Choosing the right economic indicator – Gross National Happiness vs. Gross Domestic Product index

Since the days of the Club of Rome and Canada's Conserver Society, the underlying debate about economic growth vs. resources depletion and environmental limits has continued relentlessly. Politicians and governments are focused on GDP growth. Environmentalists are looking for alternatives.

But Oliver Moore in a recent Globe and Mail article reminds us that there is at least one other way of measuring the success of a society: Gross National Happiness. He cites the example of Bhutan, a small idyllic mountainous country snuggled between Bangladesh and China. Faced with increasingly rapid change from the pressure of globalization, which threatened its traditional way of life unspoiled by colonialism, it was looking for an alternative. The country came up with a 9 x 72 matrix set of indicators that would assess the population’s mood.

The resulting Gross National Happiness or GNH index is based on residents’ assessment of nine domains including psychological well-being, time use, community vitality, culture, health, education, environmental diversity, living standard and governance. Each of these in turn is broken down into indicators or variables. For example, for living standard, there are eight indicators, i.e. household income, income sufficiency to meet everyday needs, food insecurity, house ownership, room ratio, purchase of second hand clothes, difficulty in contributing to community festivals, and postponement of urgent repairs and maintenance of house. In total, for the nine domains, there are 72 indicators or variables, each of which has an associated survey question and a resulting index. See the Centre for Bhutan Studies web site for details.

This GNH process has moved beyond a method of assessing the population.

The country's leaders now use it as a screening tool to assess whether decisions fit its criteria. For example, a recent proposal to join the WTO initially appeared attractive. But when it was screened against the GNH criteria, it was determined that the WTO policy would not further the GNH objectives. And so the proposal was rejected. A good analysis of the underlying thought process is given by Mark Mancall of Stanford University in the December 2009 issue of the Journal of Bhutan Studies:

The pursuit of GNH depends upon the affirmation and reinforcement of Bhutan’s ability to exercise self determination in the positing of long-range objectives, short and intermediate-range policy decisions, and the development of the institutions and values in which those long-range objectives will be embedded and the procedures through which they will be realized. WTO membership weakens and diminishes national self -determination institutionally, procedurally, and culturally.

A key Canadian expert who helped Bhutan in adopting GNH is Ron Colman of Nova Scotia, founder of GPI Atlantic. He started by promoting the notion of a Genuine Progress Index (GPI) for Atlantic Canada. He sees progress as being more closely related to quality of life than depletion of resources such as fisheries or forestry.

More recently, the movement spread to the United States through GNH USA, which held a very successful conference last June in Middlebury, Vermont. Countries that expressed interest in GNH include Brazil, which had its own international conference on GNH last year and South Africa.

France is another country interested in alternative measures of progress. It recently published a report on alternatives to GDP as a measure of success through its Commission on the Measurement of Economic Performance and Social Progress. The French translate Gross National Happiness as…”Joie de vivre”!

Clearly, there is a long way to go before elections are won and lost on GNH progress, but the conceptual foundations are gradually being laid. And in Canada we are off to a good start now that Montreal has been ranked as the second happiest city in the world.

To drill or not to drill, that is the question

We continue to examine barriers to moving toward a sustainable society

The gulf of Mexico BP catastrophe has brought into crystal-clear focus our long-standing dilemma over oil dependency. Should we continue our dependency on oil? Should we risk more Gulf-like disasters, including associated GHG missions from the combustion of fuel? Or NOT? To drill or not to drill, that is the question.

A recent New York Times article reports on conversations with some people in the small community of Dulac, Lousiana, and for them, the choices are very real. The issue has been brought to their front stage with dramatic clarity.

Most people in Dulac are reeling as they watch the local seafood industry collapsing under the body blow of the BP spill.

But there is another crisis caused by President Obama’s moratorium on oil drilling, which the Republican governor of Louisiana, Bobby Jinda, calls "a second man-made disaster". The oil industry is responsible for huge majority of jobs in the area, and Louisiana lawmakers fear the drilling moratorium, could put more than “100,000 people out of work, shutter businesses and destroy livelihoods”.

Federal U.S. District Judge Martin Feldman, known to invest in the oil and gas business, overturned the presidential moratorium. Last week, the US Justice Department issued a new moratorium that it hopes will pass muster with the courts.

And the fight continues. But the Dulac community members are beginning to ponder the merits of alternative energy. Those are difficult choices.

The ‘take home’ sustainability challenge can be phrased as follows:

How might we have a sustainable community (with no oil dependency) that can generate good jobs and economic prosperity?

The challenge of maintaining public commitment to sustainability

One of the biggest barriers to the transition to a sustainable society is public attitude. In essence, sustainability involves transforming our economy from one that consumes excessive energy and resources. This requires a focused dedication to long-term objectives over a time period spanning 50 to 100 years. Although there are many other metrics to define sustainability, global warming has been the one single indicator on which we’ve focused to-date. Maintaining public support to address this challenge is critical.

What is distressing is a recent article in the New York Times about the drop in support for action against man-made climate change, especially in Britain - the forefront of climate change initiatives in OECD countries.

The NYT article quotes a BBC poll that finds that “only 26 percent of Britons believed that ‘climate change is happening and is now established as largely manmade,’ down from 41 percent in November 2009”. UK politicians, including new Prime Minister David Cameron, who have previously led the charge on climate change action are now soft-pedaling the issue. Similar trends though not as strong are appearing elsewhere in Europe.

