ALBERTA

AIMCo's aim true as 2021 returns were 'strongest' in its history

PALASH GHOSH
April 21, 2022 

Evan Siddall

Alberta Investment Management Corp., Edmonton, returned a net 14.7% in 2021, outperforming its composite benchmark return of 8%.

The firm described the 2021 results as "the strongest year in AIMCo's history" in a news release Wednesday. A spokesman for the company said by email that "14.7% is our highest absolute return at the total fund level."

The firm's total assets amounted to C$168.3 billion ($133.8 billion) at the end of the year.

Over the four- and 10-year periods through Dec. 31, AIMCo delivered annualized net returns of 7.4% and 8.6%, respectively, versus corresponding benchmark returns of 7% and 7.9%, the firm said in the release.

AIMCo noted the investment return information applied to C$138.1 billion of its total assets and excluded C$30.1 billion of assets transferred from the Alberta Teachers' Retirement Fund, Alberta Health Services and the Workers' Compensation Board-Alberta in 2021 that "have not yet met the required conditions for inclusion in AIMCo's value-add as at Dec. 31, 2021."

Within asset classes, private equity was the top performer in 2021, scoring a 65.9% return, the release noted. Public equities (23.4%), infrastructure (19.0%), renewable resources (15.0%), and real estate (14.5%) rounded out the other best performing asset classes. Only money market-fixed income fell into the red, returning -1.1% for the year.

As of Dec. 31, 2021, the fund's asset allocation comprised 37.6% in public equities, 35.0% in money market-fixed income, 13.2% in real estate, 7.7% in infrastructure, 5.9% in private equity and the remainder in renewable resources, based on figures provided in the release.

"Delivering record investment returns is a tremendous accomplishment made possible by our in-house asset management expertise," stated Evan Siddall, chief executive officer, in the release.

AIMCo delivered a net return of 2.5% in 2020, 5.4 percentage points below its benchmark, the firm noted in a separate news release issued on April 15, 2021.

AIMCo invests globally on behalf of 32 pension, endowment and government funds in Alberta.

Alberta Pension Posts Record Year With 66% Private Equity Gain

Layan Odeh

Thu, April 21, 2022, 

(Bloomberg) -- Alberta Investment Management Corp. earned a record return in 2021 under a new management team, led by stellar gains in equities and infrastructure.

The firm’s return of 14.7%, almost double its benchmark, brought assets under management to C$168.3 billion ($134.6 billion), according to a statement.

Aimco unloaded a number of its private-equity holdings during the year, including a majority stake in sustainability consultancy ERM Group Inc. to KKR & Co. The private equity portfolio made almost 66% in 2021, though it’s a small portion of Aimco’s assets -- C$8.2 billion as of Dec. 31.

Aimco named Evan Siddall as its new chief executive officer a year ago after it lost C$2.1 billion on a bet against market volatility that blew up when the pandemic hit. Aimco invests on behalf of 32 pension, endowment and government funds in Alberta.

The fund earned a 23.4% return in its C$52 billion public stock portfolio, while infrastructure investments returned 19% and real estate made 14.5%. The fixed income portfolio suffered a small loss as rates increased.

The return figures are from Aimco’s Total Fund and exclude about C$30 billion transferred last year from other funds, according to the statement.

AIMCo delivers record 14.7% gain in 2021 as it rebounds from volatility scheme losses

Crown corporation beat its aggregate benchmark of 8% with a record annual 'value-add' of $7.7 billion

Author of the article: Barbara Shecter
Publishing date: Apr 21, 2022

FINANCIAL POST

Evan Siddall took over as AIMCo’s chief executive in July.

 PHOTO BY BRENT LEWIN/BLOOMBERG FILES

Alberta Investment Management Corporation (AIMCo) has bounced back from a $2-billion loss on a volatility trading scheme in 2020, posting the strongest net return in its history — 14.7 per cent — for the year ended Dec. 31.

The Crown corporation, which manages pension, endowment, and government funds in Alberta, beat its aggregate benchmark of eight per cent, with a record annual “value-add” of $7.7 billion. Client assets under management at the end of the year totalled $168.3 billion.

The annualized total fund return over ten years is 8.6 per cent.

“Delivering record investment returns is a tremendous accomplishment made possible by our in-house asset management expertise,” said Evan Siddall, who took over as AIMCo’s chief executive in July.

Siddall was previously head of the Canada Mortgage and Housing Corporation (CMHC).

James Barber, who joined AIMCo in July and became co-chief investment officer this month, praised the various teams for generating double-digit returns while responding to external risk-management recommendations following the 2020 volatility loss.

“We’ve been driving the car while changing the wheel,” he said, adding that the returns came from new investments rather than the re-valuation of a loss on paper.

“This wasn’t just a bounce back,” Barber said. “I think of the investment team being very astute in a stressful environment and actually being able to lean in and make good, risk-adjusted decisions.”

Sandra Lau, co-CIO, said the fund manager is in a good position to face down rising rates and high inflation through strategies undertaken over the past few years including geographic diversification.

“We have proactively moved to shorter duration assets and increased our allocation to private and real assets,” she said.

“Going forward the environment provides opportunity for a patient long-term investor to continue to increase allocation to illiquid (inflation-sensitive) investments and invest in private credit to further protect against inflation and higher rates.”

AIMCo’s balanced funds earned a net return of 16.2 per cent, outperforming the benchmark by 7.3 per cent. The investment manager’s government and specialty funds also beat their benchmark, with a return of five per cent.

Barber said some of the return-generating investments were years in the making, particularly in areas such as private equity and debt. Meanwhile, AIMCo’s overriding strategy remains to allocate capital where expected returns are high, while selling investments when they reach attractive prices even when they might have been purchased for the longer term.

One example of the latter was the sale of Spanish renewable energy company Eolia Renovables de Inversiones in November.

