Energy Probe

Pending N.B. report on power deal with Quebec dismissed sight unseen by Tories

Posted on February 1, 2010 by energyprbe

Keith Doucette
Canadian Press
January 31, 2010

HALIFAX, N.S. — A provincially appointed panel will release its opinion Monday on a controversial deal to sell major NB Power assets to Hydro-Quebec, but New Brunswick’s Opposition leader is already dismissing its work.

Conservative Leader David Alward maintains the six-person panel appointed last November by Premier Shawn Graham to provide independent advice has been "irrelevant from square one."

He also questions the legitimacy of the panel’s report, which will be presented in Fredericton by chair David Ganong and panel member Louis LaPierre.

Alward believes the report will amount to a "public relations exercise" on behalf of a government that has already made up its mind to proceed with what is now a $3.2-billion deal that would see Hydro-Quebec get New Brunswick’s hydro, diesel and nuclear generating plants and its transmission exports to the United States.

"There are good people on this panel," Alward said in a weekend interview. "Unfortunately, they’ve been asked to do an impossible task by the premier. … And just like the premier’s deal, their work has been behind closed doors in secrecy, and that is unacceptable."

The panel is tasked with offering advice on whether the proposed sale is in the best interests of the public.

It’s since been assessing the financial implications of the deal, its impact on New Brunswick’s future energy sovereignty and its long-term effects on residential power rates.

The report was initially expected to be released in mid-January, but Ganong warned last month that the panel would need more time because of the deal’s complexity.

Their recommendations will be released in the face of mounting unrest over a lack of public consultation about the proposed sale – something Alward is doing his best to capitalize on with a New Brunswick election looming in the fall.

"I do not believe (the report) will have a significant impact one way or the other," said Alward. "They (government) have lost a tremendous amount of credibility on decisions they take because they’ve left people out of the process."

Alward said he wants the sale dissected in public before an all-party legislative committee.

Government officials declined to comment over the weekend preferring to wait until the panel’s report is released publicly.

However, David Coon of the New Brunswick Conservation Council thinks what the panel will have to say is important, although he objects to an overall process he said is proceeding without a stated provincial energy policy.

"My hunch is their focus will largely be on how NB Power should operate and be organized substantive to the deal being arranged rather than as much on the deal itself, but we’ll see," he said.

Coon is also critical of how the deal was rolled out, although he concedes the recent revisions are a major improvement over the initial $4.7-billion deal signed last October because the province is no longer selling NB Power and took transmission and distribution off the table.

"I think (the report) will add a new sort of dimension into the discussion on, what now?" he said.

Meanwhile, energy analyst Norm Rubin of the Toronto-based lobby group Energy Probe believes New Brunswickers stand to come out ahead in any deal that relieves them of a large part of the debt racked up by NB Power.

But as for the panel and any insight into the way to proceed, he said there’s simply no blueprint available on the proper reformation of a provincial Crown utility.

"I guess the government would like to do it in some way that doesn’t get them turfed out by angry voters," said Rubin. "That sounds like one condition and it’s not clear they’ve met that condition because the popularity of the government seems to have dropped."

Pending N.B. report on power deal with Quebec dismissed sight unseen by Tories

Posted on January 31, 2010 by energyprbe

(Jan. 31, 2010) HALIFAX, N.S. — A provincially appointed panel will release its opinion Monday on a controversial deal to sell major NB Power assets to Hydro-Quebec, but New Brunswick’s Opposition leader is already dismissing its work. Continue reading →

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Keeping Canadian students in the dark on climate

Posted on January 30, 2010 by energyprbe

(Jan. 30, 2010) Climate change is natural. Spending time and money on the issue is largely a waste,” posited Steve Paikin, host of TV Ontario’s The Agenda, to his live studio audience at the University of Toronto’s Munk Centre for International Studies Thursday evening. Continue reading →

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Keeping Canadian students in the dark on climate

Posted on January 30, 2010 by energyprbe

Lawrence Solomon
Financial Post
January 30, 2010

Climate change is natural. Spending time and money on the issue is largely a waste,” posited Steve Paikin, host of TV Ontario’s The Agenda, to his live studio audience at the University of Toronto’s Munk Centre for International Studies Thursday evening. Paikin’s statement to the students came in the middle of an hour-long debate on climate change in which I participated, along with four other panelists.

