April 28, 2006 - Part 1 of 2
Scheduled start: 1:30 pm Actual Start: 1:39 pms Adjournment: 4:10 pm

Present : Merulla (out 3x for 8 min); Braden; Whitehead (out 2x for 9 min); Kelly (out 1x for 16 min; left at 3:30 pm); Collins (out 1x for 1 min); McHattie; Pearson; Bratina (out 1x for 5 min; left at 4:05 pm); Bruckler; Di Ianni (left at 4:05 pm); Samson; Jackson (out 1x for 3 min); Mitchell (out 3x for 8 min); Morelli (arrived at 4:08)

Media : CFMU, Brabant , CHML

CATCH: Don

PRESENTATIONS

4.1  "Peak Oil" (CM06012) (City Wide)

Introduction of agenda by Steve Robichaud : ".peak oil is the situation where future world oil production will reach a peak and then rapidly decline which will result in higher energy costs. And essentially what that means is that more energy will be consumed than is available on a go forward basis. Peak oil is a global issue in that there will be regional variations in terms of the effects. Some countries will actually continue to have strong energy supplies but other countries will be dependent on third parties for importing their oil or energy. It's also important to differentiate between energy supply and energy price. Within Canada we will continue to be a net exporter of oil over the next 100 years. The Alberta oil sands have a 100 to 250 year supply of oil available to them, but globally there will be a reduction in the overall energy supply which will result in increasing energy prices. The reason why this report was done was in response to a council direction that staff prepare an analysis to establish a strategy to deal with the potential fossil fuel crisis and the potential impact on the aerotropolis, goods movement future initiatives, fleet and HSR. When considering a strategy to deal with peak oil, there's essentially two policy areas for the city. One would be the city strives to minimize its own costs. That would be the corporation of the city of Hamilton as an energy consumer, whether it be through our fleet services or facilities in terms of heating and cooling buildings. And then secondly in the broader role for the municipality, that is the city seeks to sustain the economic, social and environmental welfare of the residents of Hamilton and businesses.." Introduces Gilbert. DiIanni notes that he is also past president of Federation of Canadian Municipalities "and did a very fine job for that organization". [ 3:50 ]

Gilbert : Notes last time he addressed Hamilton city council was about 20 years ago . a good friend of Bob Morrow. "I was very pleased to do this report which at the time it was commissioned was the first such report in Canada . Since then Burnaby has produced a report, but not as comprehensive as this . several municipalities in the US that have done it. When I got into this issue, I saw this more than anything else as an economic development issue. Hamilton has - and you know this much better than I do - has a huge economic development challenge. It's the growing jobs deficit . now 25% net are leaving Hamilton every day to work, actually 33% are leaving Hamilton , but some are coming in. Looking at Halton and Peel over the same period we see that they have dramatically reduced their job deficit . creating jobs much faster than population growth. Hamilton with an even lower population growth has an even lower rate of job creation. This consideration which came to me early in my work on this has above all dominated my thinking about how Hamilton might proceed here.

"So Hamilton , the Electric City is how I dubbed this. And when I started this I didn't realize that 120 years or so ago, Hamilton was called the electric city. Indeed, one of your predecessors Mr Mayor, James Vernon Keetsal [phon] introduced the meeting of the ninth convention of the Canadian electrical association in 1899 telling them that Hamilton was Canada 's electric city. What I'm proposing . is that Hamilton again be the electric city. The future is electricity . Hamilton become essentially a major R&D centre and a seedbed for our energy evolution . embracing this vision is a plausible job-rich economic strategy." Shows slide of " Hamilton the Electric City " from the Industrial Recorder of 1901 and one from 1907 using the same title including information about a long-distance powerline from DeCew Falls to Hamilton whch was "hooted at as a wild fancy". Also shows Spectator prediction 100 years ahead made in 1903.

"So four parts of this presentation as in the report - the energy challenges, energy consumption in Hamilton and energy production in Hamilton and the opportunities. Here's the big issue. The big issue worldwide in terms of oil and also natural gas . oil discoveries peaked in around 1960 and we've been going down ever since . currently we are on a worldwide basis consuming like three or four times as much as we're discovering and with no prospect of discovering more . International Energy Agency . all that increase in oil that we expect between 2001 and 2021, all that 31 million barrels of oil per day, of that 31, 29 will come from OPEC middle east, almost all from Saudia Arabia, Iran and Iraq. And of course we know about those three countries - Saudia Arabia which produced most of the hijackers on September 11m 2001; Iraq we hear about every day, and Iran increasingingly every day. Saudia Arabia is to provide the bulk of this - a stunning book last year . Mathew Simmons, an investment banker in Texas - Twilight in the Desert . He said there's doubt whether Saudia Arabia can even maintain their current production and lo and behold, just this month, on April 10th, we have in the Oil Industry News . the first indication that Saudia Arabia's production is actually declining . Saudia Aramco, which is by far the biggest oil company in the world has now an 8% decline in its fields and it's only able to offset 6% of that in its oil fields through new discoveries, expansion of existing development and so on. It looks as though the crisis may have already started.

