1. canadian energy system ontario electricity policy 1980 nep canadian energy policy in 2010s 2
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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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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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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
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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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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