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Renewable Energy and Energy Efficiency: Commencing a Comprehensive Strategy RECOMMENDATION SUMMARY: Accelerate growth in the renewable energy and energy efficiency sectors by implementing the following four fiscal strategies, as part of a comprehensive national strategy:
The GBC stresses that these recommendations are part of a recommended national strategy for renewable energy and energy efficiency. To understand more about how these measures contribute to an overall plan, please see National Strategy (below). Investment Required Benefits for Canadians
Background and Rationale Maximizing energy efficiency and supporting a transition to renewable energy is the most effective way of cleaning Canada’s air, protecting the health of Canadians, and meeting our climate change responsibilities. Energy efficiency measures and renewable sources of energy reduce air emissions, have water and land use benefits, improve energy security and local control, provide employment and economic opportunities in all parts of the country, and prepare business and consumers for the inevitable transition away from fossil fuels. Canada must therefore make energy effi ciency the cornerstone of energy policy, and renewable energy its primary focus. By working collaboratively with provinces and stakeholders to pursue a comprehensive renewable energy and energy effi ciency strategy, Canada can accelerate growth in these important sectors. These industries will contribute to increased energy security and protection of our climate, air and water. The Coalition’s vision of a national renewable energy and energy efficiency strategy is outlined at the end of this recommendation. The Coalition has identified four strategic fiscal measures that deserve primary consideration for the 2007 federal budget. Detailed Recommendations for 2007 Budget Take strategic actions to accelerate growth in the renewable energy and energy efficiency sectors, by: 1. Increasing and broadening support for Renewable Energy through Production Incentives. The Green Budget Coalition recommends that a new comprehensive production incentive program for low-impact renewable electricity and heat technologies be implemented by expanding support for low impact renewable electricity generation in Canada to a total of 12,000 MW by 2013. This would build on and replace the current 4,000 MW Wind Power Production Incentive and proposed 1,500 MW Renewable Power Production Incentive. This program would: For large projects the support should be in the form of a production incentive paid on the basis of measured production of renewable power or heat. For smaller projects a single capital manufacturers or distributors incentive should be paid based on the standard performance of the equipment. Budget: $2.5 billion over 8 years (2007-2014) 2. Increasing transfers to provinces and municipalities for investments in Energy Efficiency and Renewable Energy. The Green Budget Coalition recommends that there be dedicated increases in federal transfers to provinces and municipalities, for investment in:
Budget: $2 billion over 3 years 3. Continuing support for Energy Efficient Buildings Programs. The Green Budget Coalition recommends continued support by the federal government for successful core buildings retrofit programs such as the EnerGuide for Houses and EnerGuide for Existing Buildings (for commercial, institutional and industrial buildings). The role of the federal government should include maintenance of national labeling and quality assurance, together with financial incentives for home and building owners. The objective would be to make buildings retrofit a national priority, with most buildings upgraded in 10 years. Special attention should be given to support for energy efficiency retrofits for low-income housing and small-medium enterprises (see provincial and municipal transfers above for recommendation on low-income housing). Budget: 4. Tax measures to support phasing out inefficient lighting by 2015. A collaborative national “Strategic Lighting Initiative” to phase out inefficient lighting by 2015 has been established by federal and provincial governments, the lighting industry, and electrical utilities. The Green Budget Coalition recommends that the federal government move quickly to support this initiative with tax and other fiscal measures, including providing a long-term program of tax-credits for high efficiency lighting equipment. Budget: A five-year budget should be developed in collaboration with other partners in the Strategic Lighting Initiative Alternative and Complementary Polices The Drive Green: Company Car Tax Shift. This proposal, modeled on a successful measure introduced in the United Kingdom, would encourage employees to drive more fuel-efficient company vehicles by shifting some of the tax burden from green cars to gas guzzlers. (See Ongoing Recommendations, later in document, for more details.) Switch Green: Energy Star Appliance Feebate. This initiative would reduce the energy consumption of appliances in Canada. By offering a 6% rebate on appliances that meet the Energy Star criteria, and levying a 6% fee on those that do not, this proposal utilizes a revenue-neutral policy instrument to eliminate the price gap between efficient and inefficient appliances. (See Ongoing Recommendations, later in document, for more details.) Removing Class 43.1 restrictions on solar technologies. Class 43.1 provides an accelerated write off for many renewable energy technologies. However the qualifying restrictions placed on solar energy in Class 43.1 eliminates approximately 90% of the applications for solar energy. The Green Budget Coalition recommends that the size restrictions for solar PV systems in Class 43.1, and the restrictions on applications for solar hot water systems and solar air heating systems, be removed. Establishing a 100,000 Solar Roofs Program (Solar PV). Under this initiative 200 MW of PV systems could be installed across Canada over a 10-year period, thus encouraging direct engagement by residential owners in managing their own electricity costs. The cost of this program is estimated at $416-460 million over a period of ten years or more. Federal procurement: Make commitments to purchase 20% of all the federal government’s heating needs from “green heat” renewable sources of energy (solar water heaters, solar walls, biomass, and earth energy). Make commitments to set aside at least 10% of the government’s purchase of green power from solar PV sources. Substantial funds could be generated to offset the cost of implementing these renewable energy and energy efficiency strategies by reducing the high Accelerated Capital Cost Allowance for oil sands development to a level similar to that of conventional oil and natural gas. (See Oil Sands: Leveling the Playing Field with Other Energy Sources, later in document, for more details.) The implementation of a Regulated greenhouse gas (GHG) Emissions Targets-and-Trading System for heavy industry, domestic aviation and other large emitters is another key opportunity to reduce GHGs while stimulating integrated economic and environmental benefits. (See Ongoing Recommendations, later in document, for more details.) National Strategy In addition to the above fiscal recommendations, a national strategy should contain the following regulatory, policy and core program elements. The Green Budget Coalition believes the federal government must move quickly to:
See a more detailed description of a national strategy. Contacts: Roger Peters Marlo Raynolds Stephen Hazell Pierre Sadik |