Energy Probe

Warmed-over nukes

Posted on March 8, 2008 by energyprbe

Lawrence Solomon
National Post
March 8, 2008

The world is whooshing to nuclear energy. Just this week, Britain announced 18 new nuclear reactor sites in its bid to reduce its greenhouse-gas emissions. French President Nicolas Sarkozy is on a Mid-East nuclear-selling spree, to cash in on interest in Saudi Arabia, Qatar, the United Arab Emirates, Algeria, and Libya.

The Netherlands has lifted its long-standing opposition to nuclear power — even the Environment Minister touts the advantages of next-generation reactors. In Eastern Europe, Slovakia, Romania, Hungary, Bulgaria, Lithuania, Poland, Latvia and Estonia all are pursuing the atom.

The United States is revving up for its nuclear renaissance, too. For three decades, nuclear power was in retreat south of the border, with not one new reactor ordered and completed since the reactor accident at Three Mile Island. The U.S. Nuclear Regulatory Commission is now reviewing four applications for new reactors and it expects another 15 by year-end.

The United States — home to more reactors than any other country — is selling reactors and proselytizing them abroad, too, working with Japan, France, Great Britain, Russia and China to establish the Global Nuclear Energy Partnership: “The purpose of which is to help developing nations secure cost-effective and proliferation-resistant nuclear power, ” salesman-in-chief George Bush explained this week.

Whoosh goes Canada, too, with Ontario yesterday inviting bids from four nuclear suppliers, while New Brunswick and Alberta ponder nuclear purchases of their own. Governments tell us that nuclear power is cheap and clean, and the only practical alternative to dirty fossil fuels. In truth, it’s none of the above.

Nuclear is the single biggest business disaster in the history of the world. No other technology has failed so big, so often, and so spectacularly. No other technology has needed so much help from so many governments over so long a period of a time. Because of its sorry record, almost all developed nations decades ago scrapped their nuclear-expansion plans.

The U.S. legislation that spurred this new renaissance shows the absurdity of nuclear power’s claims to being a competitive technology: Power companies are all but paid to build the things.

To kick-start this clunker of a technology, the U.S. government is providing loan guarantees for up to 80% of a reactor’s cost. But because 80% isn’t enough, the government is also providing an operating subsidy of up to US$125-million per year over eight years for a typical reactor of 1000 MW. That’s an additional gift of US$1-billion per reactor (more for bigger

reactors that are in need of more aid).

But because that still isn’t enough to lure utilities back into nuclear construction hell, the energy legislation provides for 100% coverage of the cost of delays for the first two new plants, up to US$500-million each. There’s another potential US$1-billion for companies inclined to leap before they look too hard.

But because even that isn’t enough, the legislation provides US$2.7-billion in R&D and US$1.3-billion in decommissioning relief, among other sweeteners. All this is on top of existing subsidies, including what may be the biggest one of all: a cap on liability in the event of a serious nuclear accident.

Some government officials, somewhere, may still believe that nuclear power can compete against other forms of power generation. They have no excuse, and have had none since 1989, the year that U.K. Prime Minister Margaret Thatcher privatized her country’s power sector, forcing for the first time a market test on nuclear power. Thatcher, one of nuclear power’s truest believers, expected private-sector management to enable nuclear power to thrive. To her dismay and bewilderment, privatization — and the financial disclosures that necessarily followed — led to the cancellation of Britain’s nuclear expansion plans and the immediate demise of the U.K.’s nuclear industry.

The Observer described the industry’s unravelling in an editorial entitled “Nuclear Fantasy.” “It has taken the cold stare of the City [London’s financial district] to penetrate the veils of secrecy and deceit that have long enveloped the nuclear industry,” it wrote. “Privatization has proved that nuclear power is hopelessly uneconomic and saddled with decommissioning costs that no private company could accept without huge guarantees from the government. Yet from the 1950s to a few months ago, anyone who breathed the slightest doubt about its viability was met with a blizzard of faulty figures and downright lies.”

