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Contents

Section I  – Proposed FDI in Potash Corporation by BHP Billiton

Section II – Canadian Rejection of FDI &  the Declaration of a Strategically Significant Industry

Section III – International Relations Theoretical Foundation for Canada’s Position

Theoretical Discussion.

Summary.

Bibliography.

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oreign direct investment has been a key component of the development of the modern Canadian economy.  Since before confederation in 1867 an economic heritage developed based upon foreign investments from European and American sources.  The foreign capital provided basis for much of the infrastructure required to exploit the wealth and diversity of natural resources throughout the farthest reaches of Canada.  This paper will explore a most recent example of Canadian rejection of foreign direct investment – the 2010 case where a hostile bid for Potash Corporation of Saskatchewan was rejected on the grounds of preserving national interest.  This case is unique because it is the second such case in the past three years that has come to define the investment climate of the Canadian economy under Stephen Harper’s conservative government.  This paper will seek to answer the question of whether international relations theory is relevant in the formulation of foreign and domestic policy.

In doing so, this paper will first provide an overview of the case and provide context for why the rejection of foreign direct investment (FDI) in Canada matters.  It will explore the nature of the proposed acquisition of Potash Corporation of Saskatchewan (Potash Corp), the largest global supplier of potash, by BHP Billiton Limited (BHP) an Australian company that is currently the world leader in the iron-ore and coal industries, to name a couple.  Background information on each company will provide clarity to the importance of the proposed deal.  Ultimately this paper will delineate the exact impact such a deal would have on Canadian interests by examining the nature of the global mining industry and the nature of the potash resource for Canada in comparison to the rest of the world. 

Once the nature of the deal is clear this paper will then examine the relevance of federal and provincial governments in reaching the final decision of deterrence.  It will become clear that these domestic actors play an important role in defining the terms of foreign direct investment.  Although, the actual authority of domestic interests on FDI is concentrated at the federal level the provincial governments play a key role in deciding whether to intervene against FDI.  Drawing upon research by Steven Globerman and Daniel Shapiro this paper will demonstrate three distinctive eras of government regimes in response to FDI.  It will become clear that the government of Canada has transformed to become more welcoming of FDI which is reflected in the changing regulations of Foreign Investment Review Agency (FIRA) to the Investment Canada Act.  This second section of the paper will attempt to answer the question – if Canada has become more welcoming to FDI in recent years, then why is the current administration blocking the sale of Potash Corp to foreign interests?

The third section of this paper will explore the theoretical framework of international relations theory to attempt to rationalize why Canada rejected FDI in Potash Corp.  It is generally accepted that the body of work on international relations theory is expansive.  To attempt to apply each major theoretical model – ranging from realism, liberalism, historical structural, to constructivist or reflectivist theoretical approaches – would not provide an adequate analysis of the issue at hand.  Instead this paper will only examine the theoretical approach known as liberalism.

Specifically this paper will focus on the written works: “Liberal International Theory: Commond Threads Divergent Strands,” by Mark W. Zacher and Richard A. Matthew; “International Public Goods Without International Government,” by Charles Kindleberger;   “Hegemony in the World Political Economy,” by Robert Keohane; and “Democracy and Globalization,” by David Held.  This paper will explore each article, describing the central argument of each author.  Once the foundation for liberal theory has been established it will then be utilized to develop an understanding of Canada’s position on foreign direct investment. This paper will demonstrate that international relations theory is indeed relevant to the formulation of Canadian policy positions.

Section I
– Proposed FDI in Potash Corporation by BHP Billiton –

Potash Corp has recently been given status as a strategically vital industry to Canadian interests after an unsolicited bid by Australian company BHP Billiton Limited (BHP) was rejected by Canadian regulators.   The rejection of foreign direct investment (FDI) in Canada should be considered an important event since Canada is not historically known to be in opposition to free market principles.  In a speech given by Prime Minister Stephen Harper to the World Economic Forum in January 2010, he says that Canada plays a leadership role in the advocacy and protection of the free market.  Given the participation in the World Trade Organization (WTO) as well as bi/multi-lateral free trade agreements and the public affirmation of the benefits of free and open trade between nations Canada should be considered a steward of free market principles (Harper, 2010, p. 5).  However, the recent case of protectionism against FDI in Potash Corp marks an important event that may indicate a rising trend against free market principles.

The following section will provide background on Potash Corp and will try to rationalize how the firm gained its special status in Canada.  The discussion will be centered on the relevant history of both companies, Potash Corp and BHP; information on the proposed acquisition; the nature of the global mining industry; and the related importance of natural resource control to Canadian national interests.

According to the history available on the company website, Potash Corp originally began operations as a crown corporation of the province of Saskatchewan in 1975.  Potash Corp was later transformed into a public company after an initial public offering in 1989 for $18.00 per share.  As a publicly traded company Potash Corp is listed on both the Toronto and New York Stock Exchange.  Through the years the company has strategically acquired and merged with potash mines and chemical technology companies from around the world.  Currently Potash Corp has operations and business interests spanning several countries from Canada, Chile, China, Israel, Jordan, to the United States.  The results of the management decisions has positioned Potash Corp as the world’s largest fertilizer producer serving three distinct markets – agriculture, animal nutrition and industrial chemicals – with three distinctive product components – nitrogen, phosphates, and potash.  Each of these components is essential to the formulation of fertilizers. (Potash Corp, 2010)

The operating environment of Potash Corp makes the company ideally suited to maintain it’s near monopoly status in the fertilizer industry.  As part of the global mining industry Potash Corp faces many of the same factors that affect both supply and demand.  The supply of fertilizers is characterized by “substantial barriers to entry, few producers, low government ownership, and no known product substitutes” (Potash Corp, 2010, p. 1).  While the demand for fertilizer is closely correlated to growth in population – where more population signals greater demand for agriculture products.  In the case of a near-fixed amount of farmland throughout the world there is great pressure for each acre to produce more, which is typically assisted by the use of fertilizers.  Potash Corp estimates that without the use of fertilizer forty per cent more farmland would be required to produce the same amount of food (Potash Corp – 5Ws, p. 4).

The bulk of Potash Corp. operations are split between: Canada, where the bulk of potash production occurs because of the nature of the resource deposits; and the United States, which produces and refines phosphates and nitrogen for global export (Potash Corp, 2010).  The primary markets for Potash Corp are China, India, Brazil, South East Asia and North America – wherein China consumes nearly twenty per cent of the total global supply (Reuters, 2010).

One of the reasons Potash Corp has been able to develop into a global leader is the way they have leveraged their dominance in the Saskatchewan marketplace.  After all, Saskatchewan has the location advantage of being the site of “more than half of the world’s potash reserves” and is the leading producer of potash with ten operational mines (Bouw, 2010).  Half of which are operated by Potash Corp.  Furthermore, Saskatchewan has a history of public investment in the economy as a means of jump-starting industry.  The province still maintains public monopolies in sectors like insurance, energy and telecommunications.  The result of initial provincial involvement in the potash industry has been astounding.  The economic impact for the province for Potash Corp alone is borne in the establishment of over 5,000 jobs and the creation of millions of dollars in tax revenue for the provincial government (Hervieux-Payette, 2010).  These benefits are magnified given the local economic trickle-down each mine contributes to Saskatchewan’s economy.

In the summer of 2010 BHP Billiton Limited, an Australian company, made an unsolicited bid to purchase all ownership interests in Potash Corp.  In an August 2010 press release statement issued by Potash Corp the company rejected the $130 per share offer on the grounds that it was “wholly inadequate”.  The company’s President and Chief Executive Officer Bill Doyle stated that the bid fails to “reflect the value of our premier position in a strategically vital industry and our unparalleled future growth prospects. (Potash Corp, 2010)

The company wishing to acquire Potash Corp is BHP Billiton Limited (BHP), a major international resources company involved primarily in mineral exploration and production.  As the “world’s largest coal exporter and third-largest iron-ore shipper” BHP’s economic influence and power is both diverse and enormous (Keenan, 2010).  The Australian-based company operates on all continents of the world and has a history of regulator rejection of the hostile foreign direct investment methods the firm often pursues.

For example, in 2008 BHP made numerous unsolicited offers to invest in the British-Australian company Rio Tinto Group, the second largest iron-ore producer in the world.  The proposed deal was important because it was the largest proposed merger in history, valued at $119 billion dollars which would have effectively provided BHP with near-monopoly powers over the global iron-ore supply (The Economist – Business Section, 2008).  Given the potential of the deal to create a tight grip on iron-ore pricing the European Union’s competition authorities made objection to the merger (Ibid).

Given BHP’s international position as a leader in the supply of strategically vital minerals, like iron-ore, the company would have much to gain by diversifying their portfolio to include other strategically vital industries like agriculture.  It quickly becomes clear that BHP has much to gain from the proposed deal,

Buying Potash Corp., owner of about 20 percent of global potash output capacity, would propel BHP to the top of the league of producers of the mineral, a form of potassium used by farmers to help boost crop yields by improving the ability of plants to withstand dry soil conditions” (Keenan & Behrmann, BHP Billiton Makes Hostile $40 Billion Bid for Potash, 2010).

The addition of Potash Corp would enable the company to gain a strong-hold in the supply of fertilizers to global markets.  It would also provide BHP with a substantial amount of control of one of Canada’s most prized prairie resources that has experienced a boom in the past decade as demand has surged from developing nations like China and India (Reuters, 2010).

As the world’s population continues to increase so will the importance of agriculture-related industries like potash-based fertilizer producers.  Interestingly, BHP had already submitted a proposal to Canadian regulators to launch a new potash mine in Saskatchewan before making the bid for Potash Corp (The Economist, 2010).  This suggests that BHP will enter the Canadian market regardless; the acquisition of Potash Corp would have merely provided the foundation for a near-monopoly over the Canadian production of potash.   If this is the case, why did the Canadian regulators decide to block FDI by BHP?

Section II
– Canadian Rejection of FDI &
the Declaration of a Strategically Significant Industry –

The provincial and federal governments of Canada were not in favour of the proposed acquisition and made their positions clear.  The province of Saskatchewan was quick to oppose the BHP bid to acquire Potash Corp based on the potential of the resource company in relation to the future of Saskatchewan and Canadian interests.  As an ardent opponent Brad Wall, premier of Saskatchewan, points to the fundamental issue at hand, “What other takeover involves 25 to 30% of the world’s anything? … This is not like other takeovers we have contemplated in the country” (as quoted in Koven, 2010).  It is estimated that Potash Corp controls 20 per cent of the global potash supply; producing approximately 12 million metric tons of potassium chloride in 2009, and is expecting to near 20 million by 2014 (Reuters, 2010).  Potash Corp is one of the last remaining owned Canadian mining companies and maintains a strategically dominant position in the international fertilizer market that is paralleled by no other transnational company.

The sub-federal, or provincial, governments of Canada do not have express formal right to block FDI in their respective jurisdictions.  The power of protection over FDI rests at the federal level.  Canada has established ownership restrictions in sectors such as air transport, broadcasting, financial services, telecommunications and uranium mining.  Each of these areas has respective bearing on maintaining Canadian autonomy over national security, culture and heritage, economic solvency, national security and international non-proliferation objectives.  Therefore extra scrutiny by the federal government has always existed which is no different than other jurisdictions like the United States and the European Union.  However, Canada is “one of the few industrialized countries to have foreign investment rules requiring the review of proposed foreign investment proposals based on monetary thresholds” (Competition Policy Review Panel: Executive Summary, 2008).

At the federal level Tony Clement, Minister of Industry, signaled that the attempted hostile takeover would not be a net benefit to Canadians and therefore motioned to deny the acquisition.  Blocking the takeover was done on three-part reasoning; that there would be no ‘net benefit’ effect “on Canada’s ability to compete in world markets; on productivity, efficiency and innovation in Canada; and on the country’s overall level of economic activity” (Ibbitson, 2010).

In the November 4^th issue, The Economist identifies that party politics most likely play a larger role in Harper’s government decision to block the takeover bid on the grounds it would not be a net benefit to Canadians – his party included.  The case is considered unique because “…in the past 25 years, the country has shot down only one other foreign takeover, a case involving satellites and space missions that was vetoed on grounds of national security” (The Economist, 2010).  The Conservative party is currently supported by nearly all of the possible parliamentary seats in Saskatchewan – thirteen of fourteen. Since the premiers of Saskatchewan, Alberta and Manitoba are against the foreign takeover of Potash Corp the federal government must carefully consider the regional wishes to prevent opposition and loss of support in the next election (Ibid).   This suggests that domestic politics have a bearing on the relative success or failure of FDI.

To block FDI in Potash Corp was seen as a controversial ruling by the conservative Harper government which is considered a market-friendly administration (Financial Post, 2010).  However, how does the decision to block FDI in Potash Corp compare to the most recent track record of Canadian market intervention?

According to Globerman and Shapiro Canada has three distinct eras of foreign direct investment policy regimes.  The first era was between 1974 and 1985 and is best characterized by the Foreign Investment Review Act (FIRA).  The FIRA regime of government regulation of FDI in the Canadian market is distinguished by a sense of uncertainty caused by perceived government hostility towards foreign investment.  The government required FDI to be of a ‘significant benefit’ to Canadian interests under FIRA.  This effectively insulated Canadian domestic firms from outside investment which would create competition in the marketplace.  It is estimated that “Over the period 1975-84, the Agency’s disallowance rate was 7.0 percent (Safarian 1993, p.130 as quoted by Globerman & Shapiro, 1999, p. 516).  Although it can never be known how many foreign investors never attempted to invest in Canada because of the uncertainty and added legal and administrative costs associated with ensuring all proposals met FIRA’s expectations.  However, Golberman and Shapiro conclude that during the first era, FIRA had no significant effect on deterring or attracting foreign direct investment (1999, p. 526).

The second era came to be after the realization of the Investment Canada Act of 1985 which fostered greater willingness and openness to greater amounts of FDI in Canada.  Essentially the Investment Canada Act was a renewed and updated version of FIRA that established sectors exempt for review, set a threshold limit for transactions subject to review, and changed the condition of acceptance from ‘significant benefit’ to ‘net benefit’ (Globerman & Shapiro, 1999, p. 517).  Currently the Investment Canada Act thresholds are: “5 million dollars for direct investments and 50 million dollars for indirect transactions,” however, WTO member countries benefit from a 299 million dollars threshold (Industry Canada, 2010).  The update from FIRA to the Investment Canada Act enabled greater foreign access to the Canadian marketplace during the second era described by Globerman and Shapiro.

Under the Investment Canada Act, 1985 the federal government never blocked a foreign takeover on the grounds of failure of the ‘net benefit’ test until 2006.  In the first twenty three years of the Act, between 1983 and 2006 the federal government approved approximately 1,587 foreign takeovers that required formal review and 11,214 foreign acquisitions that required formal notification (CBC, 2008).  Regardless of the added government involvement in the economy no significant deterrence to FDI occurred during this second era; instead the FDI regime of Canada became more clearly defined which increased the accessibility of Canadian markets to foreigners.

The third and final era of FDI regimes discussed by Globerman and Shapiro is based upon the implementation of the Free Trade Agreement, 1988 and subsequent North American Free Trade Agreement (NAFTA) of 1994.  Each of these agreements signaled the further liberalization of the Canadian market to greater inward flows of FDI.  “In Canada’s case, for example, the FTA/NAFTA Agreements appear to have significantly increased levels of inward and outward foreign direct investment” (Globerman & Shapiro, 1999, p. 526).  The results of the study by Globerman and Shapiro signify that Canada has been on a trajectory course that has positioned the country as more welcoming to FDI in recent decades – especially given the increasing character of multilateral and bilateral trade agreements Canada has entered into with other nations.

In the study, ‘Motivations for FDI and Domestic Capital Formulation,’ the authors discuss how Canadian outward FDI surpassed inward FDI in the third era of liberalization.  There is a marked difference of the third era to the first; compared to 1970 levels where inwards FDI amounts were four times greater than inwards levels of FDI (Hejazi & Pauly, 2003, p. 285).  This suggests that Canada has experienced greater involvement in foreign markets by making direct investments in other national economies.  This indicates that in recent years Canadians have had a greater interest in ensuring access to free and open markets than ensuring open access for others’ FDI in the domestic Canadian market.

In a study by Nathan Jensen there is clear evidence supporting the fact that democratic governments attract higher levels of foreign direct investment (FDI).  Where “democratic institutions have a large positive effect on FDI inflows … [and] democratic regimes attract as much as 70 percent more FDI as a percentage of GDP than do authoritarian regimes” (Jensen, 2003, p. 612).  Wherein, Jensen defines FDI as private capital flows between countries and firms that provide some element of control over elements like equity, capital, debt and earnings of the firm or resource.  Jensen concludes that democratic political regimes are most likely favourable to foreign investors because the associated risks of dealing with a democratic regime are perceived to be lower.  One of the defining characteristics of a democratic regime is transparency in how decisions are made.  This begs the question – should Canada be considered a democratic economic regime based on the most recent examples of protectionism against FDI?

The evidence to suggest Canada is protectionist is indeed limited.  For the past three decades the Canadian government has only blocked two attempts by foreigners to invest in Canada.  The 2006 government intervention surrounded the sale of the space division of MacDonald, Dettwiler and Associates (MDA).  The deal was deemed to be a threat to national interests in technology and space and was subsequently the first major government intervention deterring foreign direct investment in Canada since the introduction of FDI regulations.  MDA technologies included Canadarm and Dextre as well as the Radarsat-2 satellite which had major associations with the Canadian Space Agency and were significant factors of Canadian participation in international space efforts.  The second instance of government intervention in FDI attempts is illustrated by the Potash Corp case of 2010 that is at the center of this discussion.

The case of Potash Corp is comparable to MDA because of the impact the firm has on Canada’s control of the potash resource and in turn global food security.  It is also comparable because of the related impact on international relations between Canada and her allies are considered immense.  To illustrate the importance of the resource industry to significant trading partners of Canada we must understand that potash is a strategic input for agriculture and therefore is considered closely linked to national food security.   According to the US Geological Survey, close to half of the total Canadian production in 2008 – nearly five million metric tons of potash (K₂0) – was directly supplied to the United States.  Although the amount of trade in potash fluctuates year-to-year based on prices, Canada is responsible for supplying an average of 86 per cent of all imported potash to the USA between 2005 and 2008.  Based upon this information alone it can be surmised that Canadian interests in the potash industry have direct impact on the food supply of the largest economy in the world.  (Jasinski, January 2010, p. 1 & 2)

Section III
– International Relations Theoretical Foundation for Canada’s Position –

In order to understand Canada’s domestic position on deterring foreign direct investment in the case of Potash Corp it is essential to examine the theoretical models of international relations theory.  Theory often explains action; therefore a review of theory should provide some rationale to the decision to deter FDI in Canada.  It is generally accepted that international relations theory has traditionally been dominated by the realist and liberal perspectives.  For this reason, this paper will utilize the liberal approach to international relations as the basis for illustrating Canada’s FDI rationale.

The chapter “Liberal International Theory: Commond Threads Divergent Strands,” written by Mark W. Zacher and Richard A. Matthew as found in the book Foundations of International Relations Theory is particularly useful to this discussion.  The authors do a comprehensive job delineating the nature of liberalism as an international relations theory.  They argue that there are three fundamental core values of liberal international relations theory inherent in all strands of liberalism:

• The first principle of liberalism is based upon a progressive and optimistic view of human nature.  Reason and learning is part of the human condition.  While it is also accepted that discord and coercion are necessary in some circumstances, human freedoms have been encouraged by the general condition of peace, prosperity and justice.
• The second principle of liberalism is based upon the fact that although anarchy is a reality the state is an essential actor that makes cooperation is possible.  This cooperation is necessary to maximize total group benefits and mitigate damages.
• The third principle of liberalism is that international relations have been transformed by modernization.  The major phases have included the agriculture revolution, industrial revolution, and scientific revolution.  (Zacher & Matthew, 1995)

Zacher and Matthews describe how these core fundamental values have been developed through years of theoretical debate and developments by such authors as Locke, Voltaire, Rosseau, Kant, and more recently Keohane, Nye, and Hoffman.  It is evident that there are numerous strands of liberalism; the strands range from republican, interdependence, cognitive, sociological, and institutional liberal-‘isms’ (1995, p. 121).  It is worth noting, for Zacher and Matthews, individuals are the primary actors of international relations and when comprised are represented by states which are the most important collective actors.  The interests of these actors are constantly evolving and shaped by domestic and international conditions.

One of the main conclusions that Zacher and Matthew present about liberalism is a correlation exists between democratization and free trade as means of preventing international aggression and war.  Wherein international laws and organizations brought about by democratic actions create an international regime that facilitates commerce between nations; where the mutual interests of nations, upholding principles of free trade, maintain the integrity of the regime (1995, p. 137).  That is the mutual interests of the group maintain peace among group members.  However, the authors do point to the inherent roles of self-interest and power in individual action which in general advocates “prudence” in foreign policy decisions (Ibid, 112).

Charles Kindleberger, also a liberal international relations theorist, was best known for his development of Hegemonic stability theory.  His article “International Public Goods without International Government” was a reflection of the changing nature of international relations theory – beyond the strict traditional dichotomy of realism and liberalism.  The result was sort of cross-pollination of disciplines including political science, economics, sociology and philosophy.  In an aggregating many related factors hegemonic stability theory attempts to explain how and why regimes are established and maintained by looking at a variety of contributing factors.

Kindleberger infers that stability in the international system is possible when clearly defined hegemony exists because it will act as an overarching authority.  A hegemon is best understood as a leading or dominant power (1986, 1).  In the international nation state system a hegemonic power could be considered the United States.  Acting as a hegemonic power, the United States has played a primary role in establishing stability because of the way it has founded, maintained, and regulated a common system that promotes free market principles.

In this way, Kindleberger describes that at the root of hegemonic stability is the notion of providing and sustaining public goods.  A public good is non-excludable and non-rival; where everyone has access to it and consumption does not diminish the availability of the good (Kindleberger, 1986, p. 2).  An optimum example of a public good is a free and open market economy.  Today an open trading system between most all countries is made possible by the standardization of weights and measurements, freedom of the seas, and the protection of property rights – all concepts that have been developed and enforced by hegemonic powers (Discussion, 2010).  For Kindleberger the essential role of the hegemon is to police the ‘free riders’ – those who directly benefit from the public goods but who do not contribute to maximizing the delivery of public goods (1986, p. 13).

In Hegemony in the World Political Economy Robert Keohane clearly defines the parameters of hegemony as the control of resources like raw materials, capital, markets and competitive advantages.  An important observation by Keohane is that important economic issues are often closely correlated to military-security issues of the hegemony.  This explains the military power exercises of the United States and her allies in the protection of commercial oil interests in the Middle East (Keohane, 1999, p. 300).

Although Keohane proposes that a single dominant power creates and maintains order in world politics, his understanding is not limited to the dominance of one state as a sufficient and necessary condition for the development of world order.  This idea permits the waxing and waning of hegemonic power as well as the cooperation of many states in an effort of international stability.  Keohane suggests that a single state with ability and willingness can make and enforce rules of a regime.   The key to this understanding is that willingness of a state is driven by domestic politics (Keohane, 1999, p. 295).  That is hegemonic leadership in international relations are determined in part by domestic conditions which create a demand for cooperation or conflict.

In the chapter “Democracy and Globalization” David Held discusses the idea of a cosmopolitan democracy as both necessary and possible in the globalizing world.  He argues that a shift has occurred in human affairs where we are more inter-connected having overcome spatial distances with fundamental changes in the way we perceive communication, culture, the environment, finance, security and transportation (1998, p. 12).  Overlapping spheres of influence create interest dilemmas that present challenges to the way we think of national sovereignty and boundaries in the international arena.

Held discusses the fundamental issue of constituency in a liberal democracy where consent of the community legitimates government’s actions.  He is right to point out that most forms of democracy exist on a domestic or national level.  For Held, in the case of issues where interests are cross-reaching across national interests, like the ready availability of cheap fertilizers, current forms of democracy do not adequately provide representation for global citizens to direct or have input on decisive actions to promote or uphold those interests.  For the most part, economic forces operate at a global level which cannot be contained or directed by the conventional notion of national governments (Held, 1998, p. 27).

Theoretical Discussion

Applying Zacher and Matthew’s observations of the liberal perspective of international relations theory we can make a few conclusions about Canada’s position on FDI.  The first is that the state should be considered an important actor of international relations; since both federal and sub-federal governments influenced the decision to block the foreign investment.  However, individuals should be considered the primary actors motivating action in the international community.  After all, BHP Billiton is a publicly traded company comprised of the aggregated interests of individuals.  Marius Kloppers is the chief executive officer (CEO) of BHP, he is responsible for driving both attempts to acquire Rio Tinto and Potash Corp; two failed events that cost the company approximately $800 million dollars (MacDonald, 2010).  On the other hand, Bill Doyle, CEO of Potash Corp played a key role influencing shareholders and government officials to act in concert with the rejection of BHP’s offer.  Brad Wall and Stephen Harper were also individuals with government regulatory capacity who impacted the final decision to deter FDI.  Their personal opinions no doubt had a direct impact on blocking BHP’s attempt to gain access to the Canadian market by way of acquisition.

The second observation we can draw from Zacher and Matthews liberal interpretation is that international relations are shaped by self interest and power which results in a constant state of flux.  This is demonstrated by Stephen Harper actively promoting the advancement of free and open market principles; when in fact his administrative decisions display hypocrisy between words and actions.  The control of resources as power is mirrored in Canada’s direct protectionist measures to ensure domestic control of the largest potash mines in the world and a considerable portion of the global fertilizer supply.  It is important to weigh the fact that had BHP acquired Potash Corp the monopoly that may have been created could have had a negative influence on global supply prices – thereby negatively affecting the entire group of potash users.  Canada’s display of prudence of self-interest over group-interests demonstrates that coercive intervention by state actors is at times acceptable to maintain the balance of the system.

