The Rest of Canada

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Outline

Canadian energy system Ontario electricity policy 1980 NEP Canadian energy policy in 2010s

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Green Energy Politics in Canada: Comparing Electricity Policies in BC and Ontario George HobergFaculty of ForestryUniversity of British Columbia Ian H. RowlandsEnvironment and Resource StudiesUniversity of Waterloo

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Generation sources

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Comparison: more complex governance in Ontario

Roles of government, regulatory commission similar

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Table 1

Ontario BC

generation Private, OPG Private, BC Hydro

transmission Hydro One BC Hydro

distribution Mostly local entities BC Hydro

Long term planning Ontario Power Authority

BC Hydro

aggregator IESO BC Hydro

Ontario – prelude

Harris government reshapes electricity sector in 1990s

Liberal government 2003 – request for proposals approach ran into problems of political favouritism

Opened door for alternative approach Policy entreprener (Paul Gipe) framed ‘feed-in

tariffs’ as a means of local economic development March 2006 McGuinty announced North America’s

first feed-in tariff programme –Renewable Energy Standard Offer Programme (RESOP)

Design problems caused it to flop

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Ontario - Green Energy and Green Economy Act – May 2009

Attract investment in renewable energy

Promote a culture of energy conservation

Create a competitive business environment

Increase job opportunities Reduce GHGs (15% reduction by

2020)

Note: also ambitious coal phase out by 2014

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Feed-in Tariff

FIT program was intended for projects > 10 kW, microFIT <10 MW

bioenergy, waterpower, solar photovoltaic, wind Prices ranged from 10.3 cents per kWh for larger

landfill gas to 80.2 cents per kWh for smaller, rooftop solar photovoltaic (PV) projects ‘cover development costs plus a reasonable

rate of return Contracts were 20 years in length (40 years for

waterpower projects) overwhelming response: 4,600 MW contracted

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Controversy

Excessive costs, subsidy NIMBY response, especially to wind 2011 election: Hudek pledges to kill

program Liberal minority ensured program’s

continuance

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BC – Shift 1 – 2002 Energy Plan

New sources of generation would be private

Created separate transmission authority – reversed in 2010

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BC Shift 2 – 2007 Energy Plan New coal fired power plants would only be

allowed if they used carbon capture and storage

New natural gas generation would only be allowed if its emissions were offset

50% of new electricity demand had to be made through conservation (demand side measures)

Ensure self-sufficiency to meet electricity needs, including ‘“insurance’” by 2016

Ensure “clean or renewable electricity generation continues to account for at least 90 per cent of total generation.”

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BC – Shift 3 – Clean Energy Powerhouse2010 Clean Energy Act (1)

“to be a net exporter of electricity from clean or renewable resources with the intention of benefiting all British Columbians and reducing greenhouse gas emissions in regions in which British Columbia trades electricity while protecting the interests of persons who receive or may receive service in British Columbia” (Section 2(n)).

Maintains self-sufficiency requirement, move date up 2020 from 2026

Strengthens the clean and renewable requirements from 90 to 93%

Strengthens the conservation requirement from 50% to two-thirds

All imply significant new private power projects 18

BC – Shift 3 – Clean Energy Powerhouse2010 Clean Energy Act (2)

BC Utility Commission authority removed from: Long term plan approval Export contracts development under the new

policy The Site C dam in the Peace River region,

currently under regulatory review The Northwest Transmission Line designed to

connect new areas of mining development to the provincial grid

The province’s $1 billion smart meters program 19

BC Shift #4: Return to Focus on Low-cost Reliability (2012)

March 2011: Christy Clark sworn in the “families first” agenda, BC Hydro proposes 30% rate increase

BC Hydro moves from cherished partner to pariah

Government imposes lower rate increases, prohibits BCUC from having hearings

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Comparisons – similar big policy changes

Both provinces adopted significant new legislation

dual objectives of reducing greenhouse gases while simultaneously promoting the development of a new clean energy industrial sector

Inspired by struggles in traditional core industries

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Comparisons – different policy instruments

FIT in Ontario Request for proposals in BC Active policy entrepreneurs in

Ontario, missing in BC Both ran into serious costs problems More politically salient in Ontario But still salient enough in BC to

result in major changes in policy and governance.

