t be an excuse for foot-dragging on the issue; Canada would only look like even more of a laggard on the world stage when it comes to the environment. And besides emissions, there is the depletion of fresh water reserves and boreal forest land, as well as massive tailings ponds created during production to contend with.

Levi recognizes that the environmental implications of increased oilsands production still cannot be ignored, although he believes it’s more of a long-term issue. He advocates for a harmonized cap-and-trade system between the U.S. and Canada and the development of carbon capture and storage technology to deal with emissions, both areas the Canadian government is working on.

Ultimately, the oilsands will play an important role in the States’ future energy mix, Levi writes, but by far the best way to solve the emissions problem is to reduce consumption. “Cleaning up the oil sands, meanwhile, is only a small part of the climate challenge,” he writes. “Obsession over the oil sands would be a dangerous distraction.”

One major challenge for clean tech firms is connecting with customers. Sure, you may have spent years perfecting your product in the lab, but how do you sell it? Dwayne Matthews, president of Drayton Weissenfels, points out many such companies are understandably focused on the technology and may lack the business savvy necessary to take the company to the next level.

That’s where the Clean 15 competition can help. Companies with market-ready products can enter to win services valued $60,000—including face time with execs from companies looking for clean tech opportunities. Judges will narrow down the entrants to 15 companies before picking one winner.

Full contest details, rules, and more info on the sponsors (which also include Yet2.com, OCETA, and Ricardo McRae) are available here. You can also find out more in the new issue of Canadian Business, on newsstands today. The deadline for entry is July 13, 2009—so get moving.

Toronto Hydro will outfit some of its customers (likely fewer than 1,000) with the Google PowerMeter for a three-month long pilot project. PowerMeter allows users to check their electricity consumption on their iGoogle homepages. Ideally, customers will get a better sense of how they use electricity and shift consumption to off-peak times to get better rates. Toronto Hydro also claims that providing more information to consumers about consumption encourages them to use less electricity overall (resulting in savings between 5% and 15% on a monthly bill), and that’s ultimately better for the environment.

Metering services such as Google’s fall under the umbrella of smart grid technology, which aims to change the way electricity is distributed and consumed in order to be more efficient. And it is big business. In addition to Google, Cisco Systems, IBM and a slew of other software and telecommunications companies are involved. In Ontario alone, the provincial government will need to spend $1.6 billion over the next five years to build out the first stages of a smart grid, according to a report released in February by a task force comprised of utilities and private companies.

Ontario is home to a number of smart grid companies, including Lixar SRS, which provides a similar service to Google’s PowerMeter. Lixar was part of a pilot project completed last year with Direct Energy that outfitted around 200 households in the Toronto suburb of Milton with the company’s technology. But now with Google in the game, the market just got a lot more competitive.

Critics have thrown the animal casualties issue at the wind industry from time to time, and some commentators griped last year that the 500 dead ducks (later discovered to total more than 1,500) found in Syncrude’s tailings pond in Alberta caused a PR nightmare for the oil sands giant, while comparatively little attention has been paid to the flying wildlife felled by wind turbines each year. (One study found 2,092 bats were killed over seven months at a single wind farm in West Virginia, along with more than 200 birds.)

The question of why bats are more susceptible than birds was a bit of a mystery up until last year. Wind farm operators for TransAlta in Alberta had noticed an abundance of dead bats, and the company initiated a study with the University of Calgary to find out why. The research team found that the sudden drop in air pressure created by wind turbines causes bat lungs to balloon and blood vessels to burst. Bird lungs can more easily withstand changes in air pressure—although they still cannot contend with the turbine blades, which can spin as fast as 80 metres per second.

But the Bats and Wind Energy Cooperative in the U.S. (yes, it’s for real) released a report recently about how to avoid this problem. Unsurprisingly, the method is simple: turn the turbines off. The group undertook a three-month long study at a wind farm in Pennsylvania and experimented with raising the “cut-in speed,” the minimum wind speed necessary for turbines to become operational. That means they don’t spin at lower wind speeds, which reduced bat deaths by 53% to 87% during the study period.