The statement, the first of three that Paikin posed to the university students, came from an earlier Leger public opinion poll, but unlike the results that Leger found (16% agreed with the statement), not a single student among the 80 in attendance raised a hand in agreement. Are these students so accepting of the prevailing orthodoxy that none believes that climate change is natural, I thought, scanning their faces from my perch on the stage. Or are these students too intimidated by their peers or by the presence of the Munk Centre’s director — Janice Stein, also on the stage with me — to dissent from the prevailing orthodoxy on climate change?

I found the students’ silence disquieting. The majority of the public in the English speaking world no longer gives credence to the view that humans are responsible for climate change. In the U.S. where the abandonment is most pronounced, only 36% blame humans, according a recent Pew poll. In the U.K., the figure is 41%. The abandonment is across the board, involving members of all major political parties, and all age groups, youths included. In the U.S., 45% of those under 30 blame humans, in the UK, 42%.

So why would no student in the room — either out of youthful brashness or defiance of authority or conviction based on knowledge — utter a peep?

If any of them had done their homework on this issue, they would have found that the Arctic ice is expanding, not shrinking; that the Antarctic, too, is gaining ice, not melting; that polar bear populations are not in decline, that global temperatures have been dropping over the last decade, not warming as the computer models had predicted; and that, in any event, none of the computer models on which claims of climate change rest — not one — has been made to work.

The answer to the students’ reticence to speak up is surely a consequence of Canada’s educational system. At our high schools, climate change is taught as dogma, with Al Gore’s film, An Inconvenient Truth, a staple (in the U.K., after a high-profile case before the High Court found that An Inconvenient Truth is an error-filled work of propaganda, Gore’s film can no longer be presented as scientifically valid). At our universities, no school dares encourage debate on global warming among its faculty, for fear of repercussions in research funding. By the time students have gone through high school and experienced a year or two of Canadian university, as would have been the case with many in the Munk audience, they almost surely would never have been exposed to the scientific controversy over climate change by their schools, except dismissively. One recent graduate of an Ontario university whom I know, who only discovered the controversy over climate change after receiving her master’s in environmental engineering, feels outrage at being kept in the dark by her school in the area she chose for her career.

To my knowledge, no Canadian university has ever sponsored a formal debate on climate change involving a skeptic. Last March, to my delight, the Queen’s University Business School asked me to participate in its annual Commerce Engineering Environmental Conference. When an opportunity arose to participate in a global warming debate with Elizabeth May, the head of the Green Party, I leapt at it. When Elizabeth withdrew from the debate, I readily accepted the alternative debater that the organizers proposed. Then after a period of apparent hemming and hawing, the school disinvited me without explanation, other than saying it was “no longer an option” for me to appear in a global warming debate.

Until a few months ago, I was expecting to participate in a debate at this year’s conference at Queen’s. Following my disinvite last year, I wrote a column describing my disinvitation, which led members of Queen’s alumni to contact the school, demanding an explanation. The Dean of Queen’s School of Business then became involved, leading the conference co-chair to invite me to the 2010 conference, with assurances that every effort would be made to stage the debate. As a sign of goodwill, the university even agreed to approach a list of at least six prominent global warming experts to take me on. Alas, a few months later, Queen’s decided to rescind the commitment.

On Thursday, the Munk Centre did host a debate of sorts on climate change, and for that it deserves kudos. I was pleased to participate, even though I was the only one of five panelists who disagreed with the global warming orthodoxy, even though the other four preferred to ignore rather than confront my arguments, and even though the spokesman for the David Suzuki Foundation, one of the four, attacked me personally after I told the students in the audience that they could see how the Arctic ice has been changing by visiting the website of the Japan Aerospace Exploration Agency — their satellites track continuously the ice expansions and contractions, and compare them to previous years.

But as novel as Munk was to allow me to participate, it could serve its students better still by exposing them to varying viewpoints, and encouraging them to think for themselves. If Janice Stein and the Munk faculty are confident that man is precipitating dangerous climate change, and if they trust their students to discern good science and good policy from bad, they should debate the other side rather than pretending it doesn’t exist.