Based on Kindlerberger’s assertions of liberalism we can infer that the decision to maintain Canadian interests in Potash Corp indicates the desire to maintain stability by way of a level of hegemonic control over the domestic potash resource.  Canada clearly enjoys the economic benefits of the company’s production over the natural resource.  There is also a net benefit to the global community by providing access to the by-products generated by the company’s operations at a fair market price.  In this way Potash Corp is delivering a modern public good – the seemingly limitless production of a commodity necessary to obtain higher crop yields which in turn sustains a greater number of people on the same amount of arable land.  Since the nation of Canada coincides with the geographic location of a majority of the world’s potash supply it is most likely in the best interests of the Canadian people to maintain some sense of control over the largest producer of such a valuable resource.

Applying Keohane’s conceptions of liberalism to the case at hand it is clear that potash is a valuable resource that is closely linked to food security.  For this reason, Canada has a vested interest in maintaining some level of domestic control over the resource’s means of extraction and production.  The second section of this paper demonstrated that there was as domestic willingness to preserve the integrity of Potash Corp as a Canadian entity from both the provincial and federal levels of government.  The government’s ability to control FDI is vested within the Investment Canada Act and is a tool for ensuring dominance over natural resources like potash.

Applying David Held’s conclusions of liberalism to the case study we find a disconnect in his interpretation of the liberal theoretical framework.  While it is acceptable that potash as a commodity does serve cross-reaching national interests, to argue that there was no constituency on the issue to block the BHP bid to acquire Potash Corp seems unfounded.  In fact the shareholders of Potash Corp had the ability to individually block the sale of their shares to BHP in an attempt to prevent the foreign acquisition.  Furthermore, Canadian citizens can demonstrate their acceptance or rejection of the regime advanced by the Harper government during the next election by choosing to vote or not to vote for the conservative party.  In some context, Held is correct to say that the citizens of Malawi, for example, do not have a voice in the nature of FDI permitted in Canada as was the case of Potash Corp – however, it begs the question of whether they deserve a voice in determining the relative openness or closeness of the Canadian economy to FDI.

Summary

This paper has outlined the nature of the proposed foreign direct investment in the case of BHP Billiton and Potash Corporation of Saskatchewan; the influence of federal, provincial, and individuals on the relative success of the deal; and the theoretical basis for liberal international relations theory.  Based upon the information herein presented it can be concluded that international relations theory does influence and explain the formulation of foreign and domestic policies.

Although Canada’s position on free market principles may seem obscure, the actions by the regulatory agencies were indeed influenced by the goal to preserve Canadian national interests of sovereign control over scarce natural resources.  In the past three decades Canada has been an open market and has advocated the same free market principles.  The Potash Corp case marks the second such intervention by Canadian regulators; this prudence in policy is more generally an exception to the norm.  While it may not be the norm it does mark a significant departure and signals a sense of uncertainty to potential foreign investors.

The ‘net benefit’ test has been criticized on the international stage as being too obscure and subjective to the whims of government self-interest.  The government argues that the proposed FDI did not promise to provide a net benefit because the deal would have hampered the country’s ability to compete in world markets.   Since Potash Corp is geographically based within Canada, due to the location of the mines and existing production facilities, how would ownership by BHP differ than the current structure?  It is important to keep in mind that since Potash Corp is already a public company listed on both the New York and Toronto Stock Exchange there is significant diffusion of ownership interests among a large group of individuals, many of whom are not Canadian.

The international criticism is not unwarranted.  The Harper government is now responsible for the two instances of deterring FDI – MDA in 2008 and Potash Corp in 2010.  For a government that publicly advocates principles of the free market to the world through major forums like the WTO it must ensure some level of consistency at the international level in order to be taken seriously by other economies.  Although the evidence presented herein does demonstrate that Canada has a vested interest in advancing a free market agenda to gain FDI access for Canadian investors.  After all, the Canadian levels of outward FDI have outpaced inward FDI in recent years.

The question remains –should Canada be considered a democratic economic regime given Canada’s most recent example of FDI deterrence based upon the principle of “net benefit” to Canadians that is based upon limited transparency?  The fact is this is the second case of FDI deterrence that is marking the beginning of a trend against foreign acquisitions of priority national industries.  Although it may not be entirely clear how the government reached the decision they do seem to exhibit liberal international relations tendencies in their approach to foreign and domestic policy development.  These tendencies are reasonable cooperation in general while minding the needs for power and self-interest in the long-term.

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Curtis Matwychuk-Goodman

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This paper will explore international relations (IR) theory by focusing on two specific frameworks that demonstrate the duality of the approach to the discipline.  In comparing and contrasting the particulars of both the positivist and post positivist framework it will become clear what the primary contentions of each are.  This will be useful because it addresses a key nature of the development of IR theory – that the inherent contentions of each side of the debate enrich our understanding of IR theory.  The fundamentals of each side of the debate are rooted in addressing the basis of knowledge and the advancement of intellectual thought.  The ideal would be to realize and understand the nature of humanity or perhaps more specifically, the nature of anarchy among the relations of human affairs.

This paper will first delineate the nature of IR theory.  It will then explore the major contentions of both the positivist and post-positivist approaches to IR theory.  Each perspective will become clearer.  The foundations of each approach to knowledge development will be articulated by examining the intellectual works of the following:

After a brief outlay of the positivist framework, followed by the post-positivist, the respective approaches to IR theory will be discussed in their relative strengths and weaknesses to each other.  This paper will establish the assertion that both frameworks contribute to the richness of IR theory development.  Furthermore, this paper seeks to provide answers to how knowledge is created in IR theory and why this matters for citizens of the world.

Background on IR Theory – the Major Contentions

First let us understand – what is international relations (IR) theory?  A collective body of knowledge created over years of intellectual discourse on the modern development of world events pertaining to human interactions.  The intellectual developments are often a reflection of current happenings – whether social, political, or economic; which are to some degree compared and contrasted to past interpretations of similar past historical events.

The international relations theory discipline has been described as being based upon 1) rigorous study of clear and distinct objects – like nation-states or multilateral institutions or particular documented occurrences and outcomes in history; and 2) rooted in common agreement, or disagreement, on particular definitions of IR terms and concepts.  Over the course of intellectual history commonalities have become inevitable through a constant reproduction of consensus on exactly what the central issues of humanity are in the international realm.

Thucydides, Plato, Grotius, Kant, Smith and Marx are but a few names that may come to mind when thinking of established names in the early development of IR theory.  These intellectuals characterized the essence of their generation of thought.  The big names, who were no doubt fortunate in sources of funding and publishers.

As the name implies, international relations (IR) theory is centrally involved with affairs of nations.  Dialectic occurs among IR theorists – a debate over the rightness of ideas in how nations act or behave towards each other and the corresponding rationale behind why such actions occur.  Ultimately for intellectuals the drive of IR theory is to produce knowledge that dominates the historical record.  The ultimate recognition is to be established throughout history as having the best articulated ‘original’ thought.

Ole Weaver discusses the importance of fundamental debates in the development of IR theory.  One of the most recent debates among IR theorists has included the positivists and post-positivists.  More specifically this could be broken down to a debate over the framework of knowledge.  Even more specifically this could be broken down to debates between realists and liberals; neorealists and neoliberals; or rationalists and reflectivists.  These theoretical frameworks develop knowledge that is in some ways conflicting, but in other ways helps to build consensus of what the established conditions of humanity seem to be in regards to IR.

The primary contentions of the debate between positivism and post-positivism are: How should anarchy be managed? Can we predict future actions based on past actions?  Perhaps more correctly, are humans capable of learning and developing together?  Are there universal principles that bind human interactions?  Are there only absolute or relative gains in this world – or both?  Who are the actors in international affairs – the state, the individual, the corporation, the sovereign wealth fund, or some other entity?  More importantly, how should knowledge pertaining to IR be organized and structured in order to help humanity better understand its existence together?

Let us now look at the specifics of each debate by identifying a few major approaches within each the positivist or post-positivist framework.

Positivist Framework

Positivism dominated the IR theory debate for a considerable part of the twentieth-century.  The positivist approach to research is based upon empirical findings, founded upon the science of observable facts.  This naturally provides a basis for scrutiny by other researchers and intellects.  Two threads of IR theory connected to the positivist side of the debate include realism and neo-realism.  These can be further delineated by specificity in the debate between offensive realism or defensive realism; and regime theory or complex interdependence theory.

John Mearsheimer is connected to the structural realist approach to IR theory.  Also known as offensive realism or neo-realism, this strand of IR theory views the world as offering absolute gains, wherein nations gain at the expense of others.  Mearsheimer’s article “The False Promises of International Institutions” (1994) explains that the quest for power is the only structure or ordering principle in an anarchic system.  His observations are of a world where the dominant nations spend up to one half of their gross domestic product on military and defensive strategies.  The fundamentals of his contention is clear – kill or be killed.  This adequately sums up Mearsheimer’s offensive realist approach within the positivist framework.  Drawing on relevant historical examples Mearsheimer explains a state must adequately fortify its own economic, military and political position in order to protect and maintain the prominence of their position within the global hierarchy.

His approach is positivist because of his focus on empiricism.  In his article “Back to the Future: Instability in Europe after the Cold War” he clearly delineates the variables of his focus.  These variables are then used to make predictions as to why a ‘Long peace’ ensued during the Cold War and what this could possibly mean for the future of Europe.  Isolating three key factors: 1) the bi-polar nature of the conflict, capitalism versus communism or USA versus USSR, was easier to manage than the relatively unordered multi-polar world that existed pre-WWI; 2) equal amounts of power balance each other; 3) the proliferation of nuclear weapons makes the cost of war excessively high and will therefore decrease the potential for its occurrence.  Central to this realist approach is the need for power in the international arena.

This position is, for the most part, supported by Kenneth Waltz a prominent defensive realist.  Although Waltz would argue that nations wish to gain and maintain power there is a threshold to exactly how much power is enough.  His article “The Stability of a Bipolar World” (2006) explicates that a nation’s attempt to maximize its own power will be punished by gaining too much power.  In the cases of Napoleonic France, Nazi Germany or the USSR, these nations overextended natural abilities in maintaining the presence of power in the international arena to the point that they eventually imploded under their own efforts.  However, nations must balance power internally (building national capabilities) and externally (coalitions with other nations) to keep a check on rival national powers.  The fundamental problem of the balance remains situated on the issue of relative gains among states – where no nation wants to forgo their share, especially if it will tilt the balance of power out of their favour.

Connected to this realist approach is Stephen Krasner who is grouped with the regime theorists.  Principles and norms are the defining characteristics of regimes – or patterns of human interaction.  States are the primary actors, participating in regimes through associations and structural agreements like NATO or GATT (now the WTO), where rules and procedures are created by common principles and norms.  These are established through the relative power and influence of nations who interact in methods of cooperation in the hope of attaining specific policy outcomes favourable to their own self-interest.  In the case of NATO – military protection and assistance; in the case of the WTO – secure and open trading markets.  Over time these principles guide the interactions of nations.  Although the habit of such actions may produce favourable results there is no guarantee that the state will continue to engage in the activity due to the pervasive nature of anarchy.

For Kenneth Oye the concepts of game theory best describe IR in what is known as complex interdependence.  The article “Mitigation of Anarchy – the Conditions of Cooperation in World Politics” discusses anarchy as an inherent condition of reality.  Wherein cooperation sometimes emerges; but cooperation is not guaranteed because of individual strategies and abilities to alter circumstances and thus payouts.  The differentiation between outcomes depends on whether the game is single-play or iterated.  In the case of iteration states expect to work together continuously into the future and the payoff structure is not likely to change much over time.  The outcomes of these games are diminished for Oye as the number of actors participating increases.  In the case of just a few parties the outcomes are usually more significant and ad hoc in nature; whereas consensus decreases in likelihood as the number of participating parties increases.

In the case of complex interdependence there are three fundamental characteristics.  The first is there are multiple channels between states both politically and economically.  The second is that there is no clearly defined hierarchy of issues.  And the third being that military force lessens with less conflict – iteration of cooperation becomes habit over conflict.  These clearly defined variables provide a methodological approach to the study of IR theory.  The relationships of interdependence will shed light on the vulnerability or sensitivity of states to other states.  An important development in this argument is the possibility of cooperation – which will be discussed at greater lengths and greater importance by the post-positivists.

Overall, positivism presents a neatly informed position in the IR theory discipline.  It is a state centric approach; where the nation state is the primary actor of international relations.  Yet, positivists are willing to accept the influence and existence of other actors to varying degrees.  Power is a key element for the positivist approach.  The structure of the international system is based up on the inherent nature of anarchy; as no overarching authority exists and power prevails.  While cooperation may be possible among nation states, in any event anarchy is likely to prevail because absolute gains in the international arena outweigh relative gains.  And perhaps most importantly to the positivist approach is that any intellectual contention should be thoroughly documented with clearly defined terms, concepts and well-document occurrences of history.

Post Positivist Framework

For much of the twentieth century universities from the United States dominated the agenda of IR theory.  Ivy League schools were primary drivers of intellectual study and therefore the intellectual foundation for the United States’ international agenda or foreign policy.  This is demonstrated by the successive waves of intellectual time periods influenced by global events.  The competition of ideas driven by Cold War politics tended to become narrowly defined, focusing on easily measureable variables and difficult to refute theoretical principles.  By the 1980s post-positivist or critical or post-modern theories became a growing trend in IR intellectual circles.

The post-positivist side of the IR theory equation is a response to the obvious deficiencies of the positivist approach.  Post-positivism developed through   a tide of consensus developed over the lack of values and ethical questioning in the theoretical examination of international relations offered by positivism.  Although, by no means is the inclusion of values and ethics in the philosophy of IR theory a new concept.  However, the viewpoint was not adequately represented or given much thought in meaningful or mainstream circles of IR theory.

As world issues evolved over time, an awareness of the greater impact of actions beyond issues of the state and security came into focus as more and more areas were studied.  These post-positivist approaches address a variety of issues ranging from the environment, human rights and gender equality to name a few.

The study of human morals, values and ethical foundations are not typically empirically testable.  This is fundamentally at odds with the positivist approach that requires factual observations of the laws of nature.  To demonstrate understanding of the source of values and the scope of obligation of one person to another is prone to generalizations and normative considerations.

For post-positivists values are an observable fact of study.  Where 1) norms matter in world politics; 2) the relativity of these values affects issues of inclusion in the international processes and outcomes; 3) purposeful action is morally bound – which makes any intention either good or bad.  The post-positivist framework provides a basis for which to take our current understanding of the world and apply human principles as a basis to improve the human condition.

The normative approach will be the first area of focus for this paper in the post-positivist framework.  Intellectuals like Charles Beitz argue that the primary actors in IR are the state and multinational corporations.  Power is based upon inequality.  Humans are interdependent on each other.  Cooperation is possible.  However, the very idea of state sovereignty rejects the idea that economic interdependence will transcend the world community to a single moral order.  That is, the traditional constraints of IR theory understanding of the state limit the transcendence of humanity to some degree.

For Beitz economic inequality is central to the disparity between nations.  It is because of this inequality that Kant’s idea of a federation of states would not work initially for Beitz.  However, by utilizing a more cosmopolitan approach he attempts to bring social liberalism to the forefront of the IR debate.  Whereby, if nations were economically equal then cooperation would be more likely between nations.  Beitz was labeled as a critical theorist largely due to the fact the he was not welcome in the intellectual circle during the time of publication – which was characterized by intense scrutiny of the Neo-Neo debate.  Beitz closely resembles a normative liberal approach to IR theory – which is best described within the post-positivist framework,

David Held, in “Democracy and Globalization” (1998) discusses the idea of a cosmopolitan democracy as both a necessary and possible in the globalizing world.  He argues that a shift has occurred in human affairs where we are more inter-connected having overcome spatial distances with fundamental changes in the way we perceive communication, culture, the environment, finance, security and transportation.  This has created overlapping spheres of influence involved in “interest dilemmas” that challenge the traditional concept of sovereignty and boundaries of nations.

In this way, Held addresses the issue of constituency in modern democracies.  Consent is a primary factor in legitimizing actions by nations – but in most cases there is no formal mode for citizens of the global community to provide input into the actions of nations at the international level.  In the case of issues that have interests that cross-reach national interests how can citizens be guaranteed input in order to promote or uphold their interests? Once humans have effectively addressed the nature of constituency then internationals relations will be legitimized as democratic in nature – something that ought to occur.  Held exemplifies post-positivist assumptions for providing a guideline to improve the human condition as well as opening the debate to be inclusive of more than just state actors as the primary players in international relations.

Dependency theorist Peter Gourevitch describes the importance of domestic politics in the study of IR.  In this say he connects the importance of both the market and the state at a domestic level with the related importance at the international level.  He raises the importance of the people and local issues as having impact on international affairs; to an equal degree that international affairs influence these variables in some fashion.

He articulates a revised complex interdependency theory – where a distinction between strong and weak states is not just explained by the relative strength of wealthy Northern nations with that of weaker or not as prosperous Southern nations.  The issue of security results in coalitions and special arrangements in each country’s foreign relations is a central theme that connects nations to each other.  Which builds the basis of IR study beyond the original conception of complex interdependency; this exemplifies the ongoing debate within IR theory.

Gourevitch presents a helpful viewpoint that defines a trend in IR theory to be primarily focuses on the international level.  Security issues affect the relative autonomy of states; the autonomy of the state is largely correlated to the fundamental economic prospects of the state.  Domestic factors like political, social and geographic endowment shape the way nations engage with each other.  Therefore domestic and economic issues should be primarily focused on in the study of IR theory.

For Michael Walzer state sovereignty is very important to determine the just or unjust nature of war.  He declares that war is just when 1) sovereignty is violated, and 2) in defense of human rights.  The fact Walzer outlines criteria for moral correctness provides evidence that this approach is post-positivist.  Walzer’s communitarian perspective rests on state sovereignty and state rights.

Walzer’s assertions are that states are the most important actors in international society.  That laws and norms are established to protect state rights and sovereignty.  Wherein, the rights of individuals propel and legitimate the obligation of the state within the international community.  Any threat to sovereignty should be treated as a criminal act – whereby there exists two appropriate responses which are: unilateral protection or a defensive coalition against the aggressor.  In any event, nothing but aggression justifies aggression.  And in the case of aggression, it is just to punish the aggressor.

Walzer’s six criteria of a just war provide a normative approach to IR theory.  It provides adequate guidelines for nations to act and react within the international community.  It provides an outline of what is morally correct and how nations out to act.

The post-positivist side of the IR theory debate is not as neatly summarized as the positivist approach.  Not included in this debate were the fringe post-positivist approaches like feminism, reconstructivism, or radicalism.  Instead this demonstrated the common elements among post-positivists that are: Cooperation is possible because relative gains are acceptable.  This means that in some instances a nation may have to submit to the will of international factors because of the greater good.  However, state sovereignty is critical to understanding IR theory.  The sovereignty of a nation is influenced by many factors and actors who have proven to be important including: the nation state, individuals, multinational corporations, private interest and non-governmental organizations to name a few.  In this way, domestic issues are just as important as international issues since both respectively shape the other.  The most obvious distinction of post-positivism is that there are universal principles or norms that out to be upheld – like the instance of just war.  That is, IR theory is able to be prescriptive in nature thereby providing a dialogue for betterment.

Relative Strengths and Weaknesses of Each Framework

The positivist framework of the IR theory is particularly useful for a number of reasons general structure of the framework makes it essential to quantify and establish evidence proving specific related outcomes.  In this way positivism is difficult to argue because it is factual in nature.  Furthermore the general construct of the positivist framework uses reinforcing language to imply to the reader the positivist framework accurately describes the way things are.  The use of language like positivism or realism to describe the theory created a typology of correctness.

The positivist framework falls short because it primarily focuses on the state and issues of security.  This leaves the theory unable to answer the bigger questions of human existence.  Instead positivism typically is a descriptive account of human occurrences limited by the level of analysis of the framework.  The limited focus of positivism excludes other disciplinary focuses like economics, sociology, and anthropology.

The post-positivist approach is useful since it expands the debate of IR theory beyond facts to include ethics, morals and values.  In this way post-positivist theory addresses real issues facing humanity.  These include the environment, human rights and gender issues.  In doing so, post-positivism attempts to provide a road map to making better IR decisions.  It recognizes that there are multitudes of actors involved in IR – beyond just states influencing outcomes as in the positivist approach

The post-positive approach, however, is not as unified because it attempts to utilize a multitude of factors as variables.  In nature, post-positivism includes numerous different variables which become difficult to keep track of and decisively correlates occurrences among them.   In this way post-positivism is prone to generalizations and is difficult to prove because it is subjective in nature.  Similarly, this framework tends to rely on the state as the primary actor for effecting change in international relations – which is contrary to a fundamental assumption post-positivism.

Discussion – Which Framework holds the most Promise?

It is important to recognize these intellectuals presented herein are among the numerous intellectuals who have been a fragment in the dialectic of human thought.  “We stand on the shoulders of giants,” is one way to understand how theory develops theory.  In this way, theory is constantly revised or reinvented with each new publication.

The drive to create knowledge is defined by the available research opportunities and potential for disseminating ideas for interpretation ad application in the international community.  It is important to understand the access to funding and publishing as a primary driver of intellectual thought patterns.  Domination of the debate exists where funding is available to advance a “side” of the debate in the intellectual community with any meaningful effect.

The fact is IR theory has traditionally been dominant in American universities who were able to develop rigorously because of the availability of government funding sources and domination in the publishing of IR literature.  The nature of governments is to produce scientific backing to justify political support for any given course of action.  The positivist framework provided empirical evidence that was difficult to refute in the face of scrutiny, thereby backing policy decisions.  Therefore positivism tended to dominate the base of knowledge in IR theory development.

However, the rise of different trends of thought presented challenges to the way knowledge was being constructed by the positivist framework.  This is reflected in the emergence of greater post-positivist ways of understanding the world.  While the fundamentals of each side are mutually common there are distinctions to the main questions of IR theory: How should anarchy be managed?  Can we predict future actions based on past actions?  Are there universal principles that bind human interactions?  Are there only absolute or relative gains in this world – or both?  Who are the actors in international affairs?  While attempting to provide explanation for these questions leads to the creation of more questions by the IR discipline.

As intellectuals from each framework present their argument it builds a body of IR knowledge that needs to be organized so it is accessible in and of itself, as theory should be.  For positivists the focus is on knowledge is tidy: based on empiricism, modeling, causal relations and the relevance of history.  For post-positivists the focus is on incorporating many IR cases or variables of study to demonstrate the progressive nature of humanity and providing a not-as unified framework to understand international relations.

The structure of knowledge that each side of the debate presents enriches the overall understanding of international relations theory as a discipline.  By labeling the effective framework, or approach to knowledge intellectuals endeavor upon provides structure to the discipline.  In essence it becomes more accessible.  However, these labels also serve to limit the development of new varieties of thought.  By placing labels and typifying the knowledge as it is presented creates preconceived understandings that may cause one to overlook the importance of the actual knowledge.

The function of this practice is most likely rooted in the politicization of knowledge.  The adage goes “knowledge is power.”  Control seems to be rooted in the production, reproduction and dissemination of social knowledge as it creates our common awareness.  It is for this reason that IR theory must remain open and accessible to all forms of knowledge creation.  The ideal, as Waever points to, would be for the discipline to have relevance through theory – where circumstances shift on a daily basis and theory attempts to provide explanation.

IR theory will no doubt continue to evolve over time.  The future remains unknown but that will not prevent the systematic attempts to make predictions based on the historical record or to guide the course of human actions by providing the outlay for framing our understanding of the world.  Which framework, positivism or post-positivism, provides the most hope for our future understanding of international relations?  Both will be important because they provide similar yet differing ways of analyzing and interpreting our world.

Curtis Matwychuk-Goodman

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The highest expression of friendship has been described as being love based in marriage and that which is based in virtuous moral character.  It has been articulated as being based within action, where certain expressions make true friendships possible for humanity.  When friendship exists, an individual is able to develop morally, intellectually and spiritually.  Since all individual actions are aggregated within society, when there is a greater occurrence of true friendship between the self and others, there is a type of intellectual and moral transcendence that society itself experiences.  In turn, engaging true friendships can be thought of as beneficial to humanity.

I will argue here that true friendship is based in recognition of others, spirituality, intellectual acuity, and first begins with knowing oneself.  True friendship is made possible by distinct expressions of human action and feelings.  This paper will provide perspective on true friendship by utilizing texts written in the enlightenment and ancient periods of thought.  Specifically this paper will compare and contrast the writings of the Danish philosopher Søren Kierkegaard on marriage from Part II of “Either/Or” with the writings on ethics and virtue friendship by ancient Greek philosopher Aristotle as found in Books VIII and IX of the “Nicomachean Ethics.” The idea of marriage and true friendship will be used somewhat interchangeably.

The structure of this paper will first focus on the main argument of Kierkegaard from the first chapter, “The Esthetic Validity of Marriage,” from Part II in Either/Or.  This discussion will center on interpreting Judge William’s letter to a younger friend and his understanding of marriage as true friendship.  True friendship for Kierkegaard is based within a strong relationship with God.  His discussion is predicated on the belief human nature is either – to conquer, or to possess.  In marriage one is able to possess and has no need to conquer which seems to indicate a transcendence of human nature.  Such a relationship allows for the concrete development of humans because it is a process of internal and external self-realization.  In this way, Kierkegaard believes a marriage builds a relationship with God which makes it eternal, historical and morally correct.

Following Kierkegaard’s main argument a brief review of relevant secondary literature will be discussed as the second part of this paper.  In particular this paper will review: Amy Hall’s “Kierkegaard and the Treachery of Love;” Kierkegaard’s Ethic of Love: Divine Command and Moral Obligation by Stephen Evans; and Graham M. Smith’s “Kierkegaard from the Point of View of The Political.”  This portion will attempt to dissect each article’s main interpretation of Kierkegaard’s understanding of marriage.  In doing so it will broaden this paper’s understanding of Kierkegaard’s true friendship and will seek to answer the question – is friendship based in marriage really the ultimate form of transcendence for humans?

