Last night, 60 Minutes reported on Bloom Energy and their BloomBox technology.  You can read a transcript of the story here.   Bloom appears to have developed a reasonably priced fuel cell technology.

My thought on this was that if they can sell me one for cheap (like less than the $3000 quoted in the story) to power my house using natural gas, it might pay for itself in a reasonable amount of time.  It would be even better if the power company would let me sell electricity back to the grid – because a fuel cell operating in the 90+% efficiency range would allow a BloomBox owner to generate electricity for about half the price of a combined cycle natural gas fired power plant.  I won’t hold my breath for that one though – this being Canada where government regulation never saw a novel idea they couldn’t kill to protect the status quo…

My first thought on seeing this story though was “OMG, it’s a Shipstone!” from the Robert Heinlein novel, Friday (buy here).  Now it’s not quite as magical as a shipstone, but it is interesting how science fiction turns out not to be so fictional after all…

There have been a few stories in the news lately concerning the Alberta Oil Sands and the various moves toward or away from this resource.  A couple of interesting stories:

Canada looks to China to exploit oil sands rejected by US

BP risks investor outrage at ‘dirty’ oil deal

Chinese, Korean and Japanese firms have been interested in the oil sands for a while now, and some other firms from outside Europe / USA have slowly been investing as well, such as TAQA of Abu Dhabi.  In the BP story, apparently RIL of India may be willing to pay even more than BP for the assets of Value Creation.

Shell seems to be “slowing down” investment, and shareholder resistance to StatOil and BP investment are well documented.  The question for Canadians is – are we ok with all these foreign firms investing in the oilsands?

I would say YES, and even more that we want to encourage investors who are interested in exporting the products of the oil sands outside the North American market.   One of the dangers facing the oil industry in Canada is the Low Carbon Fuel Standard (LCFS) movement in the US, whereby states and business want to avoid using so-called dirty oil that has a high carbon footprint (I of course find is most interesting is when California went this route they exempted the oil from the Kern River field which has some of the highest CO2 emissions per barrel in the world, simply because it is in California…)  A good way to mitigate this risk to Canada’s economic growth is to develop other markets for our product.  And with investment coming from Asia, this should provide more impetus for Enbridge to build the Northern Gateway Pipeline from Edmonton to Kitimat, BC.  This will protect producers in the oil sands from being solely dependent on the fickle US market and may cause those in Washington to question they have looked a gift horse in the mouth…

Jeffrey Simpson, writing in the Globe and Mail, sometimes surprises me.  He hits the nail on the head that Canadian businesses need to look beyond the US market and find more customers overseas – even if that is hard.

Mr. Simpson wrote a good book review a couple of years ago, on the same subject.  But my question is, does he now accept and understand that the government is a big part of the problem – coddling local industries and throwing wrenches in trying to pick winners – that he tried to pass off as the lesser of the complaints in the book.   While I agree that Ms. Mandel-Campbell’s book pointed out the failings of Canadian business people on the international stage, I can understand if one company is badly run – it really only affects that one company.  But when the government gets involved it screws up everyone.  Be it the wheat board, the dairy marketing system and tariffs, the way EDC is structured or government intervention in international trade in an attempt to protect/help a single “national champion”, the government isn’t helping.  They are part of the problem.

We need to get rid of marketing boards, cultural protections for bookstores and broadcasters, restrictions on foreign investment and foreign competition and put the EDC on the footing to HELP Canadian businesses export – and not by demanding domestic borrowers or foreign buyers be restricted to EDC financing or other Canadian suppliers who may not be competitive.