Posted in Climate Change, Energy Probe News, The Deniers | Leave a comment

Ontario hasn’t heard the news

Posted on January 28, 2010 by energyprbe

(Jan. 28, 2010) As Napoleon entered Moscow in the fall of 1812, Czar Alexander and his commanders were discussing just when and where they should stand their ground. A pessimistic Russian field marshal noted the splendid successes of the Grand Armeé and speculated that stopping the French might be a difficult thing. Alexander answered, “Napoleon may have Generals MacDonald and Ney, but I have General Winter.” History proved him right, and it can serve us up plenty of other examples when it comes to empires that were cut down to size all because of snow and wind. Continue reading →

Posted in Costs, Benefits and Risks | Leave a comment

Ontario hasn’t heard the news

Posted on January 28, 2010 by energyprbe

(Jan. 28, 2010) As Napoleon entered Moscow in the fall of 1812, Czar Alexander and his commanders were discussing just when and where they should stand their ground. Continue reading →

Posted in Climate Change | Leave a comment

Ontario hasn’t heard the news

Posted on January 28, 2010 by energyprbe

Jamie MacMaster
REM online
January 28, 2010

As Napoleon entered Moscow in the fall of 1812, Czar Alexander and his commanders were discussing just when and where they should stand their ground. A pessimistic Russian field marshal noted the splendid successes of the Grand Armeé and speculated that stopping the French might be a difficult thing. Alexander answered, “Napoleon may have Generals MacDonald and Ney, but I have General Winter.” History proved him right, and it can serve us up plenty of other examples when it comes to empires that were cut down to size all because of snow and wind.

So we might sympathize with poor Al Gore and David Suzuki at least to the same extent that we would pity all failed dictators and despots. With canonization but one small Fahrenheit degree away, along came something as ordinary as the weather and snatched sainthood from their sweating digits. Let me offer my sincere condolences by remarking such are the vicissitudes of life…it’s just the nature of things.

I mean, things were going just swimmingly. The media, the governments, the students and the socialists had all swallowed the anthropogenic global-warming stuff. Everyone was in accord with the Kyoto Accord; a real-life parlour game that penalized countries advanced enough to have a social conscience and rewarded those greedy enough to exploit it. But then, just when things were humming nicely and the billions were flowing in, along came some scientists, skeptics and sunspots – or more precisely, the lack of sunspots – to upset their apocalypse cart.

The first cracks to appear in the foundations of the House of Hoax were subtle – hairline really. But the replacement of the unidirectional term ‘global warming’ by the all encompassing ‘climate change’ was an admission that there were certain, ahem, ‘inconsistencies’ in the earth-is-gonna-fry theory. However, if one just concentrated exclusively on this little hockey stick graph, well, the overall picture was pretty evident: rising seas, droughts, pestilence and the extirpation of humanity within a generation or two.

But if you hang your little stick out in public for every one to see, smart people get to peek at it too…and they might even point and laugh. A lot of real scientists from around the world (including Canadian professors Tim Ball, Fred Michel and Ian Clark) who had studied the history of earth’s weather over hundreds of millions of years, knew that climate graphs don’t look like neat little hockey sticks, and they said so….publicly. And when invited to this good old fashioned sticks-and-stones science fight, the lefties didn’t have the brains to stay silent. They opened their arsenal and responded with the only weapon in their arsenal: name-calling. David had just challenged Goliath and Goliath was acting like a wee-wee. It could not go un-noticed.

A handful of journalists, writers and television producers, who had somehow resisted the climate change narcosis that afflicted their peers, recognized a retreat when they saw one. Martin Durkin, a British television producer, put together a brilliant documentary, The Great Global Warming Swindle that presented compelling evidence that the cause of climate change was not human activities, but solar radiation. At about the same time Lawrence Solomon’s essays, The Deniers, appeared in the National Post. Solomon condensed and coalesced the scientific opinions of the swelling ranks of academic heretics into three arguments: man-made global warming was a crock; unscrupulous politicians and NGOs were getting powerful and rich by perpetuating the myth; and, if the nonsense continued, the Western World would be a much poorer place.

