Karen Farbridge Interview: Part Three

After talking a bit about housing and development in the last part of the interview, I tried to start some "blue sky" thinking. One of the things that I rarely get a handle on with community leaders is some general sense of how they view the world and the big issues that we face as a culture. Instead, if you follow the news you only get to see how they deal with "one damn thing after another". But how they deal with the here-and-now is often based on how they see the big picture.

The same photo I've used in the other posts.
From a University website, used under the "Fair Use" provision.

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Hulet: Just to expand on the wealth stratification thing---.  Just to set this up. I worked with a lot of young people at the university and it's like they live in a totally different country than I do. The thought of just getting a full time, permanent job with benefits just by applying is just not possible.  At the university to even get hired as a housekeeper you have to go through a temporary contract. For other jobs, people stitch together a bunch of part time jobs and then they have to use their cell phone to keep track of their schedule from one job to another. We call that "precarious work" and the "gig economy". Where's that heading? Can any of these people ever buy a house? Start a family?

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I did some research and found out that my experience at the university is not the same as in the rest of the economy. While temporary work is expanding everywhere, it appears that it is worst in the educational sector---which is where I used to work. Here's a graph from a report by the Parliamentary Library that breaks down temporary versus permanent employment by sector. If you look the sixth bar graph from the top, you'll see "Educational services", which obviously have the highest percentage of temporary positions.

"Permanent and Temporary Employees by Industry in 2017"
From the Parliamentary report Precarious Employment in Canada: An Overview.
Used under the "fair use" provision of Canadian copyright law.

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Farbridge: That income inequality is only getting worse. It's not going the other way. The accelerant is going to be automation. 

Hulet: I'm just asking because I was approached by a politician---several elections ago---to write up some "wedge issues" to differentiate that party from others. I focused on trying to come up with a variety of things that would help these young people in the "precariat". Zero interest in any of them. But I did see that the Liberals under Kathleen Wynne took on one of them---the Canada Pension Plan expansion---and eventually it was expanded to the entire country. She also created the Guaranteed Annual Income experiment.

Farbridge: I think that's the solution. It's a structural solution. I'm sure that there will be some unintended consequences, but there are unintended consequences with our current system.  But I do think that's getting at the core of the issue. 

If you give people---I think it was Mike Schreiner who really hi-lighted this for me. If it is going to be the gig economy, it it is going to depend on people's entrepreneurialism. To be an entrepreneur is fine if you are in a fairly privileged position because you've got to be able to feed yourself while this business, right? If people have that sort of basic income taken care of it frees up their creative capacity to start a new business and that business doesn't have to feed an entire family. It can supplement a family, right? But still add significantly to the local economy and meet a need and deliver good service or whatever it is, right? 

To me the flip-side of the guaranteed income is that it will be more supportive of people being more creative and entrepreneurial. The musician will be able to "make it", right? 

Hulet: I was talking to a tree surgeon who mentioned the Canada Child Benefit---the one that Harper created and Trudeau changed so it was aimed at lower income people. He said that it was tremendously important to him when he was starting his business. It allowed him to keep in business when he was just starting up and he was wondering if he would make a go of it or not. And that is considered a "guaranteed income" too.

Farbridge:  Yeah. A bit of one. As is the Old Age Security, right? It's not as if we don't have some elements of it. 

The other side of it is just the administration that's behind so many of our social programs.

Hulet: The problem is that we will have to increase taxation.

Farbridge: Not necessarily. That's not what the research that Hugh Segal and some senators did on Guaranteed Annual Income. And a number of years ago the reform party was a big advocate of a Guranteed Annual Income because it got rid of the administrative costs. For them they thought it was going to be less costly. It would remove a lot of costs---so it's not necessarily more expensive. 

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It's important to understand a significant distinction between two things that often get lumped together: guaranteed minimum income, and, universal basic income. People routinely lump the two together, but from what I've seen the two things support very different public police objectives. 

The key difference between the two is that a universal basic income goes to every citizen in the nation, whereas a guaranteed minimum income is given out based on a means test. It might seem odd that anyone would suggest that Bill Gates, Elon Musk, and, Warren Buffet should be paid money from the government, but that proponents are trying to do two things by making the project universal. First, they are trying to build broad-range support among the entire community. Second, they tend to be people who focus on the issue of dismantling the entire edifice of the welfare state. That is, if everyone is getting a cheque from the government, why do we need employment insurance, welfare, disability pensions, etc?

In the past there have been other innovative policies that suggested that a lot of money could be saved by changing from one way of doing things to another. For example, in the 1960s there was a concerted effort to shut down mental hospitals and "deinstitutionalize" the mentally ill. On paper, this was a good idea as these complexes cost a lot of money and were dreadful places to live. The idea was that if the giant facilities were shut down the money saved could be used to set up more human-sized facilities like group homes and outreach programs that would be better at helping people with psychiatric issues. Unfortunately, what happened is that the politicians focused on "saving money" and ignored the bit about "redirecting resources to new facilities". The result is that guy "with issues" who begs on Wyndham Street and sleeps under the bushes along the river. It's tremendously important that the same thing doesn't happen again. 

In contrast, the guaranteed minimum income simply involves setting a financial "floor" below which no one is allowed to fall. If you make less than it, the government simply sends you the difference so you have money for rent, food, etc. 

We can understand these issues by looking at the history surrounding the "baby bonus". After World War Two the government decided that they didn't want a recreation of the Great Depression, so they designed social policies to help returning servicemen and to redistribute money through the economy. One of them was something like a universal basic income for children. This was the "baby bonus", which gave each parent a set amount of money for each child under a certain age. (When I was young, it was said to be enough to keep them in shoes.) 

It was done away with under Brian Mulroney, but something similar was brought in under Stephen Harper. In 2015 it gave parents $160/month for children under six years of age, and, $60/month for children between six and seventeen. The key point to remember is that this was a universal income program---if you were a billionaire, you still got the money.

After the Liberals assumed government in late 2015, they changed it into a guaranteed income program. That means that the amount you get is based on how much your family makes a year, and, how many children it has to support. For example, if your family income is less than $30,450/year you will get $541/month for a child under six, or, $457/month for a child between six and seventeen. (I won't get into the complexities of multi-child households.) 