Causes for this cooling of attitudes have been attributed to the growing visibility of climate change skeptics. Encouraged by the media, they have been making hay with last year’s email scandals at East Anglia University. Other contributing factors were some minor errors in IPCC reports, e.g. exaggerated rate of melting of Himalayan glaciers. And the coldest European January in recent years didn’t help either. The scientific community is beginning to fight back with letters and editorials in prestigious journals like Nature and Science.

But there is a deeper question. Unlike the January 2010 Haiti earthquake which galvanized world attention for almost half a year, climate change is a slowly progressing but far more pervasive and dangerous natural phenomenon. It has to be addressed through mitigation or adaptation strategies and the move to a sustainable society. But making the transition to a sustainable society requires consistent focus. This transition will require some short term sacrifices and tradeoffs. More impoertantly, it will also require a steadfast commitment spanning several elections at all levels of governments.

What’s the take home message? We have a simple challenge: how might we present sustainability as a long term critical societal goal, in a sufficiently attractive and compelling vision, to maintain the commitment over the next several decades.

Any suggestions?

New case study on the transformation of a major regulatory system – The Model National Building Code

This is a special post to announce the publication of a case study examining the National Building Code of Canada. The story is about its transformation from a prescriptive to an objective-based code to become more flexible and allow for easier innovation.

The Model National Building Code is the single most important regulatory infrastructure to shape all buildings in Canada. In examining barriers and obstacles to sustainability – the underlying purpose of this blog -- it is important that we understand how the building code operates. More critically, we also want to appreciate what it takes to modify or change a large regulatory instrument like the building code. That’s an essential part of the process of removing obstacles and barriers to innovation and change.

Codes are very complicated instruments. Changing the basis on which they are built is therefore a complex and lengthy process. The detailed case study, prepared by André Potworowski and three MBA students from the University of Ottawa, provides a narrative account of that historical transformation which spanned a full decade.

This is a classic story of the significant effort needed to re-design a well-established regulatory system to make it more responsive to the needs of society.

One of the key lessons learned, is that once the new code was published in 2005, key stakeholders also had to undergo change. There is a lot of learning and training required to work effectively and take full advantage of this new regulatory framework. An international workshop of code writers and regulators from 17 countries was held in Calgary in September 2009 to share experiences from the transition to new performance- and objective-based building codes. The conclusion: we still have a way to go before the transition is complete and all the benefits of the new performance-based codes are reaped.

Special thanks to Director General Bob Bowen of the National Research Council’s Institute for Research in Construction who agreed to sponsor this project, and to Denis Bergeron and Guy Gosselin who helped throughout the research, data collection and editing process of the final draft.

To access the case study, click here: The Transformation of the National Building Code of Canada: from Prescriptions to Objectives

In search of better indicators, signposts and metrics to help us achieve sustainability – the case of green housing

From our very first pre-workshop research and workshop proceedings two years ago, it became apparent that metrics and indicators were a critical element to the “Making it happen” project and the transition to a sustainable society.

Our first challenge was to define what we meant by a sustainable society, what were the vision and the metrics. So we reviewed over 50 studies, reports, and visions written over the last three decades. We also looked at a number of metrics or indicators used to define a sustainable society, such as energy consumption per capita, water consumed per capita and wastewater produced per capita, garbage generated per capita, and probably the hottest indicator, tons of carbon dioxide emitted per year.

Our main finding is that choosing indicators or metrics to describe a sustainable society, how you define them, what you actually measure and how, and achieving consensus on their relevance is a whole research area unto itself. For example, setting performance metrics or targets for greenhouse gas emissions is a highly charged political exercise – from the selection of the base year to the target year, all the way to deciding on the magnitude of the desired reductions. All these are subject to fierce debate.

More specifically, as we explored the barriers to shifting our residential housing stock to become sustainable or green, where we used the "net zero energy" houses as a benchmark, we discovered other challenges related to metrics.

For instance, a major challenge has to do with how to increase awareness of various stakeholder groups to the opportunity of green housing. This is a pre-requisite for the paradigm shift, and has to be achieved through such interventions as consumer education and information.

An essential component to achieve increased awareness is to demonstrate to all the members of the value chain (builders, vendors, real estate agents, consumers, and banks) the green value proposition, i.e. what is the real market value of an energy conserving feature. For example, most homeowners understand the positive impact on resale value of a house of a new $10,000 granite kitchen counter. Few people on the other hand appreciate the true dollar value of a $10,000 energy retrofit investment, e.g. achieved by installing extra insulation or triple glazed windows. We need clear agreed-upon indicators and metrics to capture and communicate this number down the value chain.

Another consideration is that an energy-efficient or "green" house looks no different from an ordinary house. We need some very clear, highly visible and simple indicators to show what is going on inside these energy-efficient houses, so normal people can readily see and appreciate what make them so unique and valuable.

At the end of the day, what the consumer really wants to know in real time is how much money these energy efficiency features are saving him or her, and what is the net operating cost of that property.

And when time-of-day meters become prevalent, consumers will want easy-to-read displays that make decision-making simple and easy: when to switch on major appliances, or delay it to another time of the day when the cost of electricity is cheaper. Already, gas and electric utilities are experimenting with various models.

On the financial side, the higher cost of green houses has led to a range of innovative financial instruments and business models. But an ongoing challenge is measuring and quantifying the dollar benefits of energy efficiency and environmental features, so that these can be better reflected in the market. Being able to measure the added value of "green" will facilitate the funding and sharing of the financial burden of the incremental cost of building an energy-efficient house.

