NASCO : North American Strategy for Competitiveness

The North American Strategy for Competitiveness (NASCO) is a fascinating organization. The economic trading partnership represents nearly a quarter of the global Gross Domestic Product (GDP). We are blessed with strong connections in terms of land, people, culture, and economy. This was my first time as the newly minted President and CEO of Port Alberta attending the NASCO 2013 conference in the Great State of Texas. I pushed a number of things off my plate to meet with industry and government leaders from across Canada, the United States, and Mexico in San Antonio.

My thoughts quickly drifted back to a time when I lived only 25 minutes from the Mexican border in Arizona when my home was in the Sonoran desert. We all shared the same desert, the same weather, the same food, and the same culture. There was an international border, but it wasn't difficult for us as we could drive to "la Frontera", grab a parking spot, and just walk across the line. For us, it was like walking across the street. Not much changed except for the number and type of stores set up at the border for the tourists. 

I knew there would be plenty of Mexicans at the conference and looked forward to meeting them and speaking Spanish.  One of the first orders of business was to register for the conference.  While looking for the registration desk, I was greeted by very nice people from Mexico speaking Spanish.  We immediately engaged in conversation and a lady from the State of Michigan joined the group. I grew up near the Windsor/Detroit border, so we had a lot to talk about.  Having spent most of my life 15 minutes from the Canadian/US border or the Mexican/US border, I was in my element.

As we continued to chat, I was graciously escorted into a room with a couple dozen people. We all exchanged business cards and I noticed these people represented their respective governments at a pretty high level. After a quick reference to the event schedule on my iPhone, I realized the seat I occupied was for "invited only" government leaders for the NAFTA countries!  Inadvertently, I wound up at the meeting of ministers.

I thought to myself, “maybe this is meant to be”, after all, I have the heart of a Latino and citizenship of Canada and the United States.  My participation and opinions were welcome in the discussion on how the three NAFTA countries might best move forward on a variety of levels. It was a thrill to observe and collaborate with such brilliant international thought leaders instrumental to the fate of the NAFTA region.

Canada, the United States, and Mexico account for nearly a quarter of the global GDP.  That fact, in and of itself, is staggering.  The United States imports nearly twice as much oil from Canada as Saudi Arabia.  Canada has invested over $230 billion in NAFTA partners and our trading relationship has blossomed to over a trillion dollars.  The combined GDP of Canada, the United States, and Mexico were about $19.2 trillion last year.  The Government of Canada has been keenly aware of a shifting multi-polar world and what that means for Canadian trading and competitiveness.  

Mexican reforms seem to be gathering momentum as indicated by considerable capital starting to pivot from Latin American markets into Mexico.  Initial Public Offerings (IPOs) and add-ons seem to be shifting capital from Brazil toward Mexico. Over 10 billion in IPOs have been racked up this year to date. While the Asian IPOs have retracted, North American IPO proceeds have gained.  Mexican President Enrique Peña Nieto is considering changes to the Constitution of Mexico, in particular, articles 25, 27, and 28 of the Constitution. 

President Enrique Peña Nieto

The potential reforms in Mexico would radically change the Mexican economy and shift foreign investment back into high gear.  It is thought that Petróleos Mexicanos (PEMEX), the state-run oil company, could ramp up exploration in dwindling oil fields.  But the alteration of the Mexican Constitution requires a 2/3 vote, and it is unlikely to pass unless President Nieto's PRI party can secure the support of the conservative PAN party which is not entirely opposed to the idea, but in order to secure their support, they are asking to have electoral reform which would allow a run-off between first and second place candidates in Presidential elections according to Jose Maria Martinez, deputy leader of the PAN in the Senate.  