As you can see, from the two different programs, if you stop giving money to middle-class and wealthy parents, it frees up a lot of money for people who are really struggling. This is why it's really important for people to understand the difference between these two types of programs!

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This whole post is dealing with complexities. The world is a really complex place and if we are going to have any hope of understanding what is going on around us, we need to get some grasp of what's going on. Businesses routinely subscribe to information digests---like the Back-Grounder---to cut through the fog that comes in when you get all your news from the daily press. But most people don't know about these things because subscriptions are generally really expensive and they hide behind solid pay walls. They aren't meant to be general interest publications, but they are a very successful part of a news media that is in free fall everywhere else. I'm trying to create an information digest for ordinary voters. 

The Back-Grounder isn't meant to be something that you consume like the nightly news or a daily newspaper. It's supposed to be like the old journals that were bound and saved for future reference. And as such, it can have a lot more influence than just a daily, ephemeral news source. But that sort of thing requires people who are willing to pony up money to support it. The Back-Grounder will never hide behind a pay wall, because what it is about is of importance to all voters. But we need to build a culture where people---and institutions, maybe your union, political party, or, other group would be willing to buy a subscription---financially support the sort of thing I'm doing here. So if you can afford it, please consider supporting the work I do through Patreon or toss something in the tip jar. Even small donations---if regularly supplied---can make a difference. 

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Hulet: I have a sneaking suspicion that what underlies a lot of the problems our society faces boils down to things just being too darn complicated.

What I'm doing with this blog would not be possible five years ago. There wasn't enough info that I could access on line to be able to do research that way, and I wouldn't be able to propagate it, and I wouldn't be able to advertise it before social media. I've got the this groovy second-hand phone that is better than the best tape recorder I could afford before---.

But every time you have something that magnifies your ability to do something the economy and society adapts to it. And it starts off as this wonderful force multiplier---to use a military term---then it quickly becomes a necessity and if it's not there you're screwed.

We have this gig economy now because we can and now the whole society has to have the gig economy or else everything would all fall apart.

Farbridge: As the technology is developed, so much more responsibility is off-loaded onto individuals, right? Just take banking. You used to go into your bank and you would go to your teller, and your teller would manage everything for you. Now you have to manage your on-line account, your passwords. It's become more complicated than what it used to be, right?

Hulet: As I turn into my grandparents---I ramble, I forget things, words---I miss the teller who would say "Oh don't worry Mr. Hulet, we'll take care of that".

Farbridge: I think there'll be a new service of people who help you manage your on-line activity. 

There's so many layers to all this. For example, I have to stay at hotels, I have this Starwood Rewards Card, right? So I get a notice---and I'm just one of a lot of people who use this in the Marriott chain---that there'd been a major hack and data breach. And they didn't just get phones and emails; they got credit cards and passport numbers---they got it all. For identity theft. So then the company gives you---I'm sure they're trying to be helpful---a half a dozen things that you can do to protect yourself. I thought "Hang-on, it was your data breach, right?"  I've got to do all these things now? I've got to sign up for a service that will track my info on the "dark web" and let me know if my data is being sold to anybody. 

And I've got to do this, and I have to do that---??? That's complicated---for a stupid little rewards card that maybe gave me some points---so maybe I got bumped to a bigger room?

[Karen laughs in exasperation.]

And that become normalized. Maybe that's what you're saying. And we don't even recognize the increase in complexity. 

Hulet: You're a very smart person---you've got a Phd, you've "turned the wheels of governance" for a city. I have a master's degree. What about people who aren't intellectuals, who just do some mindless job and want to watch the Leafs on tv after a tiring day's work? I can hear them thinking when they see something like this "What? What am I supposed to do?" "Dark web---what the Hell is that?"

Farbridge: Well, I'm not going to do it. I just deleted the email and I'm just going to have to take my chances on this one because I'm not going to add that extra layer onto my life. It'll probably lead to something else, right? 

Have you read Sapiens? [Sapiens: A Brief History of Human Kind, by Yuval Noah Harari] It's the first part of a trilogy, a history of intelligence in humans, "sapiens", from it's dawn to today. The other two books are Homo Deus: A Brief History of Tomorrow and 21 Lessons for the 21st Century.

Yuval Noah Harari. Photo by  עץבעיר.
Public domain image c/o Wiki Commons. 

In Sapiens he has a very compelling line where he says---getting to your point about complexity---that we keep layering on these things thinking that they are going to make life easier but they just end up making life more complicated. 

He starts with agriculture. Moving from being a hunter-gatherer was supposed to be so positive, but it had all sorts of negative consequences. That's one of several examples. 

He says we're not very good---once we are in "It"---at being able to step out and say "Is this really working for us?"

[Karen chuckles.]

We're just on a path---a trajectory, right? 

Hulet:  I don't know if you heard the interview between Michael Enright and Gwynne Dyer on populism. [It's here, at 1:02:03.] He said we're going through a transitional stage. Part of that is this populism that's popped up like leprosy all over the body politiic. The more I look at the world the less I see any conscious activity. As you say, no one's asking "What's going on here?" Everyone is just running in their own little hamster wheel---. It's a headless monster being created by all our own individual drives. 

The hamster wheels go faster all the time and I wonder that even if we lived in a socialist utopia we'd still all be living wretched lives just because of the complexity. 

I'm just wondering if this manifests itself in a city's inability to deal with housing, transit, and, all these other problems that manifest themselves. Environmental issues too. Dyer thinks we're just going through a phase. 

Farbridge: Definitely we're in a transition. Jeremy Rifkin  talks a lot about us being in a third industrial age, and that there are three parts to it: transportation, energy, and, communications. 

Jeremy Rifken, photo by Stephan Röhl.
Public Domain image c/o the Wiki Commons. 

The first industrial revolution was steam power---the locomotive and the printing press. The next one was centralized electricity, cheap oil and gas, the television, the telephone. That sort of thing. Now we're into renewable, localized energy, autonomous vehicles, and, the Internet. 

