Will Ontario be first to solve the low-carbon puzzle?
Over the past decade, Ontario’s coal fleet has been retired and replaced through investments in low-carbon electricity production including hydro, refurbished and upgraded nuclear and natural gas-fired facilities as well as wind, solar and bioenergy insta
When it comes to climate change action and efforts to build a low-carbon economy, Ontario appears well on its way to becoming a leader in North America.
Among the most recent announcements, in June, Ontario unveiled a five-year Climate Change Action Plan that includes $8.3 billion in funding to support the province’s goal to reduce GHG emissions by 15 per cent below 1990 levels by 2020, and 37 per cent below that baseline by 2030. The provincial plan is aligned with Ottawa’s national climate strategy, which aims to cut emissions by 30 per cent below 2005 levels by 2030.
“Our actions will help more Ontario households and businesses adopt low- and net-zero carbon energy solutions,” said Ontario premier Kathleen Wynne during a June news conference. “We will lead North America in low-carbon and zero-emission transportation, and we will halt rising greenhouse gas pollution from buildings.”
Judging from initiatives now underway and planned through 2017 and beyond, Ontario’s actions speak volumes.
The province’s plan includes green project funding support through proceeds from a cap and trade program – expected to come in at around $1.8 billion to $1.9 billion per year.
The cap and trade system involves “caps” / limits set on emissions targets that are lowered over time to reduce atmospheric pollutants. Conversely, the ability to “trade” carbon allowances provides companies with an incentive to pollute less. Companies that innovate in order to meet, or beat, their allocated limits ultimately pay less.
“We are committed to creating a low-carbon economy that will drive innovation, create more opportunities for business and industry, and generate high-value jobs,” said Wynne.
CLEAN ENERGY LEADERSHIP
Ontario’s commitment to build its low-carbon economy has taken shape over recent years through a variety of major infrastructure and other initiatives to save energy and boost clean energy production. In 2015, the province alone attracted more than half of Canada’s clean energy investment.
“The energy sector is in a state of transition,” said Meredith Renwick, a spokesperson for the Ministry of Energy. “Our responsibility now is to see that Ontario is well positioned for the future.”
Nuclear energy is a key pillar in Ontario’s energy platform and currently supplies about 60 per cent of the power used by consumers each day. Various investments aim to ensure that nuclear will continue to play a major role well into the future.
Bruce Power, for example, will spend $13 billion to refurbish six of the eight nuclear reactors at its generating station near Kincardine, Ont. Meanwhile, a commitment to extend the lifespan of the 3,100-megawatt Pickering Generating Station until 2025 translates into a GHG emissions reduction equivalent to removing 490,000 cars from roads. Pickering currently provides 14 per cent of the province’s overall electricity supply.
The province also committed to a $12.8-billion refurbishment of the Darlington Generating Station. The 10-year project’s construction phase began this October and is expected to contribute $15 billion to Ontario’s GDP.
Commenting on the project, Jeffrey Lyash, president and CEO of Ontario Power Generation (OPG), said, “It’s good for customers, it’s good for the economy, and it’s good for the environment.”
Another key investment in Ontario’s energy future is the recently announced $1.35-billion project to connect remote First Nations communities to the electricity grid. Currently, more than 10,000 northwestern Ontario residents rely on diesel-powered generators for their electricity needs.
The partnership initiative, involving Watay Power – a consortium of 20 First Nations – along with private sector companies FortisOntario and Renewable Energy Systems Canada Inc. (RES), will install 1,800 kilometres of transmission lines between 2018 and 2024.
Margaret Kenequanash, chair of Watay Power, says the project can’t happen soon enough. “Many communities are in a crisis situation due to limited generation capacity compromising the health and safety of the people and the prospect of grid connection. [With Watay Power,] our communities won’t have to rely on expensive, environmentally unfriendly diesel fuel to provide power for basic needs like food, shelter and water.”
Earlier developments, such as Ontario’s partnership with Samsung under the Green Energy Investment Agreement, helped to set the foundation for the province’s clean energy industry. Ontario also supports small-scale renewable energy projects through its Feed-in Tariff program.
Our actions will help more Ontario households and businesses adopt low- and net-zero carbon energy solutions. We will lead North America in low-carbon and zero-emission transportation, and we will halt rising greenhouse gas pollution from buildings.” Kathleen Wynne, Premier of Ontario
THE RISE OF SUSTAINABLE BUILDINGS AND TRANSPORT SYSTEMS
With buildings currently generating over 30 per cent of Canada’s GHG emissions, Thomas Mueller, president and CEO of the Canada Green Building Council (CaGBC), believes green building practices can have a large impact on the reduction of both carbon emissions and energy consumption.