In short, there is a need for a standardized simple energy efficiency and environmental performance rating system. The Energuide standard is well on the way to provide that. And NRC is developing a new energy building code. But these standards and metrics need to be visible throughout the marketplace, and should be reflected in such normal real estate transaction databases like the MLS. And building designer and inspectors, real estate agents, builders and bankers will all have to become thoroughly familiar with the new environmental and sustainability standards.

So trying to be green is good. But knowing precisely what is green, being able to measure and monitor it over the lifecycle of the product, so you can determine how well you’re doing is more critical.

Changing behavior -- the fun way

One of the recurring challenges throughout our investigation of obstacles and barriers to achieving sustainability, is the ability to change human behavior.

My friend Bob Czerny sent me the link to an interesting Swedish website sponsored by Volkswagen. Called the fun theory.com, it is “dedicated to the thought that something as simple as fun is the easiest way to change people’s behavior for the better.” The site recently organized a contest to identify creative and fun ways to change people's behavior for a better world.

The result is a highly creative collection of videos and ideas where, through a system of simple fun rewards or incentives like sound effects, consumers are drawn to the preferred behavior pattern.

Here are some of the more intriguing ideas:

Encourage people to use (piano) stairs instead of escalators

Throw garbage into garbage cans

Place glass bottles into green recycling bins or “bottle banks”.

Enjoy!

Meeting the new green house gas reduction targets – how do we make this happen?

Earlier this month, the Canadian government filed its official greenhouse gas reduction targets with United Nations. Many environmentalists object that these targets are too low. Others, however, are asking the more basic question: what can the government do to make it happen?

The short answer is that it's not a technology issue, it's a management issue. We don't need new technology to reduce our fossil fuel combustion and greenhouse gas emissions. We already have all the technology. Our research shows that there are no less than 160 such technologies available. They exist, they are on the market and they work. It is not a question of creating new technology. It’s a matter of removing barriers and obstacles to make sure the existing technologies and solutions are fully deployed.

In the housing sector alone, we could reduce our carbon emissions by 60 to 80% before 2030 if we deployed 55 of these technologies in the 10 to 15 million residential units across this country. So what’s really stopping us?

Certainly financing plays a role. In deploying green technologies, homeowners face an immediate up front cost that energy savings would only amortize over decades. Yet this could be addressed through incentives, redistribution of taxes, rebates, different types of mortgages, and even novel business models.

Other barriers show up in the lack of widely approved standards or codes to move in this direction. And an even bigger one is the acute lack of skilled trades to implement and install these technologies. By one estimate, we would need a million skilled trades people to fully retrofit Canada's existing housing stock.

There are many such barriers and taken together, they are slowing down progress toward sustainability to a crawl.

One especially difficult set of barrier consists of the complex patchwork of contradictory regulations and incentives that confuses and misdirects progress.

We all say we would like to encourage the use of public transit, yet we provide highways with a 100% subsidy from taxpayers while partially subsidized transit systems have to charge for ridership.

We recognize the advantages of higher densities in cities yet we tax buildings at higher rates than empty land and we tax high-rise buildings at higher rates than we do low rises.

Becoming green is not rocket science. It involves thousands of small decisions taken systematically and strategically to move toward sustainability.

A compelling example of such choices is offered by the University of Ottawa. Over the past 25 years, the university tripled both its surface area and its population, but its overall energy consumption remained relatively constant. In effect, its ability to use energy efficiently increased by a factor of three!

There was no magic bullet involved, Instead, thousands of individual decisions and choices had to be made relative to water faucets, pipes, air-conditioners, compressors, boilers, heat recovery etc. Through careful monitoring of daily energy use, the plant manager was able to pinpoint opportunities that increased efficiency. The result was that the University saved $28 million and it reduced its CO2 emissions by 30-40%!

What made this possible was the dedication of one individual able to make financial decisions and investments to optimize the energy system because he had the consistent backing of the university administration.

In the same way, we need governments at all levels in Canada to provide Canadians with a consistent regulatory framework that gives them incentives to make choices tending toward sustainability.

Some governments are beginning to realize this. Ontario's new Green Energy Act, passed last year, provides incentives to those wishing to install renewable energy in their homes and sell the excess to the province's electricity grid. But what really makes this piece of legislation remarkable is that it was accompanied by a careful review of other laws to identify those that might conflict with the Act’s core objectives.

The legislators recognized that aggressive promotion of renewable energy demands the removal of many different barriers across many different jurisdictions. So the Green Energy Act includes amendments to no less than 15 other provincial statutes including the Electricity Act, the Building Code Act and the Planning Act governing municipal zoning. It even amended the Co-operative Corporations Act to allow for new renewable energy co-operatives.

In other words, it is not new technology that is needed to meet greenhouse gas reduction targets. Instead, we have to face up to our complex legislative and regulatory systems. We really need the will to get down to the nitty-gritty of identifying and removing the many small institutional and bureaucratic barriers that are stopping us from moving to sustainability.