The third section of this paper will present Aristotle’s understanding of friendship.  The Nicomachean Ethics (NE) provides a discussion for which to compare and contrast Kierkegaard’s position.  Aristotle’s main argument is that virtue friendship is the culmination of human experience and is truly the pathway to happiness.  Friendship actively engages the intellectual and ethical self; such realization of ethical and intellectual being is good because of itself.  Therefore Aristotle implies friendship, like justice, is both a means and an end to happiness.  By connecting the idea of justice and the practice of friendship, Aristotle contends that friendship is necessary for a functional society.

The fourth section of this paper will include a brief review of secondary literature interpretations of Aristotle’s true friendship.  The secondary literature argues that Aristotle’s discussion of ‘means’ does not account for the vicious persons of the world and is prone to failure in interpretation.  It questions whether Aristotle correctly addresses the proper way in which to attain the ideal type of friendship?

The fifth section of this paper will compare Kierkegaard and Aristotle’s understandings of true friendship.  It will be clear that marriage and virtue types of friendship are compatible but not fully because of their relative scope and pretenses.  Both philosophers’ ideas of true friendship are rooted in common world perception and are thought to be developed with proximity and openness among people.  Friendship as a natural expression of humanity is also an idea shared by both philosophers.  Although, each philosopher differs on the exact form and meaning of true friendship – a difference entrenched in their respective positions on the means and ends of true friendship.  Kierkegaard’s argument seems heavily centered upon the spiritual ends of friendship; while Aristotle’s argument seems to offer a more applicable and balanced understanding of the means and ends of friendship.

The philosophical perceptions and principles presented within this paper will finally be applied to recent controversy between obtaining public services in Quebec and the Muslim tradition of wearing a niqab.  This paper will try to rationalize the state of affairs and will explain the relevance of true friendship as presented in Kierkegaard, Aristotle, and the secondary literature.  Ultimately this paper will attempt to provide clues as to why such an absurd public debate has ensued and what it may mean about the current state of friendship.

Kierkegaard – Marriage as True Friendship

The “Esthetic Validity of Marriage” by Søren Kierkegaard is the first chapter in Part II of the Either/Or collection of works.  The text is written under a pseudonym and in the form of a letter: from Judge William to the younger Johannes, from The Seducers Diary found in the latter of Part I in Either/Or.  In this way, the Either/Or series should be thought of as a dialogue between the aesthete and the ethical, Johannes and the Judge respectively, and provides the reader with contrasting perspectives available in choosing their own life’s path.

More or less representing the ‘Or’ side of Kierkegaard’s debate, the Judge explicates the ethical significance of marriage and the related importance of forming a true friendship with another person.  This is accomplished by comparing the rightness of an ethical approach to life with that of the aesthete.  More specifically, the Judge outlines the shortfalls of the aesthete, citing concern with immediate pleasures and an overly passive approach to life.  The tone of the Judge’s letter is best described as being admonishing towards Johannes.  The Judge is specific in describing the importance of an up-building process Johannes must undergo.[1] The Judge advises Johannes, based on his seniority and personal experience in life, that he should start to consider marriage.

The Judge criticizes Johannes, the ‘seducer,’ for being too cavalier in his personal relations with others.  Johannes is described as being a virtuoso of romantic and erotic love and because of this he is encouraged to establish better forms of friendship and to take life more seriously,

Just consider your life is passing… when you are no longer shown any further possibilities in life, when recollection alone is left, recollection, but not in the sense in which you love so much, this mixture of fiction and truth, but the earnest and faithful recollection of your conscience.[2]

The Judge explores the dangers of Johannes’ lifestyle; whereby it is to be pitied to pursue the ‘abstract’ through moods and living in illusion because it achieves nothing.  In a way Kierkegaard is also criticizing the light-mindedness of his era.  He is critical because of the debauchery he sees with increasing instances of unethical practices within society.  The ‘Either,’ is erotic and romantic love, which are presented and criticized as the aesthete.  The seducer is associated with immorality and illusionary egotism.  Described as a conquering type of behaviour, these forms of relations are considered detrimental to one’s character because it takes the individual further away from a relationship with God.  It is worth noting that both ‘either’ and ‘or’ are intended to represent the extreme instances of perspective one could have.

The Judge compares the physical dispositions of human nature which he believes are to conquer versus to possess.  The superiority is obvious, “It is not the given that is great, but the acquired.”[3] The judge states that true greatness lies in possessing because it focuses on recollection which develops humility, contentment, patience and prayer.  Recollection provides ability for self growth and helps to realize the temporal realities of humanity.  The Judge recognizes that although it is sad to grow old there is a “much more profound sadness that comes over a person if he cannot grow old.”[4] One can surmise that living without concreteness and reflection does not allow one to fully develop as a person.   Furthermore a “healthy individual lives simultaneously in hope and recollection – only thereby does his life gain true and substantive continuity.”[5] To live concretely is to be historical; to be historical is established through true concrete friendships such as marriage.

The Judge argues marriage is superior to romantic love because it is a transfiguration of romantic love; in the same way that romantic love is a transcendence of mere erotic love.  Marital love acquires meaning over time through ‘concentricity’ and because it is both ethical and religious.[6] This depicts a hierarchy of love where marital love is the human ideal because it engages the spiritual self.  Kierkegaard understands that the ethical and religious implicitly positions marriage backwards in time and forwards in time.  The Judge qualifies marital love as the “infinite moment of love.”[7] Furthermore the Judge describes marital love as concentric which implies an inward motion that opens a spiritual dialogue where “it will fight together with God for itself, will gain itself in patience;” which also implies a historical nature inherent to marital love.[8] The Judge also indicates a change of individual identity in the motion of marital love, where a “person who loves… has lost himself in another, but in losing and forgetting himself in the other he is open to the other and in forgetting himself in another he is remembered in the other.”[9] This perspective is further reinforced by the way the text is presented, as a conversation of three minds within one dialogue.  The main voice is represented by the Judge which also includes the secondary perspective of his own wife, while the tertiary perspective is that of Johannes, as anticipated by the Judge.  The fact that the Judge speaks for both him and his wife represents a belief that marriage is an integration of identity and an expansion of personal disposition.

A spouse is described as a friendship of the highest kind because it expands an individual in an external and internal sense.   Marriage is this way because of the close connection that is forged with another human and with God.  It contributes to internal expansion because it is described as reflective love that begins “with a kind of doubt that there was no possibility of loving anyone else.”[10] It is also understood as an active condition based in openness, described as an “absolute awakening” rooted in intuition, or an irresistible force of attraction towards the other.[11] In being open one is giving wholly and transparently which the Judge says is the mark of the ethical.  Openness is accepting actuality, hiding nothing and taking responsibility for each other’s being.  Confident self-assurance exists through one’s openness; a conception of freedom of self helps to overcome any doubt and is equivocal to accepting God’s will.[12] Reflective love is also based in choice or a sense of self-resignation; best described as the willingness to engage in self-denial for the express interest of the other.  Such sacrificial self-interest leads to the external expansion involved in marriage.

Kierkegaard, by way of the Judge, views marriage as “truly a state well-pleasing to God” that embraces faith, oath, humbleness and freedom.  Together these virtues allow a person to understand and strive for the ideal in life in relation to God’s will.  In this way, Kierkegaard understands marriage is a life calling and therefore the pure existence of it is bound in duty.  Kierkegaard has three specific reasons why marriage is important: it ennobles and cultivates character; it enables procreation of the human race; and it creates family and a sense of home.  Marriage is said to rescue an individual from habits, described as the “tyranny of one-sidedness,” and instills character traits like patience, collaboration and understanding.[13] Children are important because God commands “be fruitful and multiply and fill the earth.”[14] Children also are the “greatest and most significant thing in the world” because they teach us about ourselves through an opportunity to once again experience the whole of life through another.[15] Furthermore, children allow for a comprehension of one’s own life and in having a child one creates a sense of home and is able to begin acquiring possessions.  A sense of home is like a sense of concreteness in life.  By fulfilling all three duty-bound reasons with love and truth, one is truly being Christian and is therefore capable of achieving infinite harmony and wisdom.[16] The rationale is that when many people fulfill the duty of marriage they join and contribute to building a permanent sense of human community or a type of Christian society.   This indicates that a proper marriage is a journey of personal transcendence guided by ethics and morality that contributes to an overall societal betterment.

By being ethical one is able to overcome the human condition of doubt and despair and allow their true personality to show, exposing a concrete self.  The Judge depicts this as a moment of choice, whereby “turning one’s face towards the other you choose yourself absolutely.”[17] Using a gentle stream as a metaphor, a marriage is

…quiet, modest, humming.  It does not have many changements (variations), and yet it is like that water, running, and yet like that water, it has melody, dear to the one who knows it, dear to him precisely because he knows it.[18]

That is to say, being ethical creates a stable sense of self, in agreement with God, and it is because of this that each proper friendship will lead one to choose the good and always make the right choice in their own self becoming.  Such transcendence occurs in a hierarchal fashion; first one’s being is aesthetic, then one becomes ethical, and finally by being spiritual one forges a connection with God, akin to the human pinnacle of life.  “Just as nothing is impossible for God, so nothing is impossible for the religious individual either.”[19] In the journey to know oneself, a spouse is a person’s truest and closest friend that helps elevate oneself to a spiritual level, in connection with God.  Together marriage partners gain courage and strength in their love and spirituality and with God can overcome any challenge in life.

The wedding ceremony is of particular importance for Kierkegaard.  He describes marriage as a uniquely human ceremony that blesses the relationship with a higher unity and connection with God.  Marriage is a union of the universal and particular, “you are also a couple just like them; the same event is being repeated here in you, and you also are standing here alone in the infinite world, alone in the presence of God.”[20] The express intention and the concreteness of the declaration that constitutes a marriage ceremony allows each person in the relationship to be free and Kierkegaard believes that “the freer the individual the more aesthetically beautiful the marriage.”[21] This indicates that Kierkegaard’s motive for marriage is more concerned with appearance and perspective of those from outside the marriage.  Although this is balanced by the statement, “It takes courage to be willing to appear as one really is; it takes courage not to want to buy oneself off from a little humiliation when one can do this by a certain secretiveness…”[22] The concern with outsider’s perception is overcome by the personal development that takes place as a result of the marriage ceremony.  In this way the ceremony of marriage should appeal to the esthetic while fulfilling and bringing the individuals closer to God.

So far this paper has interpreted the main argument of Kierkegaard where the truest form of friendship is experienced through marriage.  Marriage is depicted as an existential reality.  Marriage is a condition for achieving the best form of human existence.  That is, marriage is the means to happiness as experienced through closer spiritual connection with God.  Kierkegaard has provided a spiritual foundation to connect with another person which will be instrumental in my final understanding of true friendship.  Let the discussion now shift to secondary interpretations of Kierkegaard.

Secondary Interpretations of Kierkegaard

This paper will now examine three relevant secondary literature sources in an attempt to expand the understanding of Kierkegaard’s argument.  Is friendship based in marriage really the ultimate form of transcendence for humans?

In his article “Kierkegaard from the Point of View of the Political,” Graham Smith interprets Kierkegaard’s understanding of the political as best understood as being grounded within the spiritual self.  Smith understands Kierkegaard’s main argument as shedding light on selfhood and how it relates to humanity.  The article suggests that any of the varying forms of human political community, be it facism or democracy, have relative shortcomings when compared to the potentiallity of spiritually connected beings.  Since Kierkegaard is considered devoutly Christian there is a recognition that in existence everyone has an implicit responsibility for one another’s wellbeing.  Smith understands Kierkegaard’s perspective as being a concern for society’s overall well-being; the politics of the Judge’s era is depicted as suffering from despair.  Despair is “the failure of the self to relate in the correct way to God (and from this point to others).”[23] To have faith in God is the correct relation with God and will free one from despair.  In this way, Smith interprets Kierkegaard’s self as being either animal or divine in nature – Kierkegaard presents the dichotomy of human nature as a choice.

Smith interprets Kierkegaard’s understanding of the modern political subject and arena as being harsh and pessimistic.

For Kierkegaard modern political subjects veer towards a mistaken sociality: a sociality that manifests in a self-interestedness and anonymity which undermines selfhood. Such a sociality does not take the task of selfhood seriously… Therefore, political life is empty because its participants are empty.[24]

Smith argues that Kierkegaard’s view of his era was that most people do not comprehend the task before them and are unable to relate to the ideal in life.  This is worrisome for Kierkegaard because these people are are therefore incapable of spiritual and moral transcendence.  This brings about the questions, is Kierkegaard’s standard for true friendship set too high for the average person?  Afterall, many people appear to find happiness in life without marriage including devoutly religious priests and monks.  Kierkegaard himself writes from a religious perspective but does not account for his form of true friendship being too exclusive, which it may be.

The chapter “Married Man as Master Thief in Either/Or,” from Amy Hall’s book Kierkegaard and the Treachery of Love, provides a basis to examine Kierkegaard’s fundamental argument of Either/Or.  Hall describes the fundamental necessity of choosing one’s ideals in life as a responsibility – as almost a paradoxical expression in choosing to achieve the self and the ideal self in harmony together.  She understands the Judge’s version of aesthetic interest as being “obtusely cheerful” and that “his domesticated salvation preys upon the solicitous work of his wife.”[25] The dutiful life outlined by the Judge is described as being muscular and implicitly characterizes a woman’s subservient role within the domestic order.[26] In this way, Hall provides a feminist perspective which attempts to expose Kierkegaard’s viewpoint of the ethical as not being transcendence of the human soul.  Hall understands Kierkegaard’s marriage as simply a socially accepted extension of the aesthetic; which should not be viewed as ethical because he implicitly advocates for the subjugation of women.

Hall understands the love for woman exists as a source of pleasure for both the Judge and the seducer.  The fundamental difference is that the Judge’s ethical love is deep and prolonged whereas Johannes’ aesthetic love is shallow and sporadic.[27] Hall interprets the Judge’s marital love as being portrayed as supreme because it is taken into higher concentricity when conferring with God.  In this way, the Judge advocates eroticism that is “enabled by Christian marriage [which] vindicates Christianity as the ‘highest development of the human race.”[28] Hall questions who is really loved in such a three-way relationship between man, woman and God; the answer is that the Judge “continues to use woman as the intercessor who connects him with the finite.”[29] She argues that in much the same way the seducer seeks a pure virgin woman the Judge is also involved in a parastic relationship that is more subtle and based upon a more complex end.

Hall’s interpretation of Kierkegaard questions the stability of his interpretation of the friendship of marriage as really the truest form of friendship.  Hall suggests Kierkegaard’s understanding of marriage as a relationship where the wife “belongs solely to God,” should be considered sacreligious for the Judge claims he is “everything to (his) wife.”[30] This hints that the Judge himself has a contradictory understanding of his own true love.  Hall interprets Kierkegaard’s marital relationship as not about intimate human connection but instead a vehicle for gaining spiritual acceptance among the Christian community.  This begs the questions – is Kierkegaard’s marital love really the truest form of friendship?  If one is not a Christian is Kierkegaard’s model of true friendship at all applicable?  Is true friendship different for men and women?

Chapter two of Stephen Evans’ book Kierkegaard’s Ethic of Love: Divine Commands and Moral Obligations, provides an account of the ethical as a stage of existence.  The basis of Evan’s argument rests on the fact that as a whole Kierkegaard’s writings did not really add much to the understanding of human nature but instead consistently called into question human systems.[31] He notes that Kierkegaard does hold traditional stereotypes of the role of men and women in society and contrary to Hall, he does not recognize Kierkegaard as misogynistic.  Evans argues that taken from the highest level of spirituality there is a “fundamental equality between men and women.”[32] Evan’s chapter focuses on Either/Or as being a presentation of the ethical and aesthetic as competing viewpoints on how to live.

The key argument of Part II, as understood by Evans, is that a person’s ideals have direct role in determining the actions undertaken by an individual and are deeply rooted in the ethical.  In consciously choosing the ethical, a person will choose that which is right and will find meaning in their life.  Evans believes the fundamental question at stake for Kierkegaard is whether to “take choice itself seriously, to seek ideals for which a person can live or die” in order to overcome desires by establishing and living up to commitments.[33] Evans believes that the aesthetic and ethical are stances of “existential spheres which can define a person’s life as a whole.”[34] In this way, the aesthetic is based in desire and want, where the ethical is based in commitment and self-sacrifice.  In rejecting the fundamental choice of ideals, the ethical, a person is subject to meaninglessness and a boredom wrought life, which ultimately leads to despair and depression which is understood as the lowest form of human existence.  Evans interpretation indicates that the suffering brought on by guilt sparks a change within a person towards becoming religious and ethical.

Taken together, these three secondary literature interpretations add to our understanding of Kierkegaard.  However, each present some potential shortcomings in Kierkegaard’s true friendship.  Smith recognizes Kierkegaard’s belief that marriage is inherently good in and of itself.  Yet, Smith understands Part II of Either/Or as a lament of the relative shortcomings of the age and Kierkegaard is fundamentally pressing for greater ethical practice and therefore greater sprituality.  Smith’s interpretation begs the question – is Kierkegaard too exclusive in his standard for true friendship?  Hall understands Kierkegaard as a mysoginist.  Her interpretation of marriage as true friendship is not congruent with Kierkegaard.  Hall interpets Kierkegaard’s marriage as the domestication of the female in the express interest of the male’s spirituality, somewhat akin to thievery.  She rejects marriage as true friendship because the goal of spiritual connection with God incites usery for personal gain which takes away from the friendliness of the relationship.  This begs the question – is true friendship the same for both men and women?  Evans, however, rebuffs Hall’s interpretation of Kierkegaard as a mysoginist.  Although Evans argues Kierkegaard did not add much to our understanding of human nature.  Instead he believes Kierkegaard presents a choice between the ethical, and in turn a connection with God, with that of the aesthetic which offers only a meaningless life of despair without God.  In essence a choice of either a full life or an empty life.

The secondary literature brings about many questions, is Kierkegaard’s choice too Christian and exclusive, mysoginistic and unethical, or simply an unattainable standard of friendship?  Moving forward, in an attempt to expand our understanding of true friendship this paper will now examine Aristotle’s argument.  As an old-world philosopher Aristotle comprehends true friendship slightly differently than Kierkegaard; true friendship is not simply found in marriage but is an expression of virtuous moral character.

Aristotle – Friendship as Virtue

Aristotle provides a good source of reflection for Kierkegaard’s interpretations of true friendship.  It is well documented that Kierkegaard studied Aristotle’s work and wrote in reference to him.  In an attempt to establish linkages between Kierkegaard’s Either/Or and Aristotle we will specifically examine the Nicomachean Ethics (NE).  More specifically this paper will focus on Book VIII and IX, respectively described as friendship in relation to community and the self.  It will be clear that true friendship is not excluded to just marriage between a man and woman – but is possible among people of similar essence.

Utility, pleasure and virtue are the three types of friendship described by Aristotle in Book VIII of the NE.  Of the three types, friendship based in virtue is the most important to this discussion.  Virtue friendship is described as a relationship built on mutual love for one another, an attraction of those with likeness of moral character.  Such friendship is the epitome of existence, of action and feeling, in one’s quest to develop a virutous moral character.

Virtuous moral character is the ultimate goal of human life and should be thought of as the fostering of proper action and proper desire.  Described thoroughly in Book II, Aristotle’s description of human characteristics is based upon a choice consisting of means between excess and deficiency in both feelings and action.  An example of human nature described by Aristotle is that of:

Pleasures and pains – though not all of them and less so concerning pains – the mean condition is temperance and the excess is dissipation.  Those who fall short concerning pleasure don’t turn up very often, for which reason they and their sort have not happened on a name, but let them be termed ‘insensible.’[35]

Based on this, to be virtuous in pleasure one must find the mean in their action between tempering the act of indulgence in sweet treats and the suppression of such desires.  That is one must find pleasure in the right measure while avoiding the vice in extreme action and feeling like that of hedonism and ascetecism.  As with other virtues like courage, anger and truth, the NE argues it is of utmost importance to learn how to act within the unpredictability of life.  Furthermore knowing how to be properly affected by any circumstance is the path to a contented and full life.

The culmination of human life is where one knows how to act and feel and is described as one having virtuous moral character.  Aristotle understands like-mindedness of virtuous moral character among a group of people as something similar to friendship.[36] Aristotle believes that a “good person ought to be a lover of self, since he will both profit himself and benefit the others by performing beautiful actions.”[37] This suggests that a person must first love himself and in doing so will understand what is necessary to bring about his individual happiness.  Equipped with such wisdom an individual further develops a virtuous nature by means of active friendships.  Aristotle explicitly states that no happy person would willingly choose to have all good things for only himself “for a human being is meant for a city and is of such a nature as to live with others.”[38] This suggests that in addition to being virtuously beautiful, friendship is necessary for a healthy society.

The culmination of moral character within society could be thought of as the preconditions necessary for justice.  Justice is necessary for a healthy society and is based in equality and reciprocity; justice is described as being either conventional or natural.[39] Conventional justice is a common bond that exists between citizens of a polity and is most apparent in the laws of the land.  His discussion makes it apparent that friendship is an expression of the “fully developed virtue of character” and should be thought of as “more natural than justice.”[40] In this way, Aristotle links justice with friendship because it is naturally based in equality and reciprocity.  Like justice, friendship brings about happiness which is good for its own sake.

A genuine friendship is like justice because a person recognizes the inherent value of his neighbor and naturally wishes for the best in the other’s life.  “So like-mindedness seems to be friendship in a political sense, just as people mean it, for it has to do with what is advantageous and what relates to life.”[41] In virtuous relationships both parties must actively engage in loving one another.  Aristotle is satisfied believing that a good friendship is both a means and an end in achieving such goodness in life.  “Equality or similarity is friendship, and especially the similarity that comes from virtue, since such people are constant in themselves and stay constant toward one another.”[42] This means that people are attracted to one another as a result of similarities in values, habit, and intellect.  This also implies that people are attracted to constancy in such relationships, perhaps because of the predictability of behaviour that develops around friendships.

Aristotle contends human well-being is the highest good in human life to be achieved and is akin to happiness.  Such goodness is possible in the form of virtuous friendship because friendship itself develops an understanding of correct moral feeling and action.  Aristotle states that “those who give freely to one another for their own sake are free of complaints,” which seems to suggest that by engaging in the practice of friendship a life of contentment is likely to follow.[43] In this way, Aristotle believes that friendship is the greatest of external goods because together friends can develop moral sensibilities since friends engage in the exchange of favours they are obviously concerned with the welfare of fellow human beings.[44] In addition to such moral virtue, Aristotle contends that friendship also develops intellectual virtues.  Aristotle believes in order for friendship to flourish one “…ought to share in a friend’s awareness that he is and this would come through living together and sharing conversation and thinking.”[45] The preconditions for friendship exist in living together since proximity enables conversation among humans.

Conversation and shared contemplation allows people to actively engage their intellectual perception and reasoning abilities.  The intellectual virtue of contemplation is characterized by constancy or perseverance of virtuous action that includes dialectic improvements of one’s persona by way of help that only a friendship can provide.  Such close interaction of humans allows intellectual virtue to arise from commonalities that grow with greater association of one another “and they seem to become even better people by putting the friendship to work and by straightening one another out.”[46] This is to suggest that friendship by virtue actually expands the human soul and contributes to the betterment of each individual’s overall character through a type of dialectic process.

Aristotle recognizes that political community is made up of the sum of its parts.  Wherein different types of communities may be characterized by different forms of friendship – all of which together form a greater sense of political community.  The civil relationship that exists in political community both serves individuals and is shaped by an individual’s interaction within society.  Persons of the same city share the same sense of justice and a common purpose; as such, Aristotle understands the form of friendship changes based on different regimes.  The aggregation of virtuous moral character leads to the betterment of society’s overall character.  Aristotle points out “training in virtue would come from living among good people.”[47] Two examples of differences in friendship are found in Chapter 10 of Book VIII, in the regime of kingship friendship is based on beneficense and should be thought of as being similar to a father and son relationship.  Similarly, in the aristocratic regime friendship is based on merit and should be thought of as similar to the relationship between man and wife.  In the case of virtuous friendships, “friends who are equal ought, in accord with their equality, to be equal in loving and all the rest, while those who are unequal ought to give what is proportional to the superiority.”[48] Such equality in loving leads to unconditional reciprocity and a sense of other regarding which is beneficial regardless of the regime’s form.

When humans are conscious of those around them and are genuinely concerned with their well-being Aristotle describes this as the full activation of humanity; for the “highest good of human life is promoting human well-being.”[49] This type of happiness is found in true friendship, which could also be called contemplative friendship; such friendship is the end goal of human life for Aristotle because there is no further level of human satisfaction that could be hoped for.  An important distinction to keep in mind, is that friendship is based in action and constancy, therefore true friendship is never fully achieved but instead should be constantly experienced.

Secondary Interpretations of Aristotle

To expand our understanding of Aristotle’s core argument of friendship as an expression of virtuous moral character this paper will now focus on secondary literature interpretations of the Nicomachean Ethics.  This discussion will include articles from Rosalind Hursthouse, and Ian Adams and R.W. Dyson.  In order to expand this paper’s understanding of Aristotle’s contemplative friendship this paper will determine if Aristotle correctly addresses the forms of friendship and the proper way in which one is to attain such an ideal type of existence.

In Rosalind Hursthouse’s article, “The Central Doctrine of the Mean,” she understands Aristotle’s assertion that the virtuous succeed in finding the mean of action and feeling.  However, because the mean is understood as being relative to the circumstances and is determined by one’s own personal motivation, Aristotle’s standard is prone to failure because even the incompetent and vicious could behave as a virtuous person.  She gives the example:

…bent on deceiving my husband, I aim at “the mean relative to the circumstances,” being careful to avoid appearing too eager that he should go away for a week, without annoying him by appearing too indifferent, arranging to visit some of his relatives but not so many as to leave me without enough time to spend with my lover – and may well hit upon it readily enough if I am clever.[50]

This example provides context, within a marriage, where one can appear to be virtuous without having the actuality of being so.  This is a major blow to Aristotle’s understanding of virtuousness because it suggests a breakdown in his reasoning.  It suggests that it is possible to obtain a suitable and virtuous mean by employing false extremes.  If anyone can appear virtuous, then could they also appear to have the overall virutousness of character necessary for the precondition of true friendship?  If that is the case, then a clever person could deceive others into a contemplative friendship that is indeed not virtuous.