The trade-off, of course, is that wind energy producers have to contend with lower output—and profits. But the study found that annual energy output would be reduced by 1% at most, not an unbearable inconvenience to help alleviate an unpleasant effect of wind power. BWEC is also investigating other ways to mitigate fatalities without have to reduce operations, such as installing devices that interfere with the echolocation bats use to navigate in order to deter them from wind farms altogether.

Different interpretations of the study have been bandied about for at least the past month, and the issue is particularly important in light of the debates in the U.S. last week over the draft Waxman-Markey energy and climate bill. America’s cap-and-trade proposal also has a particular relevance for Canada since policy-makers here will likely follow suit with whatever is decided down south.

Republicans claimed the MIT study, originally published back in 2007, showed a cap-and-trade system would cost a family of four more than $3,000 per year. John Reilly, an MIT professor and one of the authors of the study, wrote a letter earlier this month to House Republican leader John Boehner to express dismay that his report was being misrepresented. The average cost per family of four is $340 per year between 2015 and 2050, according to Reilly:

“This $340 includes the direct effects of higher energy prices, the cost of measures to reduce energy use such as adding insulation to homes, the higher price of goods that are produced using energy, and impacts on wages and returns on capital.”

The Republicans’ inflated figure, on the other hand, includes revenue collected from industry through the auction of permits—revenue that will be returned to the public under the proposed legislation.

But the latest development comes from a Weekly Standard article in which Reilly explained to the author that the actual cost is closer to $800 per household:

“I made a boneheaded mistake in an excel spread sheet. I have sent a new letter to Republicans correcting my error (and to others.)”

The Environmental Protection Agency may have cleared the air (or further obscured things, depending on your viewpoint) with an analysis of the proposed cap-and-trade system in the Waxman-Markey bill. Its report finds cap-and-trade will have a “relatively modest” impact on the U.S. consumer. The bill will only cost households between $98 and $140 annually from 2010 to 2050, provided the bulk of revenues are returned. (The importance of how that is done can’t be overlooked, of course.)

But such widely diverging analyses are probably doing little to help the public, likely already bewildered by the complexities of cap-and-trade legislation. And as the U.S. inches closer to a decision, expect similar partisan debates about cost up here. Just recall how former Liberal leader Stéphane Dion’s Green Shift plan was trashed by the Conservatives as a tax on everything.

Ultimately, the numbers may mean little, at least in the American context. The New York Times quotes Karlyn Bowman, a fellow from the American Enterprise Institute, who astutely points out:

“Americans draw their conclusions about issues based on their values, not in terms of numbers the way social scientists and journalists do.”

There are around 25 countries currently producing geothermal power, which uses heat from the Earth’s core to turn water into steam to produce electricity. (I’ve written about it before here and here.) The U.S. is the world’s largest producer, followed by the Philippines.

Where does Canada rank? Well, it doesn’t, really. There are no large-scale geothermal power projects in Canada.

I spoke with Alison Thompson, executive director of CanGEA, a couple of days ago, and she recounted the somewhat sorry history of geothermal in Canada. The federal government began funding research in the wake of high oil prices in the 1970s, and actively drilled test wells in British Columbia, Saskatchewan and Cape Breton. But support was abruptly dropped in 1986 after oil prices fell, and since then, there has been nothing for geothermal, even as other countries such as the U.S. and Germany have carried on with research. A test well in Saskatchewan, though proven to have commercial potential, is now a parking lot, and a comprehensive study of the geothermal potential in Canada was never completed.

Even so, Thompson says that from the data produced more than two decades ago, there is at least 5,000 megawatts of proven geothermal resources in Canada. That’s not a lot, equivalent to about 2% of the country’s electricity demand, but much more potential can be discovered with further research.