The biggest manufacturer of green technology in the world

By all accounts, China has become the largest manufacturer of green technology in the world. According to a recent article in the New York Times,

• China is now the largest maker of wind turbines; Vestas of Denmark has just built the world's biggest wind turbine manufacturing complex in Northeastern China;
• It is the world's largest manufacturer of solar panels;
• It is building the most efficient types of coal power plants;
• Renewable energy industries employed 1.12 million people in 2008, and climbing by 100,000 year;
• China is aiming for wind and solar and biomass energy to represent 8% of its electricity generation capacity by 2020;
• It is the world's largest market for power equipment, and the government has committed $45 billion in 2009 to upgrade the electricity grid. Domestic demand for electricity is growing at 15% a year.

China's competitive advantages include interest rates as low as 2% for bank loans, and low labor costs.


The Wall Street Journal also points to the very aggressive efforts by China to develop an electric car.

• BYD Auto Co. recently showcased in all electric car that the Chinese company intends to sell in the US by the second half of 2010. BYD, which stands for Build Your Dreams, is backed by a $230 million investment by Warren Buffett, for a 9.9% stake in the company (i.e. for a total capitalization of $2.3 billion).
• In 2009 BYD sold 450,000 electric vehicles in China, an increase of 160% over 2008 figures.

That's big!

Why Canada is not (really) interested in fighting climate change

The release last week of the Pembina Institute/Suzuki Foundation study “Climate Leadership, Economic Propserity” on the economic impact of addressing Canadian carbon emission targets has sparked criticisms from both politicians and media. Reactions from western politicians as well as Federal Ministers were understandably negative. But so was the Globe and Mail in its editorial position. Why?

A couple of weeks ago, I was finally given a candid explanation by a senior federal government official (who shall remain nameless) as to why fighting climate change and reducing its impact is not a high priority for Canada. He listed a number of perceptions currently shared by many federal politicians:

The first perception is that global warming will not hurt us. Unlike for developing countries, the impact of climate change on Canada will not be very severe. The US will suffer slightly more that us. But on the whole, the impact of global warming on our landmass will not be devastating compared to some developing countries, and in fact may have some benefits for us. At least that is the shared view.

Rising water levels and coastline erosion will not have a major impact, because most of Canada's coastline is largely uninhabited. Some small fishing villages may suffer, but these have very small populations.

Forced migrations from more vulnerable developing countries will not hit us as hard as say Florida, Australia or Europe, because Canada is more difficult to reach.

There is even the sense that global warming might in fact benefit us. Rising temperature would increase the productive agricultural areas, and would allow the production of new crops which until now could not grow in the cold climate.

However, the economic cost to Canada of addressing climate change head-on will be very high. The recent economic growth of Western and Atlantic Canada is largely based on oil, gas and coal. Canada has become the largest provider of petroleum to the United States, surpassing Saudi Arabia. So shutting that industry down will cause serious harm to the Canadian economy and Canadian jobs. And that is a very price to pay, economically and politically, for any federal government looking for a majority.

Bottom line: the general perception is that living in a warmer climate and adapting to it will be far less costly to the economy or the job market than making major efforts to reduce carbon emissions and getting the country "off-oil". That is what my federal official said.

This is the most succinct explanation I’ve heard to date as to why the current federal government is seen to be dragging its feet in supporting climate change mitigation or any serious move to a sustainable society, domestically and internationally. The hurt of doing nothing is much less than the pain of going off-oil – at least in the way my friend and his colleagues see it.

Furthermore, a province like Ontario, which is not a petroleum or fossil fuel producing exporting province, is driven by a need to revitalize its manufacturing industry. It has chosen to do so by promoting a renewable energy industry. And that explains its strong support of renewable energy and conservation through such measures like the Green Energy Act.

Needless to say, I found that perspective to be somewhat discouraging. But I was grateful to my interlocutor for expressing his view so clearly so that even I could understand it.

What can be done?

Going back to the analysis underpinning our study “Making it happen”, when faced with such a clear anti-global warming set of premises, it becomes easier to develop a strategy to shift these. We can analyze these perceptions and use them as a basis for defining our challenges. And we can formulate these challenge statements as following, for example, using the phrase “How might we…?”:

How might we show in a convincing way the scale of the long-term harm to Canada of rising temperature, e.g. invasive species such as the pine beetle, droughts in the prairies, or growing number of extreme climate events?

How might we demonstrate the increased vulnerability of Canadian agriculture to these warmer temperatures and increasing climate changes and their ecological effects?

How can we make it irresistible for Western and Atlantic provinces to go “off oil”, and develop an attractive business proposition that a non-petroleum economy would be far better for them in the long run?

It’s high time that these issues be brought into the open and debated fully and clearly.

A good example of holistic change: the Ontario Green Energy Act

Barriers to innovation and change have to be addressed holistically. That is one of the conclusions in our "Making it happen" study. A clear example of this has been confirmed to me last week when talking to a couple of people involved in the preparation of Ontario's Green Energy Act.

What makes this particular piece of legislation unique is the integrated and holistic approach it takes to address the intended challenge project. Specifically, the act contains a dozen or more amendments to other provincial statutes, to eliminate specific barriers to the deployment of renewable energy. In other words, the officials and consultants involved in drafting this legislation went to great lengths to identify the barriers and obstacles existing in other provincial laws and statutes that would impede the deployment of renewable energy.

What has intrigued me ever since the Act was first tabled is how these obstacles and different statutes were identified. In other words what was the holistic process used in developing this legislation to eliminate all these obstacles.

Last week, I finally had opportunity to talk to a couple of people who were involved in consulting stakeholders and develop a vision for the act, and who were responsible for drafting the final legislation.

