The Ontario government, to my surprise, has caved to public pressure from a small group of anti-wind folks and backtracked on its previously stated commitment to encourage the development of offshore wind in the Great Lakes. It must be election time. This news release just came out:

Ontario is not proceeding with proposed offshore wind projects while further scientific research is conducted. No Renewable Energy Approvals for offshore have been issued and no offshore projects will proceed at this time. Applications for offshore wind projects in the Feed-In-Tariff program will no longer be accepted and current applications will be suspended. Offshore wind in freshwater lakes is early in development and there are no projects operating in North America. The recently installed Lake Vanern pilot project in Sweden is one of the only operational freshwater offshore projects in the world and a pilot project has been proposed in Ohio. Ontario will monitor these projects and the resulting scientific knowledge. Ontario will work with our U.S. neighbours on research to ensure any future proposed projects protect the environment on both sides of the Great Lakes.

It was three years ago when McGuinty confidently lifted a moratorium on offshore wind projects and declared that such projects, after extensive study and consultation with authorities on the U.S. side of the Great Lakes, could be done responsibly without impact to lake ecosystems. Then came the feed-in-tariff (FIT) program less than two years later, which broke new ground in North America by including a FIT rate for offshore wind – 19 cents per kilowatt-hour compared to 42 cents for large-scale solar projects.

The government has regularly trumpeted its commitment to offshore wind development, and Ontario was well positioned to lead North America in terms of attracting manufacturers and a supporting supply chain that could serve Ontario and the U.S. northeast. One project, to be developed by Windstream Energy, was actually offered a contract under the FIT program, while developer Trillium Power was quite advanced with its project development and preliminary studies and had worked hard to attract foreign manufacturers to Ontario. These companies and others must be furious, having invested millions of dollars already only to have the province do an about-face. I mean, is McGuinty admitting that the consultations and study done three years ago were bogus?

This sends a horrible message to the market. If the government can so easily backtrack on previous commitments, what’s next? What other projects will have their plugs pulled?

Offshore wind was the one truly new opportunity in green energy where Ontario had the opportunity to lead and capture the economic development that would come with it, as this Conference Board of Canada report recently pointed out. Companies such as Siemens and Vestas were seriously eyeing Ontario as a place to lay down their North American anchors. That opportunity is now gone. What’s odd is that it’s apparently okay to have a company like Talisman drill for natural gas in the middle of Lake Erie or to ship radioactive material from a nuclear plant through the Great Lakes, but we can’t erect wind turbines with proper setbacks from shore?

Meanwhile, the U.S. is picking up steam on offshore wind. Just as Ontario is backing away, Maryland is moving forward with legislation that would require its utilities to purchase offshore wind capacity. Virginia is getting its act together, as is New Jersey. The Obama administration has pledged to fast-track offshore wind projects in the mid-Atlantic. New York, Ohio, Michigan and others are all moving forward. Ontario, which had the lead, has decided to disqualify itself from the race and watch from the sidelines.

A truly shocking and disappointing development. There’s no reason why the government couldn’t have honoured its FIT commitments but put in place regulations that made sure only the best sited projects got built. At least this would have got the ball rolling, even if it was just one or two projects that qualified. Environmental concerns can be addressed without having to outright derail the train.

My Clean Break column today explains why rare-earth metals, while important for the development of wind turbines, electric cars and energy-efficient lighting, aren’t as critical to the market as many believe. Most wind turbines today don’t rely on rare-earth metals, lithium-ion batteries and LEDs don’t need them either, while electric cars — such as the Tesla Roadster — can run on induction motors that don’t require these exotic materials. Sure, the stranglehold China is putting on the market will create some temporary discomfort for some companies, but a combination of new non-Chinese supply, recycling efforts and innovation around the problem will ease the pain. The Canadian, U.S., and Australian rare-earth stocks that have enjoyed quick gains over the past few months are way overvalued and destined to fall.

There’s a terrific month-long series of articles being published in MIT Technology Review that I’d like to draw to your attention. It’s part of a section called “Business Impact,” in which the magazine picks a theme every month and then dedicates a story every day to that theme for the entire month. The theme in January is corporate energy strategies, and the series takes a look at what technologies and green energy sources corporations are embracing and why they’re choosing to embrace them.  I wrote the first overview piece to kick off the series, and since then there have been terrific articles covering everything from electric vehicles and green data centres to LED lighting and innovation around solar financing. At the end of the month MIT puts the entire series behind a paywall, but they make access available for free during the month it’s all being published, so I encourage you to check it out while you can. There is plenty of great insight.

I particularly enjoyed this story on energy-efficiency projects and ways to finance them, and this story on energy-efficient data centres.

I’ve been a little preoccupied this past week finishing up the first draft of my book so that I can actually enjoy some R&R, my family, food and wine (ah yes, wine) during the holidays. Now that I have a bit of a breather, here are some recent news items that caught my eye:

Let’s start with today: the U.S. Department of Energy’s Ames Laboratory came out with an interesting study that suggests wind turbines in farmed fields could be boosting crop yields. The giant, sweeping blades of wind turbines, says Ames, might “help corn and soybean crops stay cooler and dryer, helping them fend off fungal infestations and improve their ability to extract growth-enhancing carbon dioxide from the air and soil.” The researchers behind the study emphasize that their results are preliminary but believe beneficial effects are likely.