OK, given that the evidence is now out on climate change, I am very disappointed that the Government of Canada insists on going along with the charade of Copenhagen by committing us, in a non-binding way, to a reduction of 17% in CO2 emissions from 2005 levels by 2020…

Let’s work out how much that is going to cost…  Since we didn’t reduce emissions from 2005 through 2009 (they went up, even with the reductions from economic contraction), we have to cut deeper now.  That means that to meet the goal, reductions must be of 1.75% every year starting in 2010.   The total reduction in emissions will need to be 744 Million tonnes.  From studies I’ve been involved with indicate carbon capture and storage will cost between $40 – 100 per tonne.  So this will cost at a minimum $30 Billion (today, inflation will drive this up).  The government’s own study in 2007 said that the price of CO2 (carbon tax or credit value) needed to change behaviour sufficiently to reduce emissions would be $195/tonne.  That pushes up the cost over the next 10 years to $145 Billion.  That’s $14.5 billion per year that will be REMOVED from the economy.  And that excludes any knock-on effects that reduce economic growth because investors would rather spend their money in countries that don’t waste money on things like this.  Or impose such regulations.   And it excludes the knock-on effects of the blackouts we are going to have because we can’t build enough nuclear plants in 10 years to counter-act the shutdown of all the coal-fired power plants we will have to shutdown to meet the goal.  An wind and solar aren’t going to replace the coal-fired because they aren’t reliable enough (wind) or don’t work well in the darkness that is a Canadian winter (solar).

Do you want to pay $15 Billion a year to make us “look kinda ok” on the world stage?  Or should we say no and stop chasing this non-existent problem?

In today’s National Post, there is an article about the elimination of a report card in Elementary schools in Ontario, replacing it with a “kinder, gentler progress assessment”.

This is a stupid idea.  You cannot fix what you don’t measure.  And fluffy, feel-good assessments don’t measure.

Mary-Lou Donnelly of the Canadian Teachers’ Federation is quoted as saying:

Assessment is very complex, it’s not just a right or a wrong and a test mark. It is an accumulation of how the student is doing in many, many different areas,

Except that measuring whether a student is absorbing and understanding the material is just a right or wrong question.  It can, and must, be measured by a test score.  Yes, there are other things that teachers should be communicating to parents about their child’s behaviour, attitude, etc – but the test score should be the opening part of the discussion.  If this kid is failing to learn the material – then let’s talk about why.   But without grade letters or percentages or some hard measurement, we can’t tell if the child is succeeding or not.

It also does a disservice to the child as they grow up.  How many businesses and career paths don’t involve hard measurement of performance?  In my field, measuring performance is critical to our success.  We measure the productivity of employees and groups of workers so we can realistically predict outcomes.  This is how the real world works – if you can’t measure it, you can’t figure out where the problem.  The movement in business over the last 20 years has been to quantify performance.  And our education system is moving as fast as it can AWAY from this model.

The big question is why?  That is simple – the teachers’ unions don’t want to be measured.  They want to get paid to do their job regardless of whether they are doing it well or not.  Measurement of performance is bad for unions because it might show that not all their members are equally good at what they do.  And poor performance is tough to use as leverage when asking for more money…

OK, so I’ve crunched the numbers on the non-agreement made at Copenhagen, using data from the IEA on emissions.

In 2006, CO₂ emissions from the world were about 28.4 billion tonnes, of which about 51.5% were from the “developed world”.  This compares to about 21 billion tonnes in 1990, when 66% were from developed countries.

So the non-treaty drafted Copenhagen indicates a goal of reducing global emissions to 50% of 1990 levels by 2050, with developed nations cutting 80% by that date.  Meeting this goal requires:

• Developed nations must reduce emissions at a rate of just about 4% a year, every year, until 2050.
• Developing nations must reduce emissions at a rate of just about 1.5% a year, every year, until 2050.

Delay in reducing emissions immediately will result in much larger cuts being required later.   For instance, if business as usual continues until just 2015, then the cuts would need to be 4.8% and 2.7% a year from then on.  It’s like compounding interest.  Time is the big factor.