Over 11,000 trucks move across the border crossing between Laredo, Texas, and Nuevo Laredo, Tamaulipas every day.  If you're going to cross the US/Mexican/Canadian border, here's a handy link for real-time data that shows the best time to cross for passengers and commercials.  Between Canada and the United States, over 1.4 million worth of goods and services cross the border from the United States every minute of every day. That's a $710 billion dollar market between the U.S. and Canada alone.  It's no wonder the Government of Canada is going to build a new bridge across the Detroit river because it is Canada's largest trade corridor with over 25% of U.S. and Canadian trade.

New Bridge from Windsor to Detroit - designed by Ted Zoli

Canada will pick up the tab for the construction of the bridge at several billion dollars (estimated between 3 and 4 billion).  That bridge represents what every person from the Detroit / Windsor corridor knows... the trading relationship sends more value in cargo across the Detroit river every day than we trade with many countries all year long.  In short, it's the single largest trading corridor in North America and it's growing.

The bridge in Laredo is also tremendously important too.  The Laredo bridge is called the World Trade International Bridge, and it carries about 10,000 (or more) trucks a day delivering cargo between the United States and Mexico. This Laredo bridge spans the Rio Grande. You can check out the bridge cams at this link.

World Trade International Bridge - Laredo

When people start talking about NAFTA, I have a whole new perspective on just how important it is for our three countries.  NAFTA matters and the key relationships we have with Mexico, Canada, and the United States are incredibly important to our economies and to our people.  Suffice it to say, I've always believed in free trade and I've always felt the relationship between Mexico, Canada, and the United States is enormously important.  Between the three countries, we can claim continental energy independence.  There are many reasons why the trading relationships of NAFTA are critical to all three countries, but the sheer size and velocity of goods and services are simply unmatched anywhere else.

Mexico, the United States, and Canada represent about a quarter of the World's GDP, over 14 million jobs depend on this relationship, and it is a 19 trillion dollar market, larger than the European Union and twice the size of China.  The message I gave the meeting of the leaders was very simple. The problems for the supply chain and logistics between Mexico, the United States, and Canada began on one particular date, September 11, 2001 a.k.a. 9/11.  That's when the borders started to become difficult to negotiate.  Only I was able to say that in no uncertain terms. Everybody else had to be restrained in their choice of words because they were high-level political representatives... I was the guy representing the industry and was not bound to the same requirement to dance around the heart of the issue.  Naturally, I put it right out there on the table and I think very much to the relief of the government officials present.

We must leverage our advantages as technological leaders and thought leaders to make make our borders easier to cross for our trade, and we can do it by leveraging technology for more intelligent border systems, cooperating more closely on these matters, and focusing on our ability to leverage these things while approving energy infrastructure, like Keystone, to create a strong energy security policy that benefits all three nations.  These recommendations, in a slightly different form, were put forth on my birthday, October 3rd, from the Canadian Council of Chief Executives and addressed to President Obama, President Nieto, and Prime Minister Harper.  

I believe President Nieto is leading a visionary change that will bring increased prosperity to Mexico.  The Eagle Ford shale play extends into Mexico and there is so much more.  But PEMEX will require the kind of expertise Canadian and U.S. companies can bring to the table in order to unleash the enormous potential of Mexican natural resources.  The United States must also consider the importance of completing the Keystone project, which in and of itself does not create a complete solution to the breadth of North American energy security that all of us want, but it will certainly help.  And to be clear, the majority of U.S. citizens want Keystone to move forward.

We recognize that business leaders and the United States Congress join the majority of the people in their desire to see Keystone move forward.  North American energy independence allows us to apply our own technologies and innovation in our marketplace instead of pushing global energy production into the hands of nations where environmental controls are nowhere near our environmental control standards.  Democratic stability and decades of harmonious relations across the NAFTA countries support continued policy development that will benefit North America.

President Nieto and President Obama

President Nieto and Prime Minister Harper

If we apply our technologies and make a genuine attempt to work more closely to harmonize our security and enhance the flow of goods and services across the North American supply chain, we will advance our economies and move forward together.

