Handouts instead of market push -- Canada budget misses the point

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Canada's year 2000 budget is getting mixed reviews from the country's wind power industry, which had been looking for a strong political commitment to renewables. The Canadian Wind Energy Association's (CanWEA) Fred Gallagher welcomes money earmarked for renewables as good news. But he is concerned that the government still thinks in terms of demonstration projects and not commercial deployment. "For some reason the government doesn't get the message that this is not a demonstration technology. This could be a huge business, worth C$3 to C$5 billion per year," he says.

In the fall, Canada's Low-Impact Renewable Energy Coalition recommended a series of budget initiatives to boost the use of renewables technologies. "We brought forward some very clear, market based proposals that would have allowed the players to go out and do business. I don't see that theme in this budget," says Gallagher, who also chairs the coalition. "What I see is selected handouts and selected project funding, selected by bureaucrats and not by the market. That worries me."

The federal budget allocates C$100 million for the establishment of a Sustainable Development Technology Fund to stimulate the "development and demonstration" of new environmental technologies, such as fuel cells, wind turbines and cleaner burning coal. Another $210 million over three years will be added to the government's Climate Change Action Fund and other federal energy efficiency and renewable energy programs.

The budget also commits $15 million to increase the government's use of green power. The money will be used to procure renewable energy over ten years for federal facilities in Saskatchewan and Prince Edward Island, two provinces that rely heavily on fossil fuels.

Quebec set-aside

The impact of this year's budget on a proposed nine-year, 450 MW wind energy set-aside in Quebec is also a concern. The province has delayed a decision on the set-aside for more than a year, hoping that federal government would help lower the cost of the plan by instituting tax incentives for renewables. While specific tax incentives never materialised, CanWEA's Jean-Louis Chaumel thinks the budget's support for renewable technologies may still translate into financial support for the set-aside. "The basic principles are here," says Chaumel. "We continue to hope that an agreement will be reached during 2000 and the call for tenders announced by Quebec. But we have some fears that we are being too optimistic."

In his budget speech, finance minister Paul Martin hinted his environmental initiatives are only a first step. He pointed out that the national climate change strategy is still to be finished. "However, within the context of a budget seeking to prepare our economy for the 21st century, there are a number of things we can and we must do now." That renewable energy is one of those things is encouraging, says Gallagher. "It's pretty clear the government has recognised the only way it's going to get early action on climate change is by going after renewables."

Other climate change and renewable energy-related initiatives in the budget include:

o A $25 million Green Municipal Enabling Fund, to help municipalities and communities determine the feasibility of renewables energy, building retrofit, water conservation, waste management and urban transit projects, and a C$100 million Green Municipal Investment Fund.

o-----C$60 million to create the Canadian Foundation for Climate and Atmospheric Sciences which will bring together researchers to study the impact of climate change and air pollution.

o-----C$9 million over three years to develop environmental and sustainable development indicators to allow Canada to measure its progress on improving the environment.

o-----C$100 million over four years for technology transfer and related initiatives to help developing countries reduce greenhouse gas emissions and promote sustainable development.

o-----C$15 million to the World Bank for its Prototype Carbon Fund.

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