Federal incentive cheap at the price

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In Canada, the soon to disappear federal ecoEnergy for Renewable Power (ERP) incentive is one of the lowest cost subsidy programs for greenhouse gas emissions reduction governments in the country, says a new study from a Canadian economic think tank. The C.D. Howe Institute reviewed the entire portfolio of federal and provincial incentives to determine their cost effectiveness in reducing emissions of greenhouse gases. Its analysis, Going Green for Less: Cost-Effective Alternative Energy Sources, found ERP costs taxpayers about C$10 a tonne of CO2-equivalent abated when biomass, solar, and wind technologies are used to replace coal, and about C$30 a tonne when used to replace natural-gas-fired power plants. By contrast, incentive programs for ethanol provide C$295-$430 of government subsidy per tonne of CO2 offset and C$122-$175/tonne for biodiesel. Subsidies in the renewable energy sector need to be reformed, the study says. A more cost-effective approach would be to create policy instruments that lead to the adoption of renewables technologies that abate CO2 emissions both effectively and at a low cost per tonne of CO2 avoided," it concludes. "Instead, the least-efficient technologies are heavily subsidised, while the most cost-effective technologies receive limited support." Canada's federal government put C$1.48 billion into ERP in 2007 and although the program was due to continue to March 2011, the money is expected to run out before the end of this year. The recently released 2009 federal budget did not put any new money into the program (Windpower Monthly, March 2009).

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