In other news, Toronto-based Riverbank Power, which has a large pipeline of innovative pumped-storage projects, is getting more seriously into run-of-river hydroelectric projects. The company has just acquired Symbiotic Energy Corp., a developer and operator of hydroelectric projects based out of Portland, Oregon. The deal boosts Riverbank’s pipeline of run-of-river projects to 1,100 megawatts and gives it three shovel-ready projects. In addition to the acquisition, Riverbank has raised $25 million from Caisse de Depot et placement du Quebec. The money will go toward development of the three run-of-river projects. This complements Riverbank’s pumped-storage business, which boasts a 16,000 MW project pipeline in North America. Riverbank has a unique underground approach to pumped storage based on a system design it calls AquaBank. You can read about it here.

Also in Toronto, Nissan Canada has committed 500 of its electric LEAF vehicles to the Toronto Atmospheric Fund’s FleetWise EV300 Initiative, meaning fleet operators participating in TAF’s program should have no problem getting first-generation LEAF vehicles when they go on sales at the end of 2011. On the topic of EVs, hotel owner Starwood Canada has installed the first hotel-based EV charging stations in Canada at its Sheraton Centre Toronto hotel and at Le Centre Sheraton Montreal. ” Coulomb Technologies is supplying the chargers, which will be part of the company’s growing ChargePoint network, which EV drivers will be able to access through their mobile devices to find charging stations closest to them. It’s a standardized charging station, so everything from cars and buses to bikes and Segways can use it. Could this be the beginning of a cell-phone like network and service for electric vehicles? Meanwhile, Canada Post has started using all-electric Ford Transit Connect delivery vehicles in its fleet.

But let’s not believe for a moment that electric vehicles are going to steal the entire show, as Energy Innovation Corp. announced it will soon open the first biodiesel fuel production facility in Toronto.  The 10-million litre a year facility will be based in the city’s Portlands area. The facility will use flaxseed from southern Ontario as its feedstock and, as a byproduct, will produce high-grade animal feed. That’s because only 40 per cent of the flax seed is used to produce fuel. The rest is high in protein and omega-3 fatty acids. The Globe and Mail has a story here.

The Conference Board of Canada came out with a report today that assesses the economic benefits to Ontario of developing offshore wind in the Great Lakes. Here’s my story in the Toronto Star. Specifically, it estimates job creation and the boost to GDP that would occur by developing 2,000 megawatts of offshore wind projects between 2013 and 2016. This, the board said, is a conservative estimate — much more could be developed over time. But even at just 2,000 megawatts, it estimated the creation of at least 55,000 person-years of employment and at least a $4.8-billion boost to the province’s GDP. This amount of offshore development would also attract more than $10 billion in private investment. Mind you, this is all based on a minimum local content requirement of 55 per cent. As of Jan. 1, 2012, Ontario will have a 50 per cent local content requirement for wind — so the assessment isn’t far off reality.

I like the idea of pursuing offshore wind, and here’s why: It’s new. It’s a chance for Ontario to be a true pioneer in North America by establishing an early foothold. With solar and onshore wind we’re playing catchup, we’re competing with Silicon Valley and the Chinese, and we”ll never truly be a centre for innovation and manufacturing. With solar we’re also vulnerable when subsidies dry up, as jobs and manufacturing are more mobile. 

With offshore wind, however, we benefit immediately by our geography. Ontario borders all but one Great Lake. Of all bordering jurisdictions Ontario has the most offshore development potential. Ontario has concrete and steel making, the skills and the infrastructure to support an embrace of offshore wind manufacturing and supporting services. A good deal of the supply chain could be established here. As the conference board report attests, the job creation potential is strong and we can leverage existing industries and also boost the more mature onshore wind market in Ontario.

Ontario already has a feed-in-tariff for offshore wind — the first on the continent — that offers 19 cents per kilowatt-hour, less than half the cost of developing multimegawatt solar projects in Ontario. It’s consistent with what Massachusetts utility National Grid has agreed to pay for offshore wind power from the Cape Wind project (18.7 cents U.S. per kilowatt-hour). This may sound expensive, but as some have said, this is an investment in a modern-day Niagara Falls. It might sound like a lot today, but it’s creating an infrastructure that decades from now will look cheap by comparison. Also, new nuclear power plants aren’t expected to be much cheaper.

Here, by the way, is a brief report on what’s going on in Europe and along the U.S. Atlantic coast, courtesy of Forbes blogger William Pentland.

I want to emphasize that this Conference Board report was sponsored by Vestas SA, which has an interest in entering the North American offshore wind market. The Conference Board, however, has a strong reputation for being independent, non-partisan and objective with its research. I guess such a report wouldn’t have been done had someone in the industry not stepped up to pay for it. I don’t think the Conference Board has anything to gain by writing a pro-offshore report; it would consider its credibility as an organization much more important. With that, I’m willing to trust that its conclusions are completely independent.