I think that if you asked most oilsands opponents to categorize their objections to the industry, their responses could be classified under one of three headings. First, they might cite the lack of appropriate planning, monitoring, and mitigation of local environmental impacts (see the RSC report executive summary here). Second, they might cite a failure to consider global implications of oil sands extraction, specifically as they relate to climate change. Third, there would likely be many who would cite the fact that Albertans are simply not getting their fair share of the benefits from the expansion of activity in Northern Alberta despite owning the resource. In general, I think most opponents would agree (and please correct me if I am wrong) that most of these problems boil down to a government policy that focused on ramping production up as quickly as possible, and where the primary measures of success were investment dollars coming into the province and barrels per day of production. The government was unwilling to “touch the brake” on the industry that its own policies had created. I think that the Government of Alberta is now learning some hard lessons and finding that their approach to oilsands development has significantly eroded the social license of the industry both at home and abroad. To their credit the Government has shown signs of turning the tide on this. I believe the government could and should go further, but at least we no longer have our Premier talking about the myth of environmental damage from the oilsands. In the meantime, I believe there is a lot that advocates who would grant a free pass to poorly designed green energy policy can lean from the errors of the past in Alberta.
So, what can green energy advocates learn from this? Well, whenever I discuss programs like the Ontario Green Energy Act with people, the first thing they look to is the number of installed megawatts as a symbol that this policy really is working. In fact, today Ontario announced that $3 billion of new contracts, for 872 MW of installed capacity, had been signed, bringing the total to over $8 billion in contracts for 2400 MW of installed capacity since the program began. Now, using installed MW as a measure of success is great, but when the program is explicitly designed to guarantee an 11-12% inflation-hedged rate of return on these projects, I am not sure Ontario should really be patting themselves on the back. After all, if you guarantee people a 12% rate of return on digging giant holes in the ground and filling them back in, I don’t think many people would look at the number of holes dug and re-filled as sufficient evidence that this was a successful policy. People would naturally ask the question “how much value is there in digging a hole?”.
So, here’s the first thing green energy advocates can learn from the oilsands – in the same way that Albertans not in the oilsands industry began to ask what was in it for them during the boom times of 2004-2008, Ontarians are beginning to ask the same questions about green energy. Luckily for Ontario, they have a regulatory body which is supposed to determine whether provincial expenditures in the electricity sector are in the public’s best interest: the Ontario Energy Board. Oh, perhaps not so lucky, since if you read the fine print of the Green Energy and Economy Act, you will find a line that reads, “the OPA’s recovery of its costs and payments related to procurement contracts shall be deemed to be approved by the Board.” In other words, when it comes to Green Energy, it’s not important or permissible for the body whose mandate includes a responsibility to “promote economic efficiency and cost effectiveness in the generation” to provide any input…their approval is taken for granted. Could you imagine the outcry in Alberta if we were to pass an Oilsands Economic Activity Act in which all projects were deemed approved by the ERCB? Perhaps Greenpeace should be delivering a giant rubber stamp to the Ontario Ministry of Energy?
Last week, a giant uproar when Ontario suspended new approvals for offshore wind projects, citing the need for further environmental research. Now, I do recall a discussion in Alberta when some people were calling on Premier Stelmach to do just this for oilsands projects. In fact, just last month, there was a great uproar that RAMP data were used as part of the ERCB approval for the Total Joslyn mine despite m0unting evidence that these data are not world class. Now, I don’t pretend to be a wildlife biologist, but I am quite sure that there are some impacts from building concrete platforms in the great lakes to support wind turbines, and that perhaps these turbines will have some impact on birds and other wildlife. I do not believe that green power advocates do themselves any favors by suggesting that the trade-off between emissions from other power sources and the damage caused by the installation of turbines should not be carefully assessed. As with any project, you have to know your opposition, and you should know that there is an army of people waiting for one of these turbines to be installed in such a way that it has a very deleterious impact on wildlife so that they can use this against any future development. In the same way as environmental groups have benefited disproportionately from those images of ducks struggling on the Syncrude tailings ponds, don’t think for a second that there are not people hoping for a similar image of a flock of Canada geese flying into a wind turbine. Think I’m wrong?
Finally, the last thing I think that Green Energy advocates can learn from the oilsands is to remember that the benefits are not universal. Take the case of a person in Ontario who has recently installed a solar system on their roof. No question they will pay that system off in a short time with feed-in tariff rates of 82c/kWh. In fact, the rates are designed to provide that payback. The program is also designed to create jobs, and many proponents will argue that the program is industrial policy, not green policy. Well, that’s fine as long as you consider the total effects. Yes, there will absolutely be green jobs created, and business and homeowners will profit handsomely from the FIT. However, there will also be losers and the net effect is what will really matter for Ontario. The FIT will increase electricity prices or taxpayer funding of electricity, and it simply can’t be any other way. If the FIT prices were not set higher than the expected future wholesale prices of electricity then I would agree with you that they would have no effect on price…but if that were true then there would be no point in having the FIT. Plain and simply, the FIT pays a price premium to some supply and so increases the average cost of electricity in the province which increases the cost to live, work, and do business in the province. The benefits enjoyed by the few who will work in the new factories and installation service industries that the Act will create will be paid for by costs imposed on many. This is a real problem for Ontario which , among other things, has always enjoyed comparatively low electricity prices which have allowed the province’s electricity-intensive industries to remain competitive. In the same way as the oil sands boom made it much more expensive to operate a shoe store or a restaurant in Alberta, the FIT program will do the same. In the long run, you have to be able to sell it to all of Ontario, not simply those making a locked-in 12% rate of return and those wearing the green collars.
Renewable energy, like oil sands, is a long game. Alberta made many mistakes by focusing their policy on getting the industry up and running as fast as possible, and by not being willing to touch the brake in favour of maintaining the social license. I can’t help but wonder, as Adam Radwanski does here, if poorly thought-out green energy policies could have the same impact. That in the rush to get as many MW in the ground as quickly as possible, that government will sacrifice the long game and lose the political license to run these programs. If, as green energy advocates are quick to suggest, we are only a few years away from solar at or close to grid parity, will Ontarians be happy paying 40-80c/kWh for the next 30 years? Will they be ready to back the next government with a good and ambitious environmental plan? They might think twice, and that can’t be a good thing.