However, this fails to take into account that Aristotle argues constancy is a necessary element in virtuous being.  A vicious person is prone to extremes in action which means if they try to appear virtuous they may only be able to do so for a short time before others notice.  Aristotle argues that through practical wisdom and experience virtuous people can detect such vicious people and would not associate with them.  Therefore a vicious person is incapable of experiencing the highest and best form of friendship because a virtuous person would not engage in the act of friendship in the first place.

Adams and Dyson believe that Aristotle recognizes that although there are numerous forms of friendship there is only one true type of friendship that can bring about the greatest pleasures available in life.  Virtue friendship is most important because of the active disposition to reason.  In actively ‘being a friend’ one engages the entirety of their sense of being and shares their existence with another human being through all human experiences such as the sensations of satisfaction, pain, sadness, joy, excitement, and debate.  Aristotle’s message is that “the good of others can make an important contribution to our own good.”[51] Virtue friendship is affirmed as being supreme true friendship for Adams and Dyson because of the expansion of the self that occurs; specifically the stimulation of philosophical understanding which thereby expands individual capabilities and one’s own satisfaction of existence in this world.  Within this understanding one must question – is it possible for a vicious person to overcome their shortcomings and become a virtuous person through marriage?  Or perhaps more importantly, is it possible for a virtuous person to uplift a vicious person to virtuosity through such an exclusive friendship?

Critical Interpretation of Kierkegaard and Aristotle

Now that we have an acceptable level of understanding of each philosopher, how do Kierkegaard and Aristotle compare with each other?

First let us state the similarities between the two understandings of friendship offered by Kierkegaard and Aristotle.  In both cases the philosophers were sure to establish the rarity of occurrence of true friendship in life; in Chapter 6 of Book VIII Aristotle limits such friendship to a few good people, while Kierkegaard limits such friendship to one instance found only in the married life.  A maximum on true friendships is necessary for both philosophers because such relationships are based on stability and concreteness.  To illustrate true friendship Kierkegaard uses the metaphor of a single stream that is constant, modest and obvious only to those who understand it.  Meanwhile, Aristotle’s logic for a limit on true friendship is based on the contention that there are only so many good people naturally available to be friends with.

Both philosophers agree that proximity, openness and equality are preconditions for a successful friendship.  The concentricity of marriage for Kierkegaard leads to a special closeness of existence to the point that each individual identities become one single entity.  In a marriage, Kierkegaard understands an openness and freedom of spirit exists which leads to one’s personal transcendence.  Aristotle contends that virtue friendship is a culmination of virtue that is based within conversation with another.  Aristotle understands that uninhibited conversation in the company of a friend leads to active reasoning which enables one to become morally and intellectually enlightened.

Both philosophers can be understood within each other’s argument.  The greatest instance of similarity between how Kierkegaard understands friendship that is found within Aristotle’s framework is based within the example of the aristocratic regime.  Aristotle describes friendship in an aristocratic regime as being based on that which is right or what corresponds to what is best.  Aristotle describes this as alike to friendship between man and wife where the relationship is based on merit and actively engages what each does best, like a woman bearing children while the man provides sustenance.  Meanwhile, the greatest instance of similarity between Aristotle’s understandings of friendship within Kierkegaard’s framework of true friendship is the close parallel in forging a spiritual connection with the infinitude.  Aristotle understands happiness (a sense of the infinite) as being experienced through the benefits of virtue friendship.  A contemplative friendship enhances one’s understanding of the world through philosophy.  This is similar to Kierkegaard’s understanding of happiness that is based in marriage because it elevates one in a spiritual conversation with God that leads to one’s own acceptance of reality and finite being.

Of course, there are differences in the two philosopher’s understanding of true friendship.  The most obvious difference is found in Kierkegaard’s express doctrine-based religiosity and the lack of any such religiosity in Aristotle.  Kierkegaard advocates marriage as the means to an end, where the end goal is a closer relationship with God.  Aristotle, on the other hand, advocates a universal viewpoint where the act of friendship is both the means and the end of achieving human happiness.  That is, friendship brings about happiness and is happiness.

Kierkegaard understands true friendship in relation to the ethical and as related to the institution of marriage that is based in commitment and responsibility.  The relative success of such true friendships is preconditioned on shared ethical belief and in being Christian.  This creates a triangle of relation – between the self, the other person and God.  The spiritual connection with God brings about happiness; therefore marriage as true friendship is a means of achieving such a connection.  Kierkegaard places great significance in the marital relationship by saying the “greater the probability that something can be repeated, the less meaning… the less the probability, the greater the meaning.”[52] This is reaffirmed by his understanding that divorce is akin to being a traitor to love; a failure of the delicate nature of marriage.[53] In this way, Kierkegaard understands that since a truly great marriage comes into existence only once in a lifetime it is must be the ultimate and truest form of friendship.

Aristotle understands friendship a little differently.  He views true friendship as an understanding of the ethical that arises from within and is best developed through engaging true friends in conversation and reasoning.  Aristotle sees friendship as based within the individual as a sense of striving.  For Aristotle, one must first know how to feel and act in order to be capable of friendship; in first being a friend to oneself a capability of friendship with others is then possible.  He also understands that true friendships are not permanent, but are subject to change over time.  Aristotle understands that by experiencing true friendship, through shared contemplation and reason, one is actively being happy, which is good in and of itself.  Virtue friendship, by way of its existence, actually expands the human soul and contributes to the betterment of one’s overall character.  Aristotle is not clear as to what form such a true friendship would take; however his description seems to infer that a proper marriage would be an adequate fit.

Both philosophers have a different understanding of true friendship in relation to the self.  Aristotle understands that friendship is based in equality and a shared sense of virtuous morality that is more akin to natural justice.  Aristotle also connects the idea of friendship and the different manifestations with different types of regimes.  The connection that Aristotle draws is that friendship is relational from self to self.   On the other hand, Kierkegaard does recognize equality as a central precondition for true friendship; he does not, however, speak of justice or of friendship in relation to justice.  He fails to directly connect friendship to the larger political community and conceptualizes friendship merely as an individual connection from self to God.  Based on this we can conclude that Aristotle has more of an intellectual focus in trying to broaden the scope of his teachings to be relational to everyone within the polis.  The message of Aristotle is clear, friendship is necessary and the best form is found in actively sharing thought with others.  Whereas Kierkegaard is more narrowly focused on the spiritual and writes to prove marital love as being supreme.  He does not link true friendship to the overall political community but instead attempts to further a specific viewpoint of a tight-knit religious community that he views as superior.

This paper has so far established a foundation of Kierkegaard and Aristotle’s arguments of how true friendship should be thought of.  By comparing and contrasting the two philosophers’ arguments this paper has provided a basis for my own interpretation of the truest form of friendship.  True friendship should be thought of as a balance between the spiritual, the intellectual, the self, and another human being.  These three fundamental elements of being must be properly triangulated to provide human society with the greatest benefits of civilization.  Marriage seems to be a natural and adequate form to embody such a true friendship in its entirety.

Niqab Controversy in Perspective

The final section of this paper will apply my understanding of true friendship as a means of rationalizing the recent niqab controversy in Quebec. The recent controversy in Quebec, Canada is over group rights versus individual rights.  In particular the issue surrounds the offering of public services to people who cover their face with a niqab.  The Globe and Mail recently reported that

“Quebec’s Bill 94… would refuse government services, public employment, educational opportunities and even most medical care to Muslim women wearing the niqab.”[54]

A niqab is a garment worn by Muslim women that most often leaves only the eyes visible while covering the body, face and hair.  To wear the niqab is to adhere to hijab religious and cultural tradition.

It is reasonable to expect that such religious and individual expression would be allowable in the multicultural and religiously free nation of Canada.  However, this appears not to be the case in Quebec.  Is the decision to limit the delivery of public services to people practicing protected religious expressions basically against the democratic nature of Canadian society?  Can either side, the niqab-wearer or the province, be fully justified in their position?

The niqab garment is rooted in religious practice and conceals a woman’s body to the benefit of herself and her husband.  By concealing a woman’s identity while in public she is free from the hassle of wandering eyes and unwanted attention – it is almost a barrier against strangers.  In this way, the idea of the niqab is akin to Kierkegaard’s understanding of true friendship.  In wearing the niqab and adhering to religious practice one is able to develop a spiritual self.  Similarly, the niqab limits most personal human interaction to include only the woman’s husband, family and closest friends.  This reaffirms Kierkegaard’s triangle of relation – the self – the other self – and most importantly, God.  In Kierkegaard’s way, the niqab is very particular in establishing human connection.

If the niqab is such an important personal garment and Canada is a free nation with a history of establishing distinctness within society then why is there controversy?  Critics argue that the niqab is a misogynist instrument; a viewpoint that is, to some degree, in accord with Amy Hall’s interpretation of Kierkegaard’s shortcomings of marital friendship.  Is this congruent with the majority viewpoint of Quebecers with a strong history of Catholicism?  In this fashion, perhaps the niqab issue should be interpreted as a clash of cultures.

Aristotle, on the other hand, explains true friendship existing within the universal but his belief is preconditioned on knowing oneself first.  Wearing a niqab is a way of establishing one’s own identity in Quebec and is a direct expression of one’s uniqueness.  This should not come as being out of the ordinary in a place that has strove to create a distinct identity in and of itself since confederation.

Perhaps the majority of Quebecers seem to hold greater for support Aristotle’s universal understanding of friendship.  Society as a group seems to have a yearning to establish a connection between the self and self as a way to forge political community.  Such a perspective would argue that intellectual connections between the self and community is the best way of establishing true friendships and creating a better society.  Covering the body in such a conservative fashion eliminates any such opportunity to see facial expressions which in turn limits the extent of an intellectual linkage among common people.  The limited freedom and openness of exchange between the niqab wearer and people in society may lead to feelings of mistrust and a sense of cultural threat.

To a certain extent the niqab controversy could be thought of as borne from within extreme expression of Kierkegaard’s viewpoint of spiritual discipleship in marital love.  Similarly the controversy may be based within Aristotle’s interpretation of the need to know oneself before being capable of any form of friendship.  Since both philosophers argue the need for humans to promote the well-being of others they would most likely be equally dismayed at the subjugation of cultural uniqueness and expression of true friendship in Quebec’s attempted suppression of niqabs.  After all, Kierkegaard argues that marriage is necessary to fully develop oneself concretely and Aristotle contends that justice naturally arises from such true friendship.

Quebec please take note and be a better friend to each citizen by respecting the rights of association, intellectual and spiritual pursuit, and by recognizing every citizen as an individual.

Bibliography

Adams, Ian, and R Dyson. Fifty Major Political Thinkers. 2^nd edition. New York: Routledge, 2003.

Aristotle. Nicomachean Ethics. Edited by Albert Kieth Witaker. Translated by Joe Sachs. Newburyport, MA: Focus Publishing, 2002.

Evans, Stephen. Kierkegaard’s Ethic of Love: Divine Commands and Moral Obligations. New York: Oxford University Press, 2006.

Hall, Amy. Kierkegaard and the Treachery of Love. Cambridge: Cambridge University Press, 2002.

Hursthouse, Rosalind. “The Central Doctrine of the Mean.” In The Blackwell Guide to Aristotle’s Nicomachean Ethics, by Richard Kraut, 97-115. Oxford: Blackwell Publishing, 2006.

Kierkegaard, Søren. Either/Or. Edited by Howard J. Hong and Edna H. Hong. Vol. II. New Jersey: Princeton University Press, 1987.

Orwin, Clifford. “No room at the Inn for Veiled Women? Get Real Canada.” Globe and Mail, March 31, 2010: Opinions.

Pakaluk, Michael. “Friendship.” Chap. 29 in A Companion to Aristotle, edited by Georgios Anaganostopoulos, 471-482. Chichester, West Sussex: Blackwell Publishing, 2009.

Smith, Graham M. “Kierkegaard from the Point of View of the Political.” History of European Ideas, 2005: 35-60.

[2] Ibid., 16.

[3] Ibid., 131.

[4] Ibid., 87.

[5] Ibid., 142.

[6] Ibid., 36,47.

[7] Ibid., 112.

[8] Ibid., 97.

[9] Ibid., 110.

[10] Ibid., 29.

[11] Ibid., 42.

[12] Ibid., 47.

[13] Ibid., 68.

[14] Ibid., 69.

[15] Ibid.

[16] Ibid., 148.

[17] Ibid., 177.

[18] Ibid., 144.

[19] Ibid., 20.

[20] Ibid., 90.

[21] Ibid., 94.

[22] Ibid., 105.

[23] Smith, Graham M. “Kierkegaard from the Point of View of the Political.” History of European Ideas, 2005, 39.

[24] Ibid., 49.

[25] Hall, Amy. Kierkegaard and the Treachery of Love. Cambridge: Cambridge University Press, 2002, 110.

[26] Ibid., 111.

[27] Ibid., 113.

[28] Quoted from Kierkegaard, 31; as found in Hall, 114.

[29] Hall, Kierkegaard and the Treachery of Love, 121.

[30] Quoted from Kierkegaard, 81; as found in Hall, 119.

[31] Evans, Stephen. Kierkegaard’s Ethic of Love: Divine Commands and Moral Obligations. New York: Oxford University Press, 2006, 34.

[32] Ibid., 43.

[33] Ibid., 47.

[34] Ibid., 48.

[35] Aristotle. Nicomachean Ethics. Edited by Albert Kieth Witaker. Translated by Joe Sachs. Newburyport, MA: Focus Publishing, 2002, II.7.1107b5.

[36] Ibid., VIII.1.1155a25.

[37] Ibid., IX.9.1169b10-19.

[38] Ibid.

[39] Ibid., V.5.1133b; V.7.1134b.

[40] Ibid., footnote 232, 144.

[41] Ibid., IX.6.1167b.

[42] Ibid., VIII.8.1159b.

[43] Ibid., IX.1.1164b.

[44] Ibid., IX.9.1169b10.

[45] Ibid., IX.9.1170b10.

[46] Ibid., IX.9.1170b12.

[47] Ibid., IX.9-1169b10-19.  

[48] Ibid., VIII.13.1162b.

[49] Ibid., IX.9.1169b10. 

[50] Hursthouse, Rosalind. “The Central Doctrine of the Mean.” In The Blackwell Guide to Aristotle’s Nicomachean Ethics, by Richard Kraut, 97-115. Oxford: Blackwell Publishing, 2006, 104.

[51] Adams, Ian, and R Dyson. Fifty Major Political Thinkers. 2^nd edition. New York: Routledge, 2003, 16.

[52] Kierkegaard, 40.

[53] Ibid., 33.

[54] Orwin, Clifford. “No room at the Inn for Veiled Women? Get Real Canada.” Globe and Mail, March 31, 2010: Opinions.

Curtis Matwychuk-Goodman

—

“Ben Franklin may have discovered electricity – but it is the man who invented the meter who made the money”
- Earl Warren-

Introduction to the Issue

conomic growth and electricity consumption are directly correlated.  As a nation’s electricity consumption increases so does the gross domestic product.[1] It is generally accepted that access to electricity is a necessary element for a healthy economy; in today’s day and age electricity is required for production of both goods and services.  Without access to reliable sources of electricity the efficiency and productivity of the North American economy would tumble.

This paper seeks to investigate the current trade policy between Canada and the United States in the case of International Power Lines (IPL) and the international sale of electricity.  The specific case of the Montana-Alberta Tie Limited (MATL) project provides an excellent case study of the Canada-U.S. relations on electrical energy.  MATL will be the first direct merchant-based grid interconnection between the province of Alberta and the state of Montana and will provide context for the regulatory environment of each country.  This paper will present the case from the Alberta perspective.  It will, however, provide analysis of both the federal and sub-federal governments from both Canada and the U.S. and their related jurisdictional authority over the MATL project.  In doing so, this paper will discuss the context surrounding the construction of an International Power Line (IPL).  The recent final approval of the MATL project demonstrates the continuing harmonization of the North American electricity grid; which will briefly be discussed.

In addition, this paper will directly examine the popular notion that Alberta is an energy superpower in the North American marketplace; albeit perhaps not a leader in the electric energy industry specifically.  In fact, this paper seeks to demonstrate that Alberta has tremendous growth opportunities but currently lacks the adequate infrastructure to exert such influence even in the North American marketplace.  To begin our discussion, let us first explore exactly what electricity is.

Electricity is an interesting commodity.  Once electricity is generated it cannot be stored. The laws of physics declare that electricity will always flow through the path of least resistance.   This is the reason that when a light switch is turned on, the lights turn on instantly. In addition to this, electricity demand is very unpredictable.[2] As a whole the electricity market services residential, commercial and industrial purposes; which means electricity must be available at any time of day in many different locations.   Furthermore, electricity loses potential over great distances and with changes in temperature.[3] This presents an interesting challenge for the creation and maintenance of a reliable electricity grid.  A perfect mix of generation, transmission, and distribution (or retailing) must exist to efficiently service all customers in need.  As a result of this the electricity industry has traditionally been region-specific and usually exists as a vertically-integrated entity.  To increase the overall efficiency of an electricity grid it is best to have many interconnections between regions because it creates economies of scale, which in turn determines the most efficient price of electricity for all users. [4]

—

The MATL Project

Montana Alberta Tie Limited (MATL) is a Calgary-based company that is currently in the progress of building Alberta’s first International Power Line (IPL).[5] This line is monumental, in that it represents the first merchant-based international project of its kind in Alberta.  This project is also unique in this province because the entire construction and financing is done by a private company instead of by the end-user who traditionally pays for such infrastructure through offset transmission charges.  Once constructed this IPL will be the first direct inter-tie between the electricity grids of the United States and Alberta.  The grid interconnection points will be located in Lethbridge, Alberta and Great Falls, Montana; crossing the border west of the Coutts crossing and spanning a distance of 345 kilometers.  The transmission power line will be privately owned and operated as a merchant system with a nominal rating of 300 megawatts of alternating current.  According to MATL, this is 240kV or enough power for 35,000 homes.[6] Even before construction, the entire line’s capacity has been auctioned off to private companies, including NaturEner, Wind Hunter and Invenergy.

The MATL transmission power line is a strategic addition to the electricity-grid and is ideally positioned for further development of local wind turbine generation projects.  The proposed IPL traverses some of the best wind energy potential locations in the western parts of North America.  In fact, the company estimates that in addition to creating 150 jobs and adding $10 million to the local economies during construction, the power line will enable up to $1 billion dollars in wind farm developments.[7] The MATL project provides a significant and necessary resource for both nations to move towards reducing their carbon footprint by providing access opportunities for renewable energy sources to join the electrical grid.  Most importantly, the MATL line will increase the overall efficiency of the Western energy grid.  If the MATL project promises such great benefits, who then has effective regulatory oversight over the IPL – Canada or the United States?

Regulatory Jurisdiction over MATL

The construction of Alberta’s first IPL provides an excellent case study of the symmetries and asymmetries of regulatory systems and trade policies of electricity as a commodity, on both sides of the border.  This paper will examine the regulatory regimes of both nations separately by looking at the jurisdiction of federal and sub-federal authorities.

The fundamental differences between Canada and the U.S. are manifested in the fact that significantly more opportunities for stakeholder input exists during all stages of the application process in the U.S.  The U.S. also has a more equal division of jurisdiction on the issue of IPLs and the international sale of electricity.  In Canada, on the other hand, authority is retained by the provincial government and there are not as many opportunities for public consultation.  In fact the provincial government is currently seeking to limit public input in essential transmission infrastructure.

After the context of each country’s regulatory regime has been established this paper will examine the move towards North American harmonization of both systems by means of joint intermediary institutions like the North American Electricity Reliability Corporation (NERC).

Canada

–>Federal Level

At the federal level there is relatively little direct control over electric power lines and related facilities, since these are under provincial jurisdiction.[8] However, the federal government retains quasi-jurisdiction and oversight through the National Energy Board (NEB).[9] The purpose of the NEB is to “promote safety and security, environmental protection, efficient energy infrastructure and markets in the Canadian public interest.”[10] In order for an IPL to be constructed the NEB must first issue a permit to construct and operate.  This provides some effective federal control over IPLs.  The NEB considers the “technical feasibility of the project, its effect on adjacent provinces and its environmental impact.” [11] In this way the NEB ensures that projects comply with the national standards set by the Canadian Electrical Code, the Canadian Standards Association, and the Canadian Environmental Assessment Act.  Additionally, the NEB has a mandate to ensure that IPLs are managed effectively to meet the needs of national security.  This requires an electricity reliability organization (ERO). The North American Reliability Corporation (NERC) has been appointed by the NEB as the best agency to ensure this electricity is reliable and can be counted on when needed.  NERC will be discussed further in the section on joint initiatives between Canada and the U.S.

The NEB does not regulate the import of electricity.[12] However, in addition to issuing construction and operational permits, the NEB can establish the limit of electricity to be exported.  This is determined by the total available electricity and the corresponding domestic demand.  Nearly 70 per cent of all energy exports to the U.S. are generated by hydro-electric facilities which are subject to dynamic environmental conditions.[13] This directly impacts the amount of electricity that can be exported to the U.S. at any given time.

–>Provincial Level

In Canada electricity is considered a resource and is therefore under provincial jurisdiction.[14] As a result of this, provincial regulations can vary by province.

In most provinces electricity is a public utility and is operated by a Crown Corporation.  In the cases of British Columbia, Manitoba, Quebec and New Brunswick excess electricity is exported through IPLs. The revenues earned from electricity exports are used to maintain “domestic electricity prices at levels that are lower than they would otherwise be.”[15] Each of the aforementioned provinces has substantial hydro-electric generation facilities and has nearly maximized their export potential.

Alberta is unique among all the provinces as it is the only privatized electricity sector in all of Canada.  The electricity industry was deregulated under the Electric Utilities Act (EUA) of 1995 which effectively privatized the electrical supply market.[16] Initially, this act mandated that all electricity generated would become part of a Power Pool which was regulated by the Alberta Energy Utilities Board (EUB).  However, as of 2001, retail competition was introduced effectively giving choice to consumers.  Presently in Alberta electricity generation is predominantly owned by private interests who sell the power to private retailers.  Through this process the retailers pay the owners of the transmission line for the intermediary use.  Electricity generation is separate from transmission, and separate from distribution. All three levels are private – yet must act in concert to ensure profitability of the entire system.

Although the power industry is privately owned there is still regulation oversight by three government created agencies: the Alberta Electric Systems Operator (AESO), the Alberta Energy Utilities Commission (EUC)^[17], and the Market Surveillance Administrator (MSA).  The first provincial regulator is the AESO; which is responsible for the reliability of the Alberta Interconnected Electric System (AIES).  The AESO is an independent not-for-profit organization that regulates access to the grid for generators and distribution companies so that electricity in Alberta is safe, reliable and affordable.  AESO facilitates a “competitive wholesale electricity market, which has more than 200 participants and about $8 billion in annual energy transactions.”[18] The AESO has a mandate to determine the need for expansion and infrastructure reinforcements.  Once a need has been determined, the AESO makes a recommendation to the second level of provincial regulation the: Alberta Utilities Commission (AUC).

The AUC is ultimately responsible for issuing permits to construct necessary transmission facilities and must conduct public consultation sessions to ensure all stakeholders have adequate input on new developments. The purpose of the public hearings is to assess local impacts, mitigate problems and accommodate solutions. As well, the AUC seeks approval of projects from the Alberta Ministry of Environment to ensure the project meets the requirements of the Environmental Protection and Enhancement Act.[19]

Currently there is great public debate in Alberta over the authority of the AUC to construct a domestic power line between Edmonton and Calgary.  A high-voltage line between these two cities has been recommended by the AESO to reinforce the power grid, as it has only seen one infrastructure upgrade since 1989.[20] Similarly, the AESO has recommended the construction of four other critical projects, together worth an estimated $8.1 billion, out of $14.5 billion dollars in total recommended system upgrades.[21]

The AUC and the Alberta Government face even greater criticism over the proposed Bill 50: Electric Statutes Amendment Act, 2009.  The intention of the bill is to provide unilateral authority of the Alberta government to approve critical transmission projects.  If Bill 50 passes, the provincial cabinet would have considerable power over the AUC, which would compromise the democratic nature of the intended system.  Tensions are exacerbated by both landowners and ratepayers.  Landowners are worried about the negative impacts of building a line over their land – including lost property values, health impacts, and a general belief of ‘not in my back yard.’[22] Rate-payers also have concerns because they will be responsible for paying for the transmission upgrades through increases in annual electricity bills.

The third provincial regulator of electricity is the Market Surveillance Administrator (MSA).  The main purpose of the MSA is to ensure fairness of the electricity markets in Alberta’s public interest.  The agency monitors, reports, investigates and is an advisory body that reports to the AUC.  The MSA does not have regulatory authority over IPL project applications.

United States

–>Federal and State Levels

In the United States the MATL project is similarly impacted by two levels of government.  In this case the regulatory process of approval required for an IPL provides effective control to many government departments related to energy and the environment.

The state of Montana has authority over matters of transmission under the Department of Environmental Quality (DEQ).  The DEQ has authority set under the Major Facility Siting Act of 2003 (MFSA) which effectively supersedes all other local government entities and regulations.[23] The federal executive level of government it is largely involved in the proceeds of the state level regulatory process, has the ability to make recommendations, or can effectively veto the project.  Under the MFSA act the Montana DEQ requires two authorizations for a developer of an IPL to proceed with construction.