Geothermal power could even play a role in the oilsands, replacing at least some of the natural gas currently used to supply the massive amounts of energy needed to separate oil from sand. But that looks like a long way off. A consortium called GeoPowering the Oil Sands was formed in 2004 that included both Suncor and Nexen. Thompson, now a project development manager with Nexen, ran the program for two and a half years, but it disbanded at the end of 2008. The conclusion was that while geothermal in the oilsands was technically possible, it was much too expensive.

But that’s not to say it can’t happen eventually. The best geothermal resources in Canada are located on the west coast, and it makes sense to develop those first before moving on to more expensive and difficult projects, such as in the oilsands, Thompson says. Large companies such as those in the oil patch also need policy clarity on geothermal, which Canada lacks. Many provinces don’t even have the legal mechanism to develop this form of power. Currently only one province, British Columbia, has a geothermal act, and CanGEA has been talking with the B.C. government about updating it.

Besides the absence of policy in Canada, the most unattractive quality of geothermal is the staggering upfront cost. It takes a lot of time and money to scout a location, drill test wells, and ultimately develop a commercial-scale facility. Thompson estimates it costs around $4 million per megawatt to build a plant. Unlike solar and wind power, geothermal doesn’t necessarily need an ongoing subsidy for each kilowatt-hour of electricity produced, but once a plant starts generating electricity, the cost is actually cheaper than other forms of alternative energy, Thompson says. “That’s assuming your project works,” she cautions, “and that you don’t have any bad luck or hiccups in development.”

The handful of Canadian geothermal companies that do exist are concentrating in the U.S. and South America where there is more financial support. (Though at least one, Western GeoPower, is investigating opportunities in British Columbia.) Thompson says there are a few ways governments can help kick-start geothermal again, such as sharing the initial development costs with industry. In Germany, geothermal firms can actually get insurance to recoup costs should a site turn out to have no commercial potential, something the U.S. is looking at, too. “This certainly helps to take the risk away,” she says. “So these entrepreneurial companies don’t go belly up after the first bit of bad luck.”

Canada has clearly fallen behind when it comes to geothermal. The U.S. is currently funding enhanced geothermal, which strives to produce power in areas previously thought of as unsuitable. The conference happening today and tomorrow should help bring more awareness to the potential of this form of power, and now it’s up to policy-makers to pick up the slack.

The company plans to roll out over the next few years in Israel, Denmark, Hawaii and California. Canada is on that list, too. Better Place and the government of Ontario announced in January the two will partner to build electric car infrastructure in Toronto, although by when and at what scale is not clear. Not much was actually agreed upon in January, aside from a commitment to explore the opportunity.

A lot more needs to be done. A manufacturer needs to sign on, for one. (In Israel, Better Place recruited Renault-Nissan to produce EVs.) Government also needs to make some kind of financial commitment. EVs are less attractive here than in places like Israel and Denmark where drivers already pay around twice as much for fuel, which means incentives are needed to encourage faster adoption.

The province will release a report in May outlining how it can do just that. I sat down with Sean Harrington, head of global development for Better Place, when he was in Toronto recently to find out what kind of policy measures the company is looking for. Some excerpts:

What have other governments done to encourage adoption?

Governments around the world are using different policy tools. For some, it’s about buying electric cars for its fleets, and certainly that’s a great way for government to show leadership. For others, it’s giving electric vehicles access to HOV lanes, even if there’s no more than one person in the car. Providing incentives to consumers, clearly that’s one of the biggest ones. You see the U.S. with their tax credit, up to $7,500 on the first 200,000 battery electric vehicles per manufacturer.

What about in Israel, where you’re launching first?

In Israel, there’s a 72% tax on gas cars and a 10% tax on electric vehicles. So there’s a 62% difference. The moment you walk into the dealership, you’ve got a significant incentive. In addition, you’ve got high taxation on gasoline. It’s generally one-and-a-half to two times the price of gasoline here in Canada.

So isn’t it a tougher sell here than elsewhere because of that?