Data began pouring in from numerous independent sources, many of them government agencies. Not only had any warming trend stopped, but the reverse was happening – the earth’s surface temperature was actually cooling….and had been doing so for eight or 10 years! Whether motivated by the impending threat to their finances or affronts to their professional dignities, the environmental coalition counterattacked. Suzuki mounted a McGill University stage and, to thunderous applause from his assembled devotees, said that politicians who ignored the ‘science’ behind climate change should be jailed. His time spent as a board member of the Canadian Civil Liberties Association had obviously left no lasting impression. Dr. James Hansen, whose NASA credentials were used to shore up Gore’s shaky suppositions, declared that industry executives who resisted the Pied Piper’s global warming tune should share bunks with Suzuki’s incarcerated politicians.

But just like the Doomsday fanatics who wake up in their earthly beds the morning of the day after Armageddon, the apocalypse-pending crowd was in a dogmatic quandary. With no rise in sea levels, and the preponderance of scientific data pointing to planetary cooling, they had no choice but to add a chapter to their Book of Revelations.

There was a progressive element to the successive edits; what started out as minor concessions became major revisions.

“Over the last two decades the overall trend is global warming” morphed into “Yes, we’ve accounted for this leveling-off, and it might last for up to 30 years.” But their feigned nonchalance couldn’t hide the fact that they were labouring under a tremendous handicap: with the water in their ponds freezing solid, they looked plain silly trying to skate in their hip-waders, and how could they be expected to win this climate-change game with a badly disfigured hockey stick?

In April 2009, Rasmussen Reports released the results of a national survey that polled Americans on their global-warming views. The results are startling. Just one short year ago, 47 per cent of respondents blamed human activity and 34 per cent were content to believe that Mother Nature was the culprit. The numbers have reversed: only one in three voters (34 per cent) now believe global warming is caused by human activity while almost half (48 per cent) attribute climate change to long-term natural cycles.

Closer to home, British Columbia’s New Democratic Party (who never saw a cloud on the horizon that wasn’t evidence of a dying planet) incurred Suzuki’s wrath by officially committing to axe a provincial carbon tax. He must surely feel a bit forsaken in his hour of need.

That this declining support for the global-warming stuff is in direct proportion to the weakening of the economy is no coincidence. The public is likely to support all sorts of things…as long as no cost is incurred to the individual’s wallet and no threat posed to his lifestyle. So wind energy is a great thing, until electricity costs triple or a windmill mars community esthetics.

But Ontario – and that certainly includes rural Ontario – in its unseemly haste to lead the charge towards all things green and beautiful, is much too committed to heed the bugle-notes of the global-warming retreat. Climate change has become our raison d’etre; it is our government and our foreign policy, and, with our manufacturing base and small enterprises succumbing to hard times and regulatory overload, it might even have to totter along for a while as a poor excuse for an actual economy.

It is there in black and white for all to see in our Provincial Policy Statement on Land Use (PPS), The Clean Water Act, The Endangered Species Act, The Green Energy Act and a host of other pieces of legislation that you never knew existed – but which you will certainly learn about in the future when you want to spray your crops, clear some land, pay your hydro bill or sell your farm.

Will it stop? Probably not, and another story that makes the rounds in military colleges tells us why. When the Spartans were at the height of their military fame they sent a delegation to the Oracle at Delphi and, with no small amount of conceit demanded: Can anything harm Sparta? The answer (which probably didn’t have much effect on their considerable egos) was short and to the point: Yes, luxury.

The danger with luxury is that it is invariably attended by its handmaidens: self-interest, complacency, cowardice, and an appalling lack of curiosity about the important things… soft living begets soft heads. It is as much a state of mind as a state of being. Let’s stretch out on our couches and think about whether that might apply to rural Ontario.

Loggers engaged in thinning county-owned forests won’t speak out against a proposed tree cutting bylaw for fear that opposing their own demise a few years down the road might hurt next week’s paycheque. Dairy farmers who spend Wednesday afternoons playing old-timers hockey and/or weekends at curling bonspiels say they don’t have the time to write MPPs about problematic legislation. The majority of agents in a rural real estate office can’t be bothered to email pre-prepared letters to their MPPs about the negative effects energy audits would have on their own industry and a faltering rural economy. And despite five years of coverage that local press gave to landowner associations in their fight against provincial land-use policies, farmers are incensed to learn that there is such a thing as a Provincial Land Use Policy, and that solar panels qualify as a legal crop on agricultural land. Such is the state of affairs in rural Ontario.