Thatcher did her best to salvage her country’s nuclear industry — when bullying didn’t work, she offered billions in subsidies to any private company that would take the reactors as part of a privatization package. To no avail. The government was stuck with the nuclear plants, while the private sector snapped up the rest. Years later, the government did manage to privatize the best of its nuclear plants as a nuclear company called British Energy, and for a brief while investors bought in — British Energy not only had the pick of the U.K. fleet, it had excellent management. That wasn’t enough. But in 2003, its share value had plummeted to less than 1% of its peak valuation and its fate was once more in government hands.

Nuclear power has always been the stuff of dreams — in the 1950s, its proponents talked of nuclear-powered cars and electricity too cheap to meter. It remains the stuff of dreams.

Lawrence Solomon is executive director of Energy Probe and author of The Deniers.

This article is first in a series:
The limits to nuclear: McCain shouldn’t try to follow French disaster
Apocalypse now
Burning in the dark

Posted in Energy Probe News, Nuclear Economics | Tagged nuclear costs | Leave a comment

Nuke sector on upswing?

Posted on March 7, 2008 by energyprbe

LAUREN KRUGEL, The Canadian Press
Ottawa Sun
March 7, 2008

Two Canadian mega-projects in works, but critics still battling

CALGARY — With two nuclear mega-projects planned for Alberta and Ontario, the sector is showing signs of growth for the first time in decades, but critics warn those sorts of major projects are fraught with risk.

On Thursday, Ontario power firm Bruce Power said it wants to build Western Canada’s first nuclear power plant near Peace River, Alta. The proposed $10-billion facility could produce enough electricity to power two million homes by 2017.

And a major new nuclear plant planned for Ontario could to power all the homes and businesses in Toronto, Canada’s most populous city, with a capacity of up to 3,500 megawatts.

“It’s certainly an exciting development. It’s a bold development,” said Norman Rubin of the Energy Probe think tank. “The financial risks are killers to this from an investment point of view, so what’s especially exciting about this is the possibility that governments won’t have to backstop this.”

Rubin warns the nuclear industry has a dismal record of keeping projects on budget and on schedule and that once the plants are built, they are prone to breakdown.

“There are two kinds of nuclear generating stations in the world. There are the future theoretical ones, which are wonderful. And there are the real world ones which break your heart and destroy your wealth and run the risk of leaving you in the dark if you actually depend on them,” he said.

Another huge issue is going to be getting enough skilled workers to build the planned nuclear mega-projects, especially in Alberta’s already squeezed labour market, Rubin said.

Posted in Energy Probe News, Nuclear Economics | Tagged nuclear costs | Leave a comment

Lawrence Solomon: The pro-carbon tax

Posted on March 5, 2008 by energyprbe

Lawrence Solomon
National Post
February 20, 2008

Big city governments concerned about global warming have a special responsibility to act because urbanization holds the greatest potential to curb greenhouse gas emissions. Residents of big cities typically produce about half the emissions that residents elsewhere produce, but even this figure minimizes the potential of cities to curb greenhouse gases.

Residents of New York, for example, generate just 29% of the per-capita emissions that Americans as a whole produce. London does even better in eschewing emissions, besting New York by 20%. Canada’s major metropolis, Toronto, cannot hold a candle to either city, with per-capita emissions 35% above New York’s and 62% above London’s. Yet even Toronto is a paragon of climate-change virtue compared with national economies, registering 60% less than the Canadian average. Governments are proposing carbon taxes to discourage people and industries from activities that emit carbon dioxide. This is a feeble use of the tax system in fending off the catastrophe that governments see coming. There are other, more powerful ways in which governments could, and should, use the tax system if they truly want to discourage CO2 emissions.

Big cities are so efficient because their residents tend to be employed in the low-impact financial, cultural, and intellectual industries, rather than the energy-guzzling primary industries, and they are less car dependent than rural or suburban folk – they tend to have more transportation choices, including walking. Because big cities allow their residents to live, work and study in compact neighbourhoods, travel is not only minimized, it is often eliminated altogether. If cities were more compact still – if Toronto was as compact as New York or New York was as compact as London, the level of greenhouse-gas emissions would quickly decline by levels otherwise seen as impossible. Toronto’s greenhouse-gas emissions would almost halve if it were as efficient as London.

The biggest stumbling block to achieving such efficiencies, especially in Canada, lies in our cities’ tax policies. The chief offender here is the property tax, the source of most city revenues.

