Get Set to Prosper in Post-Carbon Era, Investment Capitalist Advises Canada
Canadian governments and investors must accept market reality and prepare to prosper in a post-carbon economy, rather than shedding tears for an Energy East pipeline that would never have earned a significant return on the investment dollars it consumed, Chrysalix Venture Capital CEO Wal van Lierop argues in a recent Globe and Mail opinion piece.
“The economics of energy cannot be denied,” he writes. And “the energy transition is under way. The question is, how will Canada’s economy continue to thrive,” given that the country’s biggest enterprises “still depend on hydrocarbon value chains.”
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Van Lierop points to the massive price shifts that are reshaping energy, in Canada and around the world. “Unsubsidized solar and wind energy are now cheaper than coal, oil, and even natural gas, according to Lazard,” he writes. “Worldwide solar capacity grew 50% in 2016, faster than any other fuel source. Meanwhile, the price of storing and delivering renewable energy is falling quickly. Battery packs cost roughly US$200 a kilowatt-hour today but could hit $109 by 2025, making electric vehicles cheaper than gasoline-fuelled equivalents.”
Comparing today’s dynamics to the 1900s transition that replaced horse power with cleaner internal combustion engines—whose exhaust didn’t create the immediate, obvious public health hazard that horse manure did—van Lierop asserts that “market forces are phasing out hydrocarbons.”
“The market has said loud and clear that [eventually] 9.7 billion human beings want a healthy, safe, and comfortable future on this planet,” the financier argues.
Which means that “Canadian companies have one shot to adapt to the post-carbon economy. Leaders who invest in reuse cases, cross-disciplinary innovation, and networks will lead our economy. Those who just invest in cost-cutting and efficiency will not endure.”
As an example of a “reuse” case for hydrocarbons, van Lierop cites the work of Hui Wang at the University of Saskatchewan, who “has patented one of the first commercially viable catalysts for synthesizing carbon dioxide and methane back into usable liquid fuels.” He also sees carbon-based graphene as an opportunity for cross-disciplinary innovation. The material could “replace 14 rare earth metals in common electronics like smartphones and tablets. If we could capture it efficiently” from the air, van Lierop writes, “the surplus of carbon dioxide in our atmosphere would creat[e] value and reduc[e] the greenhouse effect simultaneously.”
However, such breakthroughs “require collaboration among nanotechnologists, engineers, public health scientists, chemists, and biologists,” among many other specialties.
To achieve that, he urges Canadians to “build networks, not scale,” and to shed the idea that “all innovation needs to happen inside a traditional, full-time employee model. Rather than hire university students themselves, large companies should seed their start-up projects.”
If that happens, he says, “the energy transition could become an engine of prosperity” for Canada, “depending on what actions we take today.”