"When you look around for how production - which is the link between discovery and consumption - is going to shake out you see various projections. Some of them that production has already peaked. Some say it's not going to peak until the 2030s. Nobody says after that - or nobody with any credibility says after that. But I think the most credible one which comes out of the Swedish Uppsala University . shows oil production projections . and it shows the peak in 2012. And I want you to look mainly at this black line here, because this is mainly Alberta 's oil sands showing what a small part of current and even of future world production that is going to be. It will have an insignificant effect on world oil prices. Because we have very definitely a world oil market. Yes its going to expand. It can't expand very fast because of water restraints and manpower constraints and just the physical constraints of getting stuff out of the ground. But it will expand and you see it expanding there. Most of it now is exported to the US . In fact Canada imports as much of its oil as the US does. None of the western oil comes to eastern Canada . We import 58% of our oil, mainly from Venezuela and some from Europe in the form of gasoline. And yes we could put oil pipelines from west to east. We could abrogate the NAFTA which the federal government began to do yesterday, but the prospect is that we're not going to divorce ourselves from the world market and we'll be caught up in whatever price rises occur.

"A lot of people understand this but they also say there are solutions, in terms of alternative fuels. And I could spend a lot of time talking about ethanol and other alternative fuels, but I just want to mention one, which is Hydrogen. And what people are saying is that hydrogen is a fuel you can use in cars, you can use in homes, it's a good replacement for everything we do know, and it can be made renewably. You can have a wind turbine which produces electricity which produces hydrogen by hydrolosis and you can then use that hydrogen in a fuel cell and all you get out the other end is water, which is harmless. The problem with that analysis is basically the laws of physics and chemisty - and that is as you go through each of those processes . by the time you have started with renewable electricity, made it into hydrogen, and then made it back into electricity again, you have lost 75 or 80% of the energy you started with. And in an energy-constrained world that will not be acceptable. . Compare it with using that energy directly . feed it directly into a streetcar as is done in Calgary , you lose only 10% of that energy typically. You finish up with three or four times as much energy in the end, using the direct feed as opposed to going by the hydrogen fuel cell cycle. The hydrogen fuel cell cycle, for that reason alone, will not be viable in an energy-constrained world. There are many other reasons - the cost of the fuel cell, the dangers of using hydrogen and so on and so on, but this is the fundamental reason which this won't work and why grid-connected vehicles, such as streetcars, will. One key question is - I'm going to start talking about prices - but when do prices become important? [ 15:35 ]"

Shows graph of gas prices in multiple countries. Canada and US are the lowest. "Most of the countries are around twice the Canadian level . about $2 Canadian a gallon. Most of them in Europe " Uses travel data to compare Canadians and western Europeans to show they are quite similar - 14,500 per person by Canadians and 12,600 by Europeans. Same with modal split. "Most journeys in Europe are made by car, same as they are here. Yes Europeans use a little bit more public transit, but not much more (10% versus 16%). "There is another point. . Europeans use smaller, less powerful cars. They use about a third less energy per person per kilometre. There are differences but the similarities are basically the stronger part. And the point that I'm making is that with twice the fuel price there's really very little difference. That kind of analysis . leads me to say you really have to, before you get serious changes in the society, have to have bigger price increases. . four times. When gasoline is $4 a litre. When natural gas is $2 per cubic metre. Currently it's around roughly 50 cents. Then you will get big changes in society. Then the way cities work will change. Then the way business works will change. [ 18:37 ] So in approaching this issue for Hamilton , I said, lets consider three options. One is the prices don't get to 4x in the next 25 years or have less than a 25% chance, and the second is between 25-50% chance, and the third is they have over 50% chance. In the first case you do nothing. In the second case you have the energy plan as Plan B in your back pocket in case things get worse. But if there's more than a 50% chance, make the energy plan your plan A. And I concluded that to anticipate that you need it as your plan A. We're dealing with shortfalls, we're dealing with shortfalls between what people want to consumer and what they want to consume, in terms of energy. And there've been a couple of studies done on this - both in the US . The more conservative one.by the Brookings Institution showed that quite small shortfalls - 10% - tripled the world oil price. The less conservative one, the more recent one . showed . a 4% shortfall produced a dramatic increase [177%]. . These are hard things to deal with but it does seem that small shortfalls . produce big price increases. I put the two curves together . what is the actual and estimated consumption and what is the actual and estimated production . and if you do that you have about a 25% shortfall as early as 2018. And if you go back to the more conservative of the analyses, that means something like an eight fold increase in world oil prices. Now world prices don't translate directly into retial prices, . the chances of getting a 4x higher retail energy price by 2018 are more than even. Not that it's certain to happen, not that we can guarantee that that's going to be the price on January first 2018, but there's a more than even chance that it will happen. And that is why I say Hamilton needs a Plan A.

"I would also say this is an optimistic perspective . people get really tied up about energy prices and see high energy prices as the end of the world . preachers on radio yesterday praying for deliverance from high energy prices. But I think its possible to look at $4 litre gasoline as a good outcome of what will be inevitable convulsions in the world. It would be very easy that we could get a bad outcome - that we will get economic depression. And people are predicting this - that there will be a hard landing, widespread dislocation. The prospect of a stable rise to a $4 level or something like that really implies a soft landing, and if that can be held so that you are approximately reducting your consumption and improving your efficiencies, and as the potential shortfall increases, you really have quite a good situation. So I look on this on the positive side. I see .the energy problems as inevitable, and I see the high prices, especially stable high price at around that level as being a good outcome. . [Recommendations are] Switch to electricity for transport . for use in buildings, reduce oil and gas by about 80%. . We actually use more in buildings than in transport . reduce them both by an overall roughtly 60% but if you look at the share of oil and gas versus electricity, only about 20% end use is electricity, and I'm proposing that that be more than half in the new energy configuration. Some details about movement of people . currently ... journeys within Hamilton passenger kilometres roughly 7500 by car . should be changed to about 3000 by car, half of which are a battery engine, 2000 by a new personal rapid transit . triple the use of transit. overall not much difference in the amount of travelling that is done within Hamilton .