With one of Ontario’s farm organizations gushing about the splendid opportunities McGuinty’s Green Energy Act will provide, and another one wringing its hands about an impending climate change crisis that never did exist, I’m going to speculate that things are going to get a whole lot worse before they get better.

Jamie MacMaster is a real estate salesperson with Rickerd Realty in Glengarry County, Ont. He is a director of the Ontario Landowners’ Association and owns a hunting/outfitting business. http://www.uppercanadaoutfitters.com.

Read the original story here.

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

Aldyen Donnelly: Getting private capital to buy into the green economy

Posted on January 26, 2010 by energyprbe

The Canadian government’s "low carbon economy" strategy should mobilize private capital and not rely heavily on new investment that is, effectively, 100% public debt, or electricity rate-base financed. Unfortunately, this is the corner that both BC and Ontario policy strategies appear to be based on—even though they are different policy sets at first glance.

How do we mobilize private capital where the private sector is bearing investment risk, in lieu of the current situation in which the public and electricity rate-payers are being asked to bear 100% of investor risk, and at a risk premium that is many multiples of the private sector’s current cost of capital?

First, I think that all provinces should call on the government of Canada to regulate a new "Class 27"-style capital one-year depreciation rate for any investment in equipment replacement or additions in EXISTING buildings, power plants, manufacturing facilities and commercial vehicle fleets that will result in a minimum 20% reduction in GHG emissions—as long as the investment does not drive up any other pollutant discharges.

Here is look at the original Class 27 language as well as a strawdog draft of a new Class 27 that I think would work.

Capital Cost Allowance ("CCA") accelerated depreciation for tax purposes is always the federal government’s least-cost mechanism to spawn new private sector investment. This is a federal tax deferral, not a full reduction. So it only costs the federal government the time value of money if the new capital investment spawned by the regulation is incremental.

Since there is very little new investment in existing Canadian plants at this recessionary time, almost all investment responding to the new CCA rate will be indisputably incremental.

Please note that if we assume that at the existing capital stock turnover rate, sources of 35 MM TCO2e will be retired before 2020, adopt Dr. Jaccard’s forecast of "Business as Usual" ("BaU") net GHG growth, and assume (for now) that we can implement policies and measures to ensure that new sources discharge only 50% of the GHGs that are in the BaU forecast, then:

Owners of buildings, plants and commercial transportation fleets that are in operation today and would still be in operation, on a BaU basis, in 2020 must deliver 3 out of every 4 TCO2e/year that Canada has to realize to achieve the federal government’s stated absolute national GHG target for 2020.

Almost all of the public resources that the governments of BC and Ontario have committed to GHG "reduction" to date are focused on the tax of ensuring that new energy and industrial sources, and new building construction, is less GHG-intensive than the BaU case. Very little of the new spending mobilized private capital to cut GHG emissions at existing sources that would normally continue to operate through 2020.

This is what the new Class 27 should do.

Please note that most investments in existing facilities and fleets that increase energy efficiency and reduce GHG and air pollution emissions already attract one year depreciation rates (for tax purposes) in Europe, the UK and the US. Putting the new Class 27 CCA regulation in place in Canada—before consideration of the credit banking provision that I have built into the strawdog—does no more than level the playing field for capital investment in Canada with the UK, US and Europe. I have included a depreciation tax credit banking (but not trading) provision in the strawdog regulation to:

convert Canada into a slightly more attractive investment climate than the UK, Europe and the US, while

signaling that currently unprofitable enterprises will only benefit from the tax credit if they figure out how to generate profits (and pay corporate income taxes) within 10 years of the original investment in new equipment to reduce emissions and

to effectively allow transfers of the depreciation tax credit only to acquisitors of the sites at which the existing plants are located and only when the site buyers redevelop those sites to create green industrial jobs.

I don’t quite have the credit banking language in the strawdog right, yet. But a key element of final regulation wording should be to allow the bankable tax credit to be bankable and only transferable to investors who redevelop and generate incremental jobs in the communities at the highest economic risk due to GHG regulation.

