Environmental and economic consequences of Ontario's Green Energy Act / by Ross R. McKitrick, in conjunction with the Fraser Institute Centre for Energy and Natural Resource Studies
Executive summary -- 1. Introduction -- 2. The Green Energy Act and Ontario's air quality. 2.1. Air quality trends in Ontario since the 1960s ; 2.2. Effects on Ontario's air quality of the coal phase-out ; 2.3. Potential growth in air emissions from expanding renewables ; 2.4. Conclusions -- 3. Cost-effectiveness analysis of the GEA path. 3.1. Conventional abatement as an alternative to the GEA ; 3.2. Structural inefficiencies of wind energy -- 4. Economic impacts on mining, manufacturing, and forestry. 4.1. Lack of provincial analysis ; 4.2. Comparison of electricity costs between Ontario and other jurisdictions ; 4.3. Effects on competitiveness ; 4.4. Estimated cost effects of GEA on the mining, manufacturing, and forestry sectors -- 5. Concluding comments -- Appendix. Technical details of econometric model estimation for section 2 -- References
Summary
The Ontario Green Energy and Green Economy Act (herein the GEA) was passed in May 2009 with the purpose of addressing environmental concerns and promoting economic growth in Ontario. Its centerpiece is a schedule of subsidized electricity purchase contracts called Feed-in-Tariffs (FITs) that provide long-term guarantees of above-market rates for power generated by wind turbine farms, solar panel installations, bio-energy plants and small hydroelectric generators. Development of these power sources was motivated in part by a stated goal of closing the Lambton and Nanticoke coal-fired power plants. This report investigates the effect of the GEA on economic competitiveness in Ontario. It focuses on three questions: (1) Will the GEA materially improve environmental quality in Ontario? (2) Is it a cost-effective plan for accomplishing its goals? (3) Are the economic effects on households and leading economic sectors likely to be positive? The answer to each question is unambiguously negative