The industrial age was very disruptive for people at the time. The next one was disruptive to certain people. And this one is too. 

So I agree that there is this sort of thing going on---it's just that the speed and the size of the population accelerate the potential risks:  climate change. 

I do think that we're in the energy transition regardless of climate change. The main thing is that this energy transition will lead to a lower carbon future. The question is "Can it be accelerated fast enough to make a difference?"

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Hulet: I was encourage to hear one of the speakers on today's CBC Current talking about mobilizing to a "war economy" to deal with climate change. I though "Hallelujah---that actually made it onto the CBC!" I can remember giving that talk to Guelph Council 20 or 30 years ago.

Farbridge: My first talk to Council on climate change was in 1994. You might have been one of the other delegations. I know I wasn't the only one. I know Maggie Laidlaw was there too. 

Anyway. I still have the text of that talk and I could give it today and it wouldn't be dated or embarrassing. That's a sad thing.

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Hulet: What are you doing now? 

Farbridge: I chair the Meridian Credit Union Board, and I chair a subsidiary of the Meridian. So that's a big chunk of my time.

Hulet: So the Meridian is a big deal---it's not just a local credit union?

Farbridge: Yes, it's across the province. It's the 3rd largest credit union in Canada, with $20 billion in assets. We have a leasing company and a national digital bank. I'm doing stuff for Meridian every week. It's not just me dropping in every once in a while for a board meeting.

Another thing that I do is consulting work. I'm in five communities right now. I develop and deliver the engagement program in Oakville and Brampton for them to develop a community energy plan. And then in New market---do you remember GEERS? [Guelph Energy Efficiency Retrofit Strategy]---they're still talking about it here. But New Market's doing their version of it. I do the engagement for that process.

The engagement part is just translating the data and analytical work into something people can actually adapt to it.

Hulet: You mean staff? Or the general public?

Farbridge: Staff, public, various stakeholder groups, yup.

And that sort of work will go into Windsor as well. And then I work in Vaughn doing a project. I work with a number of collaborators in the community energy planning space. At universities---York university in particular, Guelph, and then some organizations as well---some not-for-profit organizations too. So I identify barriers to the energy transition and community energy planning and where we need to address those barriers.

The project in Vaughn is looking at financing tools and doing a risk assessment for municipalities. Municipalities are concerned about risk---that's been a barrier moving forward. So we go in and engage in a workshop around identifying what the real risks are and how do we mitigate them.

Hulet: So it sounds like the community energy initiative has become a real movement.

Farbridge: Oh, totally. There's 300 of them across the country. We were one of the first in 2007---now there's 300 community energy plans. I would say right now we're getting into the second wave of sophistication---both on the engagment side and on the analytical side.

Hulet: Another thing that was started in Guelph---

Farbridge: And is dead here.

[Farbridge laughs.]

Hulet: Dead here, but taken up everywhere else.

Farbridge: We're still widely recognized for leading it. Those are examples of projects I'm working on.

I'm part of a group that's developing a three day professional development course for land use planners around community energy planning. That will be offered through York University as a class, but part of it will also be offered on-line.

It's interesting where we got our funding for that, it was the IESO (the Independent Electricity Supply Operators) gave us most of the money to develop that course. Then the electricity distributors associations and, then the Federation of Canadian Municipalities has given us extra money to put more of it on line and make it more accessible across Canada. 

As you said, it's a movement, it's a wave. A lot of stuff going on and then I'm the vice chair of QUEST (Quality Urban Energy Systems of Tomorrow.) That's a national organization promoting community energy planning across the country. 

Hulet: That's encouraging. I was kinda depressed when I did my story about the district energy hubs. 

Farbridge: I get to do a lot more about community energy now than I did when I was mayor. I was just a champion for it here---I wasn't working on it. Eventually all this stuff will come back here---but we will have missed a lot of opportunities. 

Hulet: The district energy systems. Is anyone building those?

Farbridge: Yes.

Hulet: So there is a chance that they will come back in Guelph?

Farbridge: The assets are still there. There were people who wanted to buy them. But the city wouldn't even take their calls. Because this didn't fit the narrative, right? If they were such a terrible idea, why is the private sector wanting to buy them, right?

Windmill [the company that the city is partnering with to develop the Baker Street lot for the new library]---the density is high enough to connect the district energy hub to what they're proposing. So maybe there's an opportunity for them to buy the assets that are downtown and broaden the system for their project. 

At some point someone will come in with a plan. It's just harder to retrofit---we've missed all the Metal Works condos. Once the heating and cooling is in place it's at least 20-30 years before it's time to replace existing plants. 

Will it include a hook-up to the downtown district energy system?
An artists's impression of what the Baker Street project might look like.
Photo from the Windmill site, used under the Fair Use provision of the copyright Act.

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Furthermore, I say to you---climate change must be dealt with!

District Energy: Politics

And Now We Start to Talk Politics

I hope readers' heads are swimming from my discussion about the economics of district energy. That was the point. Sometimes I hear people talk about business as if it is simply a question of research and mathematical analysis. To hear them talk, all you have to do is develop a sound business plan and if the numbers work out, you borrow the money, and, make your millions. Well, it ain't that simple. Many business folks won't admit it, but a great deal of what you need to be successful in business is luck. That's because even if you are the greatest financial genius who ever lived, there are always going to be a great many things that you simply don't know enough about to make a "fool-proof investment". That's why I put in an editorial talking about "wicked problems" because if ever there was one, this is it.

As a general case I find that it's more useful to look at political conflict from the point of view of policy and general trends instead of personality, which I find may make for a more "juicy" story, but not one that helps people get a handle on a complex issue. But having said that, I realize that politics is also important. So it's time to put on my rubber Wellies, get out the manure fork, and get to that nasty job that took up so much time in my childhood.

