Promoting Green Power in Canada

This week’s RE Insider is Martin Tampier, a Canadian writer who has recently released “Promoting Green Power in Canada: Green Power Policies: A Look Across Borders,” which he wrote for Pollution Probe, a Canadian environmental group. Although written primarily for Canada, this report contains information on Europe, the U.K., Australia and the US with respect to emerging renewable power technologies. It identifies the policies that have driven the capacity increases observed over recent years in some leading countries, and analyzes in detail several policies with respect to their effectiveness in driving the market for green, renewable electricity. The report’s Executive Summary appears here.

This report examines and assesses policy initiatives in countries that have implemented strategies to promote the development of green power markets and renewable electricity generation capacity. The report contains a large amount of information on policies and incentives that may be effective and appropriate for implementation in Canada. The research included documenting and analyzing literature on the subject, exchanging information via targeted e-mails, and making phone calls to a number of experts in the field. In addition, in-house research was carried out by Pollution Probe in order to apply the study findings to the Canadian renewable energy situation. The key findings of the report are: • Canada has a large resource base upon which to produce renewable power. Many renewable power projects would be feasible at 2 cents per kilowatt hour above the price of electricity from combined cycle natural gas plants. • Many options to bridge this financial gap could be implemented by Canadian governments. For example, providing tax incentives or increasing and broadening the Wind Power Production Incentive could reduce the price of renewable electricity enough to make it competitive with conventional energy sources. • Voluntary initiatives, such as green power marketing or green pricing, have important roles to play, but have limited effects on the deployment of new renewable energy generation capacity. • Meaningful and stable policies, such as a Renewable Portfolio Standard, are necessary to create long-term markets for renewable power. These policies need to be accompanied by other measures or incentives to be successful — no single policy can overcome all of the barriers to causing a shift in Canada’s energy planning. The main recommendations are: • The federal government should set a national renewable energy portfolio target, which can be achieved through cooperation with provincial policies, such as provincial renewable portfolio standards and renewable energy certificate trading. • The federal government should increase the Wind Power Production Incentive and broaden it to include all non-large hydro renewable power technologies, so as to match or surpass the support that such projects enjoy in the United States. • Additional financial measures, such as broadening the Canadian Renewable Conservation Expense to include capital investment cost, are highly recommended in order to make the renewable power sector financially more viable. • To facilitate the development of renewable energy sources, a national effort is needed to identify Canada’s potential renewable energy sources. Background and Purpose Canada has traditionally had a relatively low carbon electricity generation portfolio, with more than 60% of its electricity supply provided by large hydro facilities. Over the past two decades, many industrialized countries have started to shift towards new renewable power sources, with wind power taking the most eminent position. With provincial power market openings in Alberta and Ontario, customer choice and green power has also entered the Canadian arena. However, Canada is lagging behind international developments concerning green power and only produces about 2.8% of its electricity from renewable sources other than large hydro, with currently few incentives provided to change this situation. This study looks at policies that are being used in the United States, Australia, the UK, and Europe in order to promote renewable electricity production. Important lessons can be learned from these countries, and the implementation of progressive policies in Canada can help put this country among the top players in this new economic field. A large number of research and guidance documents from the US EPA and other sources have been reviewed and evaluated in this study. Special attention was given to emissions trading and renewable power setasides, feed-in tariffs as they are used in European countries, and tendering schemes, such as the former UK Non-Fossil Fuel Obligation. In addition, existing Renewable Power Portfolio Standard (RPS) Policies, including the UK’s New Renewables Obligation and the Texas and Australian policies, are examined in this study. New approaches, such as green tags, which represent the environmental and social benefits of green power-generated electricity detached of the basic “null electricity” service, are beginning to shape markets in the US, with VisionQuest, Inc. (Alberta) being the first company to offer them in Canada. Green tags may play an important role in fostering the construction of new renewable power plants in Canada. An early evaluation of opportunities and problems with green tags is provided in this report. It is important to reach agreement within Canada on Green Power (GP) definitions and certification requirements, and to understand consumer expectations, in order to avoid mistakes made in other jurisdictions when introducing GP products. Comments on Environment Canada’s Guideline on Renewable Low-Impact Electricity have been collected, feeding into the Canadian Environmental Choice certification process. These comments indicate that the definition of “green” power is not yet a decided issue. Work is still needed on developing a Canadian definition, which could also contribute to achieving international consensus over the coming years. This study complements a 2002 study commissioned by Environment Canada and carried out by the Pembina Institute, which focused on existing GP initiatives in Canada. Exchange rates for the Canadian dollar versus the currencies examined in this report have varied substantially even while it was written.
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