The property tax, long disparaged for its economic inefficiency, is also an environmentally reprehensible tax on density. In most cities, downtown land is prized most highly, leading its owners to use it intensively. The more intensively that land is used, the less that infrastructure is needed for water, power, and other utilities, the more that a society can be efficient.

Instead of welcoming the inherent efficiency with which valuable downtown properties are used, cities punish them by taxing them on the basis of their high property values, rather than the actual costs of providing properties with municipal services. The tax on valued property encourages the use of low-value property further and further away, not just away from downtown but also in suburbs and beyond. Even land remote from transportation corridors, by all rights undeserving of development, then gets a spur in low taxes that encourage development where none would otherwise occur.

The way in which the property tax is levied makes things worse. Apartment buildings, which emit fewer greenhouse gases per square foot of living space than do single-family homes, are generally subjected to a much higher property tax than duplexes or single-family homes. This is an entirely unjustified tax that pushes people into living in less energy efficient lifestyles – apartment dwellers not only tend to use fewer city services tied to their dwellings, such as water delivery or garbage pickups, they also are less likely to drive and use roads.

And worse. Businesses pay especially punitive property taxes, encouraging them to relocate outside the city boundary, and then commute into town to provide services to their city customers. After they leave, their staff and suppliers tend to follow them over time, contributing to the well-known hollowing out effect that cities experience. The hollowing out worsens because, when these taxpayers leave the city, the tax load must fall on the city’s remaining taxpayers, increasing their tax burden and encouraging further departures.

To these traditional carbon-enhancing, city-destroying property taxes comes a new hollowing-out tax: Toronto’s new land-transfer tax, which will hit house sellers with levies in excess of $8,000 for modest houses. This tax will not only convince people to avoid buying in the city, it will also convince many not to move to be closer to their work, in both cases adding to the fuel waste that comes of city taxation.

Our cities’ tax policies need not inflict all these wounds. The property tax and the land transfer tax should both be abolished, and replaced with charges that simply charge city residents for the services that they use, in proportion to their use. Businesses will flock back to the city, as will residents, providing the densities that simultaneously raise the city’s efficiency while lowering its carbon intensity.

Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute, and author of Toronto Sprawls.

Posted in Climate Change | Leave a comment

Power to consumers, not monopolies

Posted on March 5, 2008 by energyprbe

Lawrence Solomon
Power to consumers, not monopolies
August 21, 2003

Fifty million North Americans suffered inconvenience and expense in the Great Blackout of 2003. Not one will receive any compensation.

Millions of companies also suffered inconvenience and expense, and lost business that they will never make up. Amid the ruins, however, lie a lucky handful of companies who will have their losses covered. The lucky are among the electricity monopolies that brought us the Great Blackout of 2003.

Under the system of regulation that dominates North America’s electricity monopolies, customers and taxpayers are almost always at risk, and power companies are almost always saved harmless. The imbalance is even more extreme in central Canada, where deregulation was stopped, where no privatizations have occurred, and where the old monopolies remain largely intact and as unaccountable as ever. To add insult to the injury that Ontarians have just suffered, rates will soon go up, or taxes will increase, to compensate the power companies for their lost business, and the ordeal that they’ve gone through.

In a normal industry, subject to the discipline of a competitive market, heads would roll after a fiasco of such epic proportions. Don’t expect anyone to lose his job at Hydro One – a company that shares responsibility for maintaining reliability on Ontario’s grid. It treats the grid’s failure as someone else’s problem, and happily stands by as politicians on both sides of the border discuss the intricacies of how best to run the electricity business. It also gets grim satisfaction as Ontario Premier Ernie Eves places most blame on distant jurisdictions. (The only ones in Ontario subject to an Eves tongue-lashing are members of the general public. If more blackouts come, he has told Ontarians, it will be because Ontarians aren’t conserving enough.)

A regulatory system that gives a pass to those who cause the damage, and a finger to those who suffer, is worse than no regulatory system at all.

A business whose performance depends on customers conserving – i.e., avoiding – its product is an aberration. Yet in the upside-down world of electricity monopolies, these are accepted as normal, as are the inevitable consequences – frequent minor power failures and infrequent massive ones.

