Industry Welcomes Government Funding for Renewables

Proposed spending by the federal government to support wind energy, hydropower and other renewable energies has received positive support from the domestic industry.

OTTAWA, Ontario, CA, 2001-12-21 [] The Canadian Wind Energy Association welcomes the production incentive proposed in the federal budget. The budget proposes to pay an incentive of C1.2 cents per kilowatt-hour of production, gradually declining to 0.8¢/kWh over a ten-year period, for wind projects installed in the next five years. The cost of the 15-year program will be $260 million. “This is a major kick start for the industry, and shows the federal government is committed to solving emissions and climate change issues in Canada,” CanWEA president Guy Painchaud. “Wind-generated energy is more secure than other sources of supply, such as nuclear or fossil plants, because it is indigenous and distributed widely, providing regional economic benefits while being less vulnerable to disruption. Wind energy also has stable cost, and is not subject to unexpected price changes resulting from changes in fuel cost.” CanWEA says wind energy can deliver 5 percent of domestic electricity by 2010, if supportive government policies are implemented. Globally, wind energy is growing by 32 percent per year and “Canada can now share in this economic boom with other nations,” he says. “The Government has come a long way toward recognizing the key role that rural and urban municipalities play in helping communities contribute to achieving Canada’s economic, social and environmental goals,” says Jack Layton, president of the Federation of Canadian Municipalities. The budget increases spending to the Green Municipal Funds to $250 million, for projects that include renewable energy technologies. “The doubling of the resources available to the Green Municipal Funds is clearly welcome and FCM intends to put this money to work in communities across Canada to achieve sustainable community development,” says Layton. One of the larger renewable energy companies, Canadian Hydro, commends the “significant initiatives” towards a cleaner environment in the new production incentive for wind energy projects and an expanded definition of small hydroelectric project to allow accelerated depreciation on waterpower projects for tax purposes. The new mechanisms will result in the construction of a significant amount of new green power projects, predicts CEO John Keating. The wind production incentive will increase revenue for the Alberta company by $1 million during the first year on a 30 MW windfarm. The federal government is encouraging provincial and territorial governments to provide additional support for wind energy investments. The change in tax treatment for hydroelectric facilities up to 50 MW in capacity will improve the economics by deferring the payment of income taxes for initial years following construction, to recognize the significant capital investment required. A company that constructs a project for$150 million could accelerate the deduction of capital cost allowance over the first five years of production, resulting in a deferral of income taxes on $70 million of income. “The federal government’s new green initiatives will contribute significantly towards encouraging renewable energy and reducing Canada’s greenhouse gas emissions, resulting in a net economic benefit for Canada,” says Keating. “We continue to encourage all levels of government to provide a green power consumer rebate or credit and implement a low-impact renewable portfolio standard, which will support consumption of green power.” Canada’s ability to generate green power received “a shot in the arm” by the budget measures, according to the Clean Air Renewable Energy Coalition. “These new federal government mechanisms will support investments in innovation, economic growth, and new energy infrastructure in the Canadian economy,” says Rick George of Suncor Energy, one of the founders of the group. “It puts Canada on the radar screen for global investors in renewable energy.” The new mechanisms are expected to result in 360 MW of new renewable energy generation, and will indirectly contribute toward a significant expansion beyond those levels resulting from increased competitiveness of renewable energy. New investment as a direct result of the mechanisms will be $700 million, while the indirect spin-off investments could double or triple that outcome, he explains. “Low-impact renewable energy can provide a significant part of Canada’s energy needs without exhausting energy resources or impacting on the environment,” adds Robert Hornung of the Pembina Institute. “Renewable energy supports Canada’s effort to implement the Kyoto Protocol, as it is a zero emission resource.” “With these fiscal mechanisms, Canada is able to jump on the renewable train that has pulled out of the station elsewhere in the world,” says the coalition. The global market for wind power is $4 billion and expected to grow to $43.5 billion by 2010. The solar electricity industry is expected to grow from current levels of $2.5 billion to $23.5 billion by 2010. The coalition wants governments stimulation on demand, and is calling on provincial and territorial governments to develop green power demand stimuli. The coalition was co-founded by Suncor Energy and the Pembina Institute, and members include 12 corporations, five environmental organizations and the Federation of Canadian Municipalities. Members include AXOR, BC Hydro, Benign Energy Canada, BP Canada Energy, Dofasco, Enbridge, Friends of the Earth, International Institute for Sustainable Development, Ontario Power Generation, Pollution Probe, Shell Canada, Toronto Environmental Alliance, Toronto Hydro, TransAlta and WestCoast Energy.
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