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OTTAWA, Ontario, CA, August 31, 2005 (Refocus
Weekly)
Federal and provincial governments in Canada
should consider a range of fiscal instruments to promote long-term
reductions in carbon emissions, which would also “hasten the
adoption of cleaner renewable technologies, such as wind turbines,
geothermal energy, tidal power and biomass for electricity
generation,” says a federal advisory agency.
The National Round Table on the Environment & the Economy
recommends a combination of subsidies, credits, user fees and taxes
to encourage long-term reductions in GHG emissions and to promote
key energy technologies. Its Task Force on Ecological Fiscal Reform
& Energy, in the 133-page ‘Economic Instruments for Long-term
Reductions in Energy-based Carbon Emissions,’ makes 418 references
to green power, but adds that there also is significant potential
from Green Heat technologies.
“Promoting a long-term, coordinated strategy for long-term,
energy-based carbon emission reductions will require coherent and
cohesive policy reforms on many fronts, as well as engagement from
every level of government,” it explains. Canada’s current installed
capacity of low-impact green power is 2,300 MW with annual output of
12,100 GWh (of which small hydro is 1,800 MW and 9,460 GWh), but the
country’s technical potential is 68,500 to 336,600 MW of capacity
and 244,700 to 1,210,400 GWh of supply each year, it explains.
“Renewable energy is expected to assume a growing role in the
world’s primary energy mix under both business-as-usual and
alternative environmental scenarios,” and NRTEE recommends that
governments “support the gathering of timely data on installed
capacity and market activity with respect to emerging technologies.”
Numerous barriers create “a large gap between the technical resource
potential for emerging renewable power and actual installed
capacity,” and the federal government should support long-term
carbon emission reductions through development of emerging renewable
power technologies, by ensuring that its policies are “fully
supportive of, and consistent with, provincial policies in this
area.”
The federal government should implement a broad-based price signal
for carbon emission reductions or supplement provincial renewable
portfolio standards with a national system for trading of renewable
energy certificates, combined with a federally-funded renewable
generation subsidy covering a range of emerging technologies. It
should facilitate implementation of feed-in tariffs “by working with
provinces to develop clear standards for grid access and power
purchase agreements,” noting that feed-in tariffs “are more
effective than other policy measures in promoting distributed
renewable generation, which provides benefits in energy security and
grid stability.”
Canada should also develop targeted measures for non-grid-connected
green heat technologies and expand its program to purchase
electricity generated from emerging renewable power technologies.
To achieve a reduction of 12% in GHG emissions by 2030, Canada must
offer an emissions price of Cdn$10/tonne CO2, or a 24% renewable
portfolio standard, or a subsidy of 0.6¢/kWh renewable generation
subsidy, or a combination of a 24.2% renewable portfolio standard
plus a 0.2¢/kWh renewable generation subsidy, or a 61% increase in
renewable energy R&D.
“Canada has similar or better renewable energy resources than the
nations that are leaders in renewable energy supply,” including
“substantial wind potential and viable sites across the country, a
rich solar resource (Toronto has more sunshine than Berlin, and
Regina more than Tokyo), several thousand potential sites for small
hydroelectric plants and unused biomass potential,” it adds. “A
large and expanding electricity market also offers attractive
opportunities for the deployment of grid-connected renewables,” and
the rapidly evolving energy policy landscape “provides an excellent
opportunity and indeed an exigency for aggressive policy innovation
on emerging renewable power technologies.”
“Such innovation could help solve growing supply, security and
environmental challenges in the short, medium and long term,” and
“aggressive action on renewables would also be a necessary (but not
sufficient) component of a carbon-efficient hydrogen strategy.” The
study reveals a strong case for the effectiveness and efficiency of
economic instruments since current regulations have been tailored to
support large-scale hydro, nuclear and incumbent fossil fuel
technologies, while market prices “do not fully incorporate
environmental externalities, so the environmental advantages of
emerging renewables are not recognized in their price.”
Economic instruments that target the price gap between emerging
renewable energy technologies and incumbent technologies can promote
market penetration, but emerging green power technologies need
policy certainty and durability over the long term to provide
investor confidence. Production incentives should be broadened to
enable a wide choice of emerging technologies, with different levels
of subsidy set for each technology according to the cost difference
that must be overcome, and there was concern that the existing Wind
Power Production Incentive favours centralized production and
ignores the “tremendous potential” for distributed generation to
increase the resilience of the grid.
Total research spending on renewables in Canada in 2001 was $91
million and will increase to $129 million by 2010, but the report
says innovation in emerging renewable technologies “would primarily
come from international sources” and that Canadian R&D alone “will
not be able to shift the supply curve and reduce costs.”
NRTEE was established as an independent advisory body reporting to
governments and its members are appointed by the prime minister.
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