May 7, 2014

Cleantech investor and author Tom Rand to speak on campus May 9

Forum will explore the role of renewable energy in economic development and job creation

Tom Rand isn’t afraid to rattle some chains. In fact, it’s all part of his mission. After a successful turn as a software entrepreneur, the cleantech investor, speaker and author is now a passionate advocate for carbon mitigation. His recent book Waking the Frog: Solutions for our Climate Change Paralysis uses contemporary psychology, economics, business and finance to look at what it will take to achieve a sustainable future.

In his characteristically blunt fashion, Rand is clear on the need for change: “Climate change is not a future threat, it’s already here. It’s not like some unsavoury character that might one day crash the fossil fuel party, and ruin the good times. It’s already here – it’s in the kitchen, stealing beers and breaking furniture. The fossil fuel party needs to end.”

Following are excerpts from an interview with Rand done in anticipation of his May 9 visit to the University of Calgary as one of the keynote speakers for the Thought Leaders Forum: Job Creation, Economic Development and Clean Renewable Energy.

Q: Why is there a reluctance to adopt renewable energy and cleantech in Canada and Alberta?

A: Because people are making a lot of money from business as usual, and when you’re making a lot of money from business as usual, why would you change? It’s as simple as that.

Q: What needs to change?

A: That’s a complicated question. At the end of the day, we need full cost accounting with a fee on carbon emissions. It’s not free to put garbage in the dump and it shouldn’t be free to put carbon in the atmosphere.

I’d say to energy incumbents: “There are now emerging low carbon assets that you can develop, and the cleantech sector has developed technologies that have better IRRs (internal rates of return) with lower long-term risk and higher long-term upside than a new oil and gas field. From a financial perspective alone, we have produced for you a new class of assets that mitigate your carbon risk.”

The challenge is to make the energy incumbents understand that they have a fiduciary responsibility to their shareholders to explore these opportunities in earnestness because of the carbon risk their investors face. The social licence to continue to produce carbon is not open-ended. Investors understand this and want some answers as to how people are going to hedge that risk. I understand they won’t change overnight, but there is an obligation to hedge that risk.

Q: What is the biggest opportunity to make a change in Alberta?

A: It is for the boards of directors and investors in fossil fuel companies to understand that there is a new class of low carbon assets that is attractive and hedges their long-term bets.

If you’re an energy incumbent, instead of spending money to explore for new reserves that are 100 per cent unburnable – you can argue about how much existing reserves you can burn, but you can’t burn new ones – is to take that exploratory money and dabble in cleantech rather than spending it to increase your carbon risk, which is a breach of your fiduciary duty to your investors. Fossil fuels are uneconomic. The implied subsidy in fossil fuels is the freedom to emit carbon for free, and that right will be taken sooner or later. I don’t know when that will happen…it’s a political risk. But when it gets taken away, you better have another bet to make, which is what cleantech is.

Q: What advice would you give our government and future leaders like our students?

A: Skate to where the puck is going to be. There’s no question that oil and gas will be around for a while. No one pretends that we’re going to shut it off tomorrow, but what’s going to happen 10, 15 or 20 years from now is you’re going to want to have another option at the table.

We’ve been using fossil fuels for 200 years. Every industry is threatened by a shake-up from “the new,” but “the new” eventually wins because it’s better, faster, cheaper, cleaner. Renewables will win this race. There is no doubt about it. They are cost-competitive today in many ways. It’s really a matter of how fast they will scale up, not whether they will. Solar in the United States was a sideshow for the big utilities for a long time. Now, there’s so much solar going up on so many roofs that the utilities worry for their very business strategy. They’re fighting back. So the big boys in the States are getting worried because of solar. The same thing is going to happen in many other parts of the energy sector. So hedge your bets.

Q: Why are you so passionate about this issue?

A: Cleantech will kick fossil fuel’s butt sooner or later. I don’t have any worries about that. My investments are just fine, thank you very much. What I’m worried about as a human being is not whether we can kick fossil fuel’s butt, because we can…it’s whether we’ll kick fossil fuel’s butt fast enough to stop global warming hitting four, five or six degrees. What I’m worried about as a human being is that we don’t have time to fight this out. We haven’t got time for the usual market dynamics, where it takes me 50 years to put you out of business. We don’t have time for that.

Register today for the May 9 Thought Leaders Forum. The event is made possible by faculty partners Arts, Education, Environmental Design, Science, Social Work and the Schulich School of Engineering; the Van Horne Institute; and the Alberta Clean Technology Industry Alliance. It is funded in part by a grant from the Social Sciences and Humanities Research Council.