The first is step of constructing an IPL is an application outlining many factors.   In the MFSA application procedure a transmission developer must demonstrate the need for the project, justify its proposed location or alternative sites, and provide a baseline study (or a reliability analysis). Most importantly, the application must demonstrate a cost-benefit analysis of the project.  The Montana DEQ submits all relevant information to the DOE; in turn the DOE will issue a Memorandum of Understanding (MOU).  Based on each government’s findings and subsequent public hearings, the DEQ will issue or deny a Certificate of Compliance.  This certificate signifies that all conditions of the application process are met which permits the developer to proceed to the next level of the regulatory process.[24]

The first step of the MFSA application process involves communication with all relevant stakeholders from the beginning to allow maximum public input from the start.  This public consultation at the early stages of project authorization has allowed the local constituents most impacted to have a voice in the development.  In the case of MATL, local farmers were responsible for changing the pole type design on farm-lands most impacted by the line crossing.[25] The cost-benefit analysis of the MATL project suggested a local impact to farmers that would annually result in $210,000 in additional farming related costs.[26] This was out-weighed by the net benefit from tax revenue from MATL which is estimated to be $730,000 annually. [27] This does not include the potential gains from greater system efficiency and future wind farm development related tax revenue.

The second step of the authorization process to construct an IPL like MATL, is also a multi-level process involving the federal Department of Energy (DOE) and the Montana DEQ.  This step is mandated by the National Environmental Policy Act (NEPA).  Many levels of government have input in reviewing the project application through a report known as an Administrative Draft Environmental Impact Study (or agency comment stage) which is available first to related agencies impacted by the development for review.  This step of the regulatory process is intended to measure the level of environmental impact each project will have.  The implication of this is to ensure a more rigorous scrutiny process for projects that will have environmental impacts by way of national parks, critical habitat areas (reserved for endangered species), breeding areas, cultural areas, waterways, and areas of scientific, paleontological or anthropological interests.

In this way, the DEQ based their approval of the MATL project on the company’s adherence to the “Suggested Practices for Avian Protection on Power Lines: The State of the Art in 2006.” This document was created through a multi-stakeholder policy approach with input from the California Energy Commission, the Avian Power Line Interaction Committee (APLIC)[28], and the Edison Electric Institute (EEI).[29] In addition to meeting these standards the MATL project must also adhere to the National Electrical Safety Code, the Federal Aviation Administration, water quality statutes during construction, and local visual management plans.[30] This process enables simultaneously action by both the federal level (DOE) and the state level (M DEQ) and related agencies.  This fosters greater input on the proposed projects from a wider range of state and federal levels.

Once the agency comment stage is complete, the DEQ issues a Draft EIS which is released for public comment.  This provides the general public an opportunity to comment on the proposed project.  However, this stage is limited by time; within thirty days the DEQ will issue a Final EIS which legitimizes the IPL development as a real possibility.  Based on this report the DEQ has nine months to review it and draft and issue all permits not covered by the Major Facility Siting Act (MFSA) required by the proposed development.[31] This process occurs simultaneously at the federal level under the jurisdiction of the Department of Energy (DOE).  There is considerable cooperation between the state and federal levels during the second stage.  Within thirty-days of the DEQ issuing a Draft EIS the DOE may issue a presidential permit to continue with construction.  Once the DEQ and the DOE approve the application a Record of Decision is given which authorizes the construction of the IPL.

It is important to note that the federal level of government is also represented by the Federal Energy Regulatory Commission (FERC).    This effective authority over IPLs is retained by the Electrical Reliability Organization (ERO).  In the United States the designated ERO is the North American Electricity Reliability Corporation (NERC).  This will be discussed in the next section.

—

North American Electricity Integration

Recently Canada and the United States have fostered a dialogue to create a Smart Energy Grid.  This would effectively lead to greater harmonization among all North American power generators, transmitters, and distributors.  Already this has occurred through a main joint coordinating agency that links the Canadian and American electricity market is through an Electricity Reliability Organization (ERO).  The designated ERO for both Canada and the U.S. is the North American Electricity Reliability Corporation (NERC).

Interestingly NERC was first designated as the main U.S. ERO in 2005 by the Federal Energy Regulatory Commission (FERC).[32] This was a result of the major blackouts of 2003 in the Northeastern regions of North America.[33] Subsequently, the NEB in Canada appointed NERC as the national ERO because it was required if Canada was to increase the trade in electricity with the U.S.  This suggests that NERC is a domestic policy tool that has been applied to Canada – meaning Canada was treated as a sub-set of American domestic policies.  It is arguable that Canada voluntarily joined NERC, yet was there an alternative option?  If Canada was not a part of NERC, then most transmission interconnection points with the U.S. would no longer be functional.  Before however, NERC was a voluntary authority that set out policies and standards for nine regional electrical councils within the U.S.  Now NERC has the ability to fine electrical generators and distributors for non-compliance with their standards and policies.  The regional council that has jurisdiction over the MATL project is the western Electricity Coordinating Council (WECC).

The effective jurisdiction of WECC is over the states and provinces of: Alberta, Arizona, British Columbia, California, Colorado, Idaho, Montana, New Mexico, Oregon, South Dakota, Texas, Washington and Wyoming. [34] WECC has effective control over the interconnection points between Canada and the eastern coordinating councils through many high-voltage power lines; once completed MATL will become another one of these interconnections.

In order for an IPL to be approved WECC must approve the technical aspects of the proposed project.  This ensures that any new transmission infrastructure is compatible with the entire electricity grid in North America.  MATL required a Phase III status on the transmission pathway rating in order to be eligible for connection with the WECC.[35] This means that the IPL is engineered to meet the standards specified by NERC.

NERC is also part of the North American strategy for national defense; the Critical Infrastructure Protection (CIP) program has developed Cyber Security Standards to protect assets deemed high risk but necessary for the reliability of the North American system.[36]

—

Discussion

The case of MATL suggests there are many similarities between Canada and the U.S. in terms of regulatory processes of IPLs.  However, it is evident that the process in the U.S. is much better organized with greater chance of public involvement.

In Canada the regulatory process appears less well-organized.  Also, in Alberta there is less opportunity for public consultation, which under Bill 50 may diminish even more over time.  The MATL project has demonstrated that Alberta regulatory process of IPL’s is still in an infancy stage of development.  Before MATL Alberta did not have IPLs.  During the MATL approval process Alberta effectively changed the regulatory agencies responsible for IPLs – the Alberta Utilities Commission (AUC) was not the presiding agency in the approval of MATL.  In fact, the AUC was formed by the dismantling of the Alberta Energy and Utilities Board (EUB).  More investigation is required to determine if the MATL project played an influencing role on the change of the provincial government regulatory framework.

The MATL project has been very effective, especially in the U.S.  The company began the IPL development process in August of 2005 and in four short years was able to secure full regulatory approval from multi-levels of government from two countries.  The MATL project has also been successful in gaining funding by the federal U.S. government under the Recovery Act of 2009; made possible by the DOE through the Western Area Power Administration (WAPA).  In exchange for the conditional right to 50MW of the MATL line capacity, WAPA will cover the expected construction costs of $161 million.[37] MATL is the first project to be funded by WAPA under the Recovery Act of 2009.  This suggests that the project managers of MATL were keenly involved in the U.S. government regulatory process.  The Canadian company understood that in the U.S. regulation is a multilevel process that requires a coordinated and micro-policy approach.  The MATL project: aimed to harmonize the North American electricity system; is sectoral in character; and appealed to regulators because of the potential for renewable energy to be added to the grid.  It is for these three reasons that MATL was able to achieve project approval in the U.S. in just four years.

There is evidence that suggests greater integration of the North American electricity market will lead to a harmonization of regulatory oversight over matters of IPLs.  NERC is a perfect example of how Canada and the U.S. work together through an independent, sectoral-based organization to achieve common ends.  Interestingly, however, NERC was borne as a subset of domestic American policies.  This suggests that Canada could be considered the fifty-first or just another Northern state.  Given the enormous energy reserves in Canada, more specifically in Alberta, perhaps it should be the other way around.  After all, media has a unique ability to continually purport that Alberta is an energy superpower.

Is Alberta an energy superpower?  In electricity the straight answer is no.  Before the construction of MATL Alberta does have access to the United States electrical market through inter-provincial ties via British Columbia and Saskatchewan.[38] This has traditionally allowed for Alberta to engage in the import and export of power.  According to the National Energy Board, between January and February 2009 Alberta exported 167,412 megawatt hours (MW.h) of electricity. This was worth an estimated $5.6 million at an average cost of $35.32/MW.h.  During the same time period Alberta effectively imported 485,367 MW.h of electricity; worth an estimated $16.6 million at an average cost of $52.02/MW.h.[39] Based on this data it is evident that in 2009 Alberta has been a net-importer of electricity and has faced higher importing costs than those states that purchase Alberta electricity.

Alberta has paid a premium on electricity imports; paying on average $16.70/MW.h more to buy than is charged for the export of the exact same commodity.  This is most likely due to discriminatory pricing techniques involved in the electricity industry – wherein prices vary by demand and are influenced by complex financial derivatives.  However, it is interesting to consider that Alberta faces a trade deficit in electricity exports.  It is because of this that Alberta cannot be considered an energy superpower.  However, some may consider the development of Alberta’s first IPL marks an important development in the province’s energy-related economic growth strategy towards becoming an energy superpower.

It is interesting to consider that currently in Alberta most electricity is generated by burning coal.  In 2007 Alberta was responsible for the burning of a staggering 52 per cent of all coal in Canada for the purpose of electrical generation.[40] Coal is a reliable fuel source.  The economics are simple: as electrical demand increases more coal is burned so supply and demand are equal.  Subsequently, coal has a bad reputation based on the high levels of greenhouse gas emissions that result from how it is converted to energy.  If the MATL project enables Alberta to export electricity, then will impending government climate legislation detrimentally affect Alberta exports?  Will the Americans impose higher tariffs on energy from ‘unclean’ sources?  Or will MATL spur the development of renewable energy sources as promised?

—

Figure 1: Chart of Electrical Line Losses by Load and Temperature

(DOE 2008)

—

Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

(NEB January 2003, 9)

—

Figure 3: IPL Regulatory Framework – U.S.A.

—

Table 1: Key Regulatory Approvals Required by Jurisdiction

*Effective January 1, 2008 the EUB became: Energy Resources Conservation Board (ERCB) and the Alberta Utilities Commission (AUC)

**The amount of time MATL application process required for approval

***Designated the official federal Electricity Reliability Organization (ERO) by FERC in 2006; members include states/provinces from Canada, USA, Mexico

—

Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

List of Acronyms

AESO   – Alberta Electric Systems Operator

AIES     – Alberta Interconnected Electric System

APLIC   – Avian Power Line Interaction Committee (USA)

AUC     – Alberta Utilities Commission

DEQ     – Department of Environmental Quality (Montana)

DOE     – Department of Energy (USA)

EEI       – Edison Electric Institute (USA)

FERC    – Federal Electricity Regulatory Commission (USA)

IPL       – International Power Line

MATL   – Montana Alberta Tie Limited Project

MSA     – Market Surveillance Administrator (Alberta)

NEB     – National Energy Board (Canada)

NERC   – North American Energy Reliability Corporation

NEPA   – National Environmental Policy Act (USA)

WAPA – Western Area Power Administration (USA)

—

Bibliography

AESO. “About AESO.” Alberta Electric System Operator. December 2009. http://www.aeso.ca/ourcompany/ourCompany.html (accessed December 1, 2009).

Alberta Energy. Energy History in Alberta. 02 02, 2009. http://www.energy.alberta.ca/About_Us/1133.asp#2000_-_Present (accessed 12 01, 2009).

DOE. Department of Energy Announces Start of Western Area Power Administration Recovery Act Project . September 19, 2009. http://www.energy.gov/news2009/8017.htm (accessed December 3, 2009).

DEQ. “Federal Draft Environmental Impact Statement.” MATL Transmission Line EIS. 2008. http://gc.energy.gov/NEPA/nepa_documents/docs/deis/eis0399/vol2/Volume2g.pdf (accessed 12 1, 2009).

MATL. Our Project – Regulatory. 2009. http://www.matl.ca/project/regulatory.php (accessed November 1, 2009).

Mintz, Jack M. “The Power of Exports.” National Post. November 9, 2009. http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/11/09/jack-mintz-the-power-of-exports.aspx (accessed December 1, 2009).

Montana DEQ. “DEQ Findings for Certification.” Tonbridge Power – MATL Project. October 22, 2008. http://www.tonbridgepower.com/Project/DEQ%20Findings%20for%20Certification.pdf (accessed December 1, 2009).

NEB. Canadian Electricity Exports and Imports. An Energy Market Assessment, National Energy Board, Calgary: Canada, January 2003, 66.

NEB. Electricity Exports and Imports. Monthly Statistics Repor, Calgary: Canada, September 2009, 31.

NEB. Global and Canadian Context for Energy Demand Analysis. Energy Briefing Note, Calgary: Canada, September 2008, 20.

NEB. International Power Line Security Management. 11 20, 2009. http://www.neb.gc.ca/clf-nsi/rsftyndthnvrnmnt/scrty/ntrntnlpwrlnscrtymngmnt-eng.html (accessed December 7, 2009).

NEB. Who we are, governance, and responsibilities. 11 16, 2009. http://www.neb.gc.ca/clf-nsi/rthnb/whwrndrgvrnnc/rrspnsblt-eng.html (accessed Dec 6, 2009).

Puckett, Carl. “Leaders celebrate the start of MATL work.” Great Falls Tribune. December 01, 2009. http://www.matl.ca/documents/2009/project/press/articles_pdf/2009-12-01%20%28Great%20Falls%20Tribune%29%20-%20Leaders%20celebrate%20start%20of%20MATL%20work.pdf (accessed December 04, 2009).

Reuters. “Alberta needs $14.5 billion in new power lines: agency.” National Post. June 2, 2009. www.nationalpost.com/story.html?id1655795 (accessed December 1, 2009).

Statistics Canada. “Electric Power Generation, Transmission and Distribution (57-202-X).” Statistics Canada. 2007. http://dsp-psd.pwgsc.gc.ca/collection_2009/statcan/57-202-X/57-202-x2007000-eng.pdf (accessed December 2, 2009).

“Summary of State Transmission Siting Law in the Western Interconnection.” Western Governors Association. http://www.westgov.org/wieb/transmission/other/siting_paper.pdf (accessed November 27, 2009).

[2] Recognizable trends exist where consumer consumption is based on time of day and time of year.  For example, most people are home and using electricity in the morning and in the evening; and there is more electricity consumption during the winter, especially in Canada, because there are less day-light hours.

^[3] See Appendix Figure 1: Chart of Electrical Line Losses by Load and Temperature

^[4] EEI – electricity 101 (NEB January 2003, 2)

[5] MATL is a wholly-owned subsidiary of Tonbridge Power Inc. (TSX: TBZ)

[6] MATL site

[7] (Puckett 2009)

[8] Constitutional division of powers

[9] As set out by: National Energy Board Act (1959); Canadian Electricity Policy (1988); Canadian Environmental Assessment Act (1995).

[10] (NEB September 2008)

[11] (NEB 2009).

^[12] (NEB September 2008)

^[13] (NEB 2009)

^[14] As per the constitutional distribution of powers

^[15] (NEB January 2003, viii)

[16] (Alberta Energy 2009)

^[17] Originally the Alberta Energy Utilities Board (EUB) which in January 2008 was dismantled into two separate agencies: the Alberta Utilities Commission (EUC) and the Energy and Resources Conservation Board (ERCB).  The EUB was the presiding agency over the MATL project.

^[18] (AESO 2009)

[19] (Alberta Energy 2009)

[20] (Mintz 2009)

[21] (Reuters 2009)

[22] As discussed in class and in So Near and Yet So Far: NIMBY or BANANA.

[23] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[24] See Appendix Figure 3 IPL Regulatory Framework – U.S.A.

[25] This effectively changed some of the 1600 poles to be installed from just being of an H-type design to a monopole type design.

[26] These costs are as simple as a farmer being forced to combine around IPL power-poles that interfere with time-tested farming efficiencies.  These costs do not factor in the impacts of construction or lost potential land-values.

[27] (Montana DEQ 2008, 12)

[28] APLIC is a multi-level committee comprised of electric utility organizations and federal agencies.

[29] EEI is an association of shareholder electric companies that represents 70% of U.S. electric power industry.

[30] (Montana DEQ 2008, 9)

[31] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[32] FERC is an independent regulatory agency within the DOE and is responsible to federal courts.

[33] NERC was created under the Energy Policy Act of 2005.

[34] WECC was formed in 2002 by the merger of three regional councils: the Western System Coordinating Council, the Southwest Regional Transmission Association, and the Western Regional Transmission Association.

[35] (MATL 2009)

[36] (NEB 2009)

[37] (DOE 2009)

^[38] See Appendix: Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

^[39] See Appendix Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

[40] (Statistics Canada 2007)

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FULL DISCLOSURE:

At the time of writing this I owned shares in Tonbridge Power (TVE: TBZ) the parent company of MATL.

Curtis Matwychuk-Goodman

—

“Women now stand on the threshold of achieving more political power than they have ever had before.  A possible dream can become real if women translate their beliefs and votes into an organized electoral and political force”

Bella Abzug 1984, page 11

his paper will first define gender and what a gender gap is.  It will introduce relevant evidence of the existence of a gender gap in Canadian public opinion in addition to identifying a number of areas of both convergence and divergence of public opinion when gender is considered.  Furthermore, this paper will provide an update on recent developments in the study of gender and public opinion by identifying and explaining the findings of relevant literature.  Finally, this paper will discuss the importance of understanding gender as it applies to the Canadian political system in terms of the three elements of political culture: ideology, policy, and practice.

This paper will find that the way women live their lives today is different than twenty-five years ago.  This would imply that a meaningful difference may have arisen in women’s public opinion over this same time period.  However, there is little evidence suggesting a predictable and stable gender gap on particular issues of public opinion in Canada over time.  Although there have been instances of a gender gap existing, like in the 1988 Free Trade Election and the 1993 and 1997 federal elections.  The most concerning gap that does exist in Canada is the underrepresentation of women in the federal government.  This has implications for issues of equality and there should be a significant consideration of all political parties operating within Canada.

Meaning
What is a Gender Gap?

Gender can be defined as the classification of either the sexes: masculine, feminine, or less commonly neuter.  Gender provides classification of the fundamental differences of human life and can be considered in terms of biology, behaviour, lifestyle, and value patterns.

A gender gap can be thought of as the measureable differences between men and women; the corresponding roles and resulting patterns of “interactions, expectations and conditions towards each other, on themselves and on the opportunities they have.”[1] The gender gap in public opinion is considered to be one of many cleavages that exist in the Canadian political landscape.  A political cleavage is a concept used in analyzing voting behaviour and in some cases divides the voting populace into divisible blocs based on any number of factors (gender, language, religion, and region).[2] Next we will look at the origins of the gender gap by examining salient literature of any such existence in Canadian public opinion.

Origins
Explaining the Gender Gap

There have been instances of significant differences of public opinion between women and men.  One specific instance is the 1988 election which pundits dubbed  the ‘Free Trade Election’ because of the hot topic issue of the FTA with the United States.  In some constituencies there was a fear of job losses in traditional female industries – especially the textile sector; there was a noticeable impact on women’s views towards political parties and their stance on signing such a bilateral initiative.[3]

To explain the gender gap in Canada it is best to review literature and the significance of related research.  The scope of this paper will be limited to briefly discussing the findings from: the Status of Women Canada 2001; Kay, Lambert, Brown and Curtis 1987; Everitt 1998; O’Neill, Erickson 2002; Gidengil, Nevitte, Blais 2004.  Based on this literature review it will become clear that a gender gap does exist in public opinion but it is not stable or predictable over time.

First let us examine statistical evidence produced by the Status of Women Canada (SWC) that identifies major differences that have emerged in the roles of Canadian women over a twenty-five year period.  The SWC is a government department that produced “A Quarter Century of Change: Young Women in Canada in the 1970s and Today,” it effectively compares and contrasts the lives of women aged 20-29 over a period of twenty-five years. [4] Highlights of the quarter-century between 1976 and 2001 shows a change in four key areas[5]:

1. The percentage of total Canadian women aged 20-29 who were married in 1976 was 64.6%; compared to 41.9% in 2001 which indicates a 23% decline over time.[6]
2. There has been a marked decrease in the birth rate over time same time period – in 1976 there were 100 births per 1000 women – in 2001 this statistic was only 58 births per 1000 women.
3. Women’s enrollment in post-secondary education has seen a marked increase where the percentage of women with a degree in 1976 was 8.6%; in 2001 it was 21.4%.
4. “In 2001 71% of all women [aged 20-29] were part of the paid work force, up from 58% in 1976.” However, women are much more likely to be employed part-time and to be lassified as having lower incomes than men.  A significant majority of women are limited to positions in sales and service, clerical, teaching, or nursing.[7]

This body of research indicates that women are being employed in greater numbers, face lower levels of income-equity than male counterparts and are more likely to be employed only part-time.  Interestingly women are doing a double-duty in society as they are most likely responsible for a greater share of domestic duties including child care, cooking and cleaning.[8]

An interesting factor that is considered by the SWC is that multiculturalism adds an increasingly complex element to understanding women in Canada.  The research indicates that immigrant women, especially those of a ‘visible-minority,’ face extraneous hurdles above and beyond that of the average Canadian.  This research suggests that immigrant women are: more likely to be unemployed and have lower income levels; they are also more likely to live in either Toronto or Vancouver; and are now characteristically from Asia and the Middle East whereas before were typically from Europe. [9] This is concerning especially since on average women earn only seventy-two percent of their male counterparts.[10] This research suggests that the role of women in society has dramatically changed in the last twenty-five years.  Now let us examine how this has been explained as a result of changes in cultural socialization,

In the 1980s Barry Kay, Ronald Lambert, Steven Brown, and James Curtis (Kay et al.) explained the difference in gender and political activity as a result of a variety of factors: cultural socialization, role constraints, and the absence of mobilizing issues.[11] Utilizing data from six Canada Election Studies (CES) they were unable to identify general trends in gender-related differences in political activity.  The two major findings of their work suggest: women who have children are significantly less likely to participate in politics; and women with higher levels of education or income were more likely to have increased level of political activity.  Through further research the situational factors of children, education and income would later be confirmed as factors of the gender gap in Canada:

The gender difference becomes (marginally) significant only if we incorporate religiosity into our model.  Women are more religious than men, and it is in good part because of their greater religiosity that they are as likely to vote as men. (GIDENGIL, NEVITTE and BLAIS 2004, 232)

Gidengil et. al found that voter turnout is proportionally better among those: with higher incomes, who are married and are more religious.  These findings provide evidence that well-off women will have a higher propensity to vote as a result of their status in society.  These findings are logical and seem to be true of men as well – where educated, well-off individuals are much more active in politics.  This suggests that there is an element of gender gaps between the socialization of women and men that results in women being disinterested in the political while men are the opposite.

In the 1990s Joanna Everitt provided valuable insight of the gender gap in Canadian public opinion as related to cultural socialization.  Her article “Public Opinion and Social Movements: Women’s Movement and the Gender Gap in Canada” describes the women’s movement that resulted in a significant gender role change.[12] This role change dates back to the need for increased participation of women in all areas of society outside the home; which resulted in the women’s movement and eventually the post-women’s movement.[13] Everitt’s research suggests that support for feminism and equality issues gained considerable support during the period between the 1970s and 90s evenly among both men and women.  Furthermore support of such ideas is found among people socialized or directly influenced by the women’s movement which is more likely to occur in the young and is even more articulated when education and employment variables are isolated.[14] Overall, Everitt does conclude that “women’s support for feminism stems from personal experiences and gender consciousness whereas men’s develops from an ideological predisposition to equality.”[15] However, Everitt indicates her research is not able to identify clear and persistent differences of Canadian attitudes as related to gender.

This is confirmed by Brenda O’Neill and Lynda Erickson’s article “The Gender Gap and the Changing Woman Voter in Canada;” which provides an analysis of an emerging gender gap during the period between 1965 and 1997.[16] The article attempts to apply the realignment thesis, a common post-industrialist explanation for the gender gap in the United States, to Canadian political culture.  The realignment thesis purports that traditionally women were more likely to vote for centre-right parties; whereas “contemporary women voters have not just converged towards their male counterparts but are moving to the left of them.”[17] The results of the O’Neill/Erickson study demonstrate a gender value-change has occurred in Canada outside of Quebec and results as from structural gender role-changes.

Changes such as the extraordinary growth in women’s labour force participation and the increase in women’s levels of education could contribute to more leftwing voting preferences among women when combined with factors such as the occupational segregation, lower pay rates and higher levels of public sector employment that women experience compared to men and which are still features of postindustrial societies. But gender role changes and the structural/situational factors that accompany them are also said to both cause and interact with changes in cultural values and dispositions.[18]

The change towards post-industrialism exerts that role-changes having a positional gendered-effect on social values characteristically found in voting choices over time.   As a result of realignment an additional factor to consider in voting choice is the changed perceptional relevance of political issues to members of each gender.  In this way O’Neill et. al suggests a strong correlation exists between the importance of religion in making voting decisions; where women factor religion as a more important factor in casting their vote.  They acknowledge past research that has included religion as a structural or situation explanation for the gender gap in voting in addition to other demographic factors like class, marital status and age.[19]

In the 1997 election O’Neill et. al detected an increase in support for the NDP among women.  “Then, not only were women more likely to avoid a party clearly on the right, but they also showed more support for a party of the left.”[20] However, this is offset by the fact there is little evidence that a gender gap existed in the 1993 election results; where the Liberals and Conservatives shared a small gap in support among the genders.  The lack of a gender gap in 1993 was expected to have occurred as a result of Kim Campbell’s leadership of the Progressive Conservative Party; who was to emerge as Canada’s first female Prime Minister.  That is to suggest that female leadership of the Conservative party may have influenced voter decision-making.[21]

Together Everitt and O’Neill have identified that there are inconsistencies in public opinion as related to gender issues.  They suggest there are two ways of understanding this based on: structure and situation.  Structurally women are believed to be more reliant on the state by being more likely to be employed by the public sector and more likely to access welfare/social programs.  This may be exacerbated by gendered patterns of employment where women are concentrated in traditionally low-paying jobs and face significant pay discrimination.  The second explanation is situational, since women are the maternal force of society their thinking is fundamentally linked to compassion and providing support for those in need.  There are also gender-specific issues representing a material self-interest for women like: feminism, abortion, workplace discrimination, and lack of representation in government.  The result of structural and situational pressures on gender differences materializes in women preferences that are: generally more supportive of the welfare state, less supportive of the free-enterprise system, and more reluctant to the use of force.[22] If this is the case then one would expect to find differences of opinion in Canadian political culture on an issue-by-issue basis.