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So what exactly am I doing with this blog? For one thing, I'm trying to fill a void that currently exists in local news. Secondly, I'm trying to create something of a "public record" that students, researchers, and, concerned citizens can use to learn about local issues. Based on feedback I get, I know that for at least some Guelph citizens I'm already filling that goal. I'm also trying to convince people to totally rethink their relationship to the news media in general. That's what this blue type part is about. I'm trying to convince people that they should be prepared to pay for the news they consume and stop relying on giant Internet companies to provide it for free. Mainly that's because it really isn't, there's always a hidden agenda of one sort or another when it comes to something that's "free". I'm also having some success on that score---people are subscribing through Patreon and contributing through the tip jar. But to really make the point I need to have more subscribers so other people can have a chance of following Adam Donaldson and myself, and try to make a living by creating truly independent news sources. If you can afford it, why not sign up as a regular subscriber? Patreon allows very small regular payments, and the important thing is to get a lot of people making small payments rather than a small number of people making bigger ones (although that would be appreciated too!)

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I've been working through back issues of Gerry Barker's Guelph Speaks, Adam Donaldson's Guelph Politico, and, using the Internet Archive's "Wayback Machine" to look at Cam Guthrie's election blog and as near as I can tell, the district energy systems were not an issue during the 2014 election. The big thing that people were hammering away at instead was the legal problems associated with the company that build the new city hall: Urbacon. It appears that district energy only became an issue after the new mayor had taken over from Karen Farbridge.

The first indication I can find that Guthrie was interested in district energy comes from an item on the Mayor's blog dated October 8, 2015 where he says that in the past ten months 

I think we’ve made some wonderful inroads in developing a new culture throughout city hall, and around the community for that matter, which is focused on the betterment of the city on the whole.

he also wrote later on

If we as a city are stating these goals publicly, and the C.E.I. [Community Energy Initiative---ie, the over-arching framework that the district energy systems fit into] policy, framework and current governance and oversight structure are setup to help direct us to achieve those goals, then perhaps we should make sure they’re realistic and that we’re actually making a positive difference.

This is why very soon the community will see on an upcoming council agenda a request from me for staff to explore the best way to present a progress report on the C.E.I and to explore the best governance and oversight structure for implementing it.

These two quotes are filled with wonderfully ambiguous, emotive terms---like "a new culture" "focused on the betterment of the city on the whole", "realistic", and, "actually making a positive difference". It's hard to understand exactly what they mean other than being the bland "positive speak" blather that we expect from politicians and sales people. (It's the nature of the beast nowadays, so I don't really blame anyone who talks like this---even though in doing so they really don't convey much information.)

After looking through a lot of electioneering I did find one particular instance where I thought I actually saw some real emotional commitment from the mayor that I think is particularly relevant to this discussion. In Mr. Guthrie's campaign website (accessible through the Wayback Machine) I caught the following post on April 2, 2014. I think it's a rare look into what an elected official really feels, so I'm going to post it in it's entirety.

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Taxpayer or Citizen? 

There’s been quite a discussion going on in Guelph around the concept of whether those who live in the city are “taxpayers” or “citizens.” 

The discussion seems to have been started by Guelph Mercury columnist Susan Ratcliffe. It was continued in a Guelph Politico blog entry by Andy Donaldson. And recently culminated in panel discussion moderated by Mike Schreiner, leader of the Green Party of Ontario and included political advisor Ralph Benmurgui, CFRU’s Beyond the Ballot Box radio host Jan Hall and Guelph Citizen blogger Andy Best. All of these discussions have led to two conclusions. 

First: Citizens = good 

This is best seen in Ratcliffe’s column, where she wrote: “Taxpayers are focused only on the monetary cost of government actions to an individual. Broader-minded ‘citizens’ care about social benefits and community values. Taxpayers ask about the benefits to themselves. Citizens ask about the benefits to community building and well-being.” 

Second: Taxpayers = bad 

“I find the word ‘taxpayer’ deeply offensive,” the Guelph Mercury quoted Benmergui as saying. “Everyone has adopted this notion of corporate service. Taxpayers want the service they want and they don’t want to pay for services they don’t personally need. The notion of the common good has deteriorated. I’m worried there may be a crisis of citizenship.” 

As Donaldson wrote: “This vision narrows the complexities of governing on any level to utterly simplistic terms: taxes are fees for service, and we should pay the absolute minimum to get the services we want and just the services we want. That means garbage collection, hydro and water services, police, emergency responders, and clean and easy to navigate roads. Public transit, the arts, cultural events, environmental initiatives, and sustainable planning are luxuries, investments desired by the leftie elites who want to use the blood, sweat and tears of the ‘Taxpayer’ as seed money.” 

Mayor Karen Farbridge emphasized this concept during a question and answer period following one of her state of the city addresses. When asked why residents should pay increased taxes for downtown redevelopment when the return on investment could take at least a decade, Farbridge replied: “You’ve got to prime the pump”. 

The duality between “taxpayer” and “citizen” is ingenuous. The arguments are being made to frame the political discourse in one particular direction. If a politician wants to focus on the needs of the taxpayer, it means they have only one goal in mind: to cut taxes, reduce services and destroy the fabric of the community. If a politician speaks about citizens, it means, no matter the cost, they are concerned about the better good and that they feel they have the best interests of the residents in mind. 

There is no difference. We are both taxpayers AND citizens.

Whether we pay taxes directly through property taxes, income taxes or payroll taxes, or indirectly through user fees such as transit fares, recreational centre charges or development charges, we are taxpayers. And we benefit from those taxes. 

So, is it too much to ask those administrating the hard-earned dollars provided by taxpayers, to be good stewards of that money? We ask the same thing of the various non-profit organizations to which we contribute, so why can’t we ask the same thing of our municipalities? 

People also contribute to their community as volunteers, parents, voters, individuals, homeowners and employees. Everything we do contributes to the fabric of our community without any expectation of return. 

Are we “taxpayers?” Yes. 

Are we “citizens?” Yes 

We are all “citizen-taxpayers” or “taxpayer-citizens,” whichever you prefer. And there are probably a host of people living in the City of Guelph who define themselves the same way. 

It’s time to stop reviling “taxpayers” and celebrating “citizens.” It’s time to recognize and honor “citizen-taxpayers.” 

Thank you, 

Cam Guthrie

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I suppose the best statement of the citizenship ideal that Mr. Guthrie is taking issue with comes from the inauguration of President John F. Kennedy.

