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Ontario urged to stick with green energy program

Canada's largest roof-top mounted solar array in Mississauga.

Fernando Morales/The Globe and Mail

Ontario's green energy plan, with its "feed-in tariff" that pays high prices for renewable power and its incentives for local manufacturing, has met with intense opposition, mainly from critics who say the province's power prices will be pushed sharply higher.

But it would be wrong to let such a simplistic argument undermine what is a crucial policy in boosting Ontario's economy, says one of the foremost proponents of a worldwide shift to renewable energy.

Achim Steiner, executive director of the United Nations Environment Program told The Globe and Mail editorial board Monday that it is a mistake to focus on short-term power price increases that might result from the feed-in tariff (FIT) program.

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"For Ontario it would be a tragedy if the economics of investing in an energy transition were viewed as narrowly as that," Mr. Steiner said.

He said the experience of other countries that have established FIT programs is that these policies help economies shift to a "new playing field." And that transition, in places such as Germany and Austria, happened much more quickly and in a less costly manner than originally predicted.

Initial subsidies were lowered quickly because the costs of renewable technology fell, he said, and because unexpectedly high numbers of companies in the private sector embraced the programs. The high subsidies were just an "initial trigger" that got the ball rolling, Mr. Steiner said.

Currently, Ontario pays as much as 80 cents a kilowatt hour for solar power produced under the FIT program, more than 10 times the current retail price for electricity. However, that expensive power makes up just a tiny fraction of the electricity generated in the province.

Over all, Mr. Steiner argues that there does not need to be a tradeoff between economic growth and environmental sustainability, and that government support for green industries actually removes many economic imbalances.

For example, he said, the huge subsidies currently being paid to the fossil fuel and nuclear sectors distorts the marketplace while hurting the environment. These are "a gross misallocation of resources," he said.

It is risky for Canada to put all its eggs in the fossil fuel basket when the worldwide economy is increasingly buying into a new energy model, he added.

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"If you want to build Canada's economy on the premise that you are going to stick with a fuel of the 20th century as the central engine of innovation, investment and infrastructure development, then that's a high-risk choice."

Canada was seen as a leader in environmental policy back in the 1980s and 1990s, Mr. Steiner said, but it's reputation has "levelled off" since then. "Maybe there is a sense of complacency … and doubts that as a society it can afford to make the next transition."

Some other countries, such as Germany, have moved more quickly because they have the confidence the transition to a green economy is feasible and has real benefits, he said.

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