"I'm actually proposing an increase in the amount of freight movement because I'm actually seeing more local activity in Hamilton , more local agriculture, food production, more employment and more need to move things around within the city. I'm proposing heavy move to grid-connected vehicles. Streetcars are an example, trolley buses which you had in Hamilton until 1992. They have they very high efficiency and 95% of the energy is used . lighter, constant torque, no fuel to carry around. They can use a wide range of fuels and switch among them without changing the transport system. So you could have solar energy, wind energy, nuclear even if you wanted it . Calgary light rail system, powered entirely by wind energy, entirely by renewable energy. . [shows other ideas for transport, personal, rail, etc.] . even freight transport [shows trolley truck from Quebec iron ore mine . reducing fuel consumption by freighters by 30-40% by this kite arrangement. Buildings are even more important because we use more energy in buildings than we do for transport. . switch to electricity . energy production will be the priority. The difference between buildings and transport - building use more energy but they can generate energy. You can put solar collectors on roofs, you can even put a wind turbine in the back yard, and solar water heaters and so on. There are a huge number of ways and let me run through some of them very quickly - solar water heating on the right, photovoltaic on the left. You can put them on the roofs, you can put them on the front of the building .wind is better over water, but you can also have it over land. And you can have vertical wind turbines . Deep lake water cooling, which we have in Toronto , displaces a huge amount of electricity and you could have it in Hamilton . It's the fastest growing use of electricity. This is an article in the Star just a few days ago - reduce your home heating or cooling by 70% by installing one or another kind of geo-exchange - or low temperature geothermal. This is a very practible thing to do which is being done increasingly.

"Energy production, this is maybe a controversial part of my talk, but I'm saying that people want to send you fuel. They want to. I talked to the chairs of Durham and York regions - if the people around Hamilton , or people around the Wesleyville plant east of the GTA were to want to take all the waste, would these regions send their waste? Yes, they would. They would sign 20-30 year contracts to do this. I think it's a very plausible opportunity and I think you have some good locations for it around the port - current or previous heavy industry. I would impose two conditions. One is that not a single truck enter Hamilton - all come by rail or water. And the other is that for more half the year, this plant acts as an air cleaner. That it produces better than ambient air for 185 days of the year. We have an electricity problem in Ontario . There are lots of gaps to fill, and this would be the Ontario government's projection of what we're going to have to fill. We have to change the way we do land. And these are elaborated in the report.

"On the matters you raised and asked me to talk about particularly. On the aerotropolis, and I'm saying that in an energy-constrained world air freight will not have much of a future. It would be foolish in my view to commit to an enterprise that depends on air freight. If you have to develop those lands around there, focus on energy related stuff. I'm not sure if that's the best place to do it. I haven't done an examination of alternatives. But what I will say is that the kind of employment that I'm talking about will mostly not be in a particular place. It will be out there putting on solar collectors on roofs, installing district energy systems, putting up wind turbines. Yes there will have to be some offices and some research and development centres somewhere, but this will be employment doing all this other stuff above all.

"Moving goods - I've already said even in an energy-constrained situation there will be more movement of goods in Hamilton because of the localization of so much. And it's a big challenge. It needs much more work on it than I've had a chance to do in this report.

"City fleet - the city can be an enormous leader in things and there is a real need for leadership in heavy-duty vehicles, all the trucks that the city uses, and also the transit vehicles . think electric is what I would say. Reintroduce trolley buses. Even the incline railways which Hamilton used to have three going up the mountain. Streetcars - you had streetcars until 1952. And explore this personal rapid transit, which I think is a huge opportunity for a city to get its teeth into.

"So what's happening elsewhere on these issues? Well, just two weeks ago the biggest . many municipalities have done something about the peak oil thing. The biggest one is San Franscisco . the only one in Canada is Burnaby - about the same size as Hamilton . . Sweden plans to be the world's first oil-free economy - just announced this about two months ago. They're getting off oil completely by 2020 - by 14 years from now. Usually when the Swedes say something, they do it, and it will be a model for us all.

"So this is an economic development strategy. It will be good for Hamilton in many many ways. As well as all the jobs it'll create, bridging that jobs deficit, it means Hamilton will function better when the price is right. Less money will be leaving Hamilton to pay for high cost energy produced somewhere else. It's labour intensive . you willhave this large pool of research and development and implementation knowhow which will be good for the city anyway. Investors will see Hamilton as the place to come to because this is going to be the story of the future - dealing with diminishing energy - and Hamilton will be there first, or among the first - a community dedicated to being ahead of the energy wave, rather than being drowned by it.

"So what do you need to do? Well first of all you need to do a much better report than I've done. I had a brief to do, a modest and fairly quick report. It's been spread out but it was pretty, the amount of resources invovled was small - something not necessarily done by me; something that would cost you about say $50,000 or so that would have a competition for - but you need that to proceed. And I think such a report can be done in four months or so. If it captures your imagination, adopt it as Hamilton 's grand project of the twenty-first century. A new civic mission. Think big as people in Hamilton did 100-110 years ago. Redo all your plans putting energy first - land use, transport, other infrastructure, social development even. Energy first. And then of course there are all the challenges - the legal problems, the opportunities, where the money's coming from. Here's a whole bunch of initiatives. I won't go through them but you can look at it. Remember it's a response to two challenges - today's job deficit and tomorrow's energy deficit. Thank you very much. [Applause]. [35:37]