The idea is that living in society comes with just as many---if not more---responsibilities than rights. This is also an idea that the holocaust survivor and psychiatrist Viktor Frankl raised in his book Man's Search for Meaning. The thesis of that work is the idea that people are only really happy when they are able to believe in some purpose greater than themselves. He found that the only people who had a chance to survive in the NAZI concentration camps were those that had such commitments, whereas those who just lived for themselves simply withered and died under the harsh conditions. Based on this idea, he suggested that the United States should put up a statue of "Responsibility" to balance out the statue of Liberty. (Indeed there have been serious efforts to fund raise for and build such a thing.)

Artist's rendering of proposed San Diego 

"Statue of Responsibility", image from San Diego City Beat.

Image used under the "Fair Use" copyright provision.

The idea of calling voters "tax payers" instead hearkens to the idea that people live their own personal lives and that great, civic projects are just "moonshine" that wastes their hard-earned cash. That reminds me of my interview with Liz Sandals. In it I was asked what she thought was motivating the  Doug Ford government and Conservatism in general. She answered that she thinks that it comes down to a very simple prescription "the two things that I think he does believe, really strongly believes in, are "taxes are bad" and "government is bad"".

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This hearkens back to one of the ideas that I harped on in the editorial about wicked problems. People come to them with different agendas, even if they say that they are all in favour of same goal. I tossed out the idea that we should think about the term "preventing climate change" as another way of saying "preventing the human race from committing suicide". By doing so, I'm "upping the ante" when it comes to discussing the issue. Lots of people don't really think of it in terms of an existential crisis, but rather as "something nice if it doesn't lead to tax increases". This difference in emphasis isn't just a minor disagreement, but rather a totally different worldview that fuels completely different agendas. 

Totally by coincidence (this blog is not meant to be topical), this issue has recently become a big deal because Councilor James Gordon and Leanne Piper are calling for Guelph to follow Kingston and Hamilton's lead in Guelph declaring a climate change "emergency". Mayor Guthrie seems to opposed to this idea and was quoted in The Mercury website as saying 

“Declaring an emergency is not something to take lightly, and there are implications to doing so,” and,
“I am a person of action, not platitudes of words, and my fear that these types of discussions
get us away from actions and it’s more about just optics.”
Guelph's Mayor, Cam Guthrie. Photo from official City Website

I'm not about to make any definitive statement about where Mr. Guthrie fits on the "taxes are bad" Conservative scale. He does seem to be genuinely concerned about people with drug addictions and the homeless---among other things. I can also remember that the first time I met him he was involved in some sort of environmental project (sorry Cam, it was long time ago and I simply cannot remember what it involved.) He certainly seems like a nice guy. But he has "hitched his wagon" to the "taxes are bad" crowd, and even with the best of intentions, he's going to have to at least pay lip service to their worldview. And no matter how much he might protest, it is clear to me (ever looked at Guelph Speaks?) that a large percentage of those people have zero interest in the JFK motto of "ask not what your country can do for you, but rather what you can do for your country."

Having said all of that, this knife cuts both ways. People can say that they are in favour of preventing climate change and really mean "if it doesn't mean that we raise taxes". But other politicians can say exactly the same thing and mean "Goddam it, we've got to stop the human race from committing suicide!!!!!" But the fact of the matter is that because of the real and perceived attitudes of voters, both types of politicians can easily find themselves "biting their tongues" and offering bland platitudes about "baby steps". I suspect that that's part of the reason why emotions have risen both when people tried to make a distinction between "citizens" and "tax payers", and, when Councilors asked if the city should declare a climate change an "emergency". In both cases people are being asked to be "punk and plain" about what they really think in a system that often punishes them badly for doing so.

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If we keep the above issue in mind, I think what happened to the District Energy hubs makes perfect sense. They were designed not to be immediately cost-effective projects, but rather something like the "nose of the camel in the tent". 

Public domain image from "Windtoons.com", 

For those who haven't heard it, there is a teaching story about a Bedouin who allowed a camel to shove his nose in his tent only find out that once the nose was in, the rest of the beast inevitably follows. In the same way, if Guelph got used to the idea that energy for heating and air conditioning was just another commodity for the city to pipe under the roads, it would inevitably become just an accepted part of infrastructure---like water and sewage. And this would be one of those things that a Conservative hates: an increase in government size and a reason for taxes to go up.

In contrast, for anyone who has the hidden agenda of not wanting the human race to commit suicide there is a lot in favour of a district energy system. That's because the key part isn't the efficiencies that come from having one centralized source of hot and chilled water, but rather the distribution system that connects a bunch of different buildings to one centralized source. Right now the two hubs run off natural gas, but the  real hope of the people behind the system was that this could eventually be replaced by more sustainable fuel sources such as waste heat from industrial processes, geothermal or thermal-solar.

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Once this last point is understood, then it becomes easier to understand how another aspect of wicked problems comes into play. The point wasn't to come up with a system of heating and cooling buildings that would immediately pay for itself, but rather to be the first part of a new system that was going to be the first part of a revolution in how Guelph uses energy. If you looked at the systems from that perspective there really wasn't much wrong with them.

I've been told that the city hired outside consultants to do an analysis of the district energy hubs and I've found a staff document that was presented to Council on July 18th, 2016. It was prepared because Council wanted to make public a document that related to various items that they'd seen before in in camera (private) meetings.

“That the presentation and report on the financial history of the GMHI
[Guelph Municipal Holdings Incorporated---the city-owned company set
up to manage things like the district energy plants. WDH]
group of companies be referred to the June 13, 2016 Council meeting” 

“That the closed minutes and accompanying material of November 23,
2015 with respect to District Energy Strategic Long Term Financial Plan,
with the necessary redactions, be made public in conjunction with the
materials for June 13, 2016 Council.” 

“That the closed minutes and accompanying material of February 29,
2016 with respect to Decision Chronology: District Energy, be made public
with the necessary redactions in conjunction with the material for June
13, 2016 Council.”

The consultant is not directly mentioned, but on page three document makes reference to "Deloitte", so I think I can safely assume that it leans on work prepared by "Deloitte Touche Tohmatsu Limited", which is a multinational technology consulting firm based in London, England.