Power customers need strong and independent regulation, a practical impossibility in Ontario where the government effectively owns both the industry and the regulator. Government regulators can be effective – in Ontario, regulators such as the Ontario Energy Board have had a history of being superbly effective – but only when they haven’t been asked to regulate their own masters. I know of no government regulator anywhere in the world that has ever been an effective regulator of a government-owned industry.

To see what independent electricity regulators can do, we need look at the United Kingdom, the only country to privatize and break up a major power monopoly into its many component businesses and then regulate those components – such as the distribution of electricity – that did not lend themselves to competition.

In the U.K., customers are no longer powerless. If the distribution company doesn’t perform, the customer’s inconvenience is the utility shareholder’s pain. You are a residential customer in London with a problem, and you ask the company to make a service call. It doesn’t come at the agreed upon time. You receive £20 in compensation. Or you are a small business and request a quote for upgraded service. The quote arrives late. You receive £40. Or you and your business suffer an extended power interruption, of the duration Ontario and the United States just experienced. You receive £75 and your business £125, or roughly $440 to ease your discomfort.

Except that the company almost never needs to make payments – and has never needed to compensate large numbers of people – because it has invested what was necessary to deliver the service it guarantees its customers. The London utility meets 99.9% of its targets for unexpected interruptions and it meets virtually 100% of its targets in replying to customers or correcting routine service problems. The standards of service that it must meet, meanwhile, get steadily ratcheted tighter with each passing year.

Since the U.K. power system was privatized and regulated, the time that customers have been without power has dropped by almost two-thirds, thanks to more than £30-billion invested in the U.K. grid. Neither are the British exhorted to conserve to forestall a grid collapse: The U.K. is awash in electricity following an unprecedented building boom in clean power plants. Neither did customers’ or taxpayers’ pocketbooks suffer as the privatized power companies upgraded their capabilities: Rates have dropped markedly, for residential and business customers alike.

Fifty-million-odd people in the U.K. now enjoy power from the world’s most modern, most reliable, most efficient, least monopolized and least politicized electricity sector in the world. Fifty-million-odd North Americans, meanwhile, are now recovering from everything that the U.K. system is not.

Lawrence Solomon is executive director of Urban Renaissance Institute, a division of Energy Probe Research Foundation. LawrenceSolomon@nextcity.com.

Posted in Energy Probe News, Reforming Ontario's Electrical Generation Sector | Leave a comment

Grantmakers Against Global Warming

Posted on March 5, 2008 by energyprbe

Lawrence Solomon
National Post FP Comment
March 5, 2008

The $200-million per year currently spent fighting global warming isn’t enough, says “Design to Win: Philanthropy’s Role in the Fight Against Global Warming,” a report funded by six philanthropies. To get the job done, at least $800-million per year is needed.

Even this represents a short-sighted effort, says the Chronicle of Philanthropy. The $600-billion that foundations control should be turned to combating global warming, regardless of the philanthropy’s mandate, because global warming encompasses virtually all mandates.

Lawrence Solomon is Executive Director of Energy Probe and author of The Deniers (forthcoming).

Posted in Costs, Benefits and Risks, Energy Probe News | Leave a comment

Pigou's positive side

Posted on March 1, 2008 by energyprbe

Lawrence Solomon
National Post
January 16, 2008

Arthur Cecil Pigou, the celebrated 20th century economist who created a discipline over externalities, has developed a large following over the notion of taxing "bads" such as gasoline, and not just among economists. Environmentalists have taken up the theme over the last decade, and so, too, have many conservatives. Why tax meritorious activities such as earning an income, or purchasing a product, many argue, when taxing activities without merit can instead raise tax revenues?

Pigou provides an answer here, too. He didn’t just advocate taxing activity that creates harmful side effects, or negative externalities. He advocated subsidizing activities with beneficial side effects, or positive externalities. One such example, perfectly obvious to him in the early part of the last century, was farm subsidies to promote a sturdy labour force that could be conscripted for war. Another equally obvious example, in line with the Garden Suburb fashion of the day, was urban planning: It is as idle to expect a well-planned town to result from the independent activities of isolated speculators as it would be to expect a satisfactory picture to result if each separate square of inch were painted by an independent artist. No "invisible hand" can be relied on to produce a good arrangement of the whole from a combination of separate treatments of the parts. It is, therefore, necessary that an authority of wider reach should intervene and should tackle the collective problems of beauty, of air and of light, as those other collective problems of gas and water have been tackled.

