Can green energy in Ontario avoid the same fate as Commodore?

In this column in today’s Toronto Star, James Biggar of Leadnow.ca calls on Ontario to, “embrace the green future,” and to avoid becoming the, “Commodore 64 of the world economy, sitting on the trash heap of history.” I agree, but perhaps not for the reasons you expect.

This statement has irony written all over it.  For you see, the Commodore 64 could have been a great Canadian success story.  If you take a look at this history of Commodore, you will see that the original Commodore International Limited was founded by Jack Tramiel in Toronto! It was then a manufacturer of typewriters and adding machines.  After enduring some business hardship, the company was on the verge of something big and then…they relocated to Palo Alto in 1976. In 1977, they launched the PET, in 1981 the Vic20, and in 1982 they introduced the best-selling computer of all time, the Commodore 64.

Ontario’s Green Energy Act is, “part of Ontario’s plan to become a leading green economy in North America.” To succeed, they must learn the lessons of the Commodore 64.  At the time, Palo Alto offered locational advantages to Toronto, and so the company relocated.  Right now, the Green Energy Act creates a lot of artificial fiscal and regulatory comparative advantage for Ontario in the race to develop better green energy technology.  The trick is making sure that the big breakthrough in renewable energy doesn’t happen a few years after the industry packs up and leaves Ontario for a better deal somewhere else, as Ovonic Solar did when they got a better deal from Ontario than they had in Greenville, SC.  To do so, Ontario needs to focus on building real comparative advantage through skills development, superior supply chains, etc. Unlike a fossil fuel industry, renewable energy industries are mobile and so maintaining locational comparative advantage is crucial.

The history of Commodore tells me that Tramiel is, “basically retired and now lives in a house house atop a foothill in Monte Sereno, Calif.” He was able to capture a lot of the benefit from his success, but the place where his business got its start was not.  We absolutely should not let Ontario’s Green Energy Economy go the way of the Commodore 64.

 

7 responses to “Can green energy in Ontario avoid the same fate as Commodore?”

  1. Joel Wood

    Let me see if I am understanding you correctly. So you are essentially saying that the problem with domestic content rules and relocation subsidies (e.g. the Samsung deal) are that the other jurisdictions may use the same policies, so whatever artificial comparative advantage these policies were meant to create are easily negated. Therefore a comparative advantage via other means, that are not as easily replicated elsewhere, is needed (e.g. skilled labour force, transportation infrastructure (the 401), favourable exchange rate (1990s), etc.).

    cheers,

    Joel

  2. Phil

    Silly Economist. Don’t you know that green energy firms, such as a certain amphibian, are purely motivated by altruism and have a higher moral standing than those who work at dirty energy jobs?

    All kidding aside, what definition do you use for a “green job”? Is it self-identified or is it like a Hall of Famer, you know one when you see one?

  3. Jimmy

    I am not an economist but a computer engineer and like most computer engineers we have studied the history of silicon valley. Silicon valley is the epicentre for the IT world because it was the first place to supply the entire supply chain and related services that IT companies need. If I were to start up a IT company I would go to Silicon valley because that is where all the venture capitalist are. Silicon valley became the epicentre because of two reasons, Stanford University produced a lot of engineers, and the Navy and NASA had facilities in the San Francisco area. The Navy and NASA created an artificial demand for integrated circuits 40 years before they were profitable. The FIT program creates this artificial demand, once the industry gets large enough and supply chains are established business will come to Ontario because it offers an ecosystem for solar development that no other jurisdiction offers. For example look at facebook, even though the company started in Massachusetts it is now located in Silicon Valley.

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    […] the frog Can green energy in Ontario avoid the same fate as Commodore? David Roberts and Stephen Gordon are saying almost the same thing about green jobs Twice the […]

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