October 23, 2013/York University’s Sustainable Energy Initiative (SEI) announces the publication of the 5th in its series of research papers on Ontario Electricity Policy. Understanding the Economic Impact of Renewable Energy Initiatives, by SEI Co-Chair Professor Mark Winfield, examines the debates around the Ontario’s Green Energy and Green Economy Act as an energy and economic development strategy. The paper is available at http://sei.info.yorku.ca/2013/10/understanding-the-economic-impact-of-renewable-energy-initiatives/.
The paper finds that the empirical data on the employment impacts of the Ontario legislation is extremely limited. Rather, the evidence regarding the economic impacts of the GEGEA is found to be almost entirely based on the results of economic modelling exercises. Critics and supporters of the legislation have arrived at very different conclusions through such studies. These outcomes are similar to those seen in other jurisdictions pursuing renewable energy initiatives. The paper examines the reasons for the different conclusions being reached over the impacts of renewable energy initiatives. Differences in modelling approaches, assumptions regarding the costs of renewable energy technologies relative to non-renewable alternatives and most importantly the treatment and valuation of environmental and other externalities and risks in modelling the cost impacts of different energy technologies are found to be key factors in explaining the different conclusions.
Examining the range of perspectives that underlie these differences in modelling approaches and assumptions, the paper notes that debates surrounding renewable energy initiatives are not bounded by questions directly related to energy policy. Rather they are embedded within wider ideological debates about the appropriate roles of government, public policy and markets in achieving societal goals.
In policy terms, FITs and similar renewable energy initiatives are seen by their proponents as politically feasible mechanisms for addressing institutionally embedded biases with energy systems in favour of conventional technologies. They are also seen as a means of dealing with the consistent failure of governments to implement effective measures to place meaningful value on the externalized environmental and social costs and risks associated with conventional technologies in energy system planning, design and implementation.
The paper also assesses Ontario’s renewable energy initiative as an industrial development strategy. The paper finds that the province was very late in establishing a coherent strategy for the development of the renewable energy manufacturing and services sector. The future prospects for the sector are found to be under serious threat as a result of the uncertainty regarding the province’s ongoing commitment to the development of renewable energy resources. In the absence of a resolution of the issue of the province’s future direction, and of a coherent sectoral development strategy, the paper finds that there is a serious risk that GEGEA exercise will amount to an expensive but temporary countercyclical intervention as opposed to an investment in development of an industrial sector with potential to make significant long term contributions to the Ontario economy.
