Those of you who frequent this blog know that I mention Sustainable Development Technology Canada quite regularly (picture to the left is of SDTC chief Vicky Sharpe). That’s because the federal agency, which was created nine years ago, has introduced me over the years to so many interesting, innovative and ambitious clean technology companies. SDTC does the screening. It carries out the due diligence. It offers funding for demonstration projects. It forces the hand of private investors that might not otherwise open their doors or pockets. It offers guidance. Introduces partners and customers. Need I say more? This agency has given dozens of promising green technologies and the companies behind them a solid chance of success. For every dollar of public money it has invested, it has tapped into twice as much (actually more) from the private sector. Over the past few years, that has translated into $515 million in public funding being leveraged to attract about $1.2 billion in mostly private funds.
That’s why in my Clean Break column this week I argue clean technology, and specifically the efforts of SDTC, need to be part of the country’s election dialogue. We need to build on the progress SDTC has achieved to date, not abandon the momentum at a time when major world economies — Germany, China, India, Brazil, the United States — are racing to establish a dominant position in the emerging global green economy.
The leaders of the political parties looking to run the next government need to be asked: How are they prepared to support clean technology innovation and green economic development in Canada?
I’m reposting a recent entry from the blog of Ontario’s Environmental Commissioner, Gord Miller, to put Ontario’s green energy strategy — largely, its feed-in-tariff program — in perspective. Conservative pundits, anti-wind groups and other angry birds in the province like to point out how green energy is hurting hard-working families, but this is far from the truth. Natural gas and nuclear contracts contribute more, and while Miller recognizes that over the next few years green energy costs will represent a larger portion, that’s not the case today or in the near future so all the scare-mongering is just a blatant attempt to mislead voters and steal votes. Here’s how Miller lays it out:
There has been much effort made in the media to lead the public to believe that their electricity bills have been spiralling due to the cost of subsidies to wind and solar initiatives of our energy conservation programs. The 80 cents/kilowatt hour (kWh) for solar is frequently cited as the greatest offender, even though that rate only applies to rooftop solar with a capacity of 10 kW or less. In total, such installations currently amount to just 34 MW out of the 37,000 MW of installed generation in the province. Not mentioned are the subsidies paid to our private natural gas generators, or those paid to Bruce Power, when the market price doesn’t meet their guaranteed price (which is almost all the time). The latter subsidies involve 70% of the global adjustment monies paid out, simply because they pay for the delivery of much more power. In fact, the Ontario Power Authority paid out $1.35 billion in 2010 to meet gas and nuclear power purchase agreements.
So how significant are the subsidies to renewable energy and the monies paid for conservation in a typical residential electricity bill anyway? To answer that we had better clarify what a typical electricity rate is per kilowatt hour delivered to your home. There has been much confusion about that as well.
A typical electrical bill consists of a charge per kWh of electricity used, plus a charge for transmission and distribution, plus a fixed fee to the utility, plus a regulatory charge, plus a debt retirement charge, plus HST, less the 10% the Province has just given us in the clean energy benefit. It is a complicated system to be sure. To get an estimate of a representative rate, we looked at a typical home that heats with natural gas and uses 800 kWh of electricity per month, and we compared that to a similar house with electric heat that uses typically 2500 kWh of electricity per month (averaged over 12 months). Although the costs per month obviously varied ($105 vs. $303) the cost of electricity per kWh “all in” was the same, about 13 cents.
So how much of that is due to renewables and conservation? In 2010, the Ontario Power Authority paid electricity resource costs of $317 million for conservation programs, and $269 million for renewables. That is a lot of money – but you must realize that it is recovered over a total Ontario consumption in 2010 of 142 terawatt hours (that’s 142,000,000,000 kWh), which amounts to 0.4 cents per kWh (split roughly equally between conservation and renewable subsidies). So the cost of conservation and all the renewable subsidies in 2010 amounted to 0.4 cents of the 13 cents we paid for a kWh in our homes. A significant amount, perhaps, but hardly the bogeyman that it is so often made out to be.