“A number of other investors were fighting over each other to really get in and get access to the market that we felt like, well, actually, we can … realize really good returns for our clients,” Barber said, adding that returns exceeded expectations when the investment was initially made in 2019 with a planned 10-year investment horizon.

“It gave us some good renewable exposure to (fit) very neatly within the strategy for our overall infrastructure and renewables portfolio, but we were able to (exit) at a relatively attractive price, and we saw the market really running away from itself,” he said.

This freed up capital could be invested at a more reasonable valuation, he said, giving the example of AIMCo’s decision to join a consortium of investors earlier this year to privatize AusNet Services Ltd., a regulated utility business transmitting and delivering energy to 1.5 million customers in Australia.

“Part of our thesis there was we were able to look at something that was undervalued in the public markets,” he said, adding that, importantly, it was also consistent with AIMCo’s expectation that demand for electricity will grow “meaningfully” over the next five to 10 years.

“We’re seeing a large degree of electrification and people moving from gas to electrification, whether that be through electric vehicles, or heating, and so owning the network that distributes that electricity is actually a pretty strategic asset.”

Barber said AIMCo has also been taking advantage of divestment of oil and gas assets by some institutional investors. The Caisse de dépôt et placement du Québec, for example, pledged in September to divest of all oil producing assets — nearly $4 billion worth — by the end of this year.

The AIMCo thesis is to buy on valuation weakness caused by these exits, and also to encourage an energy transition by investing in sustainability projects such as hydrogen generation and storage and carbon capture.

“These companies may be (a bit) slow to evolve, but if we can help them accelerate that process, and we can buy it at a discount … then we can unlock that discount and it actually ultimately becomes more of a premium on the other side,” Barber said.

COLUMN: Controlling the power of a social media platform

The rise of social media platforms has provided a public forum to anyone with an internet connection

 Tesla and SpaceX CEO Elon Musk arrives on the red carpet for the Axel Springer media award in Berlin on Dec. 1, 2020. Musk is offering to buy Twitter, Thursday, April 14, 2022. He says the social media platform he has criticized for not living up to free speech principles needs to be transformed as a private company. (Hannibal Hanschke/Pool Photo via AP, File)

JOHN ARENDT
Apr. 21, 2022 .
COLUMNISTS
OPINION

If Elon Musk is successful in his bid to take over Twitter, the social media platform could be in for some changes.

Musk, the wealthiest person in the world, has a net worth of around US$273 billion or $344 billion in Canadian funds.

His bid last week to buy the U.S. tech firm for US$43 billion – or $54 billion Canadian – is a lot of money, but it would not come close to bankrupting him.

Musk, an outspoken critic of Twitter, has said the move is not financially motivated, but rather about free speech. “Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” he said recently.

READ ALSO: Most Canadians believe Facebook harms their mental health: survey

The rise of social media platforms over the past couple of decades has provided a public forum and a voice to anyone with an internet connection. It can be used to inspire and motivate, or it can be used to divide, intensify hate and to spread misinformation.

Whether social media has a positive or negative effect depends on the moral code of those who are communicating.

Unfortunately, there are some bad actors online.

Reports from the fall of 2021 showed massive troll farms were a growing problem on Facebook, the world’s largest social media platform. A troll farm is an internet content service, created with the purpose of interfering with political opinions and decision-making. According to the 2021 reports, these sites were reaching around 360 million people each week. Of the 20 most popular Christian-themed pages on Facebook, 19 were operated by troll farms.

Others, whether organized groups or lone individuals, have used Twitter, Instagram, TikTok and other platforms to spread extremist views and misinformation.

Before making any changes to a social media platform, especially changes to reduce or remove moderation, it would be wise to listen to those who are close to this industry.

Begin with Tristan Harris, the president and co-founder of the Center for Humane Technology, a nonprofit organization examining social media and online communications.

Prior to creating the Center for Humane Technology in 2013, Harris was a design ethicist at Google. He has a solid grasp on social media platforms and how they function. He is interested in structuring online communications in order to reduce the level of polarization, fake news and online addiction.

His podcast, Your Undivided Attention, provides an in-depth look into the way modern communications technology works, and the way it is affecting society.

It would also be worthwhile listening to Seth Everett and Shelly Palmer, co-hosts of Techstream. This podcast examines trends in culture and technology, and both have a lot of knowledge in this field.

While they speak with enthusiasm about advancements in technology, there’s a level of uneasiness when they discuss social media platforms aimed at young audiences. Both have raised concerns about how it is affecting their children and grandchildren.

In addition, listen to interviews with Frances Haugen, a former Facebook employee. In the fall of 2021, she disclosed internal documents to the Securities and Exchange Commission in the United States and to The Wall Street Journal, showing the social media giant knew about the harmful effects of its platforms.

Each of these people and others can speak to the immense power of social media communications. Such power must be used wisely.

Musk’s comments about his reason for wanting ownership of Twitter need to be considered carefully. There is much to be said about the value of providing an online public platform where people can express their opinions and offer comments.

At the same time, it is important that such a service does not open up the floodgates of hate under the banner of free speech.

John Arendt is the editor of the Summerland Review.

Alberta to shake up energy market by dissolving balancing pool, consumers to pay off $1.34B loan

ENERGY PRIVATIZATION UNDER ALBERTA CONSERVATIVES SCREWS ALBERTANS

Adam Lachacz
CTVNewsEdmonton.ca Digital Producer
Updated April 21, 2022

The province is making major changes to Alberta's energy market, as losses incurred under the previous NDP government are expected to be charged to Albertans over the next eight years.

On Thursday, the UCP government released an audit outlining the losses incurred by Alberta's 22-year-old electricity balancing pool, between May 1, 2015, and April 1, 2019.

Using already publicly available data, the UCP government ordered the audit in the "spirit of transparency" to "confirm" how the province's balancing pool managed fixed-price deals with electricity producers.