When the developing nations spoke at Copenhagen (through the G77), they spoke of reducing emissions intensity.  China, India, others all spoke of reducing the emissions per unit of GDP, not gross reductions.  But the math doesn’t support them.  Even if the developed world cut emissions by 100%, the developing world will overtake global 1990 emissions by 2050 with only 1% growth in gross emissions.   And since we know that China, India and Brazil have emissions rising at rates well above 1%, this seems unlikely.

This is why China killed any agreement at Copenhagen and will do so at Mexico City in 2010.  They will refuse to reduce emissions at all, because of the negative impact on their economy.  Why?  Because reduced economic growth in China will result in political problems.

It is interesting to me that the dream of the socialist left (be they red or green) is being derailed by the largest communist nation – in the name of capitalism!

This could be a very good plan, depending on how it plays out.   Here are the reasons:

• The world wants to build more nuclear plants, but there is a problem – the availability of fuel (uranium) and enrichment capabilities may not grow as fast as demand, which could drive up the cost of nuclear power.  This could make it unattractive, but also creates opportunities.
• One solution to the uranium enrichment problem is to use natural uranium – which is only done commercial in Canadian designed nuclear power plants.
• Another solution to the nuclear fuel problem is to switch uranium reactors to plutonium cycle.  This has already been done using decommissioned nuclear weapons as fuel.  The problem is that there is concern about the availability of this fuel past 2013.
• The CANDU technology can be easily modified into a fast-breeder reactor, whereby non-fissile U-238 (the bulk of natural uranium) is converted to Pu-239/240.  This plutonium can be extracted from the spent fuel chemically, rather than via expensive centrifuge plants that separate U-235 from U-238.  Additionally, fast breeders produce U-233 that can be used again as fuel.  This modification was first done by India in the early 1970s, which produced the plutonium for their nuclear weapon test in 1974.
• India has recently produced an Advanced Heavy Water Reactor technology (son of CANDU?) that runs on the thorium cycle instead of uranium.  The possibility of running thorium cycle expands the nuclear fuel supply significantly, which makes nuclear more attractive in the future.

What Canada needs to do is figure out how to make AECL, in conjunction with the Indians, more competitive.  This is going to require an investment of public money to further develop the technology, but I’d rather we spend money on that than on subsidizing windmills.

If you think free, open-source software is disruptive to the computer and software business, consider what Bill Gurley calls Google’s “less than free” offerings:

Google’s free navigation feature announcement dealt a crushing blow to the GPS stocks. Garmin fell 16%. TomTom fell 21%. Imagine trying to maintain high royalty rates against this strategic move by Google. Android is not only a phone OS, it’s a CE OS.  If Ford or BMW want to build an in-dash Android GPS, guess what? Google will give it to them for free.

It also poses real challenges for the leading smart phone players – RIM’s Blackberry and Apple’s iPhone. Without access to their own mapping data, these vendors now face an interesting dilemma. Do you risk flying naked without free navigation or do you suck it up and swallow the above average royalty fee for each and every handset? Neither option is stellar.

Google’s brilliance doesn’t stop there.

It is hard not to have been surprised by the rapid rise in recent buzz surrounding the Google Android Smartphone OS.

With Blackberry and iPhone grabbing more and more subs, the carriers were losing control of the customer UI, which undoubtedly represents power and future monetization opportunities. With Android, carriers could re-claim their customer “deck.” Additionally, because Google has created an open source version of Android, carriers believe they have an “out” if they part ways with Google in the future.

…“so why would they ever use the Google (non open source) license version.”…. – because Google will give you ad splits on search if you use that version!  That’s right; Google will pay you to use their mobile OS. I like to call this the “less than free” business model.

Amazing – Google and the phone carriers will still make money off of the consumer via advertising, while simultaneously lowering costs…  This is technological innovation of market forces.  I want to see how RIM and Apple deal with this kind of competition.

