B
bizorky
Guest
If you are interested in energy policy, this is an interesting article worth the read:
Coal isn't the demon; politicizing energy policy is
BRYNE PURCHASE
Special to Globe and Mail Update
Canadians and Americans represent 5 per cent of the global population and consume 25 per cent of global energy resources, a fact that reflects our culture and geography. Many challenges loom concerning the cost, environmental impact and geopolitical security of our future energy supplies. To meet these challenges, we need reasoned, farsighted public policy from all governments.
Leading up to a general election, it is essential that political parties develop comprehensive energy policies that integrate economic, environmental and security considerations. The current Ontario government did not have a comprehensive policy plan when it took office. (Neither, for that matter, did the other contenders.)
What transpired with the electricity policy of Premier Dalton McGuinty's government illustrates an important pitfall for future policy-makers. The government's most consequential commitment was to eliminate Ontario's coal-fired generation by 2007, presumably as an environmental initiative. Indeed, the government made the notion of ministerial choice of generation technology part of its new legislation. But by making coal rather than various pollutants the problem, the McGuinty government's policy has had numerous adverse consequences.
"Coal exit" was a major initiative because it meant closing down roughly 6,500 megawatts of supply — more than 20 per cent of existing generating capacity. These plants are strategically positioned, reliable, flexible, low in cost and have a secure fuel supply. The government persisted with the 2007 target for more than two years. Finally, it publicly acknowledged the practical implementation difficulties and moved the shutdown target date safely beyond the next election, first to 2009 and now possibly to 2014.
Yet smog-reducing retrofits were available three years ago at a relatively modest cost. They preserve the benefits of the existing coal-fired plants — flexibility, reliability, strategic location and security of fuel source. Smog (and mercury) is what incapacitates and potentially kills Ontarians.
The government could have addressed climate change as well. Carbon, from all fossil fuels, not just coal, could have been priced into the cost of energy immediately. The government could start doing that right now. Indeed, it could have started three years ago. Carbon pricing will drive conservation, use of renewable energy technologies, carbon capture and underground storage (perhaps in Western Canada or elsewhere, paid for by Ontarians).
Carbon capture and sequestration are vital new technologies if anything substantial is to be accomplished globally. This is especially true in the developing world, where future growth in energy use, particularly coal, will be greatest.
And herein lies the political rub. Governments fear retribution at election time if they conspicuously increase the price of energy. Mr. McGuinty's government continues to control the price of electricity in Ontario (for example, by manipulating returns to Ontario Power Generation's assets), contrary to its public claims of removing politics from electricity pricing and making conservation a priority.
It's probably smart short-term politics to push all costs into the future while proclaiming the best of intentions. Alas, it is not great for democratic accountability, the economy, the environment or our security. Something must be done to address this conundrum.
Because Ontario's coal-exit policy was not operational, yet forestalled better and timelier alternatives, it has had a negative effect on the environment. And this is not its only adverse consequence.
The Minister of Energy has said repeatedly that he must focus on Ontario's generation "crisis" to ensure future reliability. But a generalized "crisis" would not have existed without the near-term coal-exit target dates. The mere operational existence of the coal-fired plants, not the amount they run, adds to the grid's overall reliability.
And what has the government's policy-induced "crisis" wrought? It has led to a new bureaucracy, the Ontario Power Authority, entering into numerous deals to secure replacement generation. Some of these deals have been subject to competition, as they should be. Others have not. Where competition was not possible, the deals should have been subjected to performance-based regulation, administered by the Ontario Energy Board.
Perhaps the absence of formal, regulatory rate-setting was an error of omission — although it is difficult to believe anyone would overlook such basic governance principles. More likely, it wasn't done in order to "rush" ahead with new generation to deal with the self-inflicted crisis.
In this instance, not only is there no regulatory oversight, but everyone on the other side of the deal knows the government is in panic mode.
Coal exit has also diverted attention from nuclear generation, which supplies fully half of Ontario's electricity. It is clear that Mr. McGuinty's government and the Ontario Power Authority plan to continue Ontario's considerable dependence on this technology. However, all the province's existing plants have to be decommissioned or refurbished by roughly 2020 — a legitimate and major concern.
Nuclear has improved its performance, especially globally, and appears set for a renaissance of new construction. But the construction, operation and refurbishment of Ontario's nuclear plants have been beset with governance, and perhaps technology, challenges. These issues should have been reviewed fully and transparently, and without a crisis mentality. Having encouraged politicization of technology choices, however, the government may well have feared such a full and dedicated review, especially after giving itself no obvious large-scale alternative.
The recent Bruce nuclear deal is a crucial precedent. It, too, was accomplished without the benefit of a competition or full-scale regulatory price-setting. A fully competitive marketplace is unlikely to function for nuclear generation. For the immediate future, there is simply too much risk. That does not mean we should abandon nuclear generation. But it does mean nuclear must be subjected to rate-setting by the Ontario Energy Board. In the rush to meet its self-inflicted "crisis," the government did not subject the Bruce deal to rate regulation and Ontarians are left to wonder whether their interests were protected.
The simple truth is that there are no perfect technologies or fuel sources. Each has its own advantages and disadvantages. By demonizing coal, and otherwise politicizing energy technology and fuel choices, the Premier, Minister of Energy and their political advisers made a fundamental error in public policy. This error has been magnified by a series of subsequent related policy mistakes.
Let us hope future governments will develop, before assuming office, energy policies that integrate economic, environmental and security considerations. Equally, they should develop viable implementation strategies. Until reasoned public policy, based on facts, replaces facile political rhetoric, the public will continue to be put at unnecessary risk.
Bryne Purchase is executive director of the Queen's Institute for Energy and Environmental Policy, and a former Ontario deputy minister of finance and energy, science and technology.