According to the audit, $1.34 billion was lost due to losses from the sale of electricity and services under the power purchase agreements (PPAs) scheme.

"This is $1.34 billion that Albertans have to pay off through a rate-rider," said Dale Nally, associate minister of natural gas and electricity, on Thursday.

"That is a $1.34 billion that should have stayed in Albertan's bank accounts and could have been applied to any number of programs to enhance our electricity system," Nally said.

"Instead it was wasted and exists today as ratepayer debt being paid off on electricity bills through a surcharge that is expected to run until 2030."

The rate rider is expected to be charged on utility bills until as late as 2030.

In 1998, PPAs were developed by the Progressive Conservative government as a way to transition toward a competitive electricity market and produce more power to prevent brownouts.

Three electricity generators owned the vast majority of facilities in the province, including the Edmonton Power Corporation (now Capital Power), Alberta Power (now ATCO Energy), and TransAlta Corporation.

"The three big players got to hold onto the physical assets, operate them, their engineers on the ground, but new players would own the rights to control when they operate and what price they charge into the pool," said Blake Schaffer, University of Calgary economics professor.

PPAs were intended to allow new electricity vendors to the market, while also allowing compensation to the companies who owned generation plants.

The balancing pool was created as a quasi-artificial market for new utility companies to buy off PPAs until they expired at the end of 2020.

"The balancing pool was generating a lot of money for Albertan consumers for about 16 years," Schaffer said. "So those gains were handed back to your bill."

According to Nally, that was around $4 billion, which was returned to consumers on their utility bill in the form of a credit, that for the average residential customer ranged between $2 to $3.

From 2016 to 2018, Schaffer said low energy prices and the increase in carbon tax eroded profits. A clause in the PPAs allowed companies to hand them back to the balancing pool should a change in government regulation make them unprofitable.

"That's where the rebate on your bill flipped from a $2 to $3 positive to a $2 to $3 negative for the average residential customer," Schaffer said.

That small negative charge was due to the balancing pool taking out a loan and charging a rate rider to Albertans to recoup lost revenue over multiple years.

"Albertans deserved better and should not be tripped by promises to decrease utility bills with taxpayer-funded rate caps or other shortsighted policies that both contribute to inflation and do nothing to enhance future capacity or to foster competition," Nally said.

DISSOLVING THE BALANCING POOL

Nally announced the UCP would table legislation in the near future that would officially phase out the balancing pool, thereby "increasing competition" and "modernizing" Alberta's electricity system.

"We are fixing the mistakes made by the NDP," Nally said. "We are doing what it takes to support Albertans and to provide safe, reliable, and affordable electricity for consumers and a competitive market for investors."

As the government dissolves the balancing pool, Schaffer wonders what will happen to the rate rider recouping losses incurred by the government agency while it operated.

"Is that going to continue to be a rider on our bills or is the government simply taking over that debt or absolving it?" he asked.

'IT WASN'T ABOUT WHAT'S NEW'

When questioned about why the government completed the audit, when the information was already publicly available, Nally said it was a campaign promise the UCP made to Albertans.

"It wasn't about what's new, it was about confirming what we thought we knew and that's what this report does," he said. "This independent report confirms that it was $1.34 billion."

At the time, the UCP promised it would task the auditor general with completing a special duty audit, not hiring an external agency to complete the review.

"Our position was that we don't think Albertans were concerned who did the audit but that it was an independent organization that did the audit," Nally said.

Nally said he did not know how much the audit cost Alberta taxpayers. CTV News Edmonton has requested that information from his office.

"We’re working with all parties involved and will share the final costs of the independent review as soon as possible," said Taylor Hides, Nally's press secretary.

A PROPER AUDIT?

Deloitte, the independent firm hired by the province to complete the audit, was instructed by the province to examine from May 2015 to April 2019, with that period specifically "requested."

"It is interesting or odd to me that the calculation of that," Schaffer said. "(It) was specifically done to end part way through 2019.

"The balancing pool existed and managed the PPAs until the end of 2020," the economist added. "And prices were higher in 2019, in 2020, than they were previously. So if they switched to profitability that point was excluded in the calculation?

"So in my view, if they were doing a proper audit on the balancing pool's losses they should've done the full term," Schaffer said.

'WERE BAD DEALS'

Kathleen Ganley, NDP energy critic, said in a statement that the PPAs were "bad deals" signed by previous conservative governments in the 90s.

SHE IS CORRECT IT DATES BACK TO KING RALPH, SEE BELOW

"(They) guaranteed the profits of utility companies by tying the hands of government and exposing Alberta taxpayers to unreasonable risks," Ganley said.

"No government should have ever signed such one-sided deals," Ganley added. "The same approach is being taken by the UCP today."

The energy critic called on the government to reinstate rate caps for electricity prices to offer affordability to Albertans, otherwise utility payers remain vulnerable to "steep increases."

With files from CTV News Edmonton's Chelan Skulski

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LA REVUE GAUCHE - Left Comment: The Wild West Buyout 

West’s most successful privatization effort benefited privately owned Trans Alta Utilities, a company where the Alberta Government has historically put to pasture its retired cabinet ministers[5]. On their behalf he convinced Klein to deregulate electricity in the province.

“Privatization in Alberta was all but dormant until Klein realized he was in danger of being exposed as the neo-liberal he really is. Everything that could be usefully privatized – liquor stores and registry offices – had been, but the ideologue Steve West was able to convince Klein that Alberta’s stable electricity industry needed to be deregulated,” wrote columnist, Hamish MacAulay at the time.

The deregulation of electricity was controversial at the time, being opposed by both public utilities like the City of Edmonton’s EPCOR and private utilities like Tory Bag Man Ron Southern’s ATCO. Even business opposed the idea of deregulation, as much as the socialist NDP did.

So far deregulation has cost Alberta consumers millions in increased costs, has not produced infrastructure expansion(5) but has allowed Trans Alta to market electricity across Canada and into the U.S. which was its purpose all along.

