Winners and losers of Ontario’s climate-change plan

Date: May 17, 2016 Author: esolar Categories: Blogs | News & Noteworthy
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Winners and losers of Ontario’s climate-change plan

Renewable energy companies see tremendous opportunity in Ontario’s climate-change plan, though skeptics question whether the proposed incentives and regulations will achieve the government’s goals and will impose costs that are unacceptable to voters.

The $7-billion plan – outlined in a document leaked to The Globe and Mail – would provide incentives for energy retrofits and fuel switching; change building codes to require energy-efficiency improvements and phase out fossil-fuel use in new homes; and mandate a 5-per-cent reduction in greenhouse gas (GHG) emissions from transportation fuels.

Ontario to spend $7-billion on climate plan: Report (BNN Video)

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It is meant to complement the Liberal government’s cap-and-trade program, which will impose emission caps on key industrial sectors and allow companies to comply with the regulatory limits by purchasing credits from those that can achieve reductions more efficiently.

Winners would include electric vehicle makers; companies that do building audits and sell energy-efficiency goods and services; biofuel producers; and purveyors of technologies such as heat pumps, solar power and storage technologies that back up renewable sources of electricity.

Ontario has set a goal of reducing GHG emissions by 15 per cent below 1990 levels by 2020, and 37 per cent below that baseline by 2030. The provincial plan – which reflects a similar approach in Quebec – will contribute to Ottawa’s overall effort to forge a national climate strategy and at least meet Canada’s commitment to cut emissions by 30 per cent below 2005 levels by 2030.

“The Ontario plan addresses the most significant source of emissions,” Celine Bak, president of Analytica Advisors, said Tuesday. “It reflects the actions the provinces and the federal government will require to undertake as signatories of the Paris [climate] treaty.”

Prime Minister Justin Trudeau is in the process of ratifying the Paris accord, which pledges the international community to hold the anticipated increase in global temperatures to less than two degrees above preindustrial levels, with a goal of limiting the increase to 1.5 degrees.

John Cook, president of Toronto-based clean-tech investment firm Greenchip Financial Corp., said he was “horrified” at Ontario’s plan because of its top-down approach. It would be much more effective, he said, to put in place a carbon tax, broadly reduce other taxes and then “let the market determine what the economics of these technologies actually are.”

The Ontario approach will actually make it more difficult to get mainstream investors to put money into clean technology, Mr. Cook said. They will hesitate to invest if they think markets “are being controlled from above.” Essentially, Ontario is micromanaging a sector “which should be developing on its own,” he added.

Producers of gasoline and diesel fuel are already facing higher carbon costs as a result of the planned cap-and-trade plan, and worry that an additional burden will make them uncompetitive with U.S. refiners, said Peter Boag, president of the Canadian Fuels Association, which represents refiners and distributors.

The climate plan would include a low-carbon fuel standard that requires distributors of gasoline and diesel to reduce the overall GHG intensity of their fuel mix by 5 per cent. While discouraging the use of natural gas for home heating, the provincial plan would subsidize its use for heavy-duty vehicles to replace diesel fuel.

Mr. Boag said there are few pragmatic options for achieving the targeted emissions, and he noted that British Columbia is getting set to review a similar fuel standard that has failed to generate the expected emissions reductions.

But a spokesman for British Columbia’s Environment Ministry said the province reviewed its program two years ago and concluded the target remains “feasible.”

Clean-tech companies welcome the proposed Ontario plan as a boon to the fledgling sector.

“Our industry is completely primed for this opportunity,” said John Gorman, president of the Canadian Solar Industries Association.

Many large-scale solar projects have been installed in the province over the past few years, thanks to government incentives that gave developers high prices for their power. But with costs – and subsidies – declining, the new climate plan could accelerate installations in smaller systems for houses and industrial buildings, Mr. Gorman said.

“There’s really no amount of solar … that this program can throw at us that the industry wouldn’t be capable of delivering.”