Climate Change and Arctic Methane

Arctic Ocean Latitude 71 degrees North
April 15, 2010, Image Credit: NASA/JPL

I recently noticed a fascinating article in the Edmonton Journal written by Margaret Munro of the Postmedia News entitled "Scientists eager to drill in Arctic Waters for answers about methane".  The article goes on to outline a project being undertaken by the Integrated Ocean Drilling Program for the expressed purpose of gathering a deeper understanding of the ramifications of methane coming out from the permafrost under the Arctic.  

Glaciologists, geologists, and environmental researchers of different disciplines have been pondering very large questions related to the planetary environment and what the potential impacts could be to humans.  Of particular interest recently, is the impact of methane hydrates coming out from the permafrost beneath the Arctic.  Since methane is probably 20 to 25 times more potent greenhouse gas than CO2, there are considerable ramifications associated with this research.  Methane has a short half-life compared to CO2, so it dissipates faster, this offsets the sheer quantities that could be released into the atmosphere.  With estimates of methane hydrates being discussed in vast numbers, understanding the risk imposed by climate change in the Arctic is not a subject to be taken lightly.  

Image Courtesy of:
Gordon Groat
Ph.D.(abd), M.Sc. (hon), M.A., B.G.S. (IPE), A.A.Sc.
Taken from CO2 and Climate Change

According to Gregory Ryskin, associate professor of chemical engineering at Northwestern University, "explosive clouds of methane gas, initially trapped in stagnant bodies of water and suddenly released, could have killed off the majority of marine life and land animals and plants at the end of the Permian era" — long before dinosaurs lived and died. Ryskin believes that methane may have been the driving force in previous catastrophic changes in the earth's climate, where 95 percent of marine species and 70 percent of land species were lost in - geologically speaking - the blink of an eye.

The most troubling estimates suggest that once triggered, this cycle could result in runaway global warming, sometimes referred to as a tipping point.   While our scientific evidence is still limited in scope, it is important to consider what we know from looking back in time.  It seems prudent to be cognizant of strong geologic evidence that suggests something similar has happened at least twice before.  The most recent of these catastrophes occurred about 55 million years ago in what geologists call the Paleocene-Eocene Thermal Maximum (PETM), when methane burps caused rapid warming and massive die-offs, disrupting the climate for more than 100,000 years.  The granddaddy of these catastrophes occurred 251 million years ago, at the end of the Permian period when a series of methane burps came close to wiping out all life on Earth.  More than 94 percent of the marine species present in the fossil record disappeared suddenly as oxygen levels plummeted and life teetered on the verge of extinction. Over the ensuing 500,000 years, a few species struggled to gain a foothold in the hostile environment. It took 20 million to 30 million years for even rudimentary coral reefs to re-establish themselves and for forests to re-grow. In some areas, it took more than 100 million years for ecosystems to reach their former healthy diversity.

Earth image courtesy of:
NASA / JPL

Climate change... if it is anything, it is definitely controversial.  It is also a scientific field that is relatively new and requires additional investment to produce the scope of data required to properly evaluate the impact of methane release.  It should also be noted that methane emissions from tropical areas far surpass, in scale, the emissions of the Arctic.  Nevertheless, methane release due to climate change in the Arctic is worthy of scientific investigation.  The science is not settled on this matter, but it is of considerable importance.  

At the very least, it seems logical to establish baseline measurements of methane in the Arctic simply because the vast potential amounts of methane warrant our investigation for the purpose of understanding changing levels of methane.  This is required in order to reduce the chance of misinterpreting changes in methane levels as climate change continues.

To further understanding of the ramifications of global climate change impacts due to methane release from the Arctic, there is a need to establish increased scientific monitoring and research on the subject.  Rising surface temperatures should motivate the international scientific community to consider these questions.  Appropriate considerations imply the need for the deployment of scientific measuring instrumentation, improved international collaboration, and the integration of traditional indigenous knowledge.  