Coal isn't the demon; politicizing energy policy is
BRYNE PURCHASE
Special to Globe and Mail Update
Canadians and Americans represent 5 per cent of the global population and consume 25 per cent of global energy resources, a fact that reflects our culture and geography. Many challenges loom concerning the cost, environmental impact and geopolitical security of our future energy supplies. To meet these challenges, we need reasoned, farsighted public policy from all governments.
Leading up to a general election, it is essential that political parties develop comprehensive energy policies that integrate economic, environmental and security considerations. The current Ontario government did not have a comprehensive policy plan when it took office. (Neither, for that matter, did the other contenders.)
What transpired with the electricity policy of Premier Dalton McGuinty's government illustrates an important pitfall for future policy-makers. The government's most consequential commitment was to eliminate Ontario's coal-fired generation by 2007, presumably as an environmental initiative. Indeed, the government made the notion of ministerial choice of generation technology part of its new legislation. But by making coal rather than various pollutants the problem, the McGuinty government's policy has had numerous adverse consequences.
"Coal exit" was a major initiative because it meant closing down roughly 6,500 megawatts of supply — more than 20 per cent of existing generating capacity. These plants are strategically positioned, reliable, flexible, low in cost and have a secure fuel supply. The government persisted with the 2007 target for more than two years. Finally, it publicly acknowledged the practical implementation difficulties and moved the shutdown target date safely beyond the next election, first to 2009 and now possibly to 2014.
Yet smog-reducing retrofits were available three years ago at a relatively modest cost. They preserve the benefits of the existing coal-fired plants — flexibility, reliability, strategic location and security of fuel source. Smog (and mercury) is what incapacitates and potentially kills Ontarians.
The government could have addressed climate change as well. Carbon, from all fossil fuels, not just coal, could have been priced into the cost of energy immediately. The government could start doing that right now. Indeed, it could have started three years ago. Carbon pricing will drive conservation, use of renewable energy technologies, carbon capture and underground storage (perhaps in Western Canada or elsewhere, paid for by Ontarians).
Carbon capture and sequestration are vital new technologies if anything substantial is to be accomplished globally. This is especially true in the developing world, where future growth in energy use, particularly coal, will be greatest.
And herein lies the political rub. Governments fear retribution at election time if they conspicuously increase the price of energy. Mr. McGuinty's government continues to control the price of electricity in Ontario (for example, by manipulating returns to Ontario Power Generation's assets), contrary to its public claims of removing politics from electricity pricing and making conservation a priority.
It's probably smart short-term politics to push all costs into the future while proclaiming the best of intentions. Alas, it is not great for democratic accountability, the economy, the environment or our security. Something must be done to address this conundrum.
Because Ontario's coal-exit policy was not operational, yet forestalled better and timelier alternatives, it has had a negative effect on the environment. And this is not its only adverse consequence.
The Minister of Energy has said repeatedly that he must focus on Ontario's generation "crisis" to ensure future reliability. But a generalized "crisis" would not have existed without the near-term coal-exit target dates. The mere operational existence of the coal-fired plants, not the amount they run, adds to the grid's overall reliability.
And what has the government's policy-induced "crisis" wrought? It has led to a new bureaucracy, the Ontario Power Authority, entering into numerous deals to secure replacement generation. Some of these deals have been subject to competition, as they should be. Others have not. Where competition was not possible, the deals should have been subjected to performance-based regulation, administered by the Ontario Energy Board.
Perhaps the absence of formal, regulatory rate-setting was an error of omission — although it is difficult to believe anyone would overlook such basic governance principles. More likely, it wasn't done in order to "rush" ahead with new generation to deal with the self-inflicted crisis.
In this instance, not only is there no regulatory oversight, but everyone on the other side of the deal knows the government is in panic mode.
Coal exit has also diverted attention from nuclear generation, which supplies fully half of Ontario's electricity. It is clear that Mr. McGuinty's government and the Ontario Power Authority plan to continue Ontario's considerable dependence on this technology. However, all the province's existing plants have to be decommissioned or refurbished by roughly 2020 — a legitimate and major concern.
Nuclear has improved its performance, especially globally, and appears set for a renaissance of new construction. But the construction, operation and refurbishment of Ontario's nuclear plants have been beset with governance, and perhaps technology, challenges. These issues should have been reviewed fully and transparently, and without a crisis mentality. Having encouraged politicization of technology choices, however, the government may well have feared such a full and dedicated review, especially after giving itself no obvious large-scale alternative.
The recent Bruce nuclear deal is a crucial precedent. It, too, was accomplished without the benefit of a competition or full-scale regulatory price-setting. A fully competitive marketplace is unlikely to function for nuclear generation. For the immediate future, there is simply too much risk. That does not mean we should abandon nuclear generation. But it does mean nuclear must be subjected to rate-setting by the Ontario Energy Board. In the rush to meet its self-inflicted "crisis," the government did not subject the Bruce deal to rate regulation and Ontarians are left to wonder whether their interests were protected.
The simple truth is that there are no perfect technologies or fuel sources. Each has its own advantages and disadvantages. By demonizing coal, and otherwise politicizing energy technology and fuel choices, the Premier, Minister of Energy and their political advisers made a fundamental error in public policy. This error has been magnified by a series of subsequent related policy mistakes.
Let us hope future governments will develop, before assuming office, energy policies that integrate economic, environmental and security considerations. Equally, they should develop viable implementation strategies. Until reasoned public policy, based on facts, replaces facile political rhetoric, the public will continue to be put at unnecessary risk.
Bryne Purchase is executive director of the Queen's Institute for Energy and Environmental Policy, and a former Ontario deputy minister of finance and energy, science and technology.