And I want Rogers to offer me a better deal on an Android device, since they are making ad revenue from Google…

In today’s National Post, and elsewhere around the net, there is much commentary about the upcoming Copenhagen Conference where the UN and the Climate Change Priesthood will try to guilt the western world into signing on to a treaty that will cripple their economies and transfer wealth to the developing world.

• Peter Foster does a good job of explaining why the TD / Suzuki / Pembina report likely underestimates the economic consequences of trying to reduce carbon emissions.
• Kevin Libin and John Ivison do a good job of pointing out that Canadians need to wake up to the economic cost we will all be asked to bear.  Ivison also makes it clear that the government needs to provide clearer leadership on this subject and be more honest with the people.
• But the best is from Jack Mintz, who lays out the truth – not every nation is going to agree to curtail economic growth in the name of maybe reducing climate impacts a century or more in the future.  And the ones that do will suffer economic pain as industry moves to places that don’t restrict economic performance.  For any western country to sign on to this is economic suicide.
• The worst is Jim Harris, who claims that technological innovation is going to magically solve our problems.  He incorrectly compares the improvements in productivity created by the industrial revolution to the hoped for improvements in energy efficiency.  The fact is, a lot of energy use is extremely efficient.  Household furnaces are now available with >90% efficiency.  You can’t get to 100%.  The laws of thermodynamics say so.   You can’t insulate buildings to lose or gain no heat from their surroundings.  There is a limit to energy efficiency because delta S (entropy) must rise.   Coal or gas fired power plants can be up to 60% efficient – more requires circulating low grade hot water to heat buildings.  But that means moving the power plants to where the people are, which costs money because we already have 100 years of infrastructure built up.  It’s not going to change overnight.

Canada should skip the Copenhagen conference altogether.  The draft text of the treaty tells us enough that we don’t want to go near it.  We don’t want UN bureaucrats in Geneva or New York imposing sanctions or demanding tribute to the green gods because we don’t want to impoverish ourselves by shrinking the economy.

Net Neutrality is a growing issue, and watching Glenn Beck (yes, he is a blowhard, but sometimes he asked questions that need to be asked) last night I discerned that the term Net Neutrality is being used to two separate and unrelated concepts:

1. The original meaning (as I recognized) was the the Internet should be “neutral” to content providers and that the providers of the network should not treat data packets differently based on where they came from or what kind of content they contained.  It should not matter whether my data packet is part of a service that competes with a service the network provider offers .  It should not matter if the network provider offers the same kind of content (say, commentary, video, phone services) as another firm that doesn’t own the network.  The network provider should not be allowed to restrict access to the network to protect their competitive offering.  Now, this wouldn’t be as important if there were more network providers in the marketplace – but alas, in most places there are at most two firms who own portions of the backbone of the net, and in many only one.  Therefore, the monopoly (or duopoly) of network providers should be prohibited from restricting competition by content providers.  This is a freedom issue, and one that isn’t really a question of left or right.  It’s more libertarian vs. monopolist (whether the monopolist is the state or a corporation).
2. The second is the one I was made aware of on Glenn Beck’s show.  This is the issue of the Internet being neutral, or balanced, in the content it actual carries, along the lines of the old FCC fairness doctrine, or similar CRTC rules that prevent(ed) radio stations from leaning too hard to the left or right.   To me, this is political operatives, usually those in power, regardless of their position on the political spectrum, wanting to restrict access to content they find offensive or uncomfortable.  This is just censorship by another name.  The state should not be interfering in commentary or content that is on radio, television, the internet or in old fashioned print.  The free exchange of ideas is a critical part of our modern civilization – and if you destroy that you are undermining the foundations of how we got to where we are today.

So I say, I’m all for Net Neutrality version 1, but definitely not for version 2.

As for the recent CRTC decision saying throttling is OK as long as it’s use is transparent to the customer – I say bollocks!  The network providers will be able to hide this by simply saying “your network performance meets our targetted metrics” and I doubt they will ever set it up so that I know by the minute whether their throttling algorithms are affecting my data streams.