Briefly stated, the staff report says that Deloitte's analysis suggested that the energy hubs are too small to make a big enough profit to pay off the money spent setting them up. Having said that, they are working relatively well and making enough money to pay for their on-going maintenance. In addition, the operating profit that they are making isn't enough to pay for any attempt to expand their client base. In addition, the city is "locked into" contracts with existing customers which means that there would be financial penalties for shutting down the plants. As a result, Council decided to stop looking for new customers, write off incurred capital costs as a "bad debt", and, keep the physical plants working.

What the bland "bureaucrat-speak" in this document seems to miss---according to conversations I've had with various people---is that the city never planned for these limited systems to pay for themselves in the short-term.  That's why the private sector is loathe to start these things up, even though they are willing to get involved once government has "proved the concept"---like with Enwave in downtown Toronto. They were supposed to be the first stage of a long-term city investment in a much larger system. It's the nature of district energy systems that you make a long-term commitment to build a "game changing" system for long-term development. To their point of view, the Mayor didn't direct staff to look at the system and they found out that it wasn't working. Instead, the Mayor directed staff and convinced Council to sabotage the system by starving it of secondary investment by not working to get new customers and invest in the system so it could adapt to their needs. District energy is always a question of big initial investment and long term pay off---which is why it generally won't work unless it is built the same way that governments build any other infrastructure system.

In effect, the nose of the camel got cut off before the rest of the beast could make it into the tent. "Stop climate change---if there are no new taxes" won out over "stop climate change before we commit suicide!!!!!" It's just another example of a group of people trying to get society to invest in a system that might have done something impressive to cut down on carbon emissions, and which got sabotaged and destroyed by people with a totally different agenda. Another bunch of victims got into political trouble because of a wicked problem.

Or did they?

That's the thing about wicked problems, I don't really have an opinion about this thing. It might very well be that our current mayor is right and these things would never have worked as intended. One thing I won't do, however, is fault the previous mayor and Council for trying to do something big to help the city do it's bit to stop climate change. When confronted by a wicked problem the last thing a society should do is just "kick the can down the road" and ignore it. They should be willing to take risks and make experiments to see what does and doesn't work. It might very well be that some future administration on Carden Street will do some more number crunching and restart the whole district energy initiative. It might also be that some private company will step in and buy them so they can do it. It might be that new technology will make the whole thing a total anachronism. But at the time reasonable people thought district energy was a good idea and they took a chance on it. It's the easiest thing in the world to kick wicked problems down the road, but if you do that long enough it turns out the "easiest path" leads to the worst results.

Where I might be tempted to point a finger---and remember I wrote "might be tempted", not "I blame them for"---is that there wasn't enough work done building a social consensus around exactly what the long-term plan for the district energy really was. If people thought that the district energy system was going to immediately make a profit and that that was going to be high enough to fund all future expansion, then it would have been a shock to find out that these were really demonstration projects for something that would require much more ambitious long-term investment. But again, it's very hard to sell the public on something like this when there are really powerful interests in society who are bound and determined to soft-peddle the sort of crisis our civilization is really facing. The tendency is always going to be for politicians of good will to try to "schmooze" the right thing into place because they believe that they will lose all power to do good if the body politic finds out what they really want to do. It's perfectly all right for me to thunder away about the importance of dealing with climate change, but I've never been able to get a job that didn't involve heavy, unskilled manual labour---let alone win elected office. You can't do anything at all if you don't get elected---and that has to involve sucking up to the often idiotic worldview of voting citizens. (Ever wonder why politicians are the way they are? Take a look at voters---.)

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I'll leave off with the most intelligent statement I've heard about climate change in a long time. They It comes from a remarkable 16 year old Swedish girl named Greta Thunberg who is now experiencing her "15 minutes of fame". This an edited address that she gave to the World Economic Forum at Davos in Switzerland.

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Furthermore, I say to you---climate change must be dealt with!

Guelph's Community Energy Initiative: District Energy

In my previous article about the Community Energy Initiative I outlined the basic economic case for the project on strictly theoretical grounds. Now I'm going to discuss one particular type of project, the district energy plant.

"District energy" is a fairly simple idea, it's that it is more efficient to build a big heating and cooling system for several buildings than it is to install small units in each separate one. It manifests this efficiency in two ways. First, there is just the basic principle of taking advantage of what economists call "economies of scale".  This doesn't just involve saving money---large, centralized facilities can also afford to install better pollution abatement equipment. Secondly, in a large facility there is the opportunity to use the waste heat from specific industrial processes to do other things instead of simply letting it dissipate into the surrounding environment.

District Energy System, Graphic from City of Guelph District Energy Strategic Plan

As far as I know, Guelph has four district energy systems. One has been at the University since the 1960s.

The Recently-Installed Cool Water Storage Tank for the University
District Energy System. Image used under "Fair Use Provision",
From a University Promotional Website

In addition, Polycon (a division of Magna) in Guelph installed a 7 megawatt physical plant in 2015.

Polycon's Combined Electricity and Heat Plant at 65 Independence Place, Guelph
Image used under "Fair Use Provision" of Copyright Act
Photo from the Ellis Don website

These two images raise an important point that readers should understand. There is a certain "fluidity" to district energy projects in that they can take many different forms, follow very different business models, and, do very different things. In the Polycon example, the plant is a "Behind the Meter" electricity generator. This means that it doesn't sell any of the electricity it produces to Ontario's Independent Electrical System Operator (IESO). (This is the crown corporation that manages the electricity spot market in Ontario.) "Waste" heat left over from generating electricity is then used in the Polycon plant. The university system, in contrast, primarily provides both winter heating and summer air conditioning on campus. The tank in the above picture is part of a giant "heat sink" that allows the university to use the difference in temperatures from day to day and day to night, to save energy in it's chilled water air conditioning plant.

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A second element of a District Energy project involves ownership. The Polycon and University examples are very simple to understand. They are both very big institutions who own their facilities outright and use them exclusively to service their own buildings. In contrast, the Corporation of Guelph owns two systems that are supposed to provide heating and cooling to a wide variety of individual customers who choose to enter into long-term contracts with the city.