DiIanni : "I don't think a consultant's ever been applauded here before. [laughter]" Robichaud : ".just to recap on the staff report - provide a brief overview of all the work that city staff are currently involved in. Much of this work actually predates the council direction to do the report on peak oil, and relates to the city's initiatives in terms of climate change, reducing vehiclar emissions and air quality considerations . the city really has two strong policy response areas - to minimize our own costs, that is the corporation of the city of Hamilton in terms of our fuel costs, our operating costs. And secondly the city to maintain or sustain the economic, social environmental welfare of Hamilton 's residents and businesses. IN terms of energy use, as Mr Gilbert indicated, more energy's used in Ontario for buildings than transportation. And as it relates to the city of Hamilton in particular, if you're in 2031 looking back, 90% of the dwellings that will be existing in 2031 are either existing, planned or under development today. That will be achieved through the existing number of dwellings of 210,000 households; the new number of dwellings that are sort of on our vacant land inventory, which is about 30,000 households; dwellings that will be constructed in the lower Stoney Creek area, the SCUBE lands; and finally the residential intensification will add up to 270,000 households. And we're going to grow to 300,000 households by 2031. So fairly significant portion of our urban fabric and built form is already committed to, is under development or it currently exists. That has a lot of implications because a lot of homeowners will be impacted by rising energy costs and part of the city's response must recognize and deal with that. The province provides directions to municipalities on how to plan for energy and put energy considerations into our planning process. In Ontario , we are in a provincial policy led environment. Municipal planning decisions must be consistent with the Provincial Policy Statement and shortly the province will be releasing the final Places to Grow plan and all municipal planning decisions must conform to Places to Grow. What the province is telling municipalities and what the city of Hamilton has been involved in is to support energy efficiency and improved air quality by promoting compact form and a structure of nodes and corridors, promote the use of public transit or alternative transportation modes such as walking, bicycling. In and between residential and employment and other areas where these transit facilities exist or will be developed, so that in the design of new neighbourhoods or employment areas, or the redevelopment of areas give consideration to transit planning and alternative modes of transportation. To focus major employment, commercial and other transit-intensive land uses on sites which are either well-served by public transit or where transit will be provided - i.e. in the development of secondary plans for new areas to make sure that a transit hub or a transit model is incorporated into that. Or where commercial development is coming forward for the opportunity to incorporate public transit facilities into that design. We have to design land use facilities to facilitate the use of public transit in the future that is consistent with good urban design principles, to improve the mix of employment and housing uses to shorten commute journeys and decrease transportation congestion, that is both within the municipalities, within the sort of commuting environment that we operate in. To promote the design and orientation of buildings and structures which maximize the use of alternative or renewable energy - i.e. passive solar energy. Or and to mitigate and to use the mitigating effects of vegetation such as tree planting, and to provide opportunities for energy generation facilities, renewable energy systems and alternative energy systems where feasible. In the development of the new Official Plan policies for the rural area, which were previously subject to public consultation in January 2006 and will be going forward for more public consultation in May of this year, there is provision in those policies to encourage alternative energy or renewable energy systems where appropriate in the rural area.

"The city has been very active on this issue and those initiatives actually break down into sort of two general actions - the corporate actions as well as the city well-being actions. In terms of energy for buildings, the city has created an energy office and is currently in the process of hiring a manager for that energy office, which will reside in the Public Works department. That person will be responsible for sort of overseeing overall related energy issues, in terms of billing, energy consumption, prices, those sorts of matters. The city is engaged in energy from waste opportunities - at the Woodward Waste Water Treatment plant they have installed a methane electricity generator for localized consumption. Opportunities to use the methane gas generated at Glanbrook landfill are currently being investigated, as well as through the Hamilton-Niagara waste plan the opportunities for energy from waste are being considered. In terms of actual energy consumption for buildings - in terms of community perspective, the housing division currently administers the Residential Rehabilitation Assistance Program and a new program that's recently been created by Central Mortgage and Housing is the EnerGuide for Low-Income Households Programs which provides grants and low-interest loans to existing households in order to install energy conservation measures. Those households are currently say on an oil-heat system will be significantly impacted by rising energy prices, and through energy conservation measures the city's able to provide assistance to mitigate some of those costs. In terms of transportation, the idea of peak oil was first identified in the transportation master plan in terms that they recognized the need that we have to plan for and give consideration to increasing energy costs as well as provide alternative strategies to mitigate that. And there were very specific recommendations and directions that came out of the transportation master plan that have been adopted by council. Those policy papers have been referred to the GRIDS process and consideration of the recommendations are being incorporated into GRIDS as well as the Transportation Master Plan, particularly as they relate to facilitating and encouraging public transit through the land use process as well as through the existing transit system; encouraging alternative modes of transportation, walking, cycling, both on-road and off-road considerations. The city as I indicated is also creating an energy office which will be looking at energy consumption as it relates to the city's fleet. Council and the city have been very aggressive in the green fleet plan. In fact the city of Hamilton has one of the largest fleets of hybrid vehicles of any municipality in Canada . And although Mr Gilbert in his report suggested that emergency services could be exempt from a peak oil type strategy, our emergency services division is actually incorporating energy conservation measures in their operations. They've incorporated hybrid vehicles into their fleet for some non-emergency response situations, as well as looking into duel-fuel or multi-fuel vehicles where it would help reduce energy consumption measures, as well as being very proactive in energy conservation measures such as ensuring those little things, such as proper tire inflation, but that can have an overall effect when you're operating a large fleet of heavy vehicles. The fleet services is looking at opportunities to go to hybrid heavy vehicles within, whether that would be a dual engine technology system, or it would use a hybrid technology to assist when vehicles are starting, when they're consuming the most amount of energy. And in terms of a corporate well action like I've indicated to the transportation master plan, the integration of public transit, and transit considerations into our land use planning considerations, it's been identified very early in the GRIDS process. And we are doing that through the design of our existing neighbourhoods, community and new neighbourhoods in order to facilitate public transit and the opportunties for live-work arrangements and job housing balances. All being formed part of complete communities. The green fleet plan as it relates to overall air quality emissions. Much of the work that we've been doing and you're seeing in fact within other jurisdictions is in fact more related to climate change and air quality considerations, not necessarily energy costs. HSR has indicated that they, peak oil sort of cuts both ways for them. Yes it will increase their operating costs or potentially increase their operating costs, and conversely with higher energy costs they may see increased ridership. And in terms of that responding to increased demand for public transit as well as HSR has indicated that they are strongly committed to investigating and adopting where appropriate technology to reduce or lower their overall operating costs. From the growth management strategy, clearly the city has done a lot of work in this area in terms of brownfields. As Mr Gilbert indicated, its very important to look at revitalization of your existing urban areas and the redevelopment of brownfields and taking advantage of opportunities within the existing urban area. Intensification, both in terms of residential and non-residential type land uses, through the part of the Official Plan review process and GRIDS we've been doing a lot of work in the area of residential intensification, in terms of developing a made in Hamilton residential intensification strategy, that not only is consistent with provincial requirements, but also respects our own local needs and circumstances. As well as another important consideration relates to the staging of development, both within our existing area urban area in terms of the timing and phasing of when new neighbourhoods can come on stream and ultimately through the GRIDS process when, if when and where in terms of urban boundary expansions as they relate to the concept of complete communities and job-housing balance. Thank you. [45:18]