A Calgary CIPS forum in the fall of 2001 on how the electrical industry in Alberta has experienced significant changes in the form of deregulation "Alberta is leading Canada and many other countries in this area. Dawn Farrell, Executive Vice President, Corporate Development at TransAlta Utilities, will discuss this question, based on her extensive experiences in the industry. Dawn will discuss how TransAlta re-invented itself within the Alberta context, what strategic decisions were made and why, and how, in hindsight, all of these decisions were the right ones.[6] “

S'pore has opportunities to expand into green hydrogen and carbon services as it overcomes energy crisis: Experts


Shabana Begum

SINGAPORE - In crisis lies opportunity, and this can be seen in the opportunities that could open up as Singapore attempts to wean itself off fossil fuels amid an energy crisis.

The opportunities lie not only in the renewable energy sector, but also in areas such as green finance, carbon services and green hydrogen, said panellists at a roundtable organised by The Straits Times which aired on Earth Day on Friday (April 22).

One of the panellists, Dr Victor Nian, an adviser at the Centre for Strategic Energy and Resources, said there is potential for Singapore to position itself as a hydrogen hub in the future, and supply the cleaner fuel to the region.

For instance, the oil refineries and petrochemical plants in Singapore could in the future be repurposed to produce and store green hydrogen, which refers to hydrogen fuel produced by renewables.

"Think back to the 1960s, where our philosophy of having refineries on Bukom Island or Jurong Island in serving the neighbourhood, could be replicated in the hydrogen story, where we, as a country can become a hub for hydrogen production from clean energy sources, and (also) sell them to the region," he said.

Green hydrogen, which is produced by splitting water into hydrogen and oxygen by using renewable electricity, emits no carbon dioxide during the production process, making it a cleaner fuel.

The other panellists were ST climate change editor David Fogarty; Ms Swati Mandloi, a youth delegate from Singapore for the recent climate change conference in Glasgow (Cop26); and ST environment correspondent Audrey Tan.

The roundtable was moderated by Mr Warren Fernandez, ST editor and editor-in-chief of SPH Media Trust's English, Malay and Tamil Media Group.

The roundtable - aired on ST's YouTube channel and website on Friday - revolved around the theme of whether surging energy costs would spark a global rethink about the dependence on fossil fuels, and the current challenges of speeding up the adoption of renewables.

Last year, oil and fossil fuel prices soared, causing electricity bills to spike and petrol prices to rise. The war in Ukraine then worsened the world's energy crisis.

Mr Fogarty said carbon services and trading in Singapore are a growing area since one of the key issues that polluting companies are facing is in reducing their emissions in some parts of their supply chains.

Hence, they turn towards carbon offsets, where the companies buy a carbon credit from a renewable energy plant or a forestry restoration project to "offset" their emissions.

"The investment around those projects, and the financing (and auditing) of them is a growing area. Executing those projects on the ground also takes time and money."

Mr Fogarty added that issuing green bonds - financial instruments used to fund projects with environmental benefits - is an emerging area, and that the nation can also explore novel technologies in extracting carbon dioxide.

"Singapore is a great hub for a lot of these things. It's got the finance, it's got the technology, and it can bring in the brains to do it."

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On Singapore as a hydrogen hub, Ms Tan noted that it is currently challenging to produce green hydrogen here due to the small proportion of the nation's energy mix coming from renewables.

By 2030, the aim is to have solar energy - the nation's most viable form of clean energy now - cover 4 per cent of Singapore's total electricity demand.

The 4 per cent will comprise at least 2 gigawatt-peak of solar energy or the equivalent of powering about 350,000 households a year.

Currently, more than 95 per cent of the country's energy mix comes from natural gas, the cleanest form of fossil fuel.

Ms Tan said: "By 2030, 4 per cent (coming from) solar is quite small. For us to harness hydrogen in a larger way, hydrogen has to be imported, and we have to find ways to store hydrogen safely."

It was reported last year that Singapore is engaging local and international stakeholders to bring down the cost of hydrogen technology and develop global regulatory standards, to establish global hydrogen supply chains.

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Interactive graphic: Save cash, save the earth with green energy?

Hope for green future also rests on harnessing hydrogen, trapping carbon dioxide

Dr Nian added that if nuclear energy - which Singapore is looking into - takes off here, it could be used to produce clean hydrogen fuel here.

Audience member Jan Holm, 53, executive vice-president of Seaborg Technologies, a cleantech company, asked the panellists where they see the biggest opportunities for Singapore moving forward, as the nation rides the energy crisis wave.

Dr Nian said Singapore's rich talent pool can help pave the way for advances in the clean energy and technology sector - from "Generation IV" nuclear technologies to even new industries within the cleantech scene.

Generation IV nuclear power involves a system of fuel fabrication plants and facilities that would overcome some of the shortcomings and safety issues with current nuclear power plants.

"Advanced technologies (in the nuclear sector) are still in development. As a newcomer country, we can ramp up our research and development capabilities so that we catch up with this wave, and become one of the leading innovators in these areas," added Dr Nian.

"I think that is where the golden opportunity lies with a country that is educated... and is open to new options. We might even be seeing new industries being established. It could be data centres, it could be hydrogen, it could be nuclear."

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Last month, the Energy Market Authority released its Energy 2050 Committee Report which identified emerging low-carbon sources such as hydrogen, geothermal and nuclear energy as means to bring down the country's emissions to net zero by or around 2050.

Ms Tan noted that while the report was commissioned before the surge in energy prices started, and the Ukraine-Russia conflict, EMA still chose to release the report amid the energy crisis.

"(EMA) could have chosen to release the report at a later date after prices have stabilised, but the fact that they still chose to release it when we are all suffering from energy price spikes, that seemed like a commitment... that Singapore is committed to tackling this crisis."

