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6 responses to “What can green energy advocates learn from the oilsands?”

  1. Alastair

    Great post.

    Perhaps there is another lesson to be learned here? A lesson for greens to follow the AB oil industry example; invest as fast as possible while the going FIT is good, and deal with the consequences in the future.

    I think it’s in the AB oil industry’s interest (but perhaps not the Gov’s) to build as fast as possible. It’s much easier to build quickly and then defend current facilities and jobs in the face of criticism, than to go slow and advocate for expansion later if public perception changes.

    Most fallout over developing too fast hits the government not a company’s bottom line, and AB has too much invested for the oil industry to significantly lose its social license to operate it’s current facilities. So for companies; build fast, build now, and fight off the public and environmentalists later.

    In a similar vein it may be in the interests of green advocates to push for even poorly designed FITs, or make claims (solar power parity next year!) that they know is likely wrong. Convince the public to support as much green investment as possible, lock it in, and weather any following public relations or public opinion storms.

    Under this approach, hopefully people will adjust to the new prices (how much does 82c/kWh averaged with the majority of low cost conventional power really increase the bill?), criticism will wane, and Ontario will be left with a nascent green power industry. Repeat.

    If people have short enough memories, then one in the hand is better than two in the bush, and green energy advocates should be in favour of even poorly planned FITs.

  2. Joel Wood

    Great post as usual. I even found it hard to come with anything to add since the post was so thorough. But I’ll give it a shot.

    It seems to me that the FIT program has been such a feeding frenzy with no thought for the long term general equilibrium effects mainly due to political economy reasons.

    First, there are highly mobilized environmental and industry groups that stand to greatly benefit from the program (although I am still confused why the environmental groups would support this policy in its current form, maybe it is a “victory” they can spin and sell to their members). It takes much more time, effort, and money to organize ratepayers (consumers and small businesses since big business will get cheap rates on the wholesale market or through subsidized deals with the province). Traditional power producers might like the FITs since they might get price increases when they back up the intermittant supply of many of the FIT projects.

    Second, I have gotten the impression that Dalton McGuinty is all about the narrative instead of sound policy (I know, almost all politicians are). This is true with his post-secondary education policies as well. This gives him incentive to award FITs as fast as possible and delay the price increases until after the election (hence the 10% rebate to consumers). He can then campaign as a leader on green energy and job creation (since the jobs destroyed by green power are are hard to pinpoint and are spread across the economy). Also, the opposition’s alternative is to build more nuclear, which is a very hard sell to many citizens as nuclear has a long history of massive cost overruns.

    Third, as Alastair pointed out, it is harder to stop a policy once it is heavily entrenched creating major losers from a policy reversal.


  3. Cody

    I’m really enjoying your blog sir, I wish more profs wrote them. If there are any others you follow, could you add a blogroll to your front page?

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