Ontario’s Feed-in Tariff (TIF) does not do Hamilton (one of the top 30 Canadian economies at risk) any good if none of the new green power installations or continuing green power service jobs are not located in the Hamilton area.

How Could a Province Lever Off a new Class 27 CCA regulation?

Assuming that the provinces can convince the feds to put a new Class 27-like CCA regulation in the next federal budget, the provinces can adopt another US tax measure to maximize the leverage potential of the CCA regulation.

For the past 30 years, or more, US federal tax laws have declared the interest income that bond-holders earn on state and municipal bonds issued to finance power generation capacity as well as ports and certain rail infrastructure, to be 100% income tax exempt. This provision in US tax law ensures that private sector banks and investors are quick to supply low interest loans to private and public developers of the targeted infrastructure.

In exchange for Class 27, provinces should consider telling the feds that they will consider implementing the long-standing US-style interest income tax exemption, at the provincial levels, for bonds/loans to certified green technology infrastructure investments.

Remember, the goal here is to mobilize private capital—most importantly bank lending—at least short and long-term cost to the federal and provincial treasuries and to residential and industrial electricity rate-payers.

Perhaps the provinces might even go so far as ask the feds to mirror the proposed provincial interest income tax exemption in federal income tax law, in addition to promulgating a new Class 27 regulation.

In the US, Congress is obliged to establish an appropriation for every tax measure it approves, every year (unlike Canada, where we appropriate budget only for cash outlays). This establishes a fixed limit to governments’ exposures under the tax incentives. I also believe that the government of Canada and the provinces should consider establishing US-style annual "spending" limits for the above-recommended tax measures, to remove public revenue uncertainty from the proposal.

Note that the establishment of annual limits to tax credit commitments means that governments have to decide and disclose to the marketplace how they will manage the situation if/when demand for the tax credits exceeds the tax credit/interest income exemption budgets.

In most cases, the US Congress has ruled that tax credits will be made available on a ‘first come, first serve" basis, and I think that is the best approach for both of the above-recommended tax incentives.

Note, however, the alternative.

In some cases, Congress has ruled that tax credits will be allocated pro-rated to demand. For example, under the US Energy Security Act, large US producers of ethanol qualify for a production tax credit that is UP TO US$0.54/US gallon of ethanol produced, while small ethanol producers qualify for UP TO US$0.65/US gallon in production tax credits.

In 2008, however, US ethanol production exceeded the Congressional forecast, so demand for production tax credits exceeded the appropriation for those tax credits. Congress ruled that small US ethanol producers shall take the maximum US$0.65/US gallon tax credit and any remaining tax credit budget after that shall be appropriated to large producers pro-rated to their output.

This formula was established well in advance of the 2008 operating year, so this was no surprise to the industry.

The result was that in fiscal 2008, the US’s large ethanol producers realized only a US$0.45/US gallon production tax credit, not the legislated maximum US $0.54/US gallon. In fact, back in 2004, large US ethanol producers realized only US$0.20/US gallon in production tax credits.

In the 2005 Energy Security Act, the US Congress raised the large producers’ tax credit maximum from US$0.51 to US$0.54. But this was not the significant measure the US Congress introduced in 2005. The significant measure was an increase in appropriations for the ethanol production tax credit, which enabled the large producers to realize the full US$0.54/US gallon in 2006 and 2007 and US$0.45/US gallon (still over double their 2004 production tax credit realization) in 2008.

At the end of 2007, Congress amended the Energy Security Act to increase the level of the US biofuels mandate, but Congress did not substantially increase the forecast appropriations for the ethanol production tax credit. In other words, in 2007 Congress clearly signaled to the large US producers that it was time to start weaning themselves off of government subsidies.

I think the long-standing practice of pro-rating production tax credits (which I do not recommend in general) as in the ethanol example is very neat. This enables government to determine at what level of production the subsidies for each market participant should start to decline, and at what rate. As long as the strategy is well understood by industry from the outset, industry can manage this kind of uncertainty. This uncertainty motivates investors to be early adopters of the new technologies.

While I think that the federal new Class 27 budget should be allocated on a "first come, first serve" basis at the outset, I also think that the federal government might be well-advised to shift to tax credit rationing on a pro-rated basis (through a regulation amendment) after a number of years. Similarly, any budget allocation-constrained federal and provincial interest income exemption tax credits could also shift from "first come, first serve" to pro-rated to loan output shares, after a while.