DiIanni : "Thank you Steve. Thank you Richard. And you'll take some questions, I'm sure. Councillor Collins, you had a question?"

Collins : "First of all I just want to say I thoroughly enjoyed the presentation and the report. And it raises a number of questions for me. What was clear in the report is that if we don't change there's higher costs and an impact on the environment, but what I didn't get from the report - maybe this is what you're referring to if you were to do a second report - and that is, what's the cost of implementing the changes that you're recommending across the board. And so when I look at the HSR for instance, and you talk about converting the fleet. We've already been through that over the last decade. We were with diesel buses, we went to CNG, now we're going back to biodiesel, and I'm sure that will probably change over the next 10 years, and there seems to be that debate right now within the conventional transit system as to what's the best system to use. But those seem to be the two . its biodiesel or CNG. And so when I look at HSR in particular, and if I was to follow the guidelines here, I mean I want to know the cost is from a capital perspective, what the operating costs are. And so with all of that, understanding that there are increased costs coming with the peak oil issue that you've raised and highlighted throughout the report. Is that what your second report would deal with, Hamilton in particular in detail, and the investments the municipality would face?" Gilbert : "Yes, it's certainly one of the things. As Steve Robichaud has said, the city has two kinds of responsibilities. There's the general responsibilty and the second report would probably deal more with that if I had, I mean depending on what the city wants, and whether they want me to do it. It would also deal with the very particular costs to the city and the specific recommendation that I think we're getting at here is, a proposal that there be at least a partial reversion to trolley buses. .Trolley buses are, from where Hamilton is now, a good bridge vehicle to an electric future. And trolley buses are more capital intensive. There's no doubt about it, at the scale that Hamilton would be able to do it. And yet many many municipalities around the world - Vancouver for example is just expanding its fleet or replacing its fleet of trolley buses. It's buying 200 and something more . Many other cities are going over to them, partly to reduce local pollution but also in anticipation that they're going to need a more flexible system. Trolley buses sound less inflexible, but they're actually more inflexible that you need to use eventually. But there is the problem. At current costing, from a new situation where you've got to put up wires, you're into at least 25% greater costs, and so that . that has to be made. Down the road, the costs will be less, but is it pay now or pay later? And also is it the leadership issue as well. I mean if Hamilton embraces this electric city philosophy, it would not make sense for it to then invest in more in diesel vehicles - part of being consistent. So yes there would be a cost. The cost certainly needs to be identified, but it needs to be put in the context of all the other costs. Many of the other things, if I can just stay with the costs, it really needs more Hamilton to facilitate rather than to actually pay for anything in particular. For example, one of the things I just touched on very briefly in the report, and one slide there, was this business of geo-exchange. Where if go below about six feet the ground is always at the same temperature. And in the summer you can use that for cooling, in the winter you can use it for heating. It reduces your bills by 70%. But the typical home installation is $22,000. So what can Hamilton do? Well it can do two things. One it can do what Waterloo has done, which is to say we're going to have a lease-back arrangement that is going to cost you no more than your current bill, and manage that. And it's actually Waterloo hydro and not the city. But the other thing that may be even more exciting which is to say we're going to take a whole street or a whole block, and we're going to do all this digging in the street. And we're going to do it for everybody and were going to save 50% of the costs because everybody will be having it done at the same time. And therefore it will only cost households $11,000. And therefore Hamilton community energy or some other agency can not only do a lease-back that gives each household none of the risk, but is actually immediately saving money . and all the city would be doing would be facilitating that. And so that's the kind of thing - what you've mentioned and what I've added - that another report should certainly touch on."