What emerges is a very conscious and deliberate attempt to take an integrated approach. First of all, this initiative was led from the very top in the provincial government, all the way from the Premier's office. Based on our previous work on sustainable communities, such leadership is essential if you want to break silos and build collaboration across jurisdictions.

The process followed a number of steps. Extensive consultations were undertaken through the Green Energy Act Alliance, involving various stakeholder groups: First Nations, farmers, advocates and practitioners, current and retired employees of local distribution, companies and municipalities, civil servants, lawyers, business leaders and a broad representation of nongovernmental organizations. This allowed for each stakeholder group to identify what they saw as the opportunities, obstacles and barriers. A key output of these consultations was the production of a Vision for a Greener Energy System for Ontario.

Another process was taken by senior legal officials in the Ministry of Energy and Infrastructure responsible for drafting the actual legislative text. Together with a team of legal experts from other ministries, they examined the specific regulatory/legal obstacles in the various statutes and looked at the legal implications of changing them. When needed, they verified with those responsible for the central policy (which presumably meant going back to Ministers when necessary) to ensure that these could be amended.

My inquiries were by no means comprehensive, or even sufficient to write a full case study. But they do point to a number of elements essential to such a holistic approach:

1. There was leadership at the very top


2. There was broad consultation with external stakeholders


3. There was intensive internal consultation within the provincial bureaucracy led by Cabinet to eliminate legal and other institutional barriers in other Ministries


4. The process took about three to four months, from November 2008 to February 2009 when the legislation was tabled, i.e. not an exorbitant Amount of time.

In other words, there was a conscious will and focused effort to identify all the barriers and obstacles that would impede the implementation of renewable energy. Moreover, these obstacles and barriers had to be addressed in the new legislation.

This is the kind of approach that has to be far more prevalent at all levels of government if we are to move to a sustainable society.

Incidentally, one of the government lawyers tells me that that he remembers this approach being used only once previously. This was in the 1980s (!), when a consumer protection legislation was being considered.

So we have a long way to go before this becomes prevalent.

Final Report

Our final report and all the background research papers are now available at http://makingithappen.ca/ .

Click here to download the final PDF summary and recommendations.

Highlights from Phase I report:

Here are some highlights to expect in our Phase I report, “What the federal government should do to remove barriers to innovation and change, and lead Canada to a sustainable society":

• Canada already has all the technology needed to reduce greenhouse gases by 60% within two decades.
  


• What's stopping us from deploying these technologies are deep rooted institutional, legal, regulatory and economic barriers, such as lack of standards and proper metrics, inadequate financial instruments to pay for energy conserving measures, restricted leasing contracts and an insufficient supply of skilled labour.
  


• Some 100 such barriers to innovation and change for sustainability have been identified, e.g:
  


• The federal government should start by setting a compelling example. For instance, a federal government department can be disinclined to implement energy conserving measures because it is a tenant and not the owner of the building it inhabits. The divergent interests of landlord and tenant are a barrier to action that can be overcome by a new leasing arrangement between the department and the agency that acts as its landlord.
  


• While Canadian homes should all be energy efficient, it would require a million trained contractors to retrofit all existing housing units in Canada for energy efficiency. There are no provisions currently to train or certify this number of building contractors.
  
  
• Many of these can be addressed by stronger collaboration among governments and better ways of measuring our progress

• The report calls on the federal government to take on a role of leadership by example, by facilitation and by direction.
  

Stay tuned for the complete report on-line by September 3, 2009

Overcoming barriers: finding innovative ways to monitor GHG emissions

The Commissioner of the Environment and Sustainable Development published today a report on the government's compliance to the Kyoto Protocol Implementation Act that was passed in 2007 in the House of Commons, by all parties save the governing party. Obviously, this can only happen in the minority government situation.

From our perspective of barriers to change and innovation, it is worthwhile to look at just one aspect of the auditor’s critique, namely the lack of proper monitoring system. I don't want to belabor the point as to whether environment Canada did or did not fulfill its duty with regards to monitoring GHG emissions, or the requirements of the Act. But I do want to focus on the critical importance of having such a monitoring system in any change management process, which is what a transition to a sustainable society is all about.

As our research has shown today, especially using the example of the residential sector, deploying green technologies that dramatically reduce GHG emissions, water use and wastewater generation, and garbage, requires a very large number of small decisions. More importantly, the barriers to these innovations and changes cover all jurisdictions and within each jurisdiction, go across several departments and silos. There is no single golden bullet. But there are some overall metrics with relations to GHG emissions, water, energy usage and so on. And we discussed these in an earlier post (see Setting sustainability and environmental targets (1): Recent announcements on GHG emissions ; Setting sustainability and environmental targets (2): the dimensions of sustainability, and Setting sustainability and environmental targets (3): Ottawa’s “Choosing our future”)

Keeping track of how each of these small decisions, in all the sectors of the economy, contributes to achieving these objectives is critical in any change management strategy. However, a full monitoring system is not a trivial matter. It requires a fairly significant bureaucratic infrastructure and reporting structure. A good analogy is what statistics Canada uses to poll on a monthly basis the necessary manufacturing shipments and inventory data from Canadian corporations to provide the key monthly indices off economic growth and performance. However, in this instance we would be looking at all sectors of the economy, including transportation, residential, commercial, as well as industrial. We would need to not only baseline data, but the rate of implementation of new technologies to achieve these environmental objectives. This is not a trivial task. But it is essential to invest in building up such a system if we ever hope to achieve Kyoto targets.