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Comparisons - Privatization Privatization has gone much further in

Ontario than in BC BC limited to new generation Much of Ontario’s electricity purchases are

subject to market prices; all electricity purchases are controlled by regulated rates

explanation? timing of when utility privatization initiatives were influential in Canada and what party was in power at the time.

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Comparisons - rates

Ontario rates 2X BC

Ontario uses time of use pricing

BC – new smart meters but no TOU yet (unsustainable)

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Political control

similar governance changes Assertion of provincial government

authority Independent regulators seen as

threat to clean energy agenda Ditto for municipalities

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Still, impressive policy change Changes confronted implementation challenges and

political resistance But fundamentals of the policy shifts are still in place Ontario is still on target to phase out coal Ontario - remarkable increase in renewable energy

generation BC’s 93% RPS and 2/3rd conservation requirement

are impressive BC’s ambitious GHG reductions targets are in tact,

for now when motivated, leader-centered parliamentary

governments can create meaningful policy change to promote energy sustainability

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The NEP and Legacy Trudeau

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Prelude to NEP 1957-1961 1959 – National Energy Board

Created 1961 – National Oil Policy

two market policy▪ east of Ottawa Valley, cheap imported

Venezuela oil▪ Ontario and west, more expensive Canadian

oil▪ delivered by Trans-Canada Pipeline▪ continental price under umbrella of US

protectionism▪ growing exports to US

Rapid growth in oil and gas industry

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Prelude to NEP 1973-1980 1973 – OPEC oil embargo

link to global geo-politics: Arab-Israeli War price controls on domestic crude oil and natural

gas subsidized consumption by refiners through oil

import compensation program (OICP) 1975 – Petro-Canada established

foster resource development increase federal government information about reserves

1979 – Iranian revolution led to world price doubling gap between Canadian prices and world prices increased

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1980 Political Economy of Energy in Canada

Oil coalition: federal Conservative Party, western provincial governments, and oil industry rapid convergence to

world prices smaller federal share of

revenues privatization of Petro-

Canada enabling foreign

ownership

Federal Coalition: federal Liberal and NDP Party, central and eastern provincial governments slower increase in prices larger federal share of

revenues strengthening of Petro-

Canada regulation on foreign

ownership

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National Energy Program

October 1980 budget “a centralist, nationalist and

interventionist political and policy initiative which at its core was intended to substantially restructure the key relationships of power and the sectoral and regional distribution of wealth in Canadian energy politics” (Toner and Bregha 1984).

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National Energy Program 1980 3 goals

security of supply▪ Petroleum Incentive Program (PIP) encouraged

exploration and development Canadianization

▪ 50% Canadian ownership by 1990 (from 29%)▪ PIP criteria favoured Canadian firms on Canada Lands▪ enlarge Petro-Canada through acquisitions

interregional equity in price and revenue sharing▪ 8% Petroleum and Gas Revenue Tax (PGRT)

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Backlash Against NEPcbc retrospective video

Universal industry opposition Vehement opposition by Alberta – led

by Premier Peter Lougheed cutback in oil production cancellation of 2 oil sands projects

Compromise of 1981 produced a new pricing system old domestic oil increased to 75% world

price new conventional oil at world price

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NEP denouement

Beginning in 1982, world oil prices began to plummet

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NEP denouement

Oil price decline after 1982 Mulroney Era (Progressive

Conservative) begin in Fall 1984 Western Accord effectively

dismantled NEP deregulated oil prices phased out PGRT

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NEP Enduring Legacy

Lesson: mistaken federal government overregulation

Strengthened Alberta’s anti-Ottawa tendencies

Revived as a bogey-man to discredit major federal energy-related initiatives including climate action

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Canadian Energy Strategy for 2010s

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CCCE

1. Enhance the Canadian brand

2. Strengthen energy literacy and a culture of energy conservation

3. Build North American energy self sufficiency

4. Diversify energy markets

5. Invest in sound energy infrastructure

6. Create a Canadian energy technology advantage

7. Ensure sufficient regulatory process

8. Facilitate stronger partnerships with Aboriginal peoples on energy projects

9. Facilitate a coherent climate policy

10. Build an integrated labour force strategy

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