Local green firms face stiff competition in global market

In her critique of the provincial energy regulatory environment, Christine Van Geyn relies on a number of misleading claims that deserve to be clarified (Promised green jobs aren’t sticking around — July 26).

Perhaps the most substantial of these is the suggestion that provincial energy initiatives led to the closure of the Tillsonburg Siemens wind turbine manufacturing plant.

As was reported, Siemens announced that this facility is undersized to develop the larger, more efficient turbines the world is increasingly relying on. Previous procurement contracts — specifically the Goderich wind farm which Siemens supplied turbines for — were delivered with the technology available at the time of signing, but with the cost of larger, more efficient turbines that can provide the procured generation capacity with fewer resource inputs than older alternatives dropping rapidly, the decision to close a plant on the basis of competition makes sense absent any consideration of the government. While the cessation of new contracts likely played a role, it cannot be objectively concluded that this decision was the breaking point.

Van Geyn proceeds to tie the increase in renewable energy generation to the decline of manufacturing — a rather spurious link. A decline in manufacturing jobs has been seen throughout the Canadian and American economies during the reference period, primarily a function of increased automation and outsourcing, regardless of jurisdictional energy investment decisions.

Meanwhile, the Independent Electricity System Operator (IESO), in its 2016 Global Adjustment Review, notes that renewable energies — solar, wind and hydroelectric systems, which jointly provide about 35 per cent of provincial electrical generation — comprise just 17 per cent of the global adjustment. Meanwhile, nuclear energy comes in at 42 per cent attribution, and natural gas is responsible for 26 per cent. This does undermine her skepticism at the government’s insistence that renewable energy is not responsible for rate increases. While they do play a part, in addition to the coal phase-out, the facts remain that partial privatization, nuclear refurbishment, transmission investment and a comparatively short repayment period shoulder far more blame for cost spikes than green energy.

Van Geyn’s assessment omits the role that global trade rules played in curtailing manufacturing associated with renewable energy. The province’s ambition to invest substantially in renewable energy using parts manufactured in Ontario, which relied on local content rules to administer, was laudably progressive in a rapidly changing global energy environment. And in early days, it worked remarkably well — the local content requirements resulting in a host of new manufacturing plants like the Tillsonburg Siemens facility.

It was not inconsistency on the part of the provincial government which curtailed this progress, but rather an unfavourable ruling by the World Trade Organization against Ontario, brought on by the European Union and Japan.

The resulting mandated changes to the Feed-in-Tariff program eliminated the local requirements thus greatly increasing the degree of competition local firms face in a global market.