One of them is downtown and is situated in the downtown arena (the "Sleeman Centre".) It provides heat and cooling for the arena, the auditorium across Woolwich (the "River Run Centre"), and, the condo tower (the "River Mill" building) built by the Tricar Group.

Here's a promotional map from Tricar that shows where the location of customers
for the downtown district energy system. Image from Tricar, "Fair Use" provision.

A second facility exists in the Hanlon Creek Business Park. It's customers are an office building owned by "M F Property Management" and a warehouse for Wurth Canada. Originally it provided electricity which was sold onto the grid through the Independent Electrical System Operator (IESO), but once the city decided to walk away from district energy, the plant was downgraded to one that just provides heat to its two customers.

The original Hanlon Creek Business Park district energy system---including electricity generation.
Image from the Ellis Don website, used under the "fair use" provision of the Copyright law.

The Current Halon Creek Business Park district energy hub. Doesn't look all that different to me---.
Photo by Bill Hulet with help from Dr. Tim Allman. 

The Hanlon Creek Business Park with the two customers and the district
energy plant locations. Original Guelph promotional map with labels added
by Bill Hulet.

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As I mentioned in my previous article on the Community Energy Initiative, one of the key "products" that a municipal government offers to the community is planning and co-ordination. Traditionally this involved providing things like the police, the fire department, roads, potable water, sewage treatment, planning, etc. By doing so, it allows home owners and business people the opportunity to focus on their own particular activities without having to worry about finding a way to get all of these essential supports. And, because the city government provides them for everyone, it means that we get the advantages of scale, uniform standards, and, predictability that make all the difference between organization and chaos. Seen from this point of view, providing heating and cooling as a municipal service can be seen as simply the same sort of thing as piping in drinking water and piping out sewage. Some large institutions---like Polycon and the University---are so big that already can have economies of scale. This means that they don't have to have an outside organizing body (ie:  the city) co-ordinating the provision of heating and cooling. In contrast, "small potatoes" like Tricar, Wurth Canada, and, M. F. Property Management aren't big enough to warrant creating their own system.

This is why the city---under the auspices of the Community Energy Initiative---decided to build the two district energy systems: one downtown and the other in the Hanlon Creek Business Park. There are two obvious questions raised by this, however: "Why did the city do this instead of getting a private business to do it?", and, "Why haven't they been as successful as promised?"

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Enwave steam plant and smoke stack viewed
from Pearl and Simcoe Street, Toronto.
Photo by Saud, c/o Wiki Commons

The first thing to understand is that district energy systems need to be understood on a case-by-case basis because each situation is very different. To give one example, the "Enwave" district heating and cooling system in downtown Toronto takes advantage of the cold water deep in Lake Ontario to provide chilled water during hot summer days. This creates tremendous efficiences when compared to conventional air conditioning systems. It also helps that the downtown is going through a building boom which means that there are a lot of new buildings that have not already invested in heating and cooling infrastructure---which makes signing up for a district energy system a lot more attractive.

Having said the above, there are a few general things about district energy systems that can be said. They do tend to be more efficient than each individual building having it's own heating and air conditioning systems. But they are rather capital intensive, and the rates of returns aren't so high that they can quickly pay off investments. Consider the following figures that come from a paper by Hans-Holger Rogner in a 1993 Paper in Energy Studies Review. What these numbers compare are the figures just for heating (not air conditioning---like Enwave's system, or, dual electricity generation and heat---like Polycon.) Also, the percentage is a comparison between the heat created by burning natural gas versus the heat available to be used by the customer.

• Average new gas-fueled individual building furnace technology: 61.4%
• Best available gas-fueled individual building furnace technology: 65.9%
• District heating based on centralized boilers: 71.3%
• Combined Heat and Electricity using natural gas turbines with heat recovery for district heat: 87.5%

Looking the above, you can see that there is only a 8% improvement in efficiency (ie: [71.3 - 65.9] / 65.9) when you switch from the best available individual furnace technology  to a centralized boiler (like at the university and downtown systems.)  If I do the same calculation with combined heat and electricity (like at Polycon and the original Hanlon Creek Industrial Park site), the efficiency is a much more respectable 33%.

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I admit that I can be quite pushy about trying to get people to support the "Guelph-Back-Grounder". It is important to understand, however, how much of a disadvantage this news source labours under. Unlike the vast majority of blogs, it is devoted to local news. And that makes a huge difference! If I were writing on subjects of international or even national interest I would have a pool of potential subscribers that would number in the millions. That means that even if I were able to get a tiny fraction of one percent of them as subscribers I'd have a very successful publication. But because I've decided to report local news, I'm limited to a maximum total of about 100,000 subscribers. This means that for local indie news to be a viable business model people are going to have to accept that it will require a higher percentage of paid subscribers and cost more per person than a national or international source. 

If you want local news that isn't just click bait people are going to have to pay for it. So how about ponying up as little as a buck a month for the "Back-Grounder"? It's easy to do on Patreon. You can also toss money in the Tip Jar if you don't want to make a long term commitment. 

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Please remember that the above numbers refer only to comparative energy efficiency for heating alone. When we are talking about this sort of thing we also have to take into account two other very important issues:  the cost of energy, and, the cost of borrowing money. As near as I can tell, Guelph started to become serious about developing district energy in 2011, so it would be useful to look at changes in both natural gas prices and the cost of borrowing money since then.

First, here's an average yearly natural gas price from Union Gas as quoted by the Ontario Energy Board.

• 2011:  13.3 cents per cubic metre
• 2012:  9.4 cents
• 2013: 10.9 cents
• 2014: 19.4 cents
• 2015: 13.1 cents
• 2016: 9.8 cents
• 2017: 17.6 cents
• 2018: 15 cents
• 2019: 18 cents

Looking at these numbers, you can see that the price of natural gas has gone from a low of 9.4 cents per cubic metre to 19.4 cents: a change of 106%! What this tells me is that the "noise" from fluctuating gas prices (106%) can hide the savings from district energy (8 to 33%). (Please note that I wrote "hide" not "make irrelevant"---the energy price is going to go up even if you don't invest in district energy.)

