One of the excuses the B.C. government gave for springing the HST on unsuspecting taxpayers was because Ontario was doing it. Seems the government wants to copy Ontario in other ways as well. The release of B.C.’s new Clean Energy Act in April has B.C. competing with Ontario to see whose handouts will “attract” the most so-called clean and green energy investment in Canada. “Attracting” clean energy investments will somehow keep electricity rates competitive and create jobs. However, the evidence from both Ontario and abroad is clear: green-energy corporate welfare leads to higher energy prices and fewer jobs.
Creating a more generous green-energy subsidy scheme than Ontario’s won’t be easy. Since May 2009, the Ontario government has been paying a guaranteed rate to renewable energy companies—one that is higher than what these companies would otherwise receive. The Ontario government pays 13 cents per kilowatt hour for electricity produced from biomass, 13.5 cents from wind, and 44 to 80 cents from the sun.
This will drive up the cost of electricity for Ontario families. In April 2009, an average homeowner in Toronto paid 11.46 cents per kilowatt hour for electricity. The guaranteed green rate will drive that cost up to about 14.5 cents in 2011. It means the average family in Ontario will pay an extra $300 per year to heat their home and cook their food.
However, Premier Gordon Campbell has indicated quite clearly he’ll try to do a better job than Ontario to create a high-cost energy environment. He said, “There is not a jurisdiction that won’t try to win the clean-energy race.” Ontario’s commitment to subsidize energy sources has made it the most expensive energy market in Canada—do we really want to be in this race?
In comparison, B.C. ratepayers now pay B.C. Hydro between 6 and 8.3 cents per kilowatt hour for power. B.C. Hydro has already announced its rates will probably go up by 29 percent over the next three years, but that’s before the increase it will need if B.C. ratepayers are forced to subsidize high-cost energy producers.
Can you say wood-burning stove?
Why might Ontario premier Dalton McGuinty want to force Ontario families to pay more to heat their homes in the winter? The Ontario government is desperate to appear to be doing something about declining employment in manufacturing. Premier McGuinty promises to create more than 50,000 jobs with his new Green Energy Act.
Will it work? Probably not.
Spain is often pointed to as an example of green subsidy success. However, a study by researchers at the Universidad Rey Juan Carlos in Spain showed that subsidies to clean power producers destroyed jobs in metallurgy, non-metallic mining, and food processing, and the beverage and tobacco industries. Most of the renewable energy jobs created in Spain were temporary and created in the construction of the renewable energy projects. Only one-in-ten jobs in the “green” energy sector was a permanent job and included those in operation and maintenance of the renewable sources of energy. The study found it cost almost $900,000 to create each “green” job in Spain. The unemployment rate in Spain now hovers around 20 percent.
The lessons here are clear: large-scale corporate welfare schemes that promote ecofads are expensive failures. If we really want to be competitive with Ontario, we would maintain our low-cost energy advantage, not throw it away. Governments have proven again and again that forcing taxpayers to fund subsidy schemes that try to pick winners makes losers out of competitors, taxpayers, and consumers.
Maureen Bader is the B.C. director of the Canadian Taxpayers Federation.