This is a more rational and market-responsive way of phasing out a tax credit when market penetrations of the targeted investment start to become significant.

Now Let’s Talk About Ontario’s Feed-in Tariffs

I have repeatedly reported, previously, that FITs have been useful policy tools and renewable targets have been achieved at relatively low aggregate electricity price increases only if/when they have been implemented in the context of legally binding Renewable Energy Standards ("RES"). For this to work out, the RES has to be the primary driver of incremental green power demand and efficiency investments, not the price of the FIT. I have said that government must quickly implement four core regulations. A federal RES is one of those four.

I have also reported that Spain’s pre-2007 RES/FIT mix proved much more cost effective than Germany’s or any Scandinavian nation’s green power development strategies. The keys to Spain’s success story include:

the existence of a strong RES since 1985…15 years before Spain introduced its FIT, and

Spain’s development and publication of a long-term transmission development map, which is continually updated based on increasing knowledge about the availability and cost of development of Spanish renewable resources.

a FIT that fixes a green power premium to market rates for electricity, but does not fix absolute green power rates for 20 to 30 year terms.

Germany’s FIT actually provides incentives to the market to develop renewable power supplies where transmission access issues are greatest and costly to resolve. Germany’s FIT obliges the power utilities to build transmission infrastructure to meet the green power development demand. As a result, Germany and residential utility bills have realized unprecedented increases in transmission charges as a direct result of the FIT structure.

Spain has produced an intelligently developed map of current, planned and potential transmission and distribution infrastructure. Spanish green power projects bid to supply the utilities given the published transmission development plan. The pre-2007 Spanish FIT guarantees green power suppliers set premiums over market rates for long terms, but does not guarantee actual power prices for those terms.

Please note that in spite of this incremental uncertainty over the German FIT model, Spain had achieved greater green power market penetration by the end of 2007 than German, at less than 1/3 of the German incremental increase in transmission and aggregate power prices.

In 2007, Spanish leaders succumbed to market pressure to adopt a German-style FIT. In mid-2008, distressed with the manner in which this change affected Spanish electricity market, Spain retroactively and substantially reduced fixed prices in all power purchase agreements signed under the German-style FIT and reverted back to the pre-2007 Spanish FIT model.

The key difference between the models is in the balance sheets and credit worthiness of green power project developers. The German-style FIT attracts more cash-strapped green power applicants. The PPA-to-built-project ratio in Germany lags that for pre-2007 FIT Spain, significantly.

Also, the incidence of large corporate takeovers of cash-strapped small green power developers in German is significantly higher than it is in Spain. The Spanish green power market is dominated by private investors who have the capacity to share some long-term electricity price risk, while the German green power market is dominated by suppliers who have little to no risk-bearing capacity.

After implementing the tax measures I outline above, the Province might consider phasing in a FIT shift to the pre-2007 Spanish model over time.

Posted in Aldyen Donnelly | Leave a comment

Wind power a viable, but unreliable source of energy in quake shattered Haiti

Posted on January 26, 2010 by energyprbe

Sunny Freeman
Winnipeg Free Press
January 25, 2010

TORONTO – Canada’s Foreign Affairs Minister is eyeing the potential for wind power along Haiti’s coastline as part of the effort to improve the earthquake ravaged country’s capacity for power production.

Foreign Affairs Minister Lawrence Cannon said Monday technology will be an important element of rebuilding in Haiti after its infrastructure was devastated in the Jan. 12 earthquake that has left most of the Caribbean country in ruins.

Wind power could reduce the country’s dependence on fossil fuels, the minister said before a conference on Haitian reconstruction in Montreal.

But experts say that while wind energy should be part of a long-term energy strategy for Haiti, it is too expensive and unreliable as a short-term source of power to fuel reconstruction.

Andrew Thompson, a senior fellow at the Centre for International Governance Innovation,who specializes in Haiti, said Cannon was not the first person to raise wind power as an option for Haiti.

The island’s geography and a strong air stream makes wind power a viable possibility, he said. But he added, it requires a massive capital investment and a tremendous amount of infrastructure.

