Canada

Canada

Wind very attractive in the offsets market -- Utility seeks greenhouse gas credits

BC Hydro has issued a request for proposals for 5.5 million tonnes of greenhouse gas offsets and, says the utility's senior environmental co-ordinator, is "definitely" interested in reductions generated by wind power. "Wind is recognised as a very attractive technology in the whole climate change field," says John Duffy. Not only is it a source of green energy with low environmental impact, he says, but it also enjoys significant public credibility and visibility. "For all of those reasons it provides a lot of positive attributes."

Wind generated offsets, however, do come with their own set of challenges, adds Duffy. The emission reductions produced by wind turbines actually occur someplace else, making ownership a key issue. "In the case of a wind power facility, the owner can be the utility that backed off generation because it's now getting supply from a wind generator, it can be the wind generator, or it can be the end consumer of the electricity," explains Duffy. "These challenges can be overcome, but it can mean a little bit more complication in the transaction."

The deadline for submitting proposals is May 1. BC Hydro plans to begin negotiations with selected proponents by October and will start signing contracts by early 2002. The request for proposals (RFP) does not set a price range, stating only that the utility has a "preference for lower cost offsets." But Duffy says BC Hydro is ready to entertain proposals costing up to C$10 per tonne of CO2 equivalent. "We won't necessarily buy them at the high end of the range, but we might. Part of the exploratory process is to take a look at the proposals and do our own analysis of whether they're worth it."

The utility, which is owned by the provincial government, is buying the offsets to help mitigate the environmental impact of two planned natural gas-fired electricity generation plants on Vancouver Island. Between them, the plants will increase greenhouse gas emissions in the province by 1.3 million tonnes a year. The current RFP will offset 50% of that increase through to the year 2010.

"We think fifty per cent is a balance between making a serious commitment to mitigating our impact on climate and the realities of the competitiveness of our business," says Duffy. To do any more, he adds, will require a policy commitment by government. "We'll ante up the second fifty per cent if government offers meaningful credit for early action."

Fred Gallagher of the Canadian Wind Energy Association says government action on climate change is going to be the key to unlocking the country's wind power potential. While the recent unveiling of projects totalling 200 MW in southern Alberta has buoyed Canada's wind energy industry (this page), the proposed capacity is still only a fraction of CanWEA's goal of 10,000 MW by 2010.

"If we march down the road to Kyoto, then ten-by-ten is highly realistic and becoming more and more significant in terms of its opportunity," says Gallagher. If not, wind in Canada will continue to compete on the same basis it always has. "Everything we are adding now is economically viable. We're not adding anything we can't backstop. So, yes, wind will continue to occupy a portion of supply regardless, simply because it's getting to that price point. But the kind of installations of wind energy that will be necessary to meeting our Kyoto commitment will not happen."

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