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As I mentioned before, district energy systems are very capital intensive. The two systems that Guelph installed cost about $14 million, which isn't a huge price when you consider that if they ran at full capacity they would probably be able to replace more than that in the price of installed physical plant in customer's buildings. (I'm told that combined heating and air conditioning plants in a large condo tower can cost about $1 million.)

But there is a complexity to large human habitations in that it is possible for developers to push the costs of heating and cooling onto the final occupants in a building. For example, it was very common at one time for builders to simply install electric baseboard heaters with separate electrical hook-ups in apartments, which meant that each renter could be charged independently for heating through their electricity bills. I understand that even when more cost-effective systems are used (for example using combination air conditioning and air source heat pumps, or, through radiators attached to a water heater), some condominiums have separate systems installed per unit. In a city where there is a tremendous shortage of housing, like Guelph, where prices have increased by 200 to 300% since 2001, there is precious little incentive for developers to compete with each other on the basis of saving condo buyers or renters money either in initial investment in their own power plants or in long-term operating costs. 

Another complexity comes from realizing that there is more than one place that a capital investment can increase energy efficiency. The figures from Rogner's paper refer to efficiency of physical plant, but there are also important efficiencies that can come from the end use. For example, there are significant savings that can come from things like insulation and tightening up leaks in the building envelope. If you are only working with an 8% increase in efficiency from a District Energy system, then perhaps a better "bang for the buck" would involve increasing the amount of insulation and quality of windows installed in an apartment or condominium tower.

Just to make the evaluation of district energy even more complicated, recent prime interest rates have been at historic lows---averaging between 3% and 3.95%. It's important to understand that this is the lowest that the prime rate has been at since before the Second World War. This means that while it is true that district energy systems are very capital intensive, we are living at a time when capital costs are the lowest they've been in generations. If it only costs 4% to borrow money that will result in an 8% cost saving, it sounds pretty good. But it's important to understand that while efficiency and the cost of borrowing money need to be connected when planning investments in energy efficiency, they are fundamentally a question of "apples and oranges". If the 8% savings in energy amounts of $20 because of the low cost of natural gas, and you have to invest $10 million to save it because the technology is so capital intensive---well, 4% equals $400,000 so you do the math. ;-) On the other hand, if the 8% savings come to $10,000 a year and you only have to invest $20,000 to save that much, then the 4% interest comes to only $800/year---which means that it's a great deal. These are just hypothetical numbers, but I include them to point out the importance of remembering that the calculus involved in setting up a district energy system is really complex and involves numbers that fluctuate for unpredictable reasons---which is why I suspect most private business owners have been loathe to invest in starting them from scratch. 

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And don't forget the fact that district energy systems involve two things that fall directly under municipal governance: planning and utilities. City planning departments decide whether or not a specific project can be built in a specific place. District energy projects work best with new builds simply because if you are building a tower from the ground up you can save money if you don't have to build an expensive heating and cooling system. In contrast, if you already have an existing building, you've already spent the money to provide heat and air conditioning yourself. If you are a private business that is trying to make a profit off district energy, you have to know that the city is committed to letting developers build the sort of buildings that will sign on as customers.

Secondly, the pipes that connect your heating and cooling facility to new customers are going to be put under the roads. And the process of putting them there is going to be really disruptive to traffic and really expensive. (One of the reasons that Fusion Homes---the condos at the old W. C. Woods site---said that they didn't sign up for the downtown system was the extreme cost of running pipes past the Speed River.) Since the city owns the roads, they are both the experts on doing this sort of thing and the final arbitrar about what does and does not get done.

The diversity of factors determining the economics is further augmented by the fact that the distribution infrastructure of district energy systems is inherently capital intensive with payback periods resembling those in the utility sector. Consequently, utilities are best suited to own and operate district energy systems. (from Rogner's 1993 paper) 

And don't forget the issues that I raised in my first article on this subject. Any increase in the efficiency of any physical plant in the city of Guelph is going to raise the productivity of the city, which will free up money to either be harvested as profits to be reinvested or as wages to circulate through local economy. In addition, a dollar saved through efficiency is a dollar that will not leak out to the company that is providing fossil fuels from out of province or even out of country.

And if all this isn't enough to make your head spin, don't forget that increases in efficiency also have a value in a world where it's government policy to put a price on carbon. Under a cap-and-trade system increased carbon efficiencies can be sold for profit on the emissions market. Moreover, when government programs exist that subsidize capital investment in efficiency, a district energy system can apply for grants from other levels of government. For example, Guelph received a $145,750 grant from the Green Municipal Fund to do the initial research for the municipal district energy project. (And, I might point out the this grant was given under the Stephen Harper government with the then Natural Resources Minister Lisa Raitt doing the photo op.)

So to sum up, there is a case for developing municipal district energy systems. But the math is extremely complicated and based on a variety of important variables. This doesn't mean, however, that district energy system cannot be profitable, or that private businesses will not buy into them---just that they seem to something that businesses will only invest in after municipal utilities set them up and "prove the concept".

Logo used under the "Fair Use" provision,
Image c/o Wiki Commons.

Take the example of the downtown Toronto Enwave district power system. It started out as being the Ontario-government owned power plant for a cluster of downtown Toronto hospitals:  Toronto General Hospital, the Hospital for Sick Children, New Mount Sinai Hospital and Women's College Hospital. Later on, buildings in the University of Toronto and Ontario government were added. In 1998---under the Mike Harris government---it was "privatized" and ended up with shares going to the four founding hospitals, the city of Toronto, the Ontario government, and, the U. of Toronto. After various sales, the city ended up owning 47% of the shares and OMERS (the municipal employees pension fund) the other 57%. In 2012 it was announced that the entire company was sold to "Brookfied Asset Management Inc"---which means that it is now completely privately owned.

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This is the point where I think I need to stop and break the story into two parts. City Council decided that the district energy hubs were a financial failure and decided to put the project "on ice". Since describing this is a very different process than outlining the back ground, I'm going to make that the focus of another installment. 

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Furthermore, I say to you---climate change must be dealt with!