The "bounties" that he advocated for the beautification of urban spaces – then the object of social reformers of all stripes – did come about, as well as the seizure of property rights that he espoused. These policies brought us slum clearances, abject public housing complexes, and the modern suburb, innovations that today’s urban planners generally revile. More profoundly, in hindsight most urban planners have come to value highest the old, unplanned parts of cities, a valuation that the public as a whole echoes, judging by the real estate prices in what we call Heritage Districts today.

Perhaps someone wiser than Pigou and the elites of his day would today know what future generations would value and what they would not. Perhaps government today are not subject to fads and ill-considered decisions. The problem remains, even for a prescient government, that activities some might write off as unmeritorious have enormous merit. In fact, this is precisely why activities with large negative externalities exist. The larger the negative externality, as a rule, the larger the positive externality.

Take the automobile, a common target of environmentalists, myself included. With proper policies, in my view, the auto would lose much of its market share, to the general benefit of society. The auto’s negative externalities are indisputable, I believe, but I also believe its positive externalities are indisputable. Without the auto, how could the sick be rushed to hospital, how could rural folk do their shopping, how could urbanites get to provincial parks on the weekends? The internal combustion engine is not without merit.

Other activities with large negative externalities – those coal plants that spew mercury, that pulp and paper mill that pollutes downstream residents, that boisterous neighbourhood bar – also keep our lights on, support rural communities, provide comradery and social cohesion. If it is fair to tax them for the bads they provide, it must be fair to reward them for the good they do.

But who would set those Pigouvian values by judging the rights and wrongs of each activity, and what confidence do we have that Pigouvian value setters would arrive at better results than those now on offer: the ballot box (which ultimately delivers polluting mill towns), the courts (which regulates nuisances and other common laws), and the marketplace (which drives efficiency improvements)? All three of these institutions need reform, by improving democracy, by strengthening the common law, by promoting freer markets. Pigou, undoubtedly, also has a role to play, one inversely proportional to the success in the reforms of these institutions.

Lawrence Solomon is executive director of Energy Probe and the Urban Renaissance Institute.

Posted in Energy Probe News | Leave a comment

Spreading sprawl

Posted on February 29, 2008 by energyprbe

Lawrence Solomon
National Post
February 2, 2008

Canadians are becoming more and more dependent on the automobile, Stats-Can told us last week, citing figures showing that 74% of Canadians are full-time drivers, up from 70% in 1998 and 68% in 1992. This trend, a natural consequence of suburban sprawl, is only to be expected. Our governments spend billions to promote the use of suburbs.

Take the most recent shot in the arm for sprawl, British Columbia’s $14-billion plan to enable longer, faster commutes; to develop the low-density areas outside Vancouver; to enable the dispersion of Vancouverites to the outlying areas; and to counter the natural incentive we all have to live close to our places of work, study, and play.

"Our new $14-billion Provincial Transit Plan will add 600 frequent buses out-side Metro Vancouver – a 60% increase," Kevin Falcon, BC’s Minister of Transportation, boasted to the Chilliwack Times this week, explaining the provincial desire that Chilliwack and other communities outside Vancouver grow their populations.

"We will be putting frequent buses along the Trans-Canada Highway to connect Abbotsford and Chilliwack to Langley, Surrey and our rapid transit stations," Mr. Falcon continued, adding that the government will ultimately provide gold-plated bus and rail service to make it easy for people to leave Vancouver for the suburbs. "By 2030, Skytrain will extend out to Langley, integrating RapidBuses with Rapid Transit in Metro Vancouver."

B.C.’s announcement follows Ontario’s own mega Move-Ontario-to-the-Suburbs-by-2020 plan, at $17.5-billion the largest transit plan in Canadian history. The plan to transform the Greater Toronto Region, an area bigger than Prince Edward Island, includes 52 rapid transit projects along 902 kilometres of new or improved rapid transit routes designed to boost region-wide travelling. "It will result in 800 million new transit trips per year," exults the province, while only "taking 300 million car trips off GTA roads." This net expansion of 500 million vehicular trips a year throughout the Greater Toronto Area promises to be the greatest spur to sprawl in Canadian history.