Singapore's power sector now produces about 40 per cent of the country's emissions, but the sector can realistically reach net zero by 2050, the report said.

Ms Swati hopes that the current energy and existing climate crises will allow humankind to explore opportunities for a better future world.

She added that through nature-based solutions, for example, individuals' relationships with the natural environment will improve and benefit people, enriching their lives.

Quebec launches wind and renewable energy projects to meet growing demand

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Premier François Legault makes announcement while visiting Gaspé region

CBC News · Posted: Apr 20, 2022

Premier François Legault says his government is taking concrete actions for the environment and employment. ( Marguerite Morin/Radio-Canada)

Hydro-Québec, a government-owned public utility, will be putting out two calls for tender for massive renewable energy projects in an effort to meet growing demands for electricity while maintaining the government's environmental commitments.

Premier François Legault made the announcement Wednesday while he was in the province's Gaspé region, along with Minister of Energy and Natural Resources Jonathan Julien.

A first block of 1,000 megawatts will be reserved for wind power and a second block of 1,300 megawatts will be devoted to renewable resources, the government said in a statement.

In the statement, Sophie Brochu, president and CEO of Hydro-Québec, said the corporation forecasts Quebec's demand for electricity will rise 12 per cent between 2019 and 2029.

She said this project will help respond to that growing demand.

Legault said community participation will be among the criteria that companies will have to meet in order to satisfy the call for tenders for 1,000 megawatts of wind power.

"We are taking concrete action for the environment and to create wealth with Quebec workers," said Legault.

Quebec wind farms currently produce nearly 4,000 megawatts.

Wednesday's announcement is part of the government's plan to reduce greenhouse gas emissions by 37.6 per cent compared to 1990 and achieve carbon neutrality by 2050.

This is the second such announcement to come in just over four months. In December, Hydro-Québec launched two calls for tenders totalling 780 megawatts to meet the long-term electricity demand.

• Quebec looks beyond hydroelectricity as last planned megaproject set to wrap

Remote communities in Canada are still overwhelmingly reliant on diesel fuel for heating and electricity generation, according to a 2020 report by the Pembina Institute, and are responsible for the burning of more than 682 million litres of diesel each year. 

Three million litres of that is burned annually by the small, twin Cree and Inuit communities of Whapmagoostui and Kuujjuarapik, in northern Quebec.

In the absence of future hydroelectric power projects on the horizon, Hydro-Québec has been moving into other domains such as wind and solar in recent years.

It has also formed a subsidiary designed to help customers improve their energy efficiency, and it is working on large-scale batteries that can store surplus energy.

Bruce Power further exploring hydrogen production

Bruce Power is studying the feasibility of making hydrogen with excess energy from its nuclear reactors, which is specifically mentioned in Ontario’s new low-carbon hydrogen strategy announced April 7.

Author of the article: Scott Dunn
Publishing date: Apr 20, 2022

James Scongack

 PHOTO BY JOE DAYIAN /SunMedia

Among the eight immediate strategic actions listed in the provincial vision for a “low-carbon hydrogen economy” is Bruce Power’s hydrogen feasibility study and the company’s support for a “centre of excellence” in the region.

Ontario set a target of reducing greenhouse gas emissions to 30 per cent below 2005 levels by 2030. Low-carbon hydrogen could be used in public transportation, for space heating in homes and businesses and in industry, the province says.

Energy is needed to release hydrogen from other elements to which it is bonded.

Hydrogen made from carbon-free electricity, such as from nuclear or hydroelectric sources, and biomass, results in zero or near zero greenhouse gas emissions, the province says. Electrolysis uses electricity to separate hydrogen and oxygen in water, for example.

Ontario is looking at establishing hydrogen hubs in areas of the province where there’s demand for hydrogen but also where hydrogen can be produced using existing infrastructure.

Bruce Power is examining using some energy from the reactors its refurbishing, all eight or which are to be upgraded to produce 7,000 megawatts at peak in the 2030s, to create hydrogen, said James Scongack, who leads Bruce Power’s net-zero initiatives.

“What we would do is have one of two kinds of energy, either in the form of electricity or steam, that through the feasibility study we’ll seek to identify, that would then be used for a hydrogen-production process, likely off-site, by other people,” he said.

Bruce Power signed a memorandum of understanding for the feasibility study with Owen Sound-based Hydrogen Optimized, which is providing its high-current unipolar water electrolysis systems.

Greenfield Global, described as the largest producer of renewable fuels in Canada, and Hensall Co-op, a farm products, fuel and crop services member-owned co-operative, are other partners. Neither responded to a request for comment in time for publication.

Greenfield Global partnered with Bruce Power last year on what was touted as the first feasibility study in Canada of the business case for hydrogen production using nuclear-generated energy, which built on earlier work done in the region.

“Greenfield, they’re looking at this and saying, as we move to net zero, what are the fuels we are going to provide our customers?” Scongack said.

Bruce Power Net Zero Inc. is the third partner. Bruce Power announced last fall it will explore complementary technologies to nuclear energy. The company is working closely with the Ministry of Energy, Scongack said.

The feasibility study will be done in partnership with the Hydrogen Business Council and is to be completed in early 2023, said Scongack, an executive vice-president at Bruce Power.

“By no means are we at the stage yet where we are saying we’re ready to blast out with a hydrogen economy. This is what I would call very prudent, methodical first feasibility steps,” he said.

“We know in the fight against climate change . . . right now we do not have enough tools in the toolbox to meet the challenges. So you’re putting everything on the table and figuring how do I maximize it.”

Environmental Defence energy analyst Keith Brooks said if unneeded electricity from nuclear can be used to make hydrogen, that’s OK. He called it “pink” rather than “green” hydrogen, given the nuclear waste disposal problem.

“I just think that people shouldn’t get too excided about this hydrogen thing overall, Brooks said. “I think hydrogen is, everyone’s loving to talk about this now; this is our newest path to de-carbonization.”