Collins : "Okay. I'm assuming that some of the issues that you've raised . are more relevant to Hamilton than they might be to other municipalities - for instance brownfield redevelopment. We probably have more contaminated land in this municipality than any other city in Canada . And so if the city has a limited amount of resources to invest, whether its capital or operating funds, of all the issues that you've raised in the report, transit, brownfield redevelopment and the list goes on and on, which ones would offer the biggest bang for the buck? Or is that again another issue for your second report?" Gilbert : "I think it's hard to say just at the moment, but the kind of issue that I segued into, where Hamilton is a facilitator rather than an actor, are going to in general provide the biggest bang for the back. But whether, as part of a coordinated strategy, would focus only on those, I think you need to work that out."

Collins : "While we're on costs, what's the ballpark figure for the second report if this city's looking at commissioning something in more detail to follow up your first report?" Gilbert : ".This report was done for less than $15,000. I think you need a report that is about four times as much work. So I think you're looking at around a $50,000 report and of course anything of that magnitude would have to be a competitive bid and I think that's the route you should go."

DiIanni : "So that may fall out of what recommendations may be made later on and staff will look at and guide us in that direction if that's where council wants to go. Okay, there are other questions. Councillor Merulla?" [53:13]

Merulla : "To just gain some focus on this presentation. This particular initiative was borne out of a meeting which pertained to aerotropolis, and I guess the premise of some is that we should not pursue any development in and around the airport as a direct result of this peak oil crisis. That premise however assumes that all the development around the airport is directly correlated to the operation of the airport, which I don't think has actually suggested or stated. Then when you take into account that you said our priorities should be to localize employment, which decreases commuter aspects, and by localizing employment we are also dealing with what will actually be the crisis in the future is the fact that were going to be having to heat residential units and buildings. So our primary objective at this point would obviously be advances in our economic development portfolio, to increase the ratio of our commercial and industrial assessment, to create the wealth to deal with all our other challenges. So in essence what I've gathered from this presentation is that development pertaining, being directly correlated to the airport is bad, but development in that area not correlated to the airport is good because we are localizing employment because it ties into our economic development strategy. Is that correct?" Gilbert: "Not exactly. The first part is certainly the case that the view I put forward in the report, the view that I hold, is that air freight and indeed air passenger transport, but business would be more related to air freight, does not have much of a medium and long-term future. And you can see the strains already in terms of energy prices . the newspapers every day, you can find analysts everyday. What I then said in the report was essentially this - if you are to develop those lands, then develop them along the lines of the economic strategy that I'm talking about. But what I did not do for this work was a systematic analysis of what your alternatives are for this kind of development.You have the Innovation Park, you have lots of unused lands in the Port - I know there's a brownfield aspect to many of them - between the Port and the downtown, and you have other lands. And I simply did not look into this. I mean this was a very limited report, and indeed your staff anyway have done a lot of this. So I really don't have a strong, and certainly not an expert opinion on where you should put your employment lands. I'm saying two things. Don't tie your future to air freight and if you're going to develop those lands, do it as an energy intensive cluster. But my own opinion, but this is not an opinion based on expert research, is that you have a huge opportunity for developing lands for this kind of purpose between where we're sitting now and the harbour. I've walked around there, and around the harbour, and I'm just impressed by the opportunities for the kinds of industrial development that I'm talking about - which is very knowledge intensive, very rich in small scale activity. And what I know from my" interrupted by Merulla : "But perhaps we should stick to your expertise." Gilbert : "Yes, but you've asked me a question and I'm answering it, and I qualified it." Merulla : "We have a significant amount of development going on." Gilbert : "Right." DiIanni : "You asked him the question, so." Merulla : "No but the answer was." DiIanni : "Fair enough." Merulla : "The answer simply was" interrupted by Gilbert : "I was talking too much, you're absolutely right."

Merulla : "No, no. The question was simply you're talking about localization of jobs which that particular area is exactly what we're pursuing. So you said that as long as you don't tie it into the function of the airport, then it's meeting that particular objective and decreasing the job deficit, which we believe, and I personally believe. As I said last year, and will say again today, even if the airport closes down, if you attract the right type of industry and promotional development it's totally irrelevant whether or not that airport is operating or not, because you have access to the highways and access for transporting those goods. So let's stick with the focus of why we're even here today, and that was the actual question that was presented. I asked for this report. I didn't ask for this report based on our fleet division. I didn't ask for this report based on any other function of the city. So it was strictly related to the airport, the aerotropolis, the development of that, and how or if we should be having a plan B in developing those lands. Now you eliminate the actual coorelation of the operation of the airport and we're actually meeting our objective of dealing with the jobs deficit which I'm very happy to hear. Now moving on however, looking at the oil crisis as a whole, I'm seeing today that there's more of a peak corporate greed crisis than a peak oil crisis. In your opinion, with the monopolization and merging of oil compnaies, do you not believe that, considering Exxon made record profits last year in the tens of billions of dollars, and their projections aren't being lowered, that perhaps what really is the issue is the gouging of consumers, based on the monopolization of the oil industry."

