This month, the Liberal provincial government of Dalton McGuinty will finish drafting its proposed Green Energy Act. The Act's early drafts call for a big increase in renewable energy production in Ontario. Sounds nice! How do we get there?
The plan contains two big elements: (1) a huge cash giveaway and (2) a brusque slap-down of local democracy.
It is important to realize that local scrutiny is often the only scrutiny a wind project gets.
Let's talk about local democracy first. Communities often resist wind and solar power for the simple reason that they ruin the beauty of local landscapes. When you think of wind power, for example, don't think of the solitary turbine that overtops the CNE grounds in Toronto. To meet the goals set out in the Green Energy Act, Ontario will have to build tens of thousands of these massive turbines, linked by a vast network of electrical transmission wires. Many hundreds of these turbines are proposed for my own beloved Prince Edward County.
When people in places such as Prince Edward County hear about "the environment," they think of their environment. They think responsible stewardship means protecting what is lovely and natural. To them, it seems perverse to ruin the landscape in the name of preserving the environment. So they resist.
To deal with this resistance, the Green Energy Act proposes to strip local governments of their zoning powers. (In the draft's own words, the province will propose: "Streamlined regulatory and approvals processes that enable the rapid but prudent development of green energy projects across the province, reducing uncertainty and transaction costs to all involved.")
It is important to realize that local scrutiny is often the only scrutiny a wind project gets. Unless a project uses federal money or land, there is no federal environmental assessment. Smaller projects are exempt from provincial assessment as well, and bigger projects can count on a very friendly hearing.
Not all localities will be ignored. There will be special consultation with First Nations/Métis communities (and a special piece of the action for them as well). But for everybody else, Ontario's message is: Shut up and eat your peas.
It's not only local landowners and vacationers who are expected to shut up. It's taxpayers as well.
Here we come to item (1), the huge cash giveaway.
The big inconvenient truth about "green power" is that it is hugely costly--triple the cost of coal power, almost double the cost of nuclear. Advocates of green power insist that the price will soon decline. This promise never comes to pass, for reasons that should be obvious after a moment's thought.
The big costs involved in a wind and solar projects are not the turbines and solar panels, although they are very expensive in their own right. The big costs are (i) acquisition of the vast amounts of land required to site the turbines and panels and (ii) the stringing of wires from thousands of small-scale power generators to the power distribution grid. These costs are more likely to rise than to fall.
Wind and solar suffer from inherent diseconomies of scale that can never be corrected. Unable to correct these costs, the province has decided instead to conceal them.
In the United States, wind power has been incentivized with lucrative tax credits: 2 US cents per kilowatt hour. (To put that subsidy in perspective, electricity from coal costs about 3 US cents per kilowatt hour.) America's lavish wind subsidy has been in place since 1992, yet even so, wind cannot compete: In 2007, wind provided less than 5% of America's electricity supply.
Ontario, however, has no need of tax credits. In Ontario, power generation is monopolized by a government owned corporation. Ontario can simply order its power generation company to buy wind power at a price profitable to the producer--and then average that cost invisibly into Hydro bills.
The new act will offer producers even more. Not only will the province buy their power at a guaranteed profit--not only will it index that profit for inflation--but it will guarantee producers the financing necessary to build the wind turbines in the first place!
Good deal? It gets better. The dreary part about borrowing money, even from the government, is that you do sooner or later have to repay it. Or do you? The explanatory language treats repayment as more a suggestion or guideline than an obligation: "The intent is that over time the market and community will meet all financial requirements for these projects."
In the name of the environment, the McGuinty government proposes to despoil the province's beauty and pillage the province's power consumers.
That's not green. That's dumb.
David Frum is a resident fellow at AEI.