More importantly, it is a classic example of the real barriers to achieving a sustainable society, where power, information, and resources are broadly dispersed among a wide range of stakeholders, and where effective coordination is needed. (See, for example, Gilles Paquet’s studies on governance)

With some creativity, this exercise could be turned into a hugely motivating process, that could help engage the whole country. Let’s look at one sector, not mentioned in the Commissioner’s report, which we have studied in the course of our study: the residential sector.

Depending on whose definition you take, households in Canada contribute anywhere from 10 to 40 -50% of GHGs. The low end estimate looks only at the actual physical house and residential unit, the high end extends the GHG emissions to each family’s lifestyle, including what they do, how they travel and where they go to work. In fact, it can include all of the community, excluding industry.

So the challenge is to how to help each individual household monitor as accurately as possible their own progress towards achieving each reduction objectives with regards to GHG, electricity, energy and water usage reduction. And each company or enterprise could do the same, as well as each commercial building or complex. Putting all the blame on the Environment Canada, which is pretty strapped in terms of budgetary resources, is not likely to find a quick solution. Instead, why don't we throw open the challenge and find innovative ways to engage the various key sectors to determine better ways for tracking their improvement along the pathway to sustainability and GHG reductions.

Staying with the residential and community sector, we would first need some standards and common definitions, to make sure that the accounting is consistent. And the federal government and Natural Resources Canada have a well-established track record in doing so with the Energuide program. We will need new and much more user-friendly meters in each household that can track, for example, the improvement in energy consumption or water usage, or gas heating and electricity consumption. This would allow each of us to track and become aware in real time how a new appliance, a new device or a change in practice helps achieve the reduction objective. The idea is to make this cause-and-effect as clearly visible and understandable as possible. There is ample opportunity for incentives, standards and new metering products to address this task. It could be a unique opportunity for new businesses and jobs.

And by putting the responsibility on individuals, while helping them with easy to use tools to measure progress, we not only empower them, but provide a context to unleash a unprecedented flow of innovative ways to reduce GHG emissions.

“Ecoflation”: a barrier or an opportunity?

In today's Financial Post, Diane Francis brings up the term "ecoflation" first reported in a December 2008 article by Deborah Zabarenko, Environment Correspondent for Reuters.

In essence, the argument states that a barrage of environmental legislation, regulations and taxes to address environmental degradation and global warming will significantly raise the price of consumer goods and hurt the profitability of the companies that manufacture them. This view is strongly held by many business leaders. And it is a crucial perceptual barrier to any major progress on moving to a sustainable society.

To this argument, I respond by reiterating UK’s Lord Stern’s position that the long-term cost to the planet as a whole will be dramatically higher if we don't put these measures in place to address global warming.

As our project "Making it happen" demonstrates, we do need to change the way we run our economy, use resources, and build our infrastructures, if we want to become a sustainable society. And what we have been doing is looking at what are the barriers to achieve this.

But the more pertinent question here is whether those changes in infrastructure, in our manufacturing processes, and in the creation of new "green" industries and businesses, would lead to a more resilient economy.

Never mind the fact that the Arctic ice cap is melting 30% faster than any previous projection. The urgency for re-examining some of our traditional concepts of economic growth comes from another corner. The largest corporations in the United States, including GM (not to mention the Phoenix Coyotes) are on the brink of bankruptcy, something that was unheard of a year or two ago. Whatever happened to that old adage "What is good for GM is good for America"?

And here is the challenge to all of those researching what a green economy in Canada might look like: can we demonstrate persuasively that “ecoflation”, what Diane Francis and Deborah Summer consider to be a curse, might in fact be the pathway to the economic salvation and long term sustainability?

Can we be creative and find ways to devise new business models, new concepts of community, and longer-term security as a result of this transition?

Why we need more Clean Energy Acts

Technology alone won’t achieve sustainability -- we also need to address the human and social factors


Despite the head-line-grabbing economic downturn, climate change is still making news: melting Arctic ice shelf, severe drought in Argentina, and unprecedented heat waves and wildfires in Australia.

A lot has been written about sustainable development and how to stop climate change. But much less has been written about how to make it happen.

Ontario has just tabled a far-reaching Clean Energy Act last monthwhich goes a long way in that direction. But there is still room for more.

We know we could reduce our green house gas emissions by 60% by the year 2050, and surpass Kyoto targets in the process. Most of the technologies to do that already exist.

Now it's not a technological fix by itself that will solve that. Green technology alone will not stop climate change. What is critical is to make sure that these technologies actually get deployed and used in our society. That requires a multi-dimensional effort crossing all levels of governments to make these technology choices available, affordable and acceptable to consumers. What our society needs is in-depth change management.

For the last few months, our team at the University of Ottawa has been examining the various barriers to sustainability: what’s stopping innovation and change that would result in a systematic transition to a sustainable society.

And what we are discovering is a whole range of barriers to innovation and change: social, economical, legal, institutional, human, attitudinal, etc. that prevent large-scale deployment of green technology.

Here’s an example. We know how to build a very efficient or zero energy house. The technologies to do that have been known for years. So how come we're not using them? That was the subject of a workshop at the University of Ottawa last week, where practitioners, builders, real estate agents, developers and researchers explored the barriers to making the residential sector totally green.