“But the real pathway, the clearest pathway to de-carbonization to get into net-zero, is electricity. Move as many things to electricity as possible, and then to decarbonize the electricity grid as possible,” Brooks said.

Hydrogen’s role would be in limited areas including aviation, long-haul shipping, steel production, where electricity cannot be used as a replacement, he said.

He doesn’t see hydrogen replacing natural gas for home heating because only a fraction of hydrogen can be blended with natural gas. Otherwise, the infrastructure for natural gas would have to be replaced to use hydrogen instead.

Brooks said the electrolysis method with water is preferable to using steam to split hydrogen from methanol because you have to do something with the carbon created. If biomass relies on growing corn involving lots of fertilizer and pesticides, other environmental issues arise, he added.

Hydrogen extracted from biomass using steam and oxygen creates carbon monoxide, carbon dioxide and hydrogen, the province notes. The resulting carbon monoxide reacts with water and forms more carbon dioxide and hydrogen.

The province says biofuels, forest, agriculture and municipal biomass could be used. The province is consulting on changing legislation to allow carbon storage on Crown land, the provincial hydrogen strategy says.

The province says most hydrogen today is made from natural gas using a steam methane reformation process. It’s the cheapest way but because it creates carbon, capture, utilization and storage of unwanted carbon might be a solution.

Other actions in the plan include development of a new electricity rate for large electricity customers, the proposed Interruptible Rate pilot, with future rate changes possible after consultations.

The plan authorizes Atura Power, Ontario Power Generation’s subsidiary, to produce hydrogen using a 20-megawat electrolyzer at Niagara Falls, and will identify “hydrogen hub” locations where local demand for hydrogen could be met using existing electricity infrastructure.

The Independent Electricity System Operator is to report on how to support hydrogen storage and grid integration pilot projects. For the full plan and action list, visit www.ontario.ca/page/ontarios-low-carbon-hydrogen-strategy.

Gov. Whitmer wants federal aid to keep nuclear plant open

By JENNIFER McDERMOTT

April 20, 2022

Michigan’s Democratic governor wants a nuclear power plant on Lake Michigan to stay open and she’s asking the federal government to pay for it.

But the owner of the Palisades Power Plant says it’s too late — the plant will be shut down in May as scheduled.

The Biden administration on Tuesday launched a $6 billion effort to rescue nuclear power plants at risk of closing, citing the need to continue nuclear energy as a carbon-free source of power that helps to combat climate change. The Department of Energy’s civil nuclear credit program is intended to bail out financially distressed owners or operators of nuclear power reactors.

Gov. Gretchen Whitmer wrote to Energy Secretary Jennifer Granholm Wednesday to say the state will support a “compelling” application to the program and she intends to do everything she can to keep the plant open.

“Today, we have a new path forward to save Palisades, secure hundreds of good-paying jobs, empower regional economies, and help us fight climate change by generating clean energy,” she wrote.

Palisades’ owner, Entergy, said in response to the letter that their focus remains on the safe and orderly shutdown of the facility in May, though they’ll continue to talk with qualified nuclear plant owners or operators who may want to purchase and continue operating Palisades.

Palisades is licensed to operate until 2031, but is scheduled to shut down because of operating losses and the expiration of a power purchase agreement. A dozen U.S. commercial nuclear power reactors have closed in the past decade before their licenses expired, largely due to competition from cheaper natural gas, massive operating losses due to low electricity prices and escalating costs, or the cost of major repairs.

Entergy said it can’t operate the plant past May because it did not order new nuclear fuel, and employees there are transferring to other parts of the business or retiring.

The new program is the largest federal investment in saving financially distressed nuclear reactors. Taxpayer and environmental advocates, including Friends of the Earth, say billions of tax dollars should not be spent to support the nuclear industry when doing so won’t solve the climate crisis.

“While Department of Energy is taking some precautions, it’s still acting like it has an obligation to burn federal dollars that would be better spent on solar, wind and energy efficiency,” said Sarah Lutz, climate campaigner at Friends of the Earth. “Secretary Granholm is shortsightedly banking on an energy option that will tie us to fossil fuels and dangerous emissions. Propping up failing nuclear reactors rather than pursuing a fair transition for workers and communities is not the way to secure energy independence or a sustainable grid.”

Owners or operators of nuclear power reactors that are expected to shut down for economic reasons can apply for funding to avoid closing prematurely. The first round of awards will prioritize reactors that have already announced plans to close.

Another energy company, Constellation, announced plans in August 2020 to close four reactors in Illinois, at the Byron and Dresden nuclear plants, but reversed those decisions after Illinois’ governor signed climate legislation into law in September that provided hundreds of millions of dollars to keep plants open.

A Constellation spokesperson said Wednesday that though none of their plants are eligible during this initial award cycle because they’re not on the verge of closing, they’ll assess whether they can apply in future rounds. Bill Gibbons said they greatly appreciate the support and urgency reflected in the new program.

California is slated to close its last remaining nuclear power plant, Diablo Canyon, in 2025. Officials there think they can replace it with new solar, wind and battery storage resources, though skeptics have questioned whether California’s all-in renewable plan can work in a state of nearly 40 million people.

The California Public Utilities Commission has said it would likely take seismic upgrades and changes to the cooling systems, which could cost more than $1 billion, to continue operations at Diablo Canyon beyond 2025. When asked if it will seek any federal funding to keep operating, PG&E, which operates Diablo Canyon, said Wednesday that as a regulated utility it’s required to follow the energy policies of the state and the state has not changed its position regarding the future of nuclear energy in California at this time.

PG&E spokesperson Suzanne Hosn added that the plan to retire Diablo Canyon was introduced in 2016 and approved by the California Public Utilities Commission, the state legislature, and governor in 2018.