Braden suggests off-mic that this is off the topic. DiIanni : "Well I know." Merulla : "It's not off the topic." DiIanni : "Well hang on, let me rule on this." Merulla interrupts. DiIanni : "Hang on." Comments from others. DiIanni : "Hang on folks. Give me a chance. Let's not get. We have a guest. Let's not get carried away. The issue is ask some clarification, some questions of clarification. I know you also." Merulla : "gas prices, oil prices." DiIanni : "Hang on. Councillor, I'm going to facilitate. Just allow me to. The focus while we have Dr Gilbert here is to get some clarification on his report. So we can ask questions and then we can get into the debate and our opinions." Interrupted by Merulla : "I am asking questions." DiIanni : "So if you can focus to the question that would be." Gilbert : "I'm happy to answer the question as asked. Let me say two things in response.One is that you think of the big oil companies as being Exxon and Shell and BP and so on. They are relatively small in the scheme of things. The big oil companies are Saudia Aramco, the Iranian oil company and numerous others - the ones in Russia . Saudia Aramco is about 20 times the size of Exxon, and it's these companies, if anybody is setting the pace, and these national state-owned oil companies that are in control - if anybody. But what is the basic issue here is the crude oil market, and there are two crude oil markets in the world. One is in New York and the other is in Britain , and they're never quite in sync, but mostly they're in sync. You know I've played around in these markets and I can assure you they are markets. . and they set the crude oil prices in a way that as far as I can see is not contaminated by any kind of corporate shenanigans except on the reporting of reserves. And when it comes to shenanigans around reporting of reserves, then Exxon and Shell and company are models of transparency compared with Saudia Aramco and others."

Merulla : "So the fact that these record profits that have been reported last year, and in the first quarter on this year as well. Are you suggesting that something that's so profitable is actually on a decline dramatically to a point where it's actual crisis?" Gilbert : "Yes. The companies that are registered in the US and Britain and the Netherlands which is where the main so-called public companies are registered have to produce ad nauseum details about their reserves and everything else. So we know what they are. So why do they earn so much money? It's very simple. The price of oil has gone up far beyond their cost of production, and they're benefitting from it. That's all that has happened. So then you say will why has the price of oil gone up. Well it's gone up, above all, because production can't keep up with consumption. I mean there are a few other factors - fear factors on Iran . and the Iraq issue and a couple of other things. But the basic impetus for what we're getting now is that China and India are galloping ahead with their oil consumption. The year before last Chinese oil imports went up by 43%. Last year it was lower but still quite an increase. India 's imports are increasing by leaps and bounds. And none of these show any sign of slowing down. We're getting to a situation where production, which is becoming increasingly restrained by the kinds of limits I was talking about, is not keeping up with consumption. And its elementary economics, where you have one exceeding the other you have price increases and quite steep ones."

Merulla : "But is it probable, considering that some of the reserves are questionable, you mentioned that. Could it be possible, Im sure it's not beyond the corporate world, to create a crisis in order to increase, or create a supply and demand façade . but in essence the reserves are greater than they're reporting?" Gilbert : "You're absolutely right. That could be done, but if it is being done it is not being done by Exxon and Shell and BP. And I hate to have to defend them but they're not in the position to do it because so much is known about them. If it's being done, and it's being done by Saudia Aramco and the Iranian oil company and the Kuwait oil company and these people. However" interrupted by Merulla : "Based on your report those are the areas that represent the largest quantity of oil reserves." Gilbert : "Yes, and we have limited information about them, but every time we get a bit more information about them, we see that they have been overstating rather than understating their reserves. For example, just this year, in January or February, Kuwait oil company wrote down or reduced its reported estimate of its reserves by 50%. Now it happened then to correspond with what some geologists had been saying they had anyway. But they had been reporting 90 billion barrels and now it's down to around 45 or 50. I mentioned Saudia Arabia is the big one here. I mentioned this whole book by Matthew Simmons, which I really urge you to get if you want to get into this murky area in more detail - severely questioning their 200 - and I forget the exact number - billion barrels of proven reserves and the rate at which they can extract them. So if there is any shenanigans going on here, it is by those really big oil companies. It's not the relatively small ones. Even though Exxon is about the biggest company in our terms in the world , it really is small compared to Saudia Aramco. But every bit of evidence we have is that they are not playing around by underestimating, they are actually overestimating, and that is part of the cause of the current problem." Merulla : "But we don't know that for certain." Gilbert : "Nope."

DiIanni : "Can I suggest that we give five to ten minutes per questioner, and then we'll come back, because I've already got six people on the list and if everybody takes 10 minutes that's an hour just on its own. And I know that we've been awaiting this report. We've read it. Some folks have done some homework on it and we've got Richard here now. We want to take full advantage of it. Councillor Bratina, you're next." [ 1:07:24 ]

Bratina : ". great report . If you were the city of Hamilton and you had $100 million to spend and you had two employment nodes to spend it on - one was a highway/airport node and the other was a rail, water and highway node, where would you put the node?" Gilbert: "Well if I could only spend it on those two things, I would obviously do it on the latter, for the reasons in my report. Whether the city would want to do that is another matter, but I won't asnwer that." Bratina : "There is by the way, Mr Mayor, huge government infrastructure money available to put to councillor's previous statement about how we're going to put the wires up and all that. They're literally asking us how do you want to spend your infrastructure money. So we're ready to move if we want to do that. But another problem, Mr Gilbert, is the inability of some people to see new ways of doing things. Don't you find that in your consulting and discussing? For instance there's a proposal to bring sludge back and forth between here and Toronto and I asked the proponent have you thought of barges, and he said no. So I called the barge guy and he said, yeah it would be great, based on what you've told me. So isn't the big problem here people opening their minds to new ways of seeing things?" Gilbert : "Well that's always the problem councillor. But I would just say one thing and that is that I'm enormously impressed that Hamilton has asked for this report. I'm enormously impressed that it's had a special meeting to consider it. I'm impressed by Hamilton 's history. I gave some of it there. But I was impressed too that Hamilton-Wentworth was just about the first municipality in the world to embrace the sustainable development notion. This city has a history of opening its eyes. Now it didn't do much with that sustainable development stuff, but it certainly opened its eyes. And so I have more hopes for this city than I have for many others." Bratina : ".you're a veteran of the municipal wars, so you understand where pressure comes from in terms of development. It comes from people who stand to make huge amounts of money from developing greenspaces and so on. So is there a role for the province to pay in telling municipalities how they should work towards the future. Because we may not be able to make good decisions ourselves." Gilbert : "Well as Steve Robichaud mentioned, there is a new set of provincial guidelines just coming out. I've not been part of any of the discussions around this, so I don't know the exact flavour of what the province is expecting. But in terms of the drafts and what is being reported, the province does not want greenfield development, as far as I can figure out. It certainly wants brownfield development. It certainly wants intensification. And it begrudingly in the earlier stuff allowed greenfield development to have a place, but it seems clear to me that it doesn't want it. And I appreciate that developers are big and often seem bigger than the muncipality. Even Metro Toronto when I was there could be somewhat intimidated by developers. And I appreciate the need for some provincial support. But I'm absolutely certain with this particular government and where it is now, if the city of Hamilton were to say to this government, we need help in having no more greenfield development in our city, I think the provincial government would provide that. It would draw the map in the way you want. Because what's going to happen is there's going to be a map, and there's going to be a map that shows where the greenfield stuff can be and where it can't be and we've already seen some of that. And I think if this city wants the province's help in that direction, it will get it." [ 1:11:41 ]