Cost has a lot to do with barriers to change. Many energy efficiency and environmentally clean options for residential houses require an upfront investment few are willing to make. The roller coaster price of oil and natural gas over the last two or three decades have not helped to establish a stable rate of return or payback. And building owners should not be expected to absorb all these costs. This raises a number of questions: how might we use municipal and property taxes to encourage energy efficient houses and buildings? Can we change mortgage requirements to look at the entire lifecycle cost of a house, including energy savings? Can we convince utilities, who save money from avoided capacity increases, to help out?

There's also the training of builders and contractors, so they can learn how to integrate these new technologies in the existing building systems. The challenge is to retrofit and renovate all the existing houses and buildings in Canada to be energy efficient. We estimate that the total number of contractors and trades people needed to be approximately 1 million FTEs. That’s a lot of new jobs. And no one is addressing how to meet that need.

The mandatory energy audit before selling a house proposed in the new Clean Energy Act will go a long way to signal to potential buyers that there is a real measurable dollar value associated with energy efficiency. But it is only one of many measures to encourage energy efficient retrofits. Those who object to it should realize it’s no different from having to pay $80 to get a car safety-checked before selling it.

Another barrier is NIMBY, as we recently saw in the cases of windmill farms or large solar photovoltaic installations. Despite the promise of environmental benefits, neighborhoods have objected to such installations. The new Clean Energy Act is addressing this barrier very clearly for new renewable technologies.

But there are still many other areas of social and economic activity that need to be addressed. In the commercial sector, landlords generally want to minimize upfront investments, even if it will reduce energy operating costs for the tenants. That might require a change in legislation governing leases.

Transportation is another area. Here’s a simple example: inflating your car tires to the correct pressure can save between 4 and 8% of gasoline consumption. Yet studies show it’s much easier to wash your car than to check your tire pressure accurately. In fact, many gas stations don’t even have properly calibrated air pumps. Changing that is complex, and involves change management, industry cooperation, shift in consumer attitudes and motivation.

Convenience and availability are other factors. Many energy efficiency products are often inconvenient to use, e.g. meters that can be read only with great difficulty or provide incomplete data. And some products are very difficult to find in your local store. Changes in product design, standards and codes should help address these deficiencies.

And I haven’t mentioned industry, or regional development.

Unlike any previous social change in our history, the transition to a sustainable society will require an unprecedented level of cooperation between cities, provinces and the federal government. But at the end of the day, consumers need to be aware. And they need to be able to chose acceptable green products and services that are affordable, accessible, and available. That is no mean feat, and will require more legislative and regulatory changes.

Making the residential sector totally green: Initial Feedback

Our workshop on February 23 was a total success, judging by participant’s reaction and media coverage. Over 40 people attended and spent the day probing the underlying causes of “What’s stopping us from making the residential sector totally green?”.

As we wait for the final workshop proceedings, Patrick Langston of The Ottawa Citizen wrote this:

"Lack of public awareness and financial aid is stymieing the greening of Canadian homes, according to participants in a workshop promoting eco-building techniques earlier this week.
More than 40 participants tried to understand why the green movement is not going faster, since homes generate one-tenth of Canada's greenhouse gases, and technologies, innovations and practices are available to reduce emissions by 60 per cent by 2030.
"The workshop, which is part of a two-year research project by the University of Ottawa's Telfer School of Management on transitioning to a sustainable society, took place the same day the provincial government announced Ontario's Green Energy Act to promote residential energy efficiency.
"Yet participants made it clear that basic information about the availability, cost, and economic and environmental benefits of energy efficiency technologies is lacking among everyone, from developers and buyers, to real estate agents and lenders."



Peter Kovessy of the Ottawa Business Journal writes that at our workshop, “several green residential experts said previous government incentive programs, aimed at encouraging home energy efficiency upgrades, have a mixed record at best.

Rather than public subsidies, participants at a workshop examining barriers to reducing the impact of climate change in the residential sector suggested the government do a better job promoting measurable standards for home energy efficiency.”

In addition to some of the leading participants such as Mathew Sachs of Urbandale, and David Foster of the Canadian Home Builders Association, Kovessy makes reference to three MBA student presentations, which extracted lessons learned from the evaluation of past programs in energy efficiency in the eighties and nineties.

In referring to low number of houses that had been built under the R-2000 program, “by that standard the program has not been very successful, concluded Anne Murray Choudhary, a University of Ottawa MBA candidate who analyzed evaluations of the program conducted up to 1995.

In that time period, only 6,500 homes were built to the standards, she said, noting there was low public awareness and a high amount of paperwork required of builders.
Likewise, the Canadian Oil Substitution Program, in place between 1980 and 1985 to reduce the country's reliance on foreign oil, was "not particularly" effective, said another MBA student, Jason Spears.

The government handed out $715 million in subsidies to homeowners to switch their heating systems from oil to alternatives. While the program led to nearly $2 billion in conversions, two-thirds of surveyed participants said they would have made the switch regardless, said Mr. Spears, adding regional differences, such as the lack of natural gas access in Atlantic Canada, hampered the effectiveness of the one-size-fits-all program.

The Canadian Home Insulation Program was similarly established in 1977 and ran for a decade to shield the country from possible future oil shocks by saving energy used for space heating, explained MBA candidate Benedicte Losfeld.

The program only achieved 17-per-cent energy savings among participants, off from the expected 30 per cent, said Ms. Losfeld.