Implications
The Gender Gap in Canadian Political Culture

How does gender impact Canadian political culture?  Nelson Wiseman reminds us that a country can be understood by examining the political culture – or the patterns of a political community’s ways of life.  Political culture exists as a construction of inhabitants’ ideology, policies, and practices.[23] There are two ways of approaching understanding political culture in Canada.  The first is to study emergent properties through development of institutions and explaining history.  This will be done over the next three sub-sections.  The second way is a snapshot in time of personal preferences as interpreted from aggregate survey data; which has been presented in the previous section and can be found in the appendices.  Using this understanding let us examine the Canadian context of political culture by briefly describing each element: first the ideology, then the stages of policy-development and finally the political practices in terms of federal parties and voter turnout.

Canadian Political Culture
Ideology & Structure

Canadian political culture is ideologically and structurally based on a constitutional monarchy.  The monarchy is represented by the Governor General (GG) of Canada which symbolizes the top of the structural hierarchy.  The GG works as the commander-in-chief to the benefit of the entire nation by ensuring the constitution is upheld throughout all courses of government action.  The constitution outlines federal and provincial jurisdictional powers which are overseen by the GG.  The constitution formalizes many democratic values of which equality is entrenched in the Canadian constitution and is guaranteed to all citizens.[24] This includes equality of gender.  It is therefore important for political actors to pursue a course of action that minimizes any negative impacts resulting from gender gaps.  It is interesting to note that of the twenty-seven GGs in Canadian history only eleven-percent, or three have been female – Jeanne Sauvé (1984-1990), Adrienne Clarkson (1999-2005), and Michaëlle Jean (2005-present).  In terms of equality of representation at the highest level Canadian politics is obviously lacking the woman perspective.[25] Through all levels of federal government it is clear that women account for only 19% – 29% of total membership.  This suggests a structural-deficiency of female participation in politics especially at the executive level.

Canadian Political Culture
Policy-development

The second element of political culture is found in the policies of a nation.  In Canada policy is developed at a federal and provincial level.  Provincial governments are responsible for many aspects of daily life, but our discussion will be limited to federal level politics.  The federal government is a parliamentary democracy divided by an appointed Senate (Upper House) and the elected House of Commons (Lower House).  Currently the House of Commons is represented by three national parties (Conservatives, Liberals, New Democrat) and one regional party (Bloc Quebecois).  Over the past twenty-five years the national parties have remained very similar – the exceptions being the conservative parties merging at the turn of the century and the emergence of the Green Party.  The parties are elected by a first-past-the-post system in 308 local constituencies each of which represent a seat in the House of Commons.  The House of Commons is the main legislative body of the Canadian government; all legislation is passed pending approval from first the Senate and then ascension by the Governor General.

When examining female representation in the main policy process in Canada it is best to look at representation in political parties.  Female representation over time can be found in Table 5:  Total Female Representation by Party in All Sessions of the House of Commons; it provides evidence from Parliamentary records since Confederation in 1867 of the total number of females elected to the House of Commons. [26] In the one-hundred and forty-two year history of Canadian policy-making there have been a total of 216 elected female representatives.  The Liberal Party has been the most representative of women over time with 90 seats, while the aggregate of all Conservative parties are a distant second with 70 seats. [27] Since these two parties have dominated the political landscape in Canada it is not surprising that they account for nearly 75% of total historical female representation in the House of Commons.  It is concerning, however, that women have only ever held 5.2% of the total possible seats available over this same time period.  Moreover, there has only ever been one woman to form a government in Canada – Kim Campbell who led the Progressive Conservative Party in 1993 for a brief period between two of the most influential Prime Ministers of recent history Brian Mulroney and Jean Chretien.  This is compelling evidence of a significant underrepresentation by females throughout Canadian history in the primary policy-making process.

Looking further at the involvement of women at the federal level of politics we see a staggering lack of representation in the Senate.  Of the 903 total Senate appointments only nine-percent, or 82, were women.[28] Although this is significant of greater representation when compared to the House of Commons it still represents a severe lack of female involvement in the federal political process.  In the history of Canada the Liberal Party has appointed fifty women, the most of any party, to the Senate.  The ideological-right, or the aggregate of all Conservative parties over time, accounts for only twenty-eight appointments, while the ideological-left accounts for just one nomination.

Although a historical perspective is helpful, perhaps it is best to look at most recent data especially since female participation and representation has made a real breakthrough since the turn of the millennium.  Comparing the most recent elections (2004, 2006, 2008) we see the greatest shift in female representation away from the Liberals towards both the Conservatives and the NDP.[29] In these elections there has been a noticeable shift in the balance of power among political parties – from strong consecutive Liberal electoral victories to weak minority governments now dominated by the Conservatives.  With this shift in political power distribution there has been steady change in female representation overall.  In fact, the 2004 and 2008 election heralded record results for female representation in the House of Commons; with 65 and 69 female members being elected representing 21.1% and 22.4% of winning candidates respectively[30].  However, looking at female representation by political party we see considerable changes.  Appendix Table 6 shows that the number of elected female Liberal Party candidates has dropped by more than forty-percent. [31] Meanwhile, the NDP have more than doubled their female representation in the House of Commons; increasing the total number of seats held by women from just five in 2004 to twelve in both 2006 and 2008.  Likewise the Conservative Party has almost doubled female representation among their party in the same time period; with the biggest improvement in the 2008 election.

Canadian Political Culture
In Practice

The final element in describing political culture is found in the political practices of a nation.  This can be broken down into two categories of inquiry: how political parties operate and how Canadians interact with the political system which is best seen through voter turnout.

So how do federal political parties operate in Canada?  In the past twenty-five years of Canadian politics there have legitimately only been two parties vying to form government – the Liberals and the Conservatives.  However, Canada is characteristic of having a multi-party system which effectively splits the vote among other fringe-parties including the NDP and the Bloc Quebecois.   As a result of the multi-party system Canadian political parties are notorious for engaging in brokerage interest politics.  This means they are in constant conflict over the ‘centre-ground’ on popular issues of the day in an attempt to maintain and gain support during times of re-election.  Table 6 & 7 demonstrate that the Liberals have been the most successful in securing representation of women in executive levels of Canadian politics.  Throughout history the Liberals have been the most ideologically-centrist and therefore have been met with great electoral success.

Voter turnout is one of the most accurate measures of political culture at the individual level since it measures participation at the most accessible level to all citizens.  The Canadian Election Study (CES) provides comprehensive data which includes a broad evaluation of “respondent opinions about politics, political parties and leaders, and media and campaign activities.”[32] This data is used in many research studies and allows for accurate understanding of the three components of how an individual practices political culture.  The three components of political culture are: cognition, affection, and evaluation.  Cognition is how much one knows and understands their political culture.  Affection is how an individual feels towards their political culture through likes and dislikes.  And evaluation refers to judgments’ towards particular aspects of such a culture.  Although there are many models of voting behaviour this paper will adopt the Rational Choice Model of voting behaviour.  In this model elections are thought of as markets where national parties are producers and citizen-voters are consumers.[33] In such a model all actors want to minimize the political cost while maximizing political gains.  The rational choice model implies that voters are aware of their self-interest and of alternatives which leads them to make rational choices consistent with their self-interests.  This model is held in esteem because it is simple and relatively straight-forward in explaining voting behaviour.  However, it lacks an explanation of where individual preferences come from.  In addition this model assumes voters are fully rational in their decision-making which is questionable given personal preferences for habitual acts and a general laziness among the populace to commit time to becoming fully aware of the issues to make informed decisions.  The Rational Model would suggest women would be more likely to vote Liberal given the greater potential to gain political representation at the Senate level.  This was not confirmed during the most recent election 2008; a pre-election survey was conducted of approximately two-thousand Canadian citizens.[34] The results of this survey suggested a significant age gap exists between gender and political party preference.  When asked “If a federal election were held tomorrow, which party would you vote for?” men were more likely to response Conservative; while in each case women were more likely to vote Liberal, NDP, or Green.[35] The survey results also suggest that this gender gap exists in correlation to age demographics; where older men were more likely to prefer the Conservative Party and young women were more likely to prefer the NDP.

Discussion

This paper has discussed many issues related to the gender gap in public opinion and Canadian political culture.  It has suggested that literature on these issues explain the gap as a result of changes in structural and situational ways.  Gender is one of many cleavages which effectively divide public opinion over time and is one of many others like: age, religion, employment, and income.  All these factors combine as influencing events of an individual’s life – which act in concert with transformative events that arise from both situational and structural gender roles and expectations.

This paper has demonstrated that gender gaps have occurred in Canada on a number of issues.  Significant issues in the last twenty-five years are: the Free Trade Election of 1988, the 1993 general election that resulted in the first women Prime Minister, and both the 1997 and 2000 election that showed substantial female support of the NDP or leftist party.  Even most recently in the 2008 pre-election studies a gender gap has been evidenced in men’s general support of the Conservative Party and greater women’s support for all non-conservative parties.  There a numerous explanations for why a gender gap may exist – trying to accurately describe the gap is difficult.

Gender and corresponding gaps should be important considerations for any Canadian political party.  Since an individual’s political culture is based on cognition, affection and evaluation these findings should help federal parties to mobilize voter support by emphasizing specific gender-friendly platforms.  If a particular gender is pre-disposed to thinking or feeling a specific way then the parties that appeal to women may see an increase in voter support.  The 1993 election results suggest that a woman party leader may impact voter behaviour.

This paper has also demonstrated the significant lack of gender equality in representation of all executive levels of Canadian political culture.  Although this trend is beginning to change, women still lack representation-equity which presents a serious concern. Equality is constitutionally guaranteed therefore the strength of our democracy and meaningfulness of our formal political institutions could be gauged by the equity in representation of all citizens.  Currently Canada is not a leader in gender equity in political culture but has made some gains in recent years.  The most important thing is for Canadian political culture to support and encourage fairness and consideration for all of humanity.  This is especially true at the most executive levels of the policy process of the Canadian government.

APPENDIX

Table 1:
Ekos Poll – 2008 Federal Vote Intention by Demographics^[36]

Q. If a federal election were held tomorrow, which party would you vote for?

Table 2:
Demographic Factors of Women Aged 20-29 between 1976 and 2001[37]

Table 3:
Occupational Distribution – Statistics Canada Labour Force Survey, 1998[38]

Table 4:
Earnings of Women Employed Full-Time, Full-Year, as % of those of men,
by province, 1997[39]

Table 5:
Distribution of Positions of Power as a Percentage of Total Membership[40]

Table 6:
Total Female Representation by Party in All Sessions of
the House of Commons[41]

Table 7:
Total Female Senate Appointments by Party Affiliation[42]

Table 8:
Female Representation in Federal Parties by Election Result 2004-2008[43]

Bibliography

Abzug, Bella. Gender Gap; Bella Abzug’s Guide to Political Power for American Women. Boston: Houghton Mifflin Company, 1984.

Cohen, Marjorie Griffen. Feminism’s Effect on Economic Policy. Vol. 2, chap. 4 in Canadian Womens Issues: Bold Visions, by Ruth Roach Pierson and Marjorie Griffen Cohen, 281. Toronto, ON: James Lorimer & Company Publishers , 1995.

EKOS Election. “Election Harper’s to Lose.” EKOS Election. September 2008. http://www.ekospolitics.com/index.php/2008/09/election-harpers-to-lose-2/ (accessed November 27, 2009).

Elections Canada . 40th General Election. http://www.elections.ca/content.asp?section=loi&dir=res/40eval&document=index&lang=e#14 (accessed November 30, 2009).

Everitt, Joanna. “Public Opinion and Social Movements: The Women’s Movement and the Gender Gap in Canada.” Canadian Journal of Political Science 31, no. 4 (1998): 743-765.

Gidengil, Elisabeth, Andre Blais, Richard Nadeau, and Neil Nevitte. “Women to the Left? Gender Differences in Political Beliefs and Policy Preferences.” In Gender and Elections in Canada, by Manon Tremblay and Linda Trimble.

GIDENGIL, ELISABETH, NEIL NEVITTE, and ANDRÉ BLAIS. “Where does turnout decline come from?” European Journal of Political Research (Blackwell Publishing) 43 (2004): 221–236.

Heard, Andrew. Women & Canadian Elections. October 2008. http://www.sfu.ca/~aheard/elections/women.html (accessed November 28, 2009).

Jansen, Dr. Harold. Political Science 3280: Canadian Political Behaviour. University of Lethbridge. Fall 2009.

Kay, Barry J, Ronald D Lambert, Steven D Brown, and James E Curtis. “Gender and Political Activity in Canada, 1965-1984.” Canadian Journal of Political Science 20 (1987): 851-863.

Lindsay, Colin and Almey, Marcia. A Quarter Century of Change: Young Women in Canada in the 1970s and Today. Policy Research, Status of Women , Canada, Ottawa: Statistics Canada, 2005.

O’Neill, Brenda, and Lynda Erickson. “The Gender Gap and the Changing Woman Voter in Canada.” International Political Science Review 23, no. 4 (2002): 373-392.

Parliament of Canada. Women Federal Political Representation 1867 – Date. November 2009. http://www2.parl.gc.ca/parlinfo/compilations/parliament/WomenRepresentation.aspx?Menu=HOC-Representation (accessed November 27, 2009).

Peebles, Dana. Increasing gender Inputs into Canadian International Trade Policy Positions at the WTO. Policy Research, Canada, Ottawa: Status of Women Canada, 2005.

Status of Women Canada. Women and Men in Canada: A Statistical Glance. Ottawa: Statistics Canada, 2000, 27 pages.

Wiseman, Nelson. In Search of Canadian Political Culture. Vancouver: UBC Press, 2007.

[2] (Jansen 2009)

[3] (Cohen 1995, 281)

[4] (Lindsay 2005)

[5] See Appendix Table 2:  Demographic Factors of Women Aged 20-29 between 1976 and 2001

[6] (Lindsay 2005, 4)

[7] Ibid. page 9

[8] See Appendix Tables 2 & 3

[9] (Lindsay 2005, 14)

[10] See Appendix Table 4:  Earnings of Women Employed Full-Time, Full-Year, as % of those of men,  by province, 1997

[11] (Kay, et al. 1987)

[12] (Everitt 1998)

[13] The women’s movement or ‘feminism’ can be described as increased awareness on issues of: domestic violence, maternity leave, equal pay, voting rights, sexual harassment, and sexual violence.

[14] (Everitt 1998, 746)

[15] (Everitt 1998, 755)

[16] (O’Neill and Erickson 2002)

[17] Ibid. page 373

[18] Ibid.

[19] (Studlar, McAllister, and Hayes 1998; Inglehart and Norris, 2000 as cited by O’Neill et. al 2002)

[20] (O’Neill and Erickson 2002, 379)

[21] Ibid.

[22] (Everitt, Kopinak, Terry, Wearing as cited by O’Neill et. al 2005)

[23] (Wiseman 2007, 13)

[24] Explicitly found in Part I – Section 2.6 and Part III of the Canadian Charter of Rights and Freedoms

[25] See Appendix Table 5:  Distribution of Positions of Power as a Percentage of Total Membership

[26] See Appendix Table 6:  Total Female Representation by Party in All Sessions of  the House of Commons

[27] Aggregate refers to combination of the Canadian Alliance, Conservative Party of Canada, Progressive Conservative, and Reform as one “Conservative Party”

[28] See Appendix Table 7:  Total Female Senate Appointments by Party Affiliation

[29] This is confirmed in “Women to the Left? Gender Differences in Political Beliefs and Policy Preferences” by Gidengil, et al.

[30] (Heard 2008)

[31] See Appendix Table 8:  Female Representation in Federal Parties by Election Result 2004-2008

[32] (Elections Canada n.d.)

[33] (Jansen 2009)

[34] (EKOS Election 2008)

[35] See Appendix Table 1:  Ekos Poll – 2008 Federal Vote Intention by Demographics

[36] (EKOS Election 2008)
Note: Random sample of 2000 Canadians aged 18 and over responded to the survey; estimated margin of error +/- 2.2 percentage points (19 times out of 20). Survey completed September 2 to September 4, 2008.

[37] (Lindsay 2005)

[38] (Status of Women Canada 2000, 16)

[39] (Status of Women Canada 2000, 23)

[40] (Status of Women Canada 2000, 26)

[41] (Parliament of Canada 2009)

[42] (Parliament of Canada 2009)

[43] (Heard 2008)

Curtis Matwychuk-Goodman, Jeff Wilson, Ryan Gillanders, Wade Tywoniuk, and Will Woo Young Kim.

—

Introduction to the Issue

This paper is intended to provide readers with an understanding of the wind-energy industry.  In order to understand the industry a holistic approach is necessary.  First, this paper will explain the historical development of wind-energy.  It will then explain the concepts of location advantages which are crucial for industry development.  Readers will understand how location can both be an advantage and disadvantage depending on how firm-specific advantages are leveraged.  Furthermore this paper will detail the stages of wind-energy project developments as well as the technological advancements that have given rise to the current wind turbine designs.   In the end readers will understand the basics about wind-energy; with a better understand how wind can be harnessed to produce sustainable and renewable power.

In terms of the global regions of the wind-industry our research indicates the largest players are found in the triad economic regions; including the European Union, North America and Asia-Pacific.  The second part of this paper will give a brief overview of some countries from each region.  From the EU, the focus will primarily be on Germany and Spain, with brief discussions of secondary players from Bulgaria, Italy, UK, France, Turkey and Poland.  This section will prove Europe’s historical dominance in the wind energy industry.  From Asia-Pacific we will discuss the emergence of China as a global player; and from North America we will focus on Canada and the United States.  Overall, from this regional overview readers will gain insight into key areas of: the role of governments from incentives to regulation; how a global shift has occurred from Europe to the world; and the ways in which a cluster-effect has occurred similar to other global industries.  This section will enable readers to understand the high –growth potential of wind energy.

To further understand the regional markets of the wind-energy industry we will provide a detailed overview of three major companies operating within each triad region.  The Irish company Mainstream Renewable Power provides an interesting case of the cooperation between European and Canadian markets.  From Asia we will examine Goldwind Science and Technology Company, an interesting case of state-owned enterprise and the role in developing local area-clusters.  We will also look to TransAlta Wind, one of Canada’s largest wind-energy producers; which will provide readers with insight how energy market deregulation has fostered economic growth in the wind sector.  In the end readers will better understand the current issues and barriers facing firms within the wind-sector as well as our predictions of the future of the industry.  Our discussion will conclude with our key recommendations for the industry.

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Theories and Concepts

In terms of major theoretical concepts used in this paper our primary focus is: the correlation of location and competitive advantage and the CAGE Framework; Michael Porter’s Diamond of National Advantage, and cluster development.

This paper will demonstrate how location plays one of the most important roles in industry development.  Through the regional discussions we will briefly explain how the CAGE Framework of Distance applies to industry.  CAGE stands for the four distances or hurdles often faced by transnational corporations: culture, administrative, geographic and economic.  This paper will show how the greater the distance of any of the variables – the weaker the transference of firm specific-advantages across borders.

Michael Porter’s Diamond refers to four major areas that contribute to national advantage, these include: factor conditions; demand conditions; related and supporting industry players; firm strategies, structure and rivalry.   Discussion on this concept will be thoroughly addressed in the regional overviews of the wind industry.  Our discussion will cover each of the four areas of national advantage and will describe how some countries are indeed leveraging these to become industry leaders.

In terms of cluster development our paper will demonstrate how clusters are forming in each of the TRIAD regions.  From Europe we will see how the German turbine and component manufacturing sector has maintained a competitive advantage through government incentives and policies.  From Asia we will see how China has developed a regionally competitive wind-producer capable of capturing increasing market share in the years to come.  From North America we will see how since 2007 an internationally-competitive industry cluster has developed in the United States.

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History of the Industry

Wind power was not the first non-human power source in the history.  The technique of grinding grain between stones to produce flour is similarly ancient as is processes powered by both animals and water.  Windmills were originally developed in European countries which contributed significantly to both economic development and civilizations’ advancement.  Development of windmills in European countries especially in England and Holland helped these two countries develop highly skilled labour forces concentrated on technology development.  During the seventeenth and eighteenth centuries as major European powers colonized remote areas of the world they spread the technology as well.

As steam power developed, however, windmills were thought to be defective in comparison working only when the wind blew at the average rate of 16 kilometers per hour.  New industrial advancements made wind seem unreliable and not the best source of energy.  European countries struggled to make use of wind power in an effective manner.  In North America, water-pumping wind turbines began appearing in the late 1800s used primarily to irrigate crops (Transalta).

The United States was the first country that saw the possibility that the wind motor could still render its benefits to the modern civilization.  Charles F. Brush (1849-1929) is one of the founders of the American electrical industry.  He invented a very efficient DC dynamo used in the public electrical grid, the first commercial electrical arc light, and an efficient method for manufacturing lead-acid batteries.  During the winter of 1887-88 Brush built what is today believed to be the first automatically operating wind turbine for electricity generation; however, his first turbine was not efficient due to the slowly rotating wind turbines.

It was the Dane Poul la Cour , who later discovered in Denmark that fast rotating wind turbines with few rotor blades are more efficient for electricity production than slow moving wind turbines.  Following Dane Poul la Cour, Johannes Juul, who was one of the first students of Poul la Cour, became a pioneer in developing the world’s first alternating current (AC) wind turbines.

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Location Effects

Within the industry of wind energy production, location is the most important factor because how many aspects of wind energy depend on it.  When talking about location itself, it can present itself as both the most important location advantage for firms, yet at the same time it is also the most difficult factor within the industry to actually take advantage of.  Aspects of location can also uncover many barriers to entry into the industry itself.

Location Advantage

When discussing the types of competitive advantages which firms may use to gain an edge within an industry location advantage is the most important advantage that any firm within the wind energy industry can exploit.  Given that “since 1980, wind turbines have been becoming larger and more efficient at rates otherwise only seen in computer technology,” it does not make sense to depend exclusively on firm specific advantages such as innovation and technology to maintain a competitive advantage (World Wind Energy Association, 2006)[1].  This is the same dilemma that the computer and electronic industry has encountered: you simply cannot rely on technological advancement as your sole competitive advantage because of the extremely high rate of growth and innovation.  Therefore location advantage is the type of advantage that producers will need to exploit the most in order to maintain competitiveness within the industry.

Location advantage is easy to understand within this industry because not every geographic area within the world is suitable for wind energy production.  The difficulties of making location work for the firm as a competitive advantage will be described later, but what should be noted is that if an industry player has discovered and gained access to an area suitable for wind production then they already hold a tremendous advantage over other competitors.  Quite literally, any firm or nation interested in wind energy production can only enter the market if they have access to ideal locations.  This is the reason why location is the most important factor of competitive advantage in the industry and at the same time one of the most difficult issues for competitors within the industry which they could capitalize on and / or overcome.

Location as a Disadvantage

One of the most important factors that can determine the success or failure of wind energy generation is location.  Unfortunately for wind energy producers, location is often one of the most difficult obstacles to overcome.  For most wind industries development is dependent on windy areas and windy areas may still not provide optimal conditions for wind energy production.  Location of possible production areas may not have any geographical relation to areas that are requiring increased production of electricity.  This makes issues such as location, storage and transmission become serious concerns for new firms entering the industry.  Some locations may require excessive regulatory approvals which add to the time and cost of the project.

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Types of Wind Turbine Design

When people usually think of ‘wind turbine,’ they recall a high tower with three blades looking like a large fan.  Actually, there are so many different types of wind turbines as endless as the designers’ imagination.  However, we can differentiate the most common types in two ways: vertical axis and horizontal axis wind turbine.

Vertical Axis Wind Turbine (VAWT)

The principle advantage of Vertical Axis Wind Turbine (VAWT) is that they are omnidirectional – this means they accept the wind from any direction.  Vertical axis turbines also can be divided into two major groups: those using aerodynamic drag to extract power from the wind such as the cup anemometer, and those that use lift.

During 1920’s French inventor D.G.M. Darrieus patented a wind machine using curved bladed to the rotor instead of straight blades.  Darrieus’s concept eventually faded into obscurity. Canada’s National Research Council reinvented the design in the mid-1960s, and subsequently Canadian wind research focused on Darrieus turbines, which experimental Darrieus design was under developed near Picher Creek, Alberta.  There are some advantages for VAWTs:

1. It may place the generator and gearbox on the ground, and you may not need a tower for the machine equates to cost efficiency.
2. It does not need a yaw mechanism to turn the rotor against the wind, as mentioned above it is omnidirectional and should turn under any wind direction.

But the reason most VAWTs disappeared is they have more disadvantages:

1. Wind speeds are very low close to ground level, so although it may not need a tower, its wind speeds will be very low on the lower part of your rotor
2. The overall efficiency of the vertical axis machines is not impressive.
3. The machine is not self-starting
4. The machine may need guy wires to hold it up, but guy wires are impractical in heavily farmed areas.
5. Replacing the main bearing for the rotor necessitates removing the rotor on both a horizontal and a vertical axis machine. In the case of the latter, it means tearing the whole machine down.

Horizontal Axis Wind Turbines (HAWT)

Unlike VAWTs, conventional horizontal wind turbines are not omnidirectional.  To supplement this problem, wind turbine makers invented the yaw mechanism[2].Horizontal Axis Wind Turbines (HAWTs) can be largely divided depending on number of blades and yaw mechanism.