Bruckler : ".interesting, exciting, challenging and it probably raises as many questions as you've been able to offer for us this afternoon. I think that's part of the purpose of this particular report. And I think staff have identified some of the positive initiatives that we're doing, perhaps on a small scale. And I think some of the things that you're talking about here are far greater, obviously, in impact, far greater as far as investment and those kinds of things. . More recently we've been talking about global markets, global economies and those kinds of things, and now we're growing potatoes in our back yard again. How does this all sort of, which is something that global market theory probably somewhat contrary to what it is that's being put forward here. So how do those things come together, where do they grow apart, and what are the impacts?" Gilbert : "What a question. I work for the OECD in Paris and it's the biggest group of economists - 1600 economists, and I'm not one of them - been working there for 13 years - and the last report I wrote is exactly on this. I'd be happy to send it to you . It began with the discussion - is globalization dead. And you know .John Ralston Saul has written a book essentially saying it's dead, and then Thomas Friedman, the US journalist, is at the top of the best seller lists saying the world is flat, we're all together. And it's a very hard issue, but I think John Ralston Saul has more truth, even without the energy consideration and transport consideration. And I think the decision of the Canadian government yesterday - the softwood lumber resolution is a repudiation of globalization. It is trade restriction, trade restraint, trade management. And this is what Ralston Saul was talking about. So I think that even without energy, we're seeing some problems with this globalization model. And I'd be happy to talk about this more. But with energy, even though most of the world's trade travels by sea, and even though the energy aspect will not impact that very much because it is so efficient to move stuff by sea, we are bound to see some constraints on the amount of trade, the amount of goods floating around. I think that this will arise in agriculture, more than some other things, because of the particular ways you have to move this, and I think under an energy way of thinking Hamilton is going to be talking much more about a local food production. And of course it's the energy needed to produce that local food which I think should be a key part of a subsequent report, because food is energy intensive, especially when you're growing it out of season. So that's' where I think the big impact is going to be. We're seeing globalization anyway unravelling a bit and I think energy constraints will give impetus to that." Bruckler : ".the difference in the consumption of oil between air and sea?" Gilbert : "Massive. I don't have the number exactly in my head, but it's maybe 30, 40 times. Times!" [question off-mic apparently from Bruckler]. Gilbert : "If you take a tonne of produce and you move it by sea. I was in Chile in December and I talked with an exporter from Chile to the United States . about their costs and what it costs to move stuff per kilo to the United States . By air, and the lowest rate they could get was $5.80 US. By sea, 25 cents. Okay? That's the measure of. And it's basically all fuel. But of course by sea it takes minimum of nine days. By air it takes nine hours." [ 1:16:36 ]

Whitehead : "I think the one consensus we can all agree on is that oil and gas is not a replenishable resource. I've done a lot of reading on both sides of this issue and I would also contend that there are many various views on peak oil. . I'm looking at the report. Some experts believe that peak oil is unrealistic, that peak oil will occur earlier than 2012 and may even have occurred now. Other experts are more sanguine. For example a leading US firm of energy analysts have argued the global capacity is set to increase dramatically over the rest of the decade. It rejects the current fear that near term peak in world oil production and the coming exhaustion of supply is near . reading some other reports . Imperial oil, 20 wells being drilled, 200-250 million barrels of oil over the next decade is actually anticipated . you talk about transparency with respect to the oil industry, certainly with respect to the North American industry and sort of defended them on the transparency. And then we've just had Enron, certainly sends shivers down any shareholders' spine when they think about, in fact, the lack of transparency and accountability in respect to providing information. So I go back to two major companies, I guess it was in the early sixties, that were charged, because they were the major uranium producers in the world quite frankly. And they were charged with collusion. Jacking the price up . and I don't think that that is just in that industry, but certainly could happen in the oil industry. And the other thing you don't, the thing you don't touch in your report as much, although you sort of inferred when you talked in the context of Saudia Arabia and Iran, is that the political piece. And what that will change. Instead of looking outward in respect to globalization, we'll start looking inward and we'll see more protectionism, which happened, I think back in the 1960s, certainly in North America . So if you can make a comment on the fact that is there a possibilty that that could impact on some of your conclusions, depending on how governments respond to these issues?"

See Part #2