In the popular conception, the private automobile causes sprawl and public transit is either benign or beneficial as a factor of development. This misreads history, including fairly recent history.

Before the province of Ontario directed the Toronto Transit Commission to service Toronto’s outer suburbs in the early 1950s, the suburbs were largely rural and undeveloped, with densities so uniformly low that they could support but a handful of public transit lines. Only after the province stepped in by creating Metropolitan Toronto as a vehicle for massive infrastructure spending in the suburbs did sprawl on a grand scale unfold. Within a decade, the TTC’s route mileage increased by 75%, almost all of it to accommodate the suburbs and almost all of it uneconomic.

In the process, the TTC – until the advent of Metropolitan government a self-sufficient enterprise that helped make Toronto one of the continent’s most compact cities – became a burden for city taxpayers and an arch agent of sprawl.

Posted in Energy Probe News | Leave a comment

Extreme competition, but not extreme enough

Posted on February 29, 2008 by energyprbe

Lawrence Solomon
National Post
February 7, 2008

Since Maggie Thatcher broke up the United Kingdom’s dysfunctional energy monopolies two decades ago, costs plummeted, as did prices for consumers, as a wave of new entrants into the energy business led to a textbook example of the benefits of competition. Today, the typical household has several thousand options in purchasing power that come to it courtesy of six dozen different licensed merchants. Compare that to the choices your local power monopolist provides you.

Then ponder this: The ingrates across the Pond aren’t satisfied with the level of competition that the UK system provides them. When prices drop, as they have on numerous occasions in the largely deregulated UK energy marketplace, consumers are happy. When they rise, as they have recently, consumers cry foul. They do this even though a recent investigation of alleged price-fixing by Ofgem, the industry’s independent regulator, found no evidence of collusion, and even though a commonly recognized contributor to rate hikes are measures taken to combat climate change.

Because of continuing public pressure, a UK House of Commons Select Committee hearing on competition in the energy market will now investigate whether there is enough competition among the big energy suppliers. The committee is unlikely to discover anything to discredit Ofgem’s finding – Ofgem is the gold standard among utility regulators. The most the committee could do, if it finds cause for alarm, is refer the matter to the Competition Commission.

Conspiracy theorists are gladdened by the prospect of hauling industry executives to this parliamentary court. Reasonable people should be saddened to see the world’s most competitive energy marketplace subjected to baseless accusations. Most of all, they should be alarmed to see the independent regulator’s authority undermined, for without a de-politicized and independent regulator to set ground rules fair to all, the energy marketplace would again become dysfunctional.

Worst polluters still get breaks

Posted on February 29, 2008 by energyprbe

Lawrence Solomon
National Post
February 21, 2008

The B.C. government this week introduced what it hails as North America’s first carbon tax, but many will see it mostly as just another hike in the gas tax, and for good reason. The gas tax, rising to 7.24¢ per litre over four years, will do next to nothing apart from increasing the provincial take – Europe with its sky-high gas taxes and ever-increasing auto use demonstrates the ineffectiveness of gas taxes in curbing the car.

Meanwhile, British Columbia has a slew of other tax policies, many of them in the energy-intensive resource sector, that do wonders at influencing B.C.’s carbon dioxide footprint – for the worst!

Take the mining sector, as adept at mining provincial treasuries as hard-rock. Measures such as the B.C. Mining Exploration Tax Credit, flow-through shares, and super-flow-through shares, bolstered by federal programs such as the federal Investment Tax Credit for Exploration are credited with spurring boom times in B.C.’s mining communities – B.C.’s explorations expenditures soared from $30-million in 2001 to $300-million in 2006.

Other provinces likewise give preferential tax treatment to mining, as attested to by local variants such as the Manitoba Mineral Exploration Tax Credit. The upshot is that the more energy-efficient metal recycling industries, which must compete against the primary metals industry, are knee-capped. They end up with a smaller market share and society ends up with increased carbon dioxide emissions.

The pulp and paper industry gets preferential tax treatment, too, arguing quite correctly that without tax breaks or tax holidays, mills would close and forest towns would die. If they did die – as would happen with a tax policy that was even-handed – we would use less virgin paper and more recycled stock. Again, carbon-dioxide emissions would decrease.