There are various numbers of blades in HAWTs: one blade, two blades, three blades and multi-blade turbines.  One and two blade turbines are hardly seen in new turbine installations.  Two-bladed wind turbine designs have the advantage of saving the manufacturing cost of one rotor blade as well as the weight savings on the overall structure design.  On the other hand, they require higher rotational speed to yield the same energy output. This is a disadvantage both in regard to noise and visual intrusion.

One and two-bladed machines require a more complex design with a hinged (teetering hub) rotor, which enable rotor to tilt in order to avoid too heavy shocks to the turbine when a rotor blade passes the tower. In addition, one-blade rotor requires a counterweight to be placed on the other side of the hub from the rotor blade in order to balance the rotor, which is not gave them a weight efficiency anymore compared to two-blade rotor. As a result, today it is difficult to find these one and two-blade wind turbines and several traditional manufacturers of two-bladed machines have switched to three-bladed designs. Most modern wind turbines are three-bladed designs with the rotor position maintained upwind using electrical motors in their yaw mechanism.

Components of wind turbine

According to the Canadian Wind Energy Association a typical wind turbine is made up of about 8,000 separate parts – containing everything from electronics to heavy metal components (2008).  Think of it like this: once wind hits the rotor blades hold by a hub, it rotates to life, which is the same concept used for airplanes and helicopters.  Though the low speed shaft, rotation transfers to gearbox that change low speed revolution to high speed.  Hydraulics system works with gear box to make it able to have proper revolution speed from inconsistent wind.  From the gear box through the high speed, rotation convey to electronic generator.  Controller unit like an Electronic Controller Unit (ECU) in a car engine which controls overall operation is also included in turbine unit.  It also has a cooling unit to prevent over heating of turbine.  Most turbine designs also have brake-components to prevent the unit from over-spinning in intense wind speeds[3].  Once a wind-energy project is installed and contributing to the electricity market of an area they also require regular maintenance to ensure all machine parts are functioning properly.

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Development

The first major hurdle that wind energy producers must overcome is finding an adequate location to establish a wind farm. According to the World Wind Energy Association, there is a multi step process in determining the location of a new wind farm.

First there needs to be an estimation of wind conditions, this can be ascertained through a combination of general meteorological weather statistics such as average wind speed and an analysis of the geography of the location.  Geography of the location is important because every obstacle such as hills, valleys, manmade structures, and trees can dramatically affect how the wind travels through the region.  Determining the wind conditions will then give developers an idea of what type of wind turbine they will need, how tall the turbine will need to stand to capture the optimal wind conditions, as well as where the turbines can be located.  Compilation of data is extremely important and must not be overlooked because there are so many influencing factors that can determine whether or not a wind energy farm is a viable project within that geographic area.  The importance of determining and knowing accurate wind conditions cannot be taken lightly, for example “if the wind speeds are 10% smaller than expected, the energy yield will fall short by more than 30%” (World Wind Energy Association, 2006).  Such a dramatic change in energy output could not only affect the determined success of the wind farm, it could cause serious distribution problems within the electrical grid that it is supplying.

Once establishing an estimation of wind conditions have been established developers will need to draft initial estimates of installed capacity and energy yield. Essentially this involves determining how much space is available in the area, where they can obtain access to the power grid in order to transfer the electricity produced and to determine what type and how many generators will need to be installed in order to reach a nominal level of power output. For large wind farms that produce more than 20 MW of electricity it is often necessary to set up a separate transformer station for the farm which can tie itself into the power grid instead of tying the farm’s production into an already existing transformer along the grid (World Wind Energy Association, 2006).  Access to the power grid itself can be a very large issue given that the geographic location of many wind farms (due to the need for ideal geographic and meteorological conditions) does not have a close proximity to either a power transmission grid or areas requiring electrical power.  In order to deal with this issue, the consideration of construction new power transmission lines should be taken into consideration as a possible necessity and cost to successfully construct a wind farm.

The next step is to draft a layout of the farm.  This may sound like a simple task but it is actually a very complex process. Drafting the layout involves contrasting productivity optimization factors of “looking for the optimal arrangement of wind turbines on a given site is the highest possible energy yield of the entire wind farm over its service life” against other attributing factors such as “the conditions and costs of installation — such as construction of power lines from the turbines to the transformer and interconnection stations or roads for assembly, maintenance, and service vehicles” (World Wind Energy Association, 2006).  The largest difficulty that is encountered by developers is determining the optimal trade-off between the two sets of factors as well as successfully securing permits and lease agreements (if necessary) to use the decided-upon land, all the while observing specified restrictions and barriers to entry which can arise (such as maximum building heights, minimum distances from other structures, and environmental protection regulations).

If all the factor requirements can be satisfied during this development stage, the planning for the wind farm can finally become a reality. What this process shows is that there is an incredible amount of time, energy and resources that will need to be expended just to determine a location in which a producer can actually set up operations. This process considers many different factors, all of which are essential and must be met, and if the factors do not present evidence that the location is optimal for wind energy production, it is often hard to continue on with that specific location. This alone should shed some light on why location can be the most important competitive advantage and at the same time be one of the most difficult aspects of wind energy production to incorporate into successful production operations.

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Global Location of the Industry

In terms of the global regions of the wind-industry our focus is on the triad economic regions including the European Union, North America and Asia-Pacific.  Our discussion will give a brief overview of the countries in: the EU, primarily Germany and Spain, with brief discussions of secondary players from Bulgaria, Italy, UK, France, Turkey and Poland; from Asia-Pacific we will discuss the emergence of China as a global player; and from North America we will focus on Canada and the United States.

This section draws from a few key sources.  The most valuable source of wind-industry information is the Global Wind Energy Council (GWEC).  We felt that GWEC provided us with the most accurate and unbiased information on individual countries and their production of wind energy.  For information on Europe’s wind-industry the European Wind Energy Association (EWEA) proved useful for timely information.

When finding information on solely Chinese wind energy, the Chinese Wind Energy Association, the Energy Research Institute.  When researching Goldwind Science and Technology, there was a scarce amount of information that could be found in English.  Because of this, we had to rely on the Goldwind website, where we realize has the potential to be a biased source.  However, we still felt that for the most part the information we found pertaining to Goldwind was accurate.

For the section on North America, information is derived from a variety of sources.  The American Wind Energy Association and the Canadian Wind Energy Association provided valuable sources for localized knowledge of the industry.  These sources are considered to be among the most reliable as they represent the major industry players.  In addition to this the North American section is supplemented by information from Price Waterhouse Coopers, the Canadian and United States government.

This regional overview of the industry readers will gain insight into key areas of: the role of governments from incentives to regulation; how a global shift has occurred from Europe to the world; and how a cluster-effect has occurred similar to other industries discussed throughout the course of the semester.

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The European Perspective

According to the European Commission, the European Union (EU) hosts only 3.5% of the world’s proven coal reserves, less than 2% of the world’s gas, less than 2% of the world’s uranium and less than 1% of the world’s oil (EWEA, 2009).  With such a lack of natural resources, it becomes obvious that the EU Member States must turn to alternative energy sources to meet the energy demands of their populations.  However the EU has taken this requirement of alternative energy sources one step further by focusing their efforts on sustainable and renewable energy sources.

At the opening session of the European Wind Energy Conference and Exhibition, EU Energy Commissioner Andris Piebalgs said “it makes good sense to invest in indigenous sources of power which hedge against unpredictable fossil fuel prices and in which Europe has a real competitive advantage” (EWEA, 2009).  Also at the session, Arthouros Zervos, European Wind Energy Association (EWEA) president, emphasized that

…the fight over the world’s rapidly depleting fuel resources is already intensifying… [and] it will only become more brutal with time and Europe will lose the battle. European companies have two-thirds of the €35 billion global market for wind power technology. Wind energy is Europe’s contribution to peace, progress and prosperity and we should urgently develop, promote and export it to the best of our ability. (EWEA, 2009)

The implementation of this strategy could vastly decrease, even eventually eliminate, the need for imported energy fuels, and in the process develop a great opportunity for increased export markets.

The EU remains the world leader in total installed wind energy capacity, and one of the strongest regions for new development, with over 8.4 GW of new installed capacity in 2008.  Cumulative wind capacity has increased by 15% reaching 64,949 MW by the end of 2008[4].  Wind energy is now the fastest growing power technology in Europe accounting for 35% of the approximately 24 GW of total new power generation capacity built in the EU in 2008[5].  A total of 160,000 workers were employed directly and indirectly in the wind energy sector, which saw investments of about €11 billion in the EU alone.  The wind power capacity installed by the end of 2008 will produce 142 TWh of electricity, equal to about 4.2% of the EU’s electricity demand. (GWEC: EU, 2009)

A major factor behind the growth of the European wind market has been strong policy support both at the EU and the national level.  In 2001 the EU put in place the Renewable Energy Directive which is aimed at increasing the share of electricity produced from renewable energy sources in the EU, as a whole, to 21% by 2010 (up from 15.2% in 2001).  EU Member States are given the freedom of choice regarding support mechanisms, but mainly feed-in tariffs, fixed premiums, green certificate systems and tendering procedures are utilized, complemented by tax incentives, environmental taxes, contribution programs or voluntary agreements (GWEC: EU, 2009).  However, major barriers to “growth and integration” of renewable electricity are present, including “delays in authorization, unfair grid access conditions and slow reinforcement of the electric power grid” (GWEC: EU, 2009).

In December 2008, the EU agreed to a new Renewable Energy Directive in which the EU’s overall 20% renewable energy target will be divided into legally binding targets for the 27 Member States, averaging out at 20% each by 2020.  In terms of electricity consumption, renewable energy sources should provide about 35% of the EU’s power by 2020, with wind energy set to contribute more than a third of all the power coming from renewable energy sources (GWEC: EU, 2009).  The directive legally obliges each EU Member State to outline the steps it will take to meet its target in a National Renewable Energy Action Plan and every two years Member States must submit a progress report to the European Commission, containing information on their share of renewable energy, support schemes and progress on tackling administrative and grid barriers.  Flexible measures have been built into the directive to help countries achieve their targets in a “cost-effective way, without undermining market stability” (GWEC: EU, 2009).  Acceptable measures include the transfer of a specified amount of renewable energy between Member States, joint projects involving private operators, or joint or partly coordinated national support schemes (GWEC: EU, 2009).  The directive also requires EU countries to take “the appropriate steps to develop transmission and distribution grid infrastructure, [develop] intelligent networks, [develop] storage facilities, [develop the] electricity system… [and] speed up authorization procedures for grid infrastructure” to help develop renewable electricity (GWEC: EU, 2009).  EU countries must “ensure that transmission system operators and distribution system operators guarantee the transmission and distribution of renewable electricity and provide for either priority or guaranteed access to the grid system or access” (GWEC: EU, 2009).

The new Renewable Energy Directive targets will translate into 230 GW of installed wind energy capacity, including 40 GW offshore, producing approximately 600 TWh per year in the EU by 2020; power equivalent to meet the demand of approximately 135 million average EU households (60% of EU households) and meeting between 14 and 18% of EU electricity demand (depending on total demand in 2020). (EWEA, 2009)

Major European Players

Germany and Spain remain the driving forces of the European wind energy industry, remaining Europe’s leaders for new installations in 2008 and cumulative installed capacity.

Germany is Europe’s largest wind energy market, both in terms of total installed capacity and in terms of new installations; ranking Germany second in the world in cumulative capacity installed, only trailing the United States as of the end of 2008, and placing them fourth in 2008 installations, behind the United States, China and India[6].  During 2008, 866 new wind turbines with a capacity of 1,665 MW were installed in Germany, bringing the cumulative total up to 23,903 MW[7].  Repowering old machines accounted for 24 MW in 2008, and 5 MW were installed offshore. The largest turbines currently operating in Germany have a rated capacity of 6 MW.  Wind energy generated 40.4 TWh of electricity in Germany in 2008, representing 7.5% of Germany’s net electricity consumption, with a number of states now providing more than one third of their electricity generation from wind energy: Saxony-Anhalt (42.6%), Mecklenburg-Vorpommern (39.4%), Schleswig-Holstein (38.3%) and Brandenburg (34.1%).  A reliable domestic market has allowed German manufacturers and suppliers to lead the way in developing wind energy worldwide. (GWEC: Germany, 2009)

A cluster in the wind turbine and component production industry appears to exist within Germany’s borders.  In 2007, turbine and component production worldwide by German companies amounted to €6.1 billion, a healthy 21% increase from 2006.  This translated into German manufacturers and suppliers contributing to about a quarter of the total worldwide turnover of €25 billion in 2007.  The percentage of exported equipment increased from 74% in 2006 to over 83% in 2007. (GWEC: Germany, 2009)

Strong governmental support and beneficial legislation implementation has been a key driver in Germany’s development into a world leader in the wind energy industry.  Under the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz-EEG):

• electricity produced from renewable energy sources is given priority for grid connection, grid access in both distribution and transmission grids, and power dispatch.
• fixed feed-in tariffs are stipulated for each kWh of power produced and fed into the grid from renewable sources.
• there are higher tariffs for on and offshore wind energy installations, incentives and regulations for improved grid integration technology of turbines and stricter obligations for grid operators in integrating wind power.
• an ‘initial tariff’ for wind energy is fixed for at least five and up to 20 years and is then reduced to a ‘basic tariff’ depending on how local wind conditions compare to a ‘reference yield’.
• grid operators are obliged to feed-in electricity produced from renewable energy and buy it at a fixed price within their supply area.
• grid operators must not only extend the grid, but also optimize and enhance the existing grid. Failure to comply with this can lead to claims for damages by anyone willing but unable to feed-in. (GWEC: Germany, 2009)

Spain is Europe’s second largest wind energy market, both in terms of total installed capacity and in terms of new installations; ranking Spain third in the world in cumulative capacity installed, fifth in 2008 installations, directly behind Germany in both categories[8].  With 16,754 MW of total installed capacity, new installations in 2008 totaled 1,609 MW[9], maintaining pace with previous years. The developments in 2007, with over 3.5 GW of new capacity installed, provided an exception as pending regulatory change brought about a higher than usual installation rate.  In 2008, wind energy generated more than 31TWh, delivering more than 11% of the country’s electricity demand. (GWEC: Spain, 2009)

Spain is home to the world’s largest wind farm owner, Iberdrola, as well as some of the most important turbine manufacturers and developers, who are now involved in wind energy operations around the globe.  The wind energy sector contributes more to the country’s GDP than any other industry, according to a study entitled The Macroeconomic Impact of the Wind Energy Sector in Spain, published by the consultancy Deloitte in 2008.  The Spanish wind industry exports equipment worth 2.5 billion Euros every year, invests around €200 million in research and development activities and has created more than 40,000 jobs, including indirect employment and employment create by a large Spanish export industry producing components for the global wind market. (GWEC: Spain, 2009)

Spain’s current tariff system offers different levels of tariffs depending on the technology and on the size of the installation. According to Spanish law:

• the power producer can choose between a fixed price and a premium added to the market price. The choice is revisited yearly allowing a switch if desired.
• the electricity distributor has an obligation to buy electricity produced by renewable sources at the defined price and the National Commission of Energy (CNE) performs the settlement of costs incurred by distributors.
• the costs of the renewable energy electricity generation are taken into account for the annual calculation of the electricity price, thereby ensuring that the additional cost to consumers is proportional to their electricity consumption. (GWEC: Spain, 2009)

New legislation entered into force in 2008 provide a structure similar to the old system, with a choice between fixed tariff and fixed premium, but with less favorable tariffs and a cap and floor mechanism for the fixed premium option.  This new system aims to protect operators of renewable energy installations from excessively low market prices, and, on the other hand, eliminate the premium when market prices are deemed high enough to cover generation costs. (GWEC: Spain, 2009)

The 2008 market was much more balanced than in previous years [with a] group of ‘second wave’ countries emerg[ing to] provide real momentum to the surge in wind energy. Italy added 1,010 MW to reach a total of 3,736 MW of installed capacity; France added 950 MW to reach 3,404 MW and the UK added 836 MW to reach 3,241 MW… Ten EU Member States – over one third of all EU countries – now each have more than 1,000 MW of installed wind energy capacity…

[In addition, a] distinct ‘third wave’ became visible for the first time in 2008 as the new EU Member States had their strongest year ever. Hungary doubled its capacity to 127 MW and Bulgaria tripled its capacity from 57 MW to 158 MW. Poland, one of the fastest growing younger markets, now has 472 MW up from 276 MW at the end of 2007. Outside the EU Member States, Turkey tripled its wind energy capacity from 147 MW to 433 MW. In terms of offshore wind energy, 357 MW of capacity was added in 2008, to reach a total of 1,471 MW. Nearly 2.3% of total installed EU capacity is now offshore. (GWEC: EU, 2009)[10]

Mainstream Renewable Power

Mainstream Renewable Power is a renewable energy company based out of Ireland that was founded in February 2008 by Dr. Eddie O’Connor, former CEO of Airtricity, and Fintan Whelan, former Corporate Finance Manager of Airtricity (Airtricity is an Irish based renewable energy company that sold its North American business unit in October 2007 and the remainder of the company in January 2008). (Mainstream: About Us, 2009)

[Mainstream’s] vision is of thriving economies and communities liberated from the restrictions of fossil fuels, using renewable energy as their mainstream source of power… [and their mission is t]hrough the passion and imagination of our people, we work together with partners and communities to deliver a successful business that accelerates global progress towards a sustainable future. (Mainstream: Vision and Mission, 2009)

Major accomplishments since 2008 include:

• Set up offices in Berlin, Chicago, Cape Town, Dublin, London, Santiago and Toronto.
• Identified and recruited some of the most talented and experienced teams in the industry.
• Established its board to include chairman, Fintan Drury, Sir Roy Gardner, former head of Centrica, Brendan Halligan of Sustainable Energy Ireland and Mark Brown of Barclays Capital.
• Raised €72 million in equity including €20 million from Barclays Capital in return for a 14.6% stake in the company.
• Raised €26 million in corporate mezzanine debt by private placement with Dolmen Stockbrokers.
• Identified potential partners in key markets. (Mainstream: About Us, 2009)

Notable business transactions since February 2008:

• Signing a $1 billion deal to build wind farms in Chile – November 6, 2008.
• Awarded 360MW offshore wind site in Scottish Waters – February 16, 2009.
• Signing CAD$840 million deal to build wind farms in Canada – March 12, 2009.
• To build 500MW in South Africa by 2014 with Genesis Eco-Energy – March 19, 2009. (Mainstream: News Releases, 2009)

Mainstreams third transaction announcement, regarding the future construction of wind farms in Canada was the major driver in selecting them as the company of focus for the European region.  For this business agreement is extremely close to home for staff and students of the University of Lethbridge.

On March 12, 2009 Mainstream Renewable Power announced the signing of a CAD$840 million joint venture deal with Canadian wind farm developer, Alberta Wind Energy Corporation (AWEC) to build an initial portfolio of over 400MW of wind energy plants in Alberta by 2013. The joint venture company plans to have the 46MW Old Man River project, located in the Pincher Creek area of Alberta, ready for construction in late 2009 with the goal of being operational in 2010, while the 62MW Windy Point Wind Farm is due to be fully operational by 2012. (Mainstream: News Releases: Mainstream signs…, 2009)

Mainstream’s Chief Executive, Dr Eddie O’Connor said, “Our strategy is to ‘think globally, deliver locally’ and I believe this is key to our success. We identify local partners with great projects and they leverage from our global strength in areas such as Project Finance, Construction and Procurement so that together we can deliver projects faster and more cost-effectively” (Mainstream: News Releases: Mainstream signs…, 2009).

Stewart Duncan, President and CEO of AWEC commented, “This is great news for Alberta. Demand for electricity in the area is growing, while fossil fuel generating stations are nearing the end of their life and will require decommissioning or refurbishment.  A recent forecast by Alberta’s Electric System Operator indicated that Alberta will need an additional 5,000MW of generation by 2017.  Furthermore, Southern Alberta has some of the best wind sites for power generation anywhere in onshore North America” (Mainstream: News Releases: Mainstream signs…, 2009).

Sherra Zulerons, Mainstream’s Country Manager for Canada commented, “Getting connected to the transmission system can be a major obstacle for new wind generation in Alberta.   All of our projects have already obtained, or are in the process of obtaining grid connection agreements. This is a major plus” (Mainstream: News Releases: Mainstream signs…, 2009).

This is a huge step in the progression of renewable energy in the fossil fuel dominated Province of Alberta, and thus the entire nation of Canada. In addition to the Southern Alberta corridor providing great potential for wind energy projects, Mainstream is also currently pursuing possible projects in Northern Alberta and Northern British Columbia.

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The Asian Perspective

The growth in Asian markets has been breathtaking, and nearly a third of the 27GW of new wind energy capacity added globally in 2008 were installed in Asia (Global Wind Energy Council)[11]. When it comes to wind power in Asia, there are two main countries that that are leaders in wind power – China and India.

China and India have a combined population of 2.5 billion people and are two of the world’s worst culprits when it comes to global pollution.  “The rapidly expanding economies of China and India are showing a swift increase in CO2 emissions.  China, which is already the second largest polluter, has increased its emissions by 33 percent… while India’s emissions have grown 57 percent” (World Bank). However, both China and India are making conscious efforts to reduce their impact on the global environment.  One of the ways to do this is by investing in wind-energy generation sites as a source of new electricity demand.

Another Asian country that is actively harnessing wind power is Japan.  Japan’s growth in wind energy has nearly equaled that of China’s; however, “severe weather conditions are constraining growth of the Japanese wind market” (Global Wind Energy Council).  It is for this reason that we will be looking at China as the major Asian market for wind power.

China – Wind Energy Potential

The greatest potential for wind power in China occurs in two major areas of the country.  Wind power projects are mainly distributed in the northern part of China bordering Mongolia and along the coastline.  “The distribution of wind energy resource and electric load are not well matched, the best areas with rich wind energy potential and plenty available land are in the north and west China, but also no electric load centers close to wind sites, wind farms [are] usually located at the end of weak power grid. Along the coastal areas and offshore, load centers are close to the wind site, but due to the high density of population, available land for wind project is limited” (Pengfei).

The China Academy of Meteorological Sciences estimates that China has a potential of 253 GW at 10m height.  Also, offshore wind energy resource along the coast of eastern China, may be three times higher than that of mainland. The total estimated potential is 750 GW.[12]

China’s government is actively trying to reduce their conventional means of producing electricity. The Chinese government has set a National Mid and Long-Term Development Plan, which the goal is to increase non-hydro renewable electricity production to 3% by 2020.  In order to obtain this goal, China has created the 10 GW-Size Wind Base Program. The 10 GW-Size Wind Base Program is as follows: “The bureau [National Energy Administration] selected six locations from the provinces with the best wind resources: Xinjiang, Inner Mongolia, Gansu, Hebei and Jiangsu. Each site will have more than 10 GW of installed capacity by 2020” (Global Wind Energy Council).  Because one of China’s goals is to significantly increase wind power, incentives to join the wind power revolution are directed to local manufacturers. Policies to stimulate domestic manufacturing have been set in place:

In August 2008, the Ministry of Finance issued another incentive policy on funding support for the commercialization of wind power generation equipment. According to this regulation, for all the domestic brands (with over 51% Chinese investment) the first 50 wind turbines over 1 MW will be rewarded with RMB 600/kW (60 Euro) from the government. The rule specifies that the wind turbines must be tested and certified by China General Certification (CGC), and must have entered the market, been put into operation and connected to the grid. The regulation further requires that the rewarded turbines must use domestic manufactured components and share the awards proportionate with component manufacturers.

This new policy has two ground-breaking implications. It is the first time that the government gives subsidies to renewable energy manufacturers and the first time that there is a link between a stimulus policy and a testing and certification system. This policy will have a significant impact on the future promotion of China’s domestic industry’s technology innovation, improving competitiveness and building domestic branding in the long run. (Global Wind Energy Council)

With this incentive to stimulate domestic manufacturing, it in itself is also a barrier to foreign firms trying to enter the market.  With the various incentives for entry into the market, competition is inevitable leading to a decrease in the supply deficit.  The largest constraint that is faced by the Chinese government is the ability for wind generated electricity to be tapped into the existing grid system:

Among wind farms currently in operation, a great number have only limited access to the grid. According to the Renewable Energy Law, renewables should be given priority access to the grid, yet the rule is not being followed due to the physical constraints of grid capacity. In the past, new wind projects were spread throughout the country and close to grid connections. In recent years however, with the boom in wind development, most of the new wind farms are located in north-west China, where the existing grid structure is weak. (Global Wind Energy Council).

Goldwind Science and Technology Company

Goldwind Science and Technology is the largest domestic turbine manufacturer in China and one of the ten largest in the world.  Goldwind is located in the Xinjiang autonomous region produces various sizes of wind turbines in batch production.  Goldwind uses 95% Chinese made key components including: blades, gearbox, generator, yaw mechanism and control system. “We [Goldwind] are engaged in manufacturing and marketing large-sized wind generator sets; introducing and applying wind generating technology; making and selling parts of wind generating sets; providing consulting service in building and operating wind generating plants; building and operating middle-sized wind generating plants” (Goldwind).  Goldwind’s mission is to “preserve white clouds and blue skies for human beings and preserving more resources for the future”.

Since Goldwind is fully Chinese-owned with about 55% ownership being from the state, they possess a key firm specific advantage compared to foreign firms trying to enter the market. This allows the company to receive the government incentives and subsidies mentioned above. Goldwind also has bright plans for their future. Their vision is to make the transition from “Goldwind of China, to Goldwind of the world”. They plan to have worldwide international cooperation as well as to have an international research and development organizations arrangement. They also believe they can manage an international wind turbine supply and distribution chain.

