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Canada

Wind incentive fares well in audit report --But broader strategy with more vision recommended

Federal spending on wind power escaped serious criticism in a hard hitting report from Canada's Environment Commissioner saying the country is unprepared for climate change and calling for a "massive scale-up" in the government's efforts to deal with the issue. Johanne Gelinas, who is part of the independent and influential Auditor General's Office, devotes her 2006 annual report to Canada's record in addressing it Kyoto commitments. So far, she says, the federal government has done too little and acted too slowly.

Although she criticises the wind power production incentive program (WPPI) and several other major environmental initiatives for unclear targets and inconsistent public reporting, Gelinas finds the C$0.01/kWh WPPI payment has been successful in stimulating investment. "We found broad based support for the program and clear statements from provincial governments, companies and utilities about WPPI's influence on their decisions to invest in or support wind power projects," she says.

funds frozen

The question now is what will happen to the program, created by the previous Liberal government, as the new Conservative government rolls out its own clean air and emissions reduction strategy. It froze funds earlier this year for a C$920 million expansion of WPPI, along with a number of other renewable energy programs, as it developed the plan. And while environment minister Rona Ambrose tabled a new Clean Air Act in Parliament October 19, no incentive programs or other measures were announced along with the proposed legislation.

Robert Hornung, president of the Canadian Wind Energy Association, says the Environment Commissioner's report helps bolster the industry's argument that some kind of production-based financial incentive should be maintained. "The report as a whole identified a number of serious concerns with respect to the government's climate change strategy and it is clear this program wasn't one of them," he says. "From our perspective that should be a signal to the Conservative government that this type of production incentive payment program is one that can make a useful contribution and should be part of their greenhouse gas emission reduction strategy."

First cornerstone

In her report, Gelinas points out that the wind industry in Canada is changing and any major federal initiative like WPPI needs to be part of a broader overall strategy that would "provide a vision for wind power in Canada and identify what governments will do to support it and over what timeframe."

The idea is one the industry welcomes, says Hornung. "We have always said that WPPI, in many ways, was the first cornerstone in the foundation to build the Canadian wind energy industry, that on its own it does not represent a strategy. A comprehensive strategy would look at the issue of how to integrate wind energy, emerging markets for environmental attributes, how to deal with human resource needs in the industry, what could be done to attract manufacturing capacity to Canada, what would priorities be with respect to research and development. There is a whole host of things."

Wind economics

Gelinas also wants Natural Resources Canada to conduct a thorough analysis of how the economics of wind power are changing and the potential implications for federal support programs. Such an analysis would also be an important step, says Hornung.

"In the short term, what government would actually see is that WPPI has, in many ways, become much more important over the last 18 months or two years with the increases we have seen in the cost of turbines. Obviously at some point, once we get through the supply demand crunch and the cost of turbines begins to go down again, there will be a point where it is probably not appropriate to have an incentive program," he says. "We don't think that is going to happen in the next five years or anything like that. But it will happen at some point, and this sort of economic analysis and monitoring will help inform all parties as to when it might be appropriate."

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