One particularly revealing comment made by an indigenous elder of the Arctic was "in our generational memory, we have never seen the ice melt so much, we have never seen so much open water".  This prompted the interviewing scientist to ask if that meant one generation or two perhaps.  The question was not easily understood by the elder.  After some more questions, the elder replied that by generational, they meant thousands of years.  This underscores the critical fundamental knowledge carried by the indigenous people of the Arctic.  There are literally thousands of expressions to describe different ice conditions, many of them not easily translatable into English, at least not to their satisfaction.  Thankfully, as research in the Arctic moves forward, more and more participation and collaboration is taking place with indigenous peoples.

This raises the question of what to do with the research.  It's critical to place the best science we possibly can gather into the hands of decision-makers.  The policymakers and governments that have jurisdiction in many areas of the Arctic reside thousands of miles away from the Arctic.  This poses a fundamental problem that can possibly be overcome by hybridizing the structure of decision-making in the Arctic.  

By leveraging the model of the Arctic Council, where indigenous people have a seat and a full voice at the decision-making table, the outcomes can be tailored to the decision-making requirements of the region.  Of course, full diplomatic, governmental, and organizational representation is advantageous for everybody, but there may also be room for an international body where all interested scientists and people who wish to share in a democratic and open manner can come together to form the best decisions possible.

When considering methane, or any other scientific endeavor in the Arctic, it is important for us to remember that the great frontier left in the World today is the Arctic.  This means our investment, our intentions, and our results will be measured in the centuries to come.  Given the enormous impact of climate change upon the entire planet, and given the rate of climate change is highly accelerated in the Arctic, it might just stand to reason that the most important decisions we make in Canada and the rest of the Circumpolar nations will be among some of the most important decisions that will be taken in the 21st century.

Hitting the Mark

Offshore Wind Generation

According to data from the UK National Grid, production of electricity from wind reached the marker of 10%  during September of 2011, largely from the largess of Hurricane Irene and thanks to Scottish Wind generators.  The UK Department of Energy and Climate Change reported a change in quarter 2 (Q2) that was 120% more than Q2 a year ago.  That substantial year over year renewable gain in Q2 translated to over a 3% gain in national energy provision.  That's a significant gain and one worth noting especially when we see 10% of the UK's entire energy requirement being met with renewable energy.  That's a huge accomplishment and worthy of emulation.

Dr. Gordon Edge, RenewableUK's director of policy, notes that producing nearly 10% of the national energy needs is a clear demonstration that renewable energy can play a huge role in supplying national energy needs, but also, in building jobs and contributing to a low carbon economy.  In fact, the UK Department of Energy and Climate Change (DECC) has created a roadmap (downloadable .pdf), a laudable document that outlines precisely how the UK will make the shift to clean renewable energy, laying out specific technologies and targets along the way.

Scottish Undersea Turbine

But it's not all peaches and cream, as Dr. Edge points out, as the renewable energy sector approaches around 13% of the UK's national power the bottleneck will become difficulties tying into the aging grid infrastructure in the country.  This is a problem that exists in every developed nation and inevitably, it will become an issue for Alberta. 

When the UK hit the 10% mark in September of 2011... at the peak time, 1860MW was being generated - largely from Scotland - and accounted for 4.7% of total generation at the time.  That's impressive by any standard of measure.  If, according to the National Gird, wind power directly feeding into the low voltage local electricity networks by smaller wind farms is taken into account wind generated about 10% of Britain's power during the 24 hour period. 

Solar Capacity added to a Bridge in London

We can accomplish that right here in Alberta.  But it takes courageous leadership, intellectual vision, and solid planning.  In fact, the biggest challenge we face in Alberta is not how to acquire energy nor how to increase renewable production, the challenge is how to rethink our transmission infrastructure.  A viable strategy to shift to renewable energy should be incorporated or associated with every new energy infrastructure plan.  Are we up for the challenge?