Absolutely. And we’re not saying the government of Ontario has to use those tools, but if you look at other jurisdictions, that’s what they’ve done. In Denmark, it’s more significant. There’s a tax on gas cars of 140% to 180%, depending on the size of the engine, and zero percent on EVs.

Is there anything specific you’d like to see from the Ontario government?

The idea is that Ontario has to decide what’s best for Ontario. What we’re talking to government about is not Better Place-specific. It’s about creating an attractive market place for electric vehicles…. We just encourage any government partner to act boldly, and the bolder they act, the more quickly they’re going to be able to make that transition.

How much depends on the government’s report to be released in May?

What the release in May does is it determines how fast things will roll out. It affects the pace of consumer adoption. If it’s significant, and you provide a bigger rebate on electric vehicles, or on batteries, or provide bigger tax exemptions, the faster things are going to happen here in Ontario. And we’ll plan accordingly based on that.

It’s difficult to see the Ontario government acting as aggressively as those in other jurisdictions. The motivation is just not as strong. Israel is an oil importer surrounded by hostile neighbours. Denmark has long been a leader in clean energy and its zero percent tax on EVs was established before Better Place came along. Hawaii is an isolated oil importer as well, and California’s reputation as a kind of clean tech Shangri-La is well known.

What about Ontario? Certainly the desire to reinvigorate the manufacturing sector and provide jobs is strong, and EVs can also serve as energy storage for renewable power, but beyond that there is really only the environmental incentive. Ontario is making a big show of its commitment to the environment with its proposed Green Energy Act, which indicates it could act equally boldy when it comes to EVs. But we’ll have to wait until next month to find out just how far the government will go.

I asked Wall about the criticism of CCS that it just perpetuates a fossil fuel-based economy, and that it funnels investment away from renewable energy such as wind and solar. Here’s what he said:

“I’ve never understood that argument, because it actually takes the carbon out. That’s what we’re supposed to do, and it gives life to a very affordable source of energy—if it works. So it’s worth exploring. However, we are looking at all the renewables … I think clean coal is part of it.”

Saskatchewan is already home to one of the world’s few large-scale CCS projects. EnCana has been taking liquefied CO2 from a coal gasification plant in North Dakota and injecting it into a depleted oilfield near the town of Weyburn since 2000. The CO2 helps flush oil to the surface in a process known as enhanced oil recovery.

In addition to work on a $1.4-billion CCS project at Boundary Dam, the province is currently in talks with the state of Montana on a $270 million demonstration facility, this time taking CO2 from a coal-fired power plant in Saskatchewan and storing it underground in Montana. Wall said the provincial government may kick in around $50 million, and added Montana governor Brian Schweitzer is hoping to tap into federal stimulus money to fund the project.

One of the major drawbacks of CCS is the cost. Estimates vary, but the U.S. Department of Energy says it currently costs around US$150 to capture one ton of carbon, “much too high for carbon emissions-reduction applications.” Technological advances can bring down costs, of course, but more importantly, governments need to put a price on carbon, which Canadian politicians are taking their sweet time doing. There is little incentive for private industry to bear the high costs of CCS otherwise.

Many have also pointed out that in terms of a global warming solution, CCS quite literally buries the problem. The phrase “clean coal” is really a misnomer. Just because the carbon is buried doesn’t make the process clean.

But CCS is quite popular in Canada. Slightly more than 8% of the federal government’s stimulus package went toward “green” initiatives, according to British economist Nicholas Stern. Of that amount, the largest chunk of cash (US$1.1 billion) was earmarked for CCS projects. How much did renewable energy get? Zip.

Wall pointed out that Saskatchewan is exploring all energy options, and plans to boost wind power. (Saskatchewan is the fourth largest producer of wind energy in Canada). But while the latest provincial budget had millions of dollars for CCS and enhanced oil recovery projects, it did not once mention renewable energy. Same with the 2008 budget.

