Perspectives on the Green Energy Act – Summary by Gavin M

In spite of the looming provincial election, 19 September marked another successful WSIC event, with about 30 interested citizens joining the WSIC team to hear about and discuss Ontario’s Green Energy Act.

John Stepheson kicked off the evening with a discussion on district heating. Space and water heating account for about 20% of our energy consumption, and we can’t live without the heat. Since marginal energy use comes from the grid – which is heavy on fossil fuels – improvements in secondary heating can generate significant returns.

District heating accounts for only about 1% of heating energy in Canada, as these projects have difficulty competing with natural gas on price. In Sweden, by contrast, carbon taxes make gas less competitive and district heating accounts for about 50%. From the speaker’s perspective, feed in tariff prices for alternatives promotes generation but doesn’t provide a market incentive for loads, like district heating, to switch to sustainable alternatives.

John was joined by Kevin Matthews from Canada Composting, a private company that provides anaerobic digestion of organics into methane – the energy output of 1/3 of Toronto’s 120 tons of annual green bin waste. With organics disposal coming to condos, we hope more of Toronto´s waste will be converted to usable methane.

Admittedly, at inception the project was viewed by government as an alternative to landfill disposal. The methane product from organic digestion can be purified and the purified methane – aka “Pipeline Gas” – can join the existing natural gas infrastructure. As volumes and capacity increase, biomass should join other renewables as a generation option, rather than a green disposal alternative.

The Green Energy Act is more than a feed-in tariff. It also mandates that 50% of green tech be manufactured in Ontario: while the photovoltaics mostly come from China, for example, the majority of a given generation system must be made and assembled here in Ontario. John questioned whether this was a suitable use of competitive advantage: the Ontario market is not large enough to develop scale economies as compared to industries in places like Sweden, Austria, and Italy that are already tooled-up.

The Act does not include a provincial plan for siting facilities. Accordingly, proposed facilities have to go through a local process for approval without any legislative aid and are frequently derailed by NIMBY activists. John noted that his company prepares proposals in response to RFPs about annually at a cost approaching 1/4 million; none have been lost, but none have gone ahead. Both speakers agreed that provincial direction is needed to overcome this gap.

Attendees also discussed the economic realities of the higher feed in costs for renewables. While some were concerned that higher power costs means job losses – particularly to Quebec – John noted that there are very few industries in Ontario that are so power intensive, and accordingly very few businesses for which small changes in marginal energy cost would be relevant as compared to most other cost factors. The changes in price would likely be very small: the current mix has an almost negligible proportion of renewables and the marginal price is set by the grid.

Please join us for another night of non-partisan discussion October 12th with MP Terence Young about the need for an independent drug agency in Canada.

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