In fairness, it must be acknowledged that this 0.4 cent amount will rise as more green energy comes on line in future years, but in 2010 that is what it was. During these times when we are publicly discussing a long-term electrical energy plan, I think it is important to be honest about the current cost of electricity.
Now, I think we need to start moving larger-scale wind and solar projects to a competitive bidding process to keep FIT costs from escalating too much, too quickly, but clearly the impact today doesn’t justify what public outcry there has been.
Exciting to see Nissan announce Canadian pricing for its Leaf electric car today. Disappointing to see that Canadians will have to pay more than $5,000 more than Americans at a time when the Canadian dollar is worth more than the U.S. greenback. What’s with that? I mean, a couple of thousand more, maybe I can see the reasoning. But having to pay $38,395 Canadian for the base model when you can get the same thing for $32,780 U.S. south of the border? That’s just a ripoff.
Nissan has to come up with a pretty good reason to justify the higher cost if it wants Canadians to buy in. Personally, I was interested in the Leaf until this pricetag shocker, so I may wait now for Ford to launch its Focus Electric in Canada. This seems like a brazen attempt by Nissan to soak up the generous $8,500 rebate being offered to electric car buyers in Ontario.
So, Nissan, what the dilio?
My Clean Break column is a defense of electric vehicles, which are often dissed by auto reviewers who can’t wrap their heads around a world not dominated by noisy, smelly, polluting vehicles. Yes, the internal combustion engine can become and is becoming more efficient. Yes, the internal combustion engine will be here for decades to come. But electric vehicles, despite the pronouncements of some skeptics, will not be dead on arrival. What these folks fail to take into account is that many of the problems associated right now with electric vehicles are likely to be overcome within the next 10 or 20 years as the rate of adoption begins to pick up. The amount of innovation going on in this area is unprecedented, and the benefits will become clear enough by 2020. Nobody is claiming electric vehicles will completely take over. Nobody is saying the adoption of electric cars will be quick. But electric cars are coming — get used to it — and the world will be a better place for it.
It’s time to stop stubbornly clinging to the past.
Okay, here are budget highlights related to clean energy and technology (in no particular order):
1) $97 million over two years to renew funding for technology and innovations in areas of clean energy and energy efficiency.
2) $8 million over two years to renew funding to promote the deployment of clean energy technologies in Aboriginal and Northern communities.
3) Accelerated capital cost allowance has been expanded to include investment in technologies that generate electricity using waste heat from industrial processes. The CCA allows the cost of eligible assets to be deducted for tax purposes at a rate of 50 per cent per year on a declining balance basis—which is faster than would be implied by the useful life of the assets.
4) Oil sands investments will see some reduced subsidies. The accelerated capital cost allowance will be reduced for “intangible capital expenses in oil sands projects” to align them with existing rates for the conventional oil and gas setor. Question: Why does the conventional oil and gas sector still get this subsidy?
5) And, while the government continues to figure out how to sell of AECL’s commercial reactor division, Canadian taxpayers will pay another $405 million on a cash basis in 2011–12 to cover the crown corporation’s anticipated commercial losses and support the corporation’s operations, including to ensure a secure supply of medical isotopes and maintain safe and reliable operations at the Chalk River Laboratories.
6) $870 million over two years to support the government’s Clean Air Agenda, including $400 million in 2011 and 2012 to temporarily revive the EcoEnergy retrofits program and $252 million to support “regulatory activities to address climate change and air quality,” whatever that means. Also included in this larger figure is $86 million to support clean energy regulatory actions that focus on energy efficiency; $48 million to develop transportation sector regulations and next-generation clean transportation initiatives; $58 million for projects that improve our understanding of climate change impacts; and $25 million to advance Canada’s engagement in international negotiations and support the Canada-U.S. Clean Energy Dialogue.
7) Finally, $40 million over two years will go to Sustainable Development Technology Canada. It’s not a lot of money compared to the more than $50 million it has issued annually in previous years, but it keeps the agency alive and supporting new energy innovations.
I’ll comment on these more later…