Project Development, Solar, Utility Scale, Wind Power

Sunny Sky but Loonie Shy: Canada’s Peculiar Aversion to Federal Support for Renewable Energy Deployment

When it comes to federal support for renewable energy deployment, the difference between Canada and the U.S. can be summed up in a quote by the late actor Robin Williams: “Canada is like a sleepy loft apartment over a really great party.”

For the U.S. renewables industry, the last decade has been a fete like no other. Installed capacity of wind generation grew six-fold and solar PV seventy-fold. The build-out was made possible by federal support in the form of the Investment Tax Credit (ITC) and 1603B Grant program, covering 30 percent of every project’s cost. In the case of wind, an alternative Production Tax Credit (PTC) providing a 2.2 cent/kWh incentive was also available.

Regretfully, the Canadian government decided not to join the festivities. In fact, Canada remains one of the only large carbon emitters in the world without a federal support mechanism for renewable energy. In large part, that status was due to the pro-fossil fuel policies of former Conservative Prime Minister Stephen Harper and his singular obsession with energy from Alberta’s oil sands.

What is peculiar though is that the renewables industry itself seems similarly disinterested. The Canadian Wind Energy Association admits on its Windfacts website that it abandoned federal lobbying to “focus most of its efforts on provincial policies and programs.” Meanwhile, the Canadian Solar Industries Association does not list any specific federal ask.

Why does the Canadian renewables lobby shun federal support? One explanation is cultural – Canadians are just far too polite to request it. Another is more insidious. Canadian electricity regulations, tax rules and capital markets tend to favor renewables ownership by large integrated utilities. Federal advocacy is thus controlled by companies for whom renewables is not a core business and who might prefer to expend limited political capital on, say, the tricky task of obtaining oil sands pipeline permits.

Whatever the reason, silence is bound to result in disappointment. Apart from offering credit enhancements to certain projects, Canada’s new Liberal Prime Minister Justin Trudeau has not committed any federal money to renewable energy deployment in his policy platform. Instead, federal spending is targeted to research and development and early-stage clean-tech manufacturers.

The recent multi-year ITC and PTC extensions by the U.S. Congress mean that U.S. climate ambition is sure to contrast heavily with that of Canada between now and 2020. As Washington spends billions of dollars on renewables deployment for carbon reductions today, will Canada’s wait-and-see clean-tech strategy be tolerated in a post-Paris world where nations continually size up the action of their neighbors? Likely not.

Beyond improving foreign relations, adopting federal support for renewables deployment could help Canada in other ways. Trudeau has said he wants Canadian provinces to do more to reduce carbon emissions. The U.S. experience has shown that federal support can leverage state resources through the expanding number of states and their municipalities with programs and incentives. And there’s jobs. Given its slowing economy, Canada should recall that renewable energy deployment was a successful part of America’s stimulus and job creation efforts to recover from the recession of 2008 and 2009.

Canada has ample land area along with the solar and wind resources necessary for renewable energy deployment. Its population is concerned about climate change and knows it needs to diversify its energy and economy away from fossil fuels. With the right federal support for renewable energy deployment, Canada can become the rowdy loft apartment that hosts a great after-party. Canadians just need to start asking for it.

Lead image: OTTAWA, CANADA – NOVEMBER 11, 2015: Canadian Prime Minister Justin Trudeau. Credit: Art Babych / Shutterstock.com