Maintaining rural Canada, and rural industries, is a prime thrust of government tax policy, even though these industries have several times the carbon footprint of urban industries, and would be rapidly phased out if not protected from the marketplace. Not surprisingly, the B.C. carbon tax exempts the worst polluters, most of them rural-based, from carbon taxes. These include British Columbia’s most energy-intensive sectors: oil and gas, aluminum, cement and agriculture. Together, exempted industries account for about one-third of the province’s carbon emissions.

Because tax breaks for rural industries aren’t enough to support rural Canada, governments provide outsized supports directly to rural residents too. To ration scarce jobs in uneconomic areas, and keep workers from migrating, the federal government tailors the Employment Insurance system to retain rural workers: It collects payroll deductions from resource workers for but a few weeks before granting them benefits for the rest of the year. To encourage more remote workers, the government provides more benefits still.

Northern residents can claim a residency deduction of up to 20% of net income through their income tax forms, plus travel deductions, including travel for vacations (the federal government permits two vacations per year for each member of the household).

The more directly that governments control a sector, the more likely that it will be a polluter, a greenhouse-gas contributor, and a recipient of tax breaks. Most of Canada’s power is generated by Crown corporations and most of these are largely or wholly untaxed. Most of Canada’s mining lands and forest lands are in government hands. Most of Canada’s roads are run by governments.

Eliminating the tax breaks in these government-run areas would do more to reduce carbon-dioxide emissions than any carbon tax possibly could. A charge on roads, for example, greatly reduces road use and greatly increases public transit use, as evidence from London, Stockholm and other road-tolling jurisdictions attest. Rather than increasing the gas tax by 7.24¢ per litre, B.C. could have replaced it with a European-style road levy that merely charged those who used roads, in proportion to their use. Less carbon tax plus more accountability equals less carbon emissions

Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute, and author of The Deniers (forthcoming).

Posted in Energy Probe News | Leave a comment

More wind power viable: study

Posted on February 27, 2008 by energyprbe

Tyler Hamilton
Toronto Star
October 25, 2007

A study released yesterday by Ontario’s electricity authorities says wind power could represent nearly 20 per cent of the province’s power-generation capacity with little compromise to system.

Critics say the numbers are suspiciously high.

Ontario has four major wind farms in service now with a potential of producing 396 megawatts of emission-free electricity. About 1,300 megawatts are to be operating by 2010.

The problem with wind energy is that another source of power generation, or "operating reserve," is required to pick up the slack when the wind isn’t blowing. Add too much wind to the mix and the whole system can become unstable.

The study, conducted by GE Energy, concluded that Ontario’s electricity system could handle up to 5,000 megawatts of wind capacity with "negligible" need for additional operating reserves. Beyond that, a more substantial investment in reserve power is required.

It also found that the average capacity value of the wind resource in Ontario during the summer is about 17 per cent, meaning the province can expect to get 170 megawatts of electricity from wind turbines that could, under optimal conditions, generate 1,000 megawatts.

Don Tench, director of planning and assessments for the Independent Electricity System Operator, which balances demand and supply on Ontario’s grid, said the study will help guide the province as it puts together its 20-year system plan.

"We’ve still got some work to do to integrate 5,000 megawatts," said Tench. "But I’m much more confident that something like this would be feasible."

The system operator, along with the Ontario Power Authority and the Canadian Wind Energy Association, jointly commissioned the study. Tom Adams, executive director of Energy Probe, said he’s concerned that a wind-turbine manufacturer such as GE Energy was hired to do the work.

"The authorship of this suggests we should read it with caution," said Adams, adding that his own analysis indicates the GE report is overly optimistic.

Tench said the study isn’t the final word on the issue. The system operator, for example, announced the creation of a working group yesterday that will explore ways of integrating wind power into Ontario’s grid.

The wind market, meanwhile, is booming in Canada.

The industry employed the equivalent of 1,200 full-time workers last year, up 65 per cent compared to 2004, and contributed $736 million to Canada’s GDP, says the wind association.

Revenue doubled in 2005 to $548 million.

Alberta has capped wind development at about 10 per cent of its system capacity because of inadequate transmission and concerns over grid stability.

Tench said Ontario will have to invest heavily in transmission to tap its vast wind resources up north.

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