Rebecca Lindall, Globe and Mail, July 29, 2010
David Parkins for the Globe and Mail |
Will the Clean Energy Act clear the way for British Columbia to become a significant exporter of clean energy?
The story so far:
The Liberal government passed the Clean Energy Act in June to inject investment into the province’s green energy industry, with a key goal of increasing such clean-energy exports as hydroelectric, solar and wind. Under the act, BC Hydro could serve as a clean energy middleman, buying power from private producers and selling it to provinces and U.S. states. (No contracts have been signed yet.) Pursuing private-sector energy partnerships was a minefield for the governing Liberals. The NDP ran on a moratorium on private power production in the 2009 election. The Liberals had already called for clean power through contracts with private energy producers, but the plan was rejected by the British Columbia Utilities Commission as “not in the public interest” in July of 2009. In response, the Liberals passed the Clean Energy Act, which includes export-oriented private power projects that will no longer be subject to utilities commission regulation.
Political calculations:
The Liberals have promised that a clean energy export market supported by the private sector will create jobs, keep prices low and help achieve the legislated goal of becoming electricity self-sufficient by 2016. To protect ratepayers, the government has said it will only acquire energy to export when there will be a financial return.
NDP energy critic John Horgan said the Liberals are trying to create an artificial export market and that BC Hydro customers will be left footing the bill. Buyers are not guaranteed and are unlikely to offer the full cost of the privately produced power, which will force the province to eat the difference, he said. The NDP would also like to see B.C.’s energy market firmly in the hands of public-sector BC Hydro, which could continue to buy and sell energy strategically to ensure the lowest prices and highest returns for taxpayers.
The Players:
“ We want British Columbia to become a leading North American supplier of clean, reliable, low-carbon electricity and technologies that reduce greenhouse-gas emissions while strengthening our economy in every region. ”— Premier Gordon Campbell, April 28
“ We are creating an opportunity to give shareholders a return when we should be creating opportunities to make the [public] utility more efficient and more attuned to the needs of British Columbians. ”— NDP energy critic John Horgan, July 28
The debate (click the headlines to read each argument):
Export opportunities
Bill Bennett, B.C. Energy Minister: "We are in a unique position."
Jock Finlayson of the Business Council of British Columbia: "Temper your enthusiasm."
Export opportunities
Bill Bennett, Globe and Mail, July 29, 2010
Bill Bennett, B.C. Energy Minister: "We are in a unique position." |
Selling green power beyond border fuels programs at home
The lifestyle British Columbians enjoy is powered by our wealth of natural resources. Those natural resources built this province, and the development and export of minerals, natural gas and clean energy continue to fuel B.C.’s economy.
The Clean Energy Act builds upon our unique heritage of hydroelectric electricity generation plus our abundance of clean, renewable energy resources. The act moves a number of public and private clean power developments forward and will result in a growth of wind, biomass and run-of-river projects.
We are actively working toward developing export opportunities, to markets such as California. Many states and provinces want to reduce their emissions by replacing electricity generated from carbon-intensive fuels, and we are in a unique position to offer these jurisdictions clean and reliable power generated at competitive prices.
We will need to work with independent power producers as we seek and advance these opportunities. BC Hydro, as required under the act, will present to government an integrated resource plan on export opportunities. In the meantime, the province is committed to working collaboratively with the independent power industry.
Under the act, electricity exports will be undertaken when they can be demonstrated to be in the best interest of British Columbians where long-term contracts are secured and there is no additional cost to electricity ratepayers. B.C.’s energy sector will continue to help fund vital social services such as health care and education and support families across the province.
The Clean Energy Act will put clean, renewable energy resources to work for B.C., creating jobs and economic opportunities, while reducing our carbon footprint within and beyond our borders. The act will help ensure that we continue to enjoy the benefits of our clean, reliable and cost-effective power for many years to come.
Bill Bennett is Minister of Energy, Mines and Petroleum Resources for British Columbia
California dreamin’
Jock Finlayson, Globe and Mail, July 29, 2010
Jock Finlayson of the Business Council of British Columbia: "Temper your enthusiasm." John Lehmann/The Globe and Mail |
The state might not be such a lucrative customer
The Clean Energy Act was approved by the British Columbia Legislature this spring. One goal of the legislation is to establish a regulatory framework to enable B.C. to become an exporter of renewable energy to the United States.
Some 30 states have embraced renewable portfolio standards (RPS) which require utilities to procure specified amounts of renewable electricity. And a growing number of jurisdictions, notably California, have adopted policies aimed at reducing emissions of greenhouse gases. Both of these trends underscore the potential for Canadian jurisdictions with abundant low-carbon energy to boost exports.
For B.C., California is the primary export opportunity. In 2008, California met 68 per cent of its power needs through in-state generation, with the rest satisfied by imports from other states (mainly in the U.S. Southwest). California wants renewables to comprise 33 per cent of electricity sales by 2020.
However, there are several unknowns. One is future energy demand. California is mired in a protracted economic slump, with the unemployment rate hovering above 13 per cent. Recently, the state’s energy commission downgraded its forecast for electricity demand growth. At the same time, falling natural gas prices are hurting the relative cost-competitiveness of renewable energy sources all across North America. Rich public subsidies for wind and solar create strong incentives to produce electricity from these sources within the United States and will dampen demand for imports. The California Energy Commission has pointed to various technical, transmission and reliability challenges involved in integrating large amounts of new renewable energy into the state’s electricity system. Finally, to date California regulators have declined to classify imported hydroelectric power as “renewable” under the state’s RPS rules.
All of this suggests that policy makers and independent power producers in British Columbia may need to temper their enthusiasm for electricity exports.
Jock Finlayson is executive vice-president of the Business Council of British Columbia
