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The Rest of Canada

The Rest of Canada. Outline. Canadian energy system Ontario electricity policy 1980 NEP Canadian energy policy in 2010s. George Hoberg Faculty of Forestry University of British Columbia Ian H. Rowlands Environment and Resource Studies University of Waterloo.

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The Rest of Canada

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  1. The Rest of Canada

  2. Outline • Canadian energy system • Ontario electricity policy • 1980 NEP • Canadian energy policy in 2010s

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

  4. Generation sources

  5. Comparison: more complex governance in Ontario • Roles of government, regulatory commission similar

  6. 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

  7. 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

  8. 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

  9. Controversy • Excessive costs, subsidy • NIMBY response, especially to wind • 2011 election: Hudek pledges to kill program • Liberal minority ensured program’s continuance

  10. BC – Shift 1 – 2002 Energy Plan • New sources of generation would be private • Created separate transmission authority – reversed in 2010

  11. 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.”

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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.

  17. 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.

  18. Comparisons - rates • Ontario rates 2X BC • Ontario uses time of use pricing • BC – new smart meters but no TOU yet (unsustainable)

  19. Political control • similar governance changes • Assertion of provincial government authority • Independent regulators seen as threat to clean energy agenda • Ditto for municipalities

  20. 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

  21. The NEP and Legacy Trudeau

  22. 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

  23. 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

  24. 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

  25. 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).

  26. 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)

  27. 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

  28. NEP denouement • Beginning in 1982, world oil prices began to plummet

  29. 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

  30. 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

  31. Canadian Energy Strategy for 2010s

  32. CCCE • Enhance the Canadian brand • Strengthen energy literacy and a culture of energy conservation • Build North American energy self sufficiency • Diversify energy markets • Invest in sound energy infrastructure • Create a Canadian energy technology advantage • Ensure sufficient regulatory process • Facilitate stronger partnerships with Aboriginal peoples on energy projects • Facilitate a coherent climate policy • Build an integrated labour force strategy

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