Contributed by Robert Lyman © 2017
Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years; prior to that he was a diplomat for 10 years.
SUMMARY OF HIGHLIGHTS
(updated Nov 6, 2017 to correct typos)
This paper is intended to “shine light” on the generally under-reported topic of the subsidies paid to solar and wind energy in Canada.
The subject is complicated by the different meanings given to the term “subsidy” and the different ways people measure subsidies. This paper will describe a wide range of financial aid and other direct and indirect support that Canadian governments provide to the suppliers and users of solar and wind energy.
Under Budget 2017, the federal government will spend almost $1.7 billion over four years on renewable energy research, development, demonstration and commercialization programs, much of which will go to solar and wind industries.
Under the ecoEnergy for Renewable Power program, the federal government subsidized the generation of electricity from renewable energy sources through a refund to producers of one cent per kilowatt-hour. The cumulative cost of this program to 2021 will be $1.4 billion.
Budget 2017 included authority for over $2.4 billion over four years to promote the production and use of “clean energy”, a large part of which will go to solar and wind energy.
Provinces and territories now have in place 272 different programs to assist the production and use of solar, wind and other renewable energy sources. There is no way to know the total costs of these programs, their benefits, or even to what extent they duplicate existing federal government programs.
Through the Green Municipal Fund, the federal government has provided $675 million to support environmental initiatives in municipalities, including solar and wind projects.
The federal government, the largest purchaser in the country, has a Policy on Green Procurement that requires federal departments and agencies to meet procurement targets according to pre-determined environmental criteria and specifications. It does not publish the cost of this policy. The Trudeau Government has committed that the federal government will operate on 100% “clean energy” by 2015.
The Accelerated Capital Cost Allowance, removed from oil sands and mining in 2010, has been extended to renewable energy projects. Solar and wind generation equipment qualify for corporate income tax reductions through depreciation on a declining-balance basis at the accelerated rate of 30% per year (Class 43.1). Certain other equipment can be depreciated on a declining balance basis at the accelerated rate of 50% per year (Class 43.2). In addition, Canadian Renewable and Conservation Expenses (CRCE) covering startup costs can be deducted in full (100% deductibility) in the year incurred. Finance Canada does not report the cost to the treasury of these significant tax expenditures.
Provinces use a range of regulations to advantage solar and wind energy. Ontario, for example, exempts them from environmental assessment requirements under the Environmental Assessment Act, eases approvals under the Environmental Protection Act, and curtails municipal powers under the Planning Act to exercise land use planning and zoning authorities. It has also capped the property taxes that industrial wind turbines must pay, to the disadvantage of municipal tax bases. There are no public estimates of the costs of these advantages.
Provinces use multiple strategies to increase the revenues of renewables projects or to provide revenue certainty for these projects. The most costly of these are the feed-in-tariffs implemented in Ontario. In effect, Ontario has signed contracts with hundreds of solar and wind energy generators paying rates four to 20 times higher than those available to conventional electricity generators and guaranteed for the 20-year lives of the contracts. The Ontario Auditor General estimated that, from the beginning of the FIT program until the end of 2015, ratepayers had paid over $9.2 billion more for renewable energy generation (almost all solar and wind) than if the government had continued with its previous competitive bidding procurement policy. Scott Luft, an expert on Ontario electricity operations, has calculated the total subsidy to solar and wind since 2006 as the cost paid above the average cost for other supply. Using this standard, the subsidy has been $6.4 billion.
Because of gaps in the publicly available information, there is no way to calculate the total cost of the subsidies and advantages given to solar and wind generators in Canada. There, however, is no question that governments are embarked on a concerted effort to promote these energy technologies over others, regardless of the objective costs and benefits.
The rationale for such subsidies rests primarily on two assertions – first, that humans are causing catastrophic global warming which can be cost-effectively addressed by expensive emissions reductions in Canada’s electricity generation and use; and second, that solar and wind firms are “infant industries” that need temporary assistance and protection against unfair competition from more established firms. The first relies on questionable science and economics, and the second ignores the fact that windmills and solar technologies have been available for centuries.
1) FinAdvice “Lessons Learned”
2) Wind Energy: Facts and Fiction –
“A half truth is a whole lie” was the work of the late J.A. Halkema, of the Netherlands, whose website domain lapsed after his death
Republished here: http://skepticva.org/energy.skepticva.org/halkema/halkemas.html
3) “Lesson Learned from Technology” – Prof. Michael J. Kelly
4) “To Get Wind Power You Need Oil” – Vaclav Smil, IEEE
5) Comparing One Cubic Mile of Oil to Equivalent Alternative Energy
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