Passive funds could threaten UK climate transition, warns think-tank

Madeleine Bruder


Passive funds are set to become investors of last resort in UK fossil fuel companies, a trend that could create stewardship “inertia” and threaten the climate transition, a think-tank has claimed.

Common Wealth argued that passive, index-tracking funds should bolster their stewardship activities to help support the transition to a decarbonised economy as they become more powerful owners of UK-listed companies.

The leftwing think-tank, whose board members include former Labour party leader Ed Miliband, said passive funds were “on track” to overtake actively managed funds’ ownership of the fossil fuel industry in the UK, albeit not for a few years. This raised “fundamental questions” about passive funds’ stewardship activities, it added.

Index-tracking mutual and exchange traded funds globally have increased their ownership of companies in the FTSE All-Share index from less than 1 per cent in December 2001 to 2 per cent in 2012 and 12 per cent at the end of last year, the think-tank found.

Actively managed funds hold 23 per cent of UK-listed companies’ market capitalisation, up from 10 per cent in 2001, according to Common Wealth’s analysis of Refinitiv data.

However, active funds in aggregate have their largest underweight position, relative to the benchmark, in fossil fuel stocks.

Broad-based passive funds hold all sectors in line with their index weighting. As a result, passive funds tend to be disproportionately exposed to fossil fuel companies, compared with their active peers.

Passive funds own 45 per cent of all fossil fuel stakes held by the fund industry, Common Wealth found, compared with an average of 33 per cent across all industries.

Adrienne Buller, senior research fellow at Common Wealth, said passive funds’ increasing ownership raised questions about the effectiveness of mechanisms such as shareholder activism and divestment, posing “fundamental questions about how corporations will transition to a decarbonised economy”.

“The over-representation of passive funds in the fossil fuel sector [as a proportion of total fund ownership] seems to support what many campaigners have suggested — that these actors risk becoming ‘holders of last resort’ in the transition to a decarbonised economy,” said Buller.

Chris Hayes, senior data analyst at Common Wealth, said investors could “influence the activities of fossil fuel firms by divesting from them or by exercising shareholder pressure for change from within”. However, “it is now clear that the rise of passive funds is increasingly acting as a drag on the former, baking inertia into the system,” he added.

Common Wealth called for passive funds to invest more in their stewardship teams and increase transparency around voting policies and the extent of their direct engagement with investee companies.

The researchers claimed the “explosion” of passively managed funds over the past two decades, particularly since the 2008 global financial crisis, marked a “major shift” in corporate governance and control over investment allocations.

“A small cohort of increasingly vast asset management giants — chief among them BlackRock, Vanguard, State Street and Fidelity — has ridden a wave of enthusiasm for passive investing to positions of dominance within the UK shareholder structure,” said Common Wealth.

These groups’ “dominant position” in the allocation of capital and decision-making power within the UK economy is “especially the case” for industries “most pivotal to the question of what kind of economy we want to live in, particularly in the transition to a decarbonised future,” it argued.

The think-tank found that passive funds’ growing ownership of UK companies was largely driven by US-domiciled funds.

US-based funds account for 66 per cent of the assets of all funds with exposure to UK companies, a figure that rises to 72 per cent for passive funds.

The latter list is headed by two of Vanguard’s US-based funds, the $385bn Total International Stock Index Fund and $160bn Developed Markets Index Fund.

A third of fund holdings of FTSE All-Share companies were held by US-domiciled funds, compared with 39 per cent for passive funds alone, at the end of 2021.

Big tech wants to bootstrap carbon removal into a big business

THE ECONOMIST
Date:
April 21, 2022

A GROUP OF rich do-gooders tried a bold experiment 15 years ago. The Gates Foundation, a charity, and five countries put $1.5bn into a pilot project aimed at encouraging research and development in a previously neglected area. The “advanced market commitment” (AMC) they created promised rewards to drugmakers that came up with an effective vaccine against pneumococcus, a disease which killed many children in poor countries. Defying sceptics, three vaccines have since been developed. More than 150m children have been immunised, saving 700,000 lives.

Now several initiatives aim to apply the same approach to a different scourge. This month four big tech companies—Alphabet, Meta, Shopify and Stripe—and the sustainability practice of McKinsey, a management consultancy, pledged $925m over nine years to bootstrap technology to remove carbon dioxide from the atmosphere in an effort to arrest global warming. A similar AMC-esque project is expected to be unveiled in May at the annual plutocrat retreat in Davos hosted by the World Economic Forum (WEF). That project’s instigators in the First Movers Coalition, which was forged last November and unites the WEF, America’s State Department and dozens of big global firms, have already made purchasing commitments aimed at helping to decarbonise the aviation, shipping, trucking and steel industries.

Experts reckon the world must remove about 6bn tonnes of CO2 a year from the atmosphere by 2050 to avert the worst impacts of climate change. Less than 10,000 tonnes have so far been permanently extracted in this way. Closing the gap thus requires heavy-duty bootstraps.

To be eligible for the tech companies’ scheme, known as the Frontier Fund, carbon-removal technologies have to pass several tests (besides obvious ones like being safe and legal). One is permanence: the technologies must be able to store the stuff sucked from the air for at least 1,000 years. Another is scalability: they must not have land-use requirements that are in conflict with food security. A third is cost: they must have a path towards a price tag of less than $100 per tonne of carbon dioxide removed (down from hundreds of dollars or more per tonne for existing techniques). These are “absolutely foundational to getting anything close to net-zero”, says Mark Patel of McKinsey.

The goal is not to invest in carbon-tech startups, explains Nan Ransohoff of Stripe, which controls the Frontier Fund and will chip in more than a quarter of the kitty. Rather, the idea is to be early customers for the nascent carbon-removal techniques, which can help meet the buyers’ own decarbonisation targets. For early-stage carbon-suckers, the fund will offer low-volume pre-purchase agreements. For bigger firms scaling up proven methods, it will offer larger contracts that pay providers for tonnes of carbon once these are delivered to the agreed specifications. Suppliers can then use these commitments to secure financing and expand capacity.