Given the current trends, CCS will undoubtedly be a part of the future energy mix, but it is not necessarily a long-term solution to reducing our use of fossil fuels and cutting emissions. Karen Campbell, staff counsel and director of strategy for the Pembina Institute, calls it a “bridge” between the present and a renewable energy future:

“The real solution—a transition away from fossil fuels—should be the primary focus of our creativity, our research dollars and our technology developments.”

Today, when GM is reportedly preparing plans for a bankruptcy filing, the company unveiled Project P.U.M.A. (Personal Urban Mobility and Accessibility), a partnership with Segway to develop an electric, two-wheeled, two-seat vehicle. Larry Burns, GM’s vice-president of research and development and strategic planning, appeared on the Today Show this morning to proclaim, “What we’re doing is reinventing the automobile.”

Ready? The future, apparently:

The vehicle can speed along at 56 km/h and travel 56 kilometres without motorists needing to recharge its lithium-ion battery. It will eventually incorporate technology to drive itself and avoid crashing into things. According to the press release, the vehicle “also enables design creativity, fashion, fun and social networking.” Whatever that means.

Segway’s original two-wheeled device was supposed to revolutionize personal transportation when it was introduced in 2001, but seems only to have succeeded in making police officers and security guards look silly, not to mention being the butt of Weird Al jokes.

P.U.M.A., despite incorporating some neat technology, seems doomed to a similar fate. Weaning North Americans off bulky gas-guzzlers for smaller, more fuel-efficient vehicles is difficult enough, but this? Maybe in some kind of Timecop-esque future. It’s also strange that GM has criticized more viable ideas, such as Better Place, and yet presents something like the P.U.M.A. The problems immediately facing GM are massive. The auto industry is shedding jobs like never before, and filing for bankruptcy is a serious option for the company. In the face of these kinds of challenges, the P.U.M.A. and the corresponding PR initiative is just a bizarre distraction.

Railpower seemed to be on track a couple of years ago. Its fuel-efficient technology promised to save rail companies money, and it received a vote of confidence from the Ontario Teachers’ Pension Plan, which invested $35 million in 2007 and another $20 million last year in exchange for convertible debentures. (OTPP is Railpower’s largest creditor.)

But Railpower has never turned a profit and failed to secure any significant orders for its locomotives last year. Construction on its manufacturing plant in Quebec ceased in the fall, and nearly 40% of the company’s staff was laid off in January, leaving 84 employees.

The company maintains in its latest release that it continues the search for alternatives, and that it may seek to extend its creditor protection order, which expires tomorrow. (Railpower was already granted an extension last month.) It is tough to foresee a positive outcome, however. The U.S. may be cracking down on emissions in the transportation industry, which was supposed to be a major driver of Railpower’s business, but the company has much stronger competitors, primarily GE Transportation and National Railway Equipment. Neither of those two companies suffered the corporate and public relations disaster that Railpower did, either.

The firm’s flagship product, a low-emission and fuel-efficient locomotive called the Green Goat, proved to have a major safety flaw: a battery leak that could cause the locomotive to burst into flame. More than 60 locomotives were recalled, which had cost the company around $20 million as of last year. Shares plummeted after the recall and Railpower became a penny stock.

The flaw was discovered shortly after José Mathieu joined the company as CEO in 2005, and the problem caught both him and the board by surprise. The magnitude of the turnaround before Mathieu was so large that when I spoke with Cormark Securities analyst MacMurray Whale last year about Railpower, he wondered, “If you go back and ask Mathieu, ‘If you knew what you know now, would you go back and quit your job?’ I would be really interested to know.”

Whatever the case, Mathieu was shown the door when Railpower filed for bankruptcy protection in February. The company may get another extension tomorrow, but with tight credit markets, dim sales prospects and the spectre of the Green Goat still hanging around the company, this could be the end of the line for Railpower.

Further reading: Railpower in its glory days, when it was set to “revolutionize the railway industry.”