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The North American Perspective

North America is among the world’s largest consumers of electricity – since the turn of the millennium over 4,000 billion kilowatt hours are required annually to power one of the world’s largest-trio of economies (Energy Information Administration 2008).  In fact, between 1970 and 2000 “total electricity demand grew by 3.3 per cent annually, very close to the actual GDP growth of the OECD nations” (Hunt 2007).  Due to such incredible demand for electricity there has been incredible growth in the region’s energy industry.  This section is dedicated to exploration of the wind industry within North America with specific focus on the countries of Canada and the United States of America (USA).  Mexico does not currently have a meaningful wind energy sector and therefore will not be discussed at any great length.

It has only been within the last ten years that North American has embraced the capabilities of wind energy that are abundantly available.  According to the Global Wind Energy Council (GWEC) in 2008 North America experienced the largest growth in new grid capacity from wind generated sources[13].  Onshore development has been the largest growth sector in North America.

In terms of recent industry growth 2007 has been the most productive to date for bringing renewable energy sources online.   This is confirmed by Price Waterhouse Coopers, one of the big-four accounting firms, who reported that in 2008 wind power had been the principal focus of deal activity^[14] in the North American energy sector “accounting for the majority of the value (57%) of all renewable energy deal making” (PWC 2008).  The report indicates the total overall value of such deals has dropped to total number of deals has increased; a 40% drop in the overall value but an increase of 74% in total deals^[15].

Canada

In terms of potential for wind energy it has long-been known that Canada is one of the top countries with such an ability to capture “free energy” – however Canada has not leveraged such location advantages to become a world leader in the industry.  In fact, according to CanWEA only about 1% of all electricity produced in Canada comes from wind (2008).

According to the Global Wind Energy Council Canada is now among the top twelve nations to diversify their energy sources to include wind.  In 2008 the total installed capacity finally exceeded 2000MW almost the equivalent of one-percent of total national electricity demand. (GWEC 2009)

Traditional sources of energy in Canada have been coal, natural gas, nuclear and hydro-electric – each of which still has considerable influence on energy markets’ procurement strategies.  There is proof of this in the fact that until recently Alberta had a cap on total wind-energy production at less than 1000MW.  However, the environmental implications of coal, natural gas and nuclear are making alternatives like wind-power much more appealing for new generation facilities.

Recently the federal government has offered production incentive payments under the ecoENERGY for Renewable Power program.  The program provides a production incentive of 1 cent/kWh for the first 10 years of production on new energy technologies such as wind.  The program was brought into effect at the beginning of 2007 and was budgeted to run until 2011 – however, due to such strong demand for the program all of the funds will be fully allocated by mid-2009. (GWEC 2009)  This suggests the need for greater regulatory stability in such programs to ensure consistency for companies who seek to invest in Canada.

The Canadian Wind Energy Association (CanWEA) released a strategic plan, Wind Vision 2025 – Powering Canada’s Future, which suggests wind energy could supply 20% of the country’s electricity demand by 2025.  The plan outlines approximately 55,000 MW of wind generation capacity which would in turn generate close to $79 billion in investment through 2025.  Due to the recent economic fallout CanWEA has lowered their expectations for wind energy sector growth in 2009, but still expects 650 MW of new capacity to be added.  The five year outlook for the industry expects an additional five-thousand mega-watts to be added to the grid which should help achieve the GWEC’s expected minimum of 12,000 MW of installed wind energy capacity in Canada by 2015. (CanWEA 2008)

There are numerous hurdles to achieving such ambitious targets.  These range from the varying-degree of regulation across provincial jurisdictions to the weak transmission infrastructure.  The ten provinces of Canada comprise different regulatory jurisdictions; many provinces do not have a clearly defined long-term procurement strategy for electricity (GWEC 2009).  Where crown corporations are in charge of electricity procurement they often leave the process to competitive tendering.  In the case of wind-energy such a tendering process can range from hundreds of thousands of dollars well into the millions (CanWEA 2008).  This makes it especially difficult for smaller wind-energy producers to successfully penetrate the market.  Since each province is a separate jurisdiction this also means a long and often redundant permit process.  This duplication and excess regulation makes Canada’s wind power generation sector difficult to enter and does not add to outsiders of the transparency of the system.

In addition to this, many provinces lack adequate transmission infrastructure to transport wind from favourable geographic regions to those with high-demand for electricity.  According to the Canadian Electricity Association there are more cross-border connections with the United States than there are across provincial boundaries.  This makes it especially difficult to develop large national-projects.  Since economies of scale are required to stabilize investment and offer adequate long-term returns such hurdles make Canada a less appealing destination for transnational corporations to invest.

In terms of cluster development – there is evidence to suggest generating regions are in order of largest developments: Quebec, Ontario and Alberta.  In terms of component manufacturing there is little evidence suggesting a strong domestic industry or cluster development of related industries in any one area.  Most corporate headquarters are based out of Ontario because of the Toronto Stock Exchange (TSX) and the related access to capital.

The United States

The current electrical system in the United States is comprised of “approximately 200 investor-owned utilities, 70 large municipal and federal or state systems, and 50 rural generation and transmission cooperatives supply power for more than 3,000 local distribution companies across the country.” (DOE 2008)  Such a large energy industry is required to power the world’s largest economy.  It has only been recently that the United States has rapidly increased the size of their wind energy industry.  In fact, 2008 was the biggest year in wind energy with an increase of almost 50% in one year – which represents over 8000MW of new capacity potential (GWEC 2009).

Since the beginning of 2009 the United States has taken an impressive stance towards renewable energy sources under the Obama administration.  To encourage demand for clean electricity twenty-six state governments have implemented Renewable Portfolio Standards (RPS) which set minimum levels for ‘renewables’ in the electricity system.  The federal government has also just set a National Renewable Energy Standard in which 25% of demand will come from wind energy sources by 2025 (USA 2009).  In fact, under the American Recovery and Reinvestment Act (ARRA) there are numerous measures aim at developing and expanding the wind energy industry.  Under the ARRA numerous incentives have been created making it especially favourable for some wind companies to invest in new projects.

According to the American Wind Energy Association the ARRA extends the existing Production Tax Credit (PTC) for wind energy for three years, through until 2012 and offers the temporary option to claim 30% investment tax credit in lieu of the PTC.  This is an important development, as it will allow developers of wind energy to lease or sell such facilities without losing the potential for tax credit (AWEA 2009).  The new regulatory environment also mandates the creation of close to two-billion dollars in Clean Renewable Energy Bonds to encourage the creation of electricity from renewable sources including wind.

According to PWC there were 15-utility scale wind turbine manufactures in the USA in 2008 – this represents significant jump from only five in 2005.  PWC also reports the average wind turbine installed in 2007, was on average 1.6 MW of capacity almost twice as powerful as the average wind turbine installed in 2000 which was 0.76 MW.  According to the Global Wind Energy Council the USA wind industry employs more than 85,000 workers[16].  They also report that since 2007 over “70 manufacturing facilities have opened, been expanded or announced, including 55 in 2008 alone.”  This allows for almost fifty percent of all turbine components used in the country are made in the USA.  This is evidence that a wind-energy cluster has developed in recent years.

TransAlta Wind

To further understand the North American context, this paper seeks to provide readers with an overview of one major company that is considered an industry leader.  This section will describe Transalta as a firm operating within the North American wind industry.  This will include a detailed overview of Transalta as a firm; from company history to their current vision and strategy.  Consideration will be given to the firm’s operating environment –including industry alliances, the regulatory environment and barriers to commerce.

The company Transalta provides an excellent case example of a firm that operates throughout North America offering both traditional energy sources, like coal and natural gas, and renewable energy sources like wind and hydroelectric.  With a founding history as an integrated and regulated Alberta energy supplier Transalta has principally had a core focus on coal-generation.  Since 1996 Transalta has successfully transformed their generation portfolio to include wind – and has grown to become Canada’s largest investor-owned wholesale power generator and marketing company.  In 2008 the firm had approximately CAD$3 billion in annual revenue, $7 billion in assets, with power plants in Canada, the U.S. and Australia.  In 2008 alone the company generated close to 50,000 GWh of energy enough to power over seven-million homes. (Transalta 2009)

The Transalta Wind division is a result of mergers and acquisitions in the Alberta sustainable energy market.  The principal assets of Transalta Wind were originally formed after the acquisition of Vision Quest.  The company had 67 wind turbines in southern Alberta and held licenses in provinces across the country. The wind division grew further after a successful joint venture between The Chinook Project Inc. and Canadian Enhanced Energy Development Ltd. which was acquired by Transalta in 1996[17].

Vision and Strategy

Transalta would be considered a vertically integrated firm involved in host market production.  The entire company operates through two principal entities: TransAlta Generation Partnership, a general partnership, and TransAlta Energy Marketing Corp.  This means they are involved in almost every step of the energy generation process and caters directly to the needs of the market in which it is located.  In the case of traditional energy generation this means the firm is involved in the mining of coal reserves, the conversion of coal to alternating current (AC) energy, and the marketing of energy.  This is not to suggest Transalta is responsible for every step of the process to the end consumer.  In fact there is energy retailers involved in electricity transmission and end-customer delivery such companies includes Fortis and Enmax.  In the case of wind energy Transalta commissions local projects which then set up power-purchase agreements that sell to such electricity retailers.

Currently Transalta has a diversified portfolio of assets in both North America and Australia.  In terms of wind resources the firm has more than 200,000 acres of land that are currently under lease, option, or negotiation which hold potential for more than 1,000 megawatts of wind energy development.  In Canada alone properties currently in production include the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Prince Edward Island.   As Transalta continues to grow they are adding more turbines to their portfolio that are larger with greater energy potentials.

It is evident that Transalta Wind has principally held Canadian assets in the province of Alberta, but as they continue to grow they have acquired assets further abroad in the United States, Mexico and Australia[18].  It is important to note, Transalta has not acquired any wind-related assets outside of Canada and recently Transalta sold all assets in Mexico.  It is no wonder that Transalta has chosen Alberta as the principal location to develop their wind energy portfolio.  It is generally accepted that Alberta has one of Canada’s best wind resources with a potential greater than 60,000MW.  However, Alberta currently only generates about 2% of its annual electricity supply from the wind (Energy Information Administration, p.3).

Industry Alliances

Transalta has recognized the importance of aligning the interests of energy producers in order to have an adequate voice in regulatory matters.  In terms of sectoral involvement Transalta is active in many ways:

• Canadian Wind Energy Association (CanWEA) which represents the wind energy community across Canada.   TransAlta Wind involvement with the association stems back to the association’s founding and continues on today. All three founding members of TransAlta Wind served as CanWEA Presidents.  CanWEA provides leadership and support to all wind energy producers; in addition CanWEA helps guide the industry by further developing its leading edge members.
• The Clean Air Strategic Alliance (CASA) is a non-profit organization of stakeholders committed to developing and applying a comprehensive air quality management system in Alberta.
• Independent Power Producers Society of Alberta (IPPSA) and British Columbia (IPPBC) are provincial organizations that were established prior to deregulation (in Alberta) and work to maintain an open energy market supporting by multiple buyers and sellers; and to develop a cost-effective independent energy service in BC.  Transalta Wind has been involved with the IPPSA since its inception.

Transalta is involved in the North American wind-energy industry principally in the province of Alberta – but has power-generation assets throughout Canada and the United States.  This diverse portfolio of energy-sources gives Transalta the ability to expand their wind capabilities relatively easily across North America.  This is because the CAGE distances have already been bridged by the firm in many ways.  Since they are already operating in both jurisdictions they have covered the administrative barriers to commerce.  The United States division is capable of handling new wind-energy generation assets especially under the new favourable investment conditions that have been unveiled under the APPA.

As discussed earlier, wind is based on location and therefore the closer generation projects are built to their intended source of consumption to more efficient they are – this means Transalta must be willing to expand beyond just Alberta.  Geographically Transalta is able to leverage their strategic position in the North American market in many ways.  For one, there is greater north-south connection between Canada and the USA when compared to interprovincial connections; which indicates willingness for electricity export from Canada to the USA.  However because of the lack of infrastructure this would require great initial investment to bridge such a gap.

Regulatory hurdles remain among the largest concern for Transalta’s expansion into new areas.  Areas like British Columbia and Saskatchewan are regulated energy markets and are prone to fluctuations in wind-energy market growth because power-purchase agreements (PPA’s) with the regulated providers are negotiated on a staggered basis.  This means the firm must be ready to tender for projects in a fashion that does not allow for controlled and strategic growth.

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Conclusions and Industry Outlook

This paper has demonstrated the power of the wind-energy industry.  We have covered many things – beginning with the historical development of wind as a viable electricity source.  We have seen the origins of harnessing wind power for milling flour and irrigating crops.  We have discussed the different types of wind turbines currently in use in commercial applications.  In addition we have demonstrated how location advantages play a crucial part of industry development.

The main focus of this paper has been on the TRIAD economic regions – including the European Union, Asia-Pacific and North America.  This discussion has offered valuable information from countries within each region and has demonstrated a fundamental global shift in the industry over time.  Historically the wind energy industry was based in Europe, but in the last ten years this has shifted to include both North America and Asia.  Now there seems to be consistent growth in all three economic zones representing an overall stability in the industry.  We found that governments play one of the most important roles in the wind energy sector.  Each regional perspective demonstrated the importance of government involvement in the industry – from creating a regulatory framework for which firms operate within to providing incentives to encourage wind-energy production and investment.

Europe has enjoyed the benefits of being the first-mover into an industry with endless potential.  The EU countries alone continue to place Europe as the world leader in cumulative installed capacity, however this position is at risk.  2008 showed a strong emergence of domestic wind energy suppliers in nations worldwide that Europe had once enjoyed the dominant or only position in the market.  In some of these countries intellectual property rights are less rigorously upheld, which means European exporters must continually increase innovation in order to stay ahead of the market and remain the global gold standard for the wind energy industry.

China has the fastest growing wind energy market in Asia.  Incentives given for domestic firms (51% Chinese owned), however the wind turbines must be tested and certified by China General Certification and requires that the rewarded turbines must use domestic manufactured components.  The largest barrier is being able to tap into the existing grid system – new wind farms are located in north-west China where the grid structure is weak.  Goldwind is the largest domestic turbine manufacturer in China and one of the ten largest in the world. Goldwind is 100% Chinese owned, with 55% state ownership therefore they able to receive government incentives and subsidies.  The government involvement in Goldwind has allowed the firm to capture significant domestic market share.

North America has been one of the largest growth areas since the mid 2000s.  Both the United States and Canada have added close to 9000MW in 2008 alone – this represents close to a doubling in capacity in the USA.  Because of the new wind-generation capacity USA finally surpassed Germany in terms of annual growth for the first time ever.  This represents a major global shift in the wind-energy industry.  The domestic environment has also been conducive to new industry growth.  In the USA under the America Reinvestment and Recovery Act (ARRA) incentives have been extended to offer either production or investment credits for up to 30% the total project value.  In Canada the ecoENERGY for Renewable Power program is a federal initiatives designed to provide a production incentive of 1 cent/kWh for the first ten years of production on new wind technologies.  Such incentives provide valuable ways to spur investment in the industry.  However these programs must provide stable long-term funding for firms to avoid boom and bust cycle of the industry as such programs expire.  In terms of industry growth in North America the potential is virtually endless as the region is home to some of the best wind-power areas on the globe.

Transalta Wind provided a unique example of a former Albertan regulated energy-provider that has grown to become the largest wind-energy provider in all of Canada.  Transalta is an example of how traditional energy players can transform to become competitive wind-energy providers.   As a vertically-integrated firm Transalta provides an example of how regulatory jurisdictions can impact firm strategy.  In this particular case Transalta has been limited to providing Alberta with wind-energy and has been reluctant to expand to different geographical areas because of the varying regulatory hurdles and requirements of transmission infrastructure by province.

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Recommendations

1. Wind energy is an intermittent power source.  This means that because wind is an erratic and unpredictable energy source, it is not possible to generate a steady level of production.  This can sometimes be perceived as a major downfall to wind energy production as a competitive technology but the fact is “while single wind turbine can be quite intermittent, a large wind farm spread over a geographically diverse area will as a whole rarely stop producing power altogether” (Diesendorf 2007).  The best solution of this problem is to determine some form of average output and to develop the project accordingly so that in normal, expected varying weather conditions, the wind farm will be able to meet at least the minimum power production levels needed to serve demand.  Alternatively, this issue could be solved by developing innovative ways in which to store the produced energy thus eliminating the problem of wind energy being intermittent and unreliable.
2. One area where we hope wind energy can grow is to have the ability to correlate their operations with all other sources of electricity production.  Since wind can be sporadic and unpredictable we feel that Supervisory Control and Data Acquisition (SCADA) would be extremely beneficial to the wind industry.  “SCADA refers to a system that collects data from various sensors at a factory, plant or in other remote locations and then sends this data to a central computer which then manages and controls the data”  (TechFAQ 2009).  We hope that in the future, when wind speeds in one area become strong, through SCADA, a message will be sent out to all energy producers (including coal, hydro and natural gas), to coordinate their production accordingly.  This will ensure maximum efficiency while minimizing the impact on the environment.  This will allow for the best combination of energy generation sources. As well, SCADA will allow for real-time production, in the most efficient way possible.
3. Another area of importance is the sharing of intellectual property with developing countries.  It is important for developed countries to promote the benefits of wind energy globally to ensure new generation capacity has a minimum input from wind-sources.  Research and development for wind energy is quite costly, and by sharing such information it will allow for all countries to take a proactive approach – even though wind may not be the most affordable means of producing electricity it does provide a renewable and essentially free source once implemented.  We feel that the most effective way to encourage growth in these countries is by using joint initiatives.  This way the developing countries have a stake in the project and their economies will experience some positive economic fallout as a result.
4. Another recommendation that we have is to implement funding for education programs. We believe local conferences, seminars and dedicated education programs would be most beneficial.  We would focus these programs on educating the population on why wind energy is a good alternative, how it works, what can you do to become a user of wind energy, and how this alternative can eventually lower your energy costs.  Another important way to advance to industry would be to educate people on the requirements of specialized knowledge in the wind industry. The wind industry employs micro-climatologists, engineers, construction, maintenance people, retailers, and the list goes on.  Government funding for education programs as well as research and development initiatives will no doubt aid in the overall industry growth.
   

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Appendix 1: COMPONENTS of a Wind Turbine

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Appendix 2: Increasing Size and Capacity of Wind Turbine Size

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Appendix 3: Global Regional Wind-Capacity Breakdown  – 2008

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Appendix 4: Chart on European Union’s Energy Mix in 2008

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Appendix 5: Total Installed Capacity (MW) of TRIAD Regions 2000 – 2008

Source of information: (Global Wind Energy Council, 2009)

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Appendix 6: Average Wind Speeds in TRAID Regions

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Appendix 7: Wind Energy Jobs in the USA

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Appendix 8: TransAlta Wind Milestones

• 1997: First new power generation on the Alberta electric grid, two – 600 kW turbines
• 1998: Added two additional 600 kW turbines
• 2000: Installed 16 additional 660 kW turbines
• 2001: Installed 12 additional 660 kW turbines to power Calgary’s “C-Train” under the Ride the Wind program and installed 46 additional 660 kW turbines
• 2002: Transalta purchases 100% interest in Vision Quest and installed two 660 kW exploratory turbines
• 2003: Constructed Canada’s single largest wind farm of the time, 75 MW at McBride Lake, Transalta officially becomes one of Canada’s largest wind power producer
• 2004: Installed 38 new 1.8 MW wind turbines at the Summerview wind farm in southern Alberta
• 2007: Installed 32 – 3.0 MW wind turbines at Kent Hills in New Brunswick adding 96 MW to the grid
• 2008: Announces 66 MW Blue Trail wind farm project in southern Alberta and announces a 66 MW expansion to its Summerview wind farm
• 2008: The Kent Hills, New Brunswick wind farm begins commercial operation supplying up to 96 MW of power.  This is the first wind-generated power delivered commercially in New Brunswick.

Table 1: Transalta Wind Generation

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Appendix 9: Complete Map of Transalta Operations

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Works Cited

History of the Industry and Technology

Gipe, Paul. “Wind Power; Renewable energy for home, farm, and business” Copyright 2004. Editor: Chealsea Green Publishing Company, Vermont

Europe

(EWEA) European Wind Energy Association. “Wind Energy Gives Europe a Competitive Advantage, Says EU Energy Commissioner.” 18 Mar. 2009. 9 Apr. 2009 <http://www.ewea.org/index.php?id=60&no_cache=1&tx_ttnews[tt_news]=1465&tx_ttnews[backPid]=1&cHash=29a0316e5b>.

(GWEC) Global Wind Energy Council. “Regions: (EU) European Union.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=127>.

(GWEC) Global Wind Energy Council. “Regions: Germany.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=129>.

(GWEC) Global Wind Energy Council. “Regions: Spain.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=131>.

Mainstream (Renewable Power). “About Us.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/About-Us.html>.

Mainstream (Renewable Power). “New Releases: Mainstream signs CAD$840 million deal to build wind farms in Canada.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/Mainstream-signs-CAD%24840-million-deal-to-build-wind-farms-in-Canada.html>.

Mainstream (Renewable Power). “New Releases.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/News-releases.html>.

Mainstream (Renewable Power). “Vision and Mission.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/Vision-And-Mission.html>.

Asia

Brower, Micheal, Bruce Bailey, and John Zach. “New High-Resolution Wind Resource Maps of China.”

Global Wind Energy Council. 10 Apr. 2009 <http://www.gwec.net/index.php?id=28>.

Goldwind. 11 Apr. 2009 <http://cn.goldwind.cn/en/index.asp>.

Haiyan, Qin. “Large Potential Market of Wind Power in China.” Chinese Wind Energy Association. 11 Apr. 2009 <http://www.adb.org/Documents/Events/2005/Prega-Subregional-Workshop/day1-presentation-haiyan.pdf>.

Pengfei, Shi. “Booming Wind Power Market and Industry in China.” Chinese Wind Energy Association. 11 Apr. 2009 <http://www.ontario-sea.org/Storage/26/1825_Booming_Wind_Power_Market_and_Industr_in_China.pdf>.

World Bank. China and India show rapid increase in global warming emissions. 10 Apr. 2009 <http://news.mongabay.com/2006/0510-worldbank.html>.

Yanqin, Song. “Renewable Energy in China.” 5 June 2008. Energy Research Institute. 11 Apr. 2009 <http://www.juccce.com/documents/Facts/Energy/YANQIN_Session19_ACEF2008.pdf>.

North America

AWEA. “Summary of the American Recovery and Reinvestment Act (ARRA) of 2009:Provisions of Interest to the Wind Energy Industry.” American Wind Energy Association . March 2009. http://www.awea.org/legislative/pdf/ARRA_Provisions_of_Interest_to_Wind_Energy_Industry.pdf (accessed April 10, 2009).

CanWEA. “Windvision 2025 Powering Canada’s Future.” Canada Wind Energy Association. 2008. http://canwea.ca/images/uploads/File/Windvision_summary_e.pdf (accessed April 05, 2009).

DOE. “Report.” 20 Percent Wind. Edited by Department of Energy. Oct 2008. http://www.20percentwind.org/report/Chapter6_Wind_Power_Markets.pdf (accessed April 05, 2009).

Energy Information Administration. “International Energy Annual 2006.” World Net Energy Consumption 1980-2006. December 2008. www.eia.doe.gov/pub/international/iealf/table62.xls (accessed April 10, 2009).

GWEC. Global Wind Energy Council. 2009. www.gwec.net (accessed April 05, 2009).

Hunt, Colleen. “Electricity in the 21st Century.” Canadian Nuclear Association. 2007. http://www.cna.ca/english/pdf/Articles/Electricityinthe21stCentury.pdf (accessed April 02, 2009).

PWC. “Renewable Deals 2008 Annual Review: Mergers and acquisitions activity within the global renewable energy market.” Price Waterhouse Coopers. December 2008. http://www.pwc.com/extweb/pwcpublications.nsf/docid/40403CD74245F764852575520060DF25/$File/RenewablesDeals2008.pdf (accessed April 05, 2009).

Transalta. Transalta Wind. March 2009. http://www.greenenergy.com/ (accessed April 05, 2009).

USA. “Wind Energy for A New Era – An Agenda for the President and Congress.” New Wind Agenda. 2009. http://www.newwindagenda.org/ (accessed April 10, 2009).

Other Sources

Diesendorf, Mark. “The Base-Load Fallacy.” Institute of Environmental Studies. August 2007. www.sustainabilitycentre.com.au/baseloadfallacy.pdf (accessed April 09, 2009).

Jacobson, Archer and. k1-Hybrids: The Power of Wind. 2009. http://www.k1hybrids.com/reference/powerofwind.htm (accessed April 13, 2009).

TechFAQ. What is SCADA? April 2009. <http://www.tech-faq.com/scada.html>. (accessed April 13, 2009).

[2] Almost all horizontal axis wind turbines use forced yawing, i.e. they use a mechanism which uses electric motors and gearboxes to keep the turbine yawed against the wind.

[3] See appendix 1 for a complete picture and diagram of a wind turbine assembly

[4] See appendix 3 for a table on world regional wind-capacity breakdown

[5] See appendix 4 for a chart on European Union’s energy mix in 2008

[6] See appendix 3 for a table on world regional wind-capacity breakdown

[7] See appendix 3 for a table on world regional wind-capacity breakdown

[8] See appendix 3 for a table on world regional wind-capacity breakdown

[9] See appendix 3 for a table on world regional wind-capacity breakdown

[10] See appendix 3 for a table on world regional wind-capacity breakdown

[11] See appendix 5 for a table of capacity growth between 2000 and 2008

[12] See appendix 6 for a map of average wind speeds in the TRIAD regions including mainland China

[13] See appendix 5 for a table of capacity growth between 2000 and 2008

[14] According to the PWC report this includes deals relating to manufacturers and developers of wind technologies (for example, wind turbine manufacturers and wind technology firms).

[15] According to PWC in 2008 the average deal value was approximately $85 million; average number of deals was 74.

[16] See appendix 7 for wind energy jobs in the USA

[17] See appendix 8 for a detailed timeline of the major corporate milestones of Transalta Wind.

[18] See appendix 9 for a complete map of Transalta operations