Climate plan: clean energy funding

Ottawa, Canada (GLOBE-Net) – The federal government has announced a $230 million fund to promote the development and demonstration of clean-energy technologies, including clean coal and carbon capture, in the first of a series of planned announcements on energy and the environment. The ecoEnergy Technology Initiative will form a large part of the government’s climate change strategy, which is expected to include intensity targets for greenhouse gas emissions by 2015. Natural Resources Minister Gary Lunn called Canada an “emerging energy superpower”, that must meet the challenge of creating clean energy. In order to do this, technologies for renewable energy and to make conventional energy cleaner are necessary, he said. He also added that the greatest untapped energy source is energy efficiency.

The government will channel energy technology funds towards three main areas:

  • Increasing the supply of clean energy from sources such as wind, solar, biomass, ocean power and small hydro

  • Raising energy efficiency by supporting efficient technologies

  • Reducing pollution from conventional energy sources (fossil fuels) through technologies such as ‘clean coal’ and carbon dioxide capture and storage

Minister Lunn made the announcement at the CANMET Energy Technology Centre (CETC) in Ottawa, against the backdrop of a number of new energy technologies on display. These included an ‘oxy-fuel vertical combustor’, which allows coal to burn more cleanly by combining air with oxygen in the combustion chamber. This technology can be combined with CO2 capture to produce near zero air emissions.

The ecoEnergy plan

The $230 million ecoEnergy Technology Initiative will be used to support new energy technologies, focusing on research and development leading to demonstration projects and commercialization. As a key component of the government’s “Science and Technology” (S&T) strategy for climate change, it will involve participation of industry, universities, and provincial and territorial governments.

Most of the investment will be directed towards public-private partnerships. “Industry can do much but not all” of the necessary technology development, mainly because industry tends to focus on late-stage technologies with low investment risk, “says a statement from Natural Resources Canada (NRCan). Because of this, the government will lead in medium and long term research and development which “(1) carries a higher investment risk, (2) is essential to the public good and (3) would not otherwise be done”, says NRCan.

According to the announcement, one of the fund’s top priorities will relate to sustainable fossil fuel use: carbon dioxide sequestration, clean coal, and clean oil sands production are all listed ahead of renewable energy, perhaps tellingly. The rationale for this is simple: for the foreseeable future both in Canada and abroad, the majority of our energy supply will come from fossil fuels. The oil and gas industry is vital to Canada’s role as an energy supplier, and the government hopes to take advantage of that position by developing ‘clean fossil fuel’ technologies which will can reduce domestic emissions and increase exports to countries such as India and China.

Further priorities are to be developed through stakeholder consultation, including advice from the National Advisory Panel on Sustainable Energy S&T, provincial governments, and industry. Other key areas will include hydrogen fuel cells and plug-in electric vehicles, next generation nuclear power, and bioenergy. The structure of the funding organization and the details of the program are still being worked out and will be available in April.

One key component of the funding will be the tracking of results. Projects will be “expected to lead to significantly reduced emissions of particulates, gaseous pollutants, toxic substances and greenhouse gases from the production and use of energy.”

The rest of the plan..

The ‘Science and Technology’ is one component of the government’s climate change strategy; regulation is the other. Two more announcements related to energy are scheduled over the next week, and reports indicate that the government will also establish greenhouse gas emissions intensity targets that specific industries will be required meet by 2015. This Friday, Minister Lunn will make an announcement in Victoria, BC, on renewable energy. This is expected to include a re-launch of the Wind Power Production Incentive (WPPI), which provides a subsidy of one cent per kilowatt hour for the first ten years of a wind power project. This program was also placed on hold in 2006 pending a review of all climate programs. The 2005 Liberal budget had planned a 15 year extension of the program worth $920 million, and a separate $886 million fund for other renewable energy over the same period. According to media reports, officials are hinting that the government will combine the two funds in a long term package.

Energy efficiency is a clear priority, and will be the subject of an announcement next week. Speculation is that it will deal with programs such as the EnerGuide for houses, which provides a subsidy for energy efficient house construction but was placed on hold last spring. The government has also pledged new regulations under the Energy Efficiency Act to encourage the development of efficient appliances and equipment.

What it all means…

The flurry of announcements planned for this week indicate that after a year of review and planning, the government has begun implementing concrete measures to promote environmental technologies and address climate change and air pollution.

With technology funding and fiscal measures in particular, the goal is to create a stable investment climate which will encourage the development and commercialization of technologies which provide environmental benefits. While the details of the ecoEnergy funding have yet to be established, it and other announcements should provide some certainty that the government is ready to support private industry in this area – if the government follows through on its commitment to show leadership in this regard, then the private sector will need to step up and demonstrate its own capacity for innovation.

New Environment Minister John Baird also faces a challenge in implementing the regulation needed to support climate change measures. The most immediate of these is the passing of the Clean Air Act, likely with the inclusion of specific emissions reduction targets for industry sectors.

But there are other challenges that should be met. For example, a comprehensive carbon trading regime is needed immediately. The machinery is in place and the corporate sector already primed to participate in such a market-based mechanism for dealing with climate change. Many would prefer this to a carbon tax regime.

  • See: Does Canada need a carbon tax?

  • The government needs to make it very clear to industry leaders in all sectors that greater control over greenhouse gas emissions is inevitable, and if companies can’t exercise self control, the government will exert that control through tough, even handed regulation, with no favourites.

    Real progress on the climate change file with these upcoming announcements will mean support for investments in clean technologies and infrastructure, and regulations which will bring about real emissions reductions. If the government can deliver on those two aspects, it will begin to address an issue that has become a priority for Canadians.

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