Mueller explains that a combination of constructing new buildings to a Zero Carbon Buildings Standard, which the CaGBC will be launching in spring 2017, and improving the performance of existing building through retrofits, renewable onsite energy systems and switching fuel sources to renewable options could yield impressive results. In addition to energy and emission savings, these measures would help to stimulate the economy, increase demand for new technologies and generate jobs, he says.
While Mueller believes incentives and regulations play an important role in advancing sustainable building practices, he adds that demonstrated financial, market and social benefits can also inspire voluntary action. “In essence, improving building environmental performance simply makes good business sense.”
An example of a building that recently achieved the LEED® Platinum for existing buildings (operations and maintenance) certification is the office tower at 200 King Street West. Located in the heart of the Toronto Financial District and managed by Bentall Kennedy, the property’s sustainability features include a modernized chiller, green roof, daylight harvesting and electric vehicle charging stations. A strong ENERGY STAR score of 94 places 200 King Street West in the top six per cent of energy-efficient buildings in North America.
Another crucial component of the province’s plan for reaching emission reduction targets focuses on transportation – currently the province’s single-largest emitting sector with GHG emissions from cars accounting for more pollution than those from industrial iron, steel, cement and chemical sectors combined.
The potential upside is well reflected in Toronto’s Eglinton Crosstown light rail transit (LRT), a $9.1-billion investment ranked as 2016’s top public infrastructure project in Canada. With a projected peak ridership of 5,500 passengers per hour by 2031, Eglinton Crosstown promises to further lessen public reliance on private vehicles. “We are mak- ing considerable progress on the Eglinton Crosstown LRT line,” said Ontario Minister of Transportation Steven Del Duca earlier this year, describing the initiative as “modern transit infrastructure that will manage congestion, reduce commute times, create jobs and improve the quality of life for Ontarians.”
Cleaner transportation is also getting a boost through the province’s commitment of $20 million of its $325-million Green Investment Fund to construct approximately 500 electric vehicle (EV) charging stations at more than 250 locations across Ontario by 2017.
SPARKING INVESTOR INTEREST
Ontario’s policies and GHG commitments are making it an attractive place to invest for Richard Abboud, founder, president and CEO of Forum Equity Partners. Among other things, the Toronto-based developer invests in residential solar projects in Ontario and both wind and solar in the U.S.
Abboud says government incentives continue to play an important role in stimulating low-carbon project development. “While the cost of wind and solar are coming down rapidly, incentives are likely required for a period of time – until these energy forms break through to an economic independence stage.”
That said, he points to a number of factors that could lead to independence from government support in the not-too-distant future. “There is a huge global movement to zero-emission electricity, and the demand for solar and wind is increasing dramatically due to policy and also due to pricing,” he says. “As pricing comes down, it becomes more economic.”
In some markets across North America, the cost of solar is already approaching a point where incentives are no longer required to make projects “work,” he says.
Notwithstanding uncertainty around U.S. policies in light of Donald Trump’s presidential election, Abboud says much of world is embracing the transition to a low-energy economy. “This is where the future lies. We’re proud to be part of this very important movement and a new way of doing things.”
James McKellar, a professor a York University’s Schulich School of Business, agrees.
“More and more leaders are realizing that the faster they move on this, the better,” he says. “It’s a rapidly growing industry.”
Already, Ontario is home to nearly 40 per cent of Canada’s installed wind capacity and more than 99 per cent of all installed solar capacity. McKellar points to pension funds and other private and public investors whose funding is helping to drive the transformation to a low-carbon economy. While subsidies have helped encourage investment to date, McKellar also sees such incentives becoming less necessary in future.
“I’m fairly confident that, due to the growing number of emerging technologies, we will get weaned off those subsidies,” he says.
BEYOND 2017
Michelle Brownlee, director of policy at the Smart Prosperity Institute, a national research network and policy think-tank based at the University of Ottawa, believes today’s focus shouldn’t just be on new investment, but also on getting governments, pension funds and corporations to direct some of their current sources of finance towards greener investments.
“While the trend is to see growing investments made in low-carbon, renewable and resource-efficient infrastructure and energy, it’s not enough to transition to the low-carbon economy fast enough to keep climate change below really dangerous levels, or to seize the economic opportunity that clean innovation offers,” Brownlee says. “To do that, we need to keep growing the base of green or sustainable investment.”
She believes the top challenge for governments is to gain public support to spend the money needed today to transition to a low-carbon economy in future, without unfair negative impacts.