Interim project chair Tom Brzustowski said there hasn't been enough emphasis on management in sustainability discussions given the main impediments tend to be institutional, jurisdictional and cultural, rather than technological.

"There seems to be no shortage of knowledge or innovation," he said. "Maybe we've been too preoccupied with ideas and haven't spent enough time putting things into practice."

Overcoming barriers to innovation and change: the creation of a new international agency to promote renewable energy.

Last month marked the creation of a new international agency, the International Renewable Energy Agency (IRENA), exclusively focused on the promotion of renewable energy technologies.

More than 120 government delegations from across the world attended a conference in Bonn. The Agency’s statute was signed on January 26, 2009 by a total of 75 nations, a broad cross-section of developing and industrialized countries. Canada did not attend.

The initiative was led by Germany, Denmark, Spain, and Poland.

“The founding of IRENA is a milestone on the road towards a future-oriented energy supply. It is a clear sign that the global energy paradigm is changing and that more and more governments are committed to accelerating that shift.”

“The aim of the new Agency is to work throughout the world to close the gap that exists between the enormous potential of renewables and their current relatively low market share in energy consumption. IRENA is the first international organisation to focus exclusively on the issue of renewable energies, addressing both the industrialized and the developing world. The main work of IRENA will be to advise its members on creating the right frameworks, building capacity, and improving financing and the transfer of technology and know-how for renewable energies. IRENA seeks to cooperate closely with other international organisations and institutions active in the field of renewable energy.”

For more information, see www.irena.org

Program update: What's stopping us from making the residential sector totally green

Here's a program update to our February 23 workshop at U of Ottawa Telfer School, as of Friday, February 6 2009.

We have reached 75% of our registration objective. So hurry, space is limited.


Some of our presenters and resource persons as of today:

Hugh MacLeod, Associate Deputy Minister to the Premier of Ontario: Climate Change
Peter Love, Chief Energy Conservation Officer,Conservation Bureau, Ontario Power Authority
Ralph Torrie, Navigant Consulting
David Foster, Director of Environmental Affairs,Canadian Home Builders’ Association
Gordon Shields, Executive Director,Net-Zero Energy Home Coalition
Dana Silk, General Manager, Envirocentre, Ottawa
Chris Higgins, Coordinator, LEEDR Canada for Homes, Canada Green Building Council
Bob Linney, Canadian Real Estate Association
Tom Green, project manager, EQuilibrium™ Housing, CMHC
Representatives from City of Ottawa, Ville de Gatineau

Preliminary results from the Telfer School research project
on barriers to innovation and change

For program background, click here

For registration, click here

Inconvenience with public transit: A barrier to innovation and change

With the end of the disastrous two-month public transit strike in Canada’s National Capital, people are wondering what can OC Transpo do to regain its former popularity among commuters. Mike Kesterton of the Globe and Mail has pointed us to an interesting story by Fox News about novel technologies that would make public transit more convenient, eliminating some of the current barriers:

TransitTracker
"For commuters who have to choose between breakfast and catching the bus, companies such as TransitTracker keep tags on buses and trains so you can track them online or on your cell phone.

The system follows your ride's actual location — not an estimated schedule — so you know exactly when it will arrive at your station or stop." It’s currently being used in Portland, Oregon.

iNap
"Once you're on that train or bus, you can finally get back to what matters most: going back to sleep.

Thanks to an ingenious iPhone application called iNap (get it here) , the phone's built-in GPS device will track your location (as long as you're above ground) and set off an alarm when you're near your destination — not too soon, not too late, leaving you little excuse to be grumpy when you actually arrive."

What's stopping us from making the residential sector totally green?

A special workshop on identifying barriers to change and innovation
to reduce impacts of climate change in the residential sector

When: Monday, February 23, 2009, 9:00 am to 4:00 pm
Where: Telfer School of Management, University of Ottawa, Room 4101
55 Laurier East, Ottawa, K1N

The residential sector in Canada generates at least one tenth of greenhouse gases. These emissions can be reduced by as much as 60% by the year 2030. All this requires is the deployment of known technologies, innovations, and practices, already in the market.
What's stopping us from reaching that objective?

Key questions to be addressed:

What have we learned?
Over the last thirty years we have tried to reduce usage of fossil fuels. Many of the necessary technologies already exist and are available in the market. Refinements and improvements are always possible, but there is enough available already to make a big difference. So what have we learned from these years of federal, provincial, and municipal efforts to reduce energy consumption of Canada’s residential sector?

What are the barriers to change?
Identify major themes and obstacles, including jurisdictional, legal/economical, and behavioural challenges

What are some common themes?
Discuss common themes and possible integrated areas of intervention.


Program
- Overview of objectives and sustainable visions
- Some of the presenters and resource persons:
Hugh MacLeod, Associate Deputy Minister
to the Premier of Ontario: Climate Change
Peter Love, Chief Energy Conservation Officer,
Conservation Bureau, Ontario Power Authority
David Foster, Director of Environmental Affairs
Canadian Home Builders’ Association
Gordon Shields, Executive Director
Net-Zero Energy Home Coalition
Dana Silk, General Manager
Envirocentre, Ottawa
Also
- Preliminary results from the Telfer School research project
on barriers to innovation and change
- Recent case studies
- Breakout into groups and sharing of past experiences
- Synthesis and priorization of major barriers to innovation and change
- Next steps

To register, click here

For further information: makingithappen@telfer.uottawa.ca