"There’s no silver bullet for Haiti’s energy needs. Wind would be one of a series of different options, I think its worth considering solar power as well."

Before the quake struck, non-profit groups were installing solar panels on the roofs of Haitian schools, as a self-sustaining source of power that doesn’t require a massive infrastructure investment like wind farms, he said.

Haiti needs to consider several other sources of energy, including importing charcoal from a neighbouring country. The country’s forests have been plundered to supply charcoal for cooking for the 80 per cent of Haitians who are desperately poor and cannot afford electricity.

Haiti’s mainly thermal and hydroelectric plants supply only a fraction of the energy required and even those who can afford to be on the grid receive power for only half the day. Many rely on expensive and polluting diesel generators.

"One of the challenges for Haiti will be to engage in a reforestation plan, while at the same time offering people an alternative source of fuel for cooking their food so that trees aren’t cut down again," he said.

"And that’s the appeal of something like wind or solar… it’s potentially a source of energy that in time could replace charcoal."

Robert Evans, a mechanical engineering professor at the University of British Columbia, said wind is an expensive type of energy production, that has been heavily subsidized in countries where it has been integrated.

Wind power is intermittent and works at full power capacity only one-third of the time fossil fuel plants do, and a back up source of power would be crucial, he said.

"It really only makes sense to integrate it into an existing situation where you’ve got the availability of back up power of some kind."

Lawrence Solomon, executive director of Energy Probe said being green is an extravagance Haiti can’t afford.

"For Haiti that needs to rebuild its infrastructure, this is the last thing they need, they need to get their economy up so they can have jobs, they don’t need to be wasting money on an unreliable power source."

But Robert Hornung, president of the Canadian Wind Energy Association said small island states are ideal for wind farms because wind is stronger in areas where land meets sea, adding Cuba and other Caribbean countries have already invested in wind energy.

"There are examples of how wind is making real contributions in countries that face those sort of climatic circumstances and development circumstances," he said.

Hornung said Cannon’s suggestion could also represent an opportunity for Canada’s small wind turbine manufacturers.

"We hope its an indication of role that wind energy can play…there’s a fairly broad consensus that if you’re looking to improve the environmental sustainability of your electricity system that wind is a sound choice."

Haitian Prime Minister Jean-Max Bellerive told delegates in Montreal Monday his government has set up six committees to deal with the crisis, including sanitation and energy. But it could take as long as three or four months to restore electricity in Port-au-Prince, which is now using generators.

Even before the quake destroyed Haiti’s infrastructure, it had the lowest coverage of electricity in the Western Hemisphere, according to a 2006 study from the Inter-American Development Bank. Only about 10 per cent of its 8.5 million people had access to limited services.

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Lawrence Solomon: Global warming dead last in poll

Posted on January 25, 2010 by energyprbe

A Pew Research Center poll released today shows that few Americans consider global warming to be a top priority, so few that global warming came in dead last among 21 issues. “I’d like to ask you some questions about priorities for President Obama and Congress this year,” the Pew questioner asked the public. “As I read from a list, tell me if you think the item that I read should be a top priority, important but lower priority, not too important or should it not be done.”

The great majority of Americans (80% or more) considered the economy, jobs, and terrorism to be a top priority. Most of them also chose as top priorities a number of other issues, such as social security (66%), education (65%) and financing Medicare (63%). Fewer chose items such as reducing crime (49%) or addressing the country’s moral breakdown (44%). Near the bottom were illegal immigration (40%), reducing the influence of lobbyists (36%) and dealing with global trade issues (32%). At the very bottom was dealing with global warming (28%).

The verdict on global warming was even bleaker among Republicans (11%) and Independents (25%), who both also relegated global warming to last place. Democrats weren’t quite so dismissive — they considered global warming more important than three issues (dealing with global trade, reducing the influence of lobbyists, and dealing with illegal immigration.

Last year, global warming 30% of Americans considered global warming a top priority and in 2008, 35% did. In all three years, however, global warming came in last among the issues that Pew surveyed.

Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute and author of The Deniers: The world-renowned scientists who stood up against global warming hysteria, political persecution, and fraud.

Lawrence Solomon, Financial Post, January 25, 2010

Posted in Climate Change, The Deniers | Leave a comment