In January, 2007, Gary Lunn, then the federal minister of natural resources, declared that it was not good enough for Canada to strive to be an energy superpower. "We must become a clean-energy superpower," he said. "It's a priority for our government." Three years later, Mr. Lunn is labouring in the outer ring of cabinet as the Minister of State for Sport, and the country is further than ever from assuming a superpower role, because a coherent renewable energy policy has dropped off the priority list.
That must change. Energy is key to our economy, and even those who are reluctant to lessen the grip that fossil fuels have on our energy needs concede that renewables will play an increasingly vital role. Indeed many countries, including the United States, see renewables as way to inject an enormous shot in the arm to a moribund manufacturing sector.
The Obama administration recognizes the need to boost the sector, and it has created a wide range of tax credits, loan guarantees and R&D support mechanisms. These are available to companies involved in solar, wind, biomass, geothermal and fuel-cell technology. Canada, on the other hand, is phasing out many of its supports, such as the EcoEnergy for Renewable Power program, which has now run out of money and was not renewed in the recent budget. Calgary's Pembina Institute estimates that U.S. federal spending on renewable energy outpaces Canada by 18 to 1 on a per-capita basis, an unacceptable ratio.
The Conservative government is dropping the ball on this issue. The recent federal budget was lacking in new ideas to encourage renewable technology; the Prime Minister now talks mainly of carbon capture and storage as the key environmental technology that will get federal support; the Environment Minister, Jim Prentice, said more renewable incentives are not needed because Canada already has clean-energy generation (mostly hydro and nuclear); and a former cabinet minister, Maxime Bernier, raised questions in a newspaper column about the urgency of climate change.
Fortunately, some provinces are aggressively moving ahead with their own programs. Ontario's new Green Energy Act has prompted remarkably quick expansion in the renewable sector. The provisions that require local sourcing of a proportion of the equipment used in wind or solar-power systems - in order to qualify for favourable prices for the electricity they generate - are already yielding results. Several companies have announced plans to build local manufacturing plants that would not have existed otherwise. Just last week, California-based Enphase Energy said it will make equipment for photovoltaic solar-power systems at a plant in Newmarket, Ont., north of Toronto, its first manufacturing operation outside China. "It is very unlikely that we would have set up another manufacturing facility in Ontario, had it not been for this requirement," said Paul Nahi, Enphase's chief executive officer. The new law "is doing what it set out to do."
Incentives clearly work, although they need to be judicious and fair. Ontario's sweetheart deal to give the South Korean company Samsung Group priority access to the province's electricity grid, and extra financial incentives, in return for building four manufacturing plants in the province, was blatantly unfair to other participants. And those accepting government support should be required to conduct more than just assembly in the province - research and development is what really creates a competitive renewable industry.
Even if the federal government is reluctant to add its own national incentives because of the high priority placed on fiscal restraint, it can still play a vital leadership role. Most important, it must move ahead to establish a long-term policy on carbon pricing, and outline some details of a cap-and-trade system that will allow businesses to plan their future. Investors must know the value that will be allocated to the carbon displaced by renewable technology. Existing carbon-heavy industries - such as coal-fired power plants and oil sands producers - are anxious to find out what their carbon targets and costs will be. Canada needs a renewable energy policy that comes clean on these issues without delay.