“A billion dollars is a big number but not even close to big enough,” concedes Peter Freed, who leads the project at Meta. But, he hopes, it may “start a snowball rolling down the hill”. And, if all goes well, it will keep some snow from melting, too. ■

TYPE 1 CIVILIZATION, YES PLEASE

Scientists Predict that Humanity Could Harness Earth's Energy by 2371

When will humans harness all Earth's available energy? In about 300 years, according to a new study.

By Becky Ferreira
21.4.22

Over the course of thousands of years, humans have harnessed increasingly bigger energy yields, starting with ancient campfires and domesticated animals and progressing to modern sources, such as fossil fuels, nuclear power, and renewables such as wind, hydro, and solar.

That said, we are still a long way from producing the amount of energy that Earth naturally receives from the Sun, a feat that would officially distinguish us as a Type I civilization, according to the Kardashev scale, a metric that ranks the advancement of a civilization based on its power-generating capabilities.

Now, a team led by Jonathan Jiang, a scientist at NASA’s Jet Propulsion Laboratory, has produced a new estimate for when humans might attain this Type I status: the year 2371, or thereafter. The researchers reached this conclusion by analyzing “the consumption and energy supply of the three most important energy sources”—fossil fuels, nuclear energy, and renewable energy—while factoring in our likelihood of wiping ourselves out with these power sources, a concept known as the Great Filter, according to a study published on the preprint server arXiv.

Named after its inventor, the Russian astronomer Nikolai Kardashev, the Kardashev scale starts with the planetary level category, Type I, then imagines a Type II civilization that could access all the energy of its star, before concluding with a Type III civilization that could tap into the power of an entire galaxy. Jiang and his colleagues also invoke the “K formula,” developed by the American astronomer Carl Sagan, which expresses the Kardashev scale as gradient, rather than as three distinct stages.

“In its early formulation, the Kardashev Type I civilization was based on the overall consumption of energy of a given civilization,” said Jiang in an email. “However, it should also encompass that civilization’s stewardship of their home world.”

“Therefore in this study, when we analyze the consumption and energy supply of the three most important energy sources (fossil fuels, nuclear energy and renewable energy) based on Carl Sagan’s K formula, we are inspired to also consider environmental limitations suggested by United Nations Framework Convention on Climate Change and the International Energy Agency,” he added.

Humans are likely to be thousands of years away from becoming Type II or Type III civilizations, assuming such enormous energy yields are even attainable at all. Though we are already an impressive 73 percent of the way toward cinching Type I status, that progress has come at an unsustainable price. Fossil fuels primarily power the world, but they are also causing rapid climate change, a trend that is amplifying deadly phenomena such as natural disasters and pollution, all of which threatens to leave us on the wrong end of the Great Filter.

“Development is an eternal theme for human society. But in the process of development, we can't just develop for the sake of development,” said Fuyang Feng, an astronomer at Beijing Normal University who co-authored the study, in an email. “More importantly, we can understand some truths in the process of development, so that we can reflect on past history, what shortcomings we have made, and it can give us more inspiration for our future development. Only in this way can we develop sustainably and have the ability and possibility to understand the nature of the world better.”

Feng added that if humans fail to find the right balance between our major energy sources, then our “biggest problem is not how many years we will take in reaching Type I civilization, but whether we will survive until we reach Type I civilization and succeed in avoiding the Big Filter.”

For this reason, the new study assumes that humans must rapidly abandon our consumption of fossil fuels within the next three decades just to survive, let alone become a Type I civilization. Beyond that horizon, alternate energy sources—such as nuclear, solar, hydro, and wind power—must swiftly increase their yields to meet, and ultimately exceed, the power demands of global society. That said, the study also isolates nuclear power as another form of energy that could place humanity at risk if its hazardous byproducts are not properly handled.

“Another major and inevitable concern with the increasing development of nuclear energy are the dangers to all life on Earth posed by such a powerful resource, while trying to successfully avoid the Great Filter,” the team said. “Thus, in concert with significantly increasing the growth rate of nuclear energy generation,” they added, we must adopt “improved technology for even more secure disposal radioactive wastes, all while transitioning to cleaner forms of energy.”

Jiang and his colleagues cite another similar study that estimated when humans might reach Type I status, which came up with the year 2347 as a possible tipping point. But the new study is slightly more conservative in its estimation of the growth rate of clean technologies, as it factors in the role of policy changes involving energy use and other complex factors, resulting in a date a few decades later.

Taken together, the research suggests that if humans are able to switch to renewables within the next few decades, we might expect to earn our Type I stripes sometime in the 24th century. Working toward this goal is not just some aspirational futurist goal, it may be essential to ensuring our species evades extinction, according to co-author Philip Rosen, a retired energy expert.

“Stagnation, or worse, backsliding into decline are simply not options for the long-term survival of humanity,” Rosen said in an email. “While continued technological development, and the associated increasing energy demand, certainly poses risks, those genies cannot be stuffed back into their bottles.”

While the researchers acknowledge the difficulties of making predictions about an outcome riddled with so many inherent uncertainties, they suggest that the exercise has value as a means to consider the awesome responsibility of humans to safeguard our planet and all its inhabitants.

“The key difference that separates humanity from other species on this Earth is that we have the power to imagine the future!” said Prithwis Das, a student at Vivekananda Mission High School in India and a co-author of the study, in an email. “We are the race of explorers and we are here to rewrite history every-time we make a breakthrough finding.”

“Reaching the Type 1 civilization and beyond will not only make us the next generation of human race but also will successfully help us keep aside the question concerned with the very existence of mankind,” concluded Das. “And for us to upgrade ourselves, analysis of energy consumption/supply of the three major energy sources is a critical step since we cannot progress a single step without harnessing energy. This was the motivation for our team to conduct this study."