CANADIAN ENERGY POLICY ISSUES Peter Love Adjunct Professor, Sustainable Energy Initiative York University Canadian Society for Ecological Economics November 1, 2013

PRESENTATION OUTLINE Energy In Canada Climate Change National Energy Strategy/Carbon Price Energy Conservation Transferring Technical/Financial Risk Questions & Answers 2

ENERGY FLOWS IN CANADA 3

CLIMATE CHANGE IPCC– Warming is an “unequivocal” fact - “observed changes are unprecedented over decades” - “It is extremely likely (>95%) that human influence has been the dominant cause of the observed warming since the mid 20 th century” IEA -rising fossil-fuel energy use will lead to irreversible and potentially catastrophic climate change Ban Ki-moon - slowing or even reversing the existing trends of global warming is the defining challenge of our ages. World Economic Forum’s - climate change has the highest combined perceived impact and likelihood World Bank – The 4 o C scenarios are devastating 4

CLIMATE CHANGE IN CANADA 82% of Canada’s man-made GHG from production and use of energy 5

CLOSURE OF COAL PLANTS BY

CARBON COST ABATEMENT CURVE 7

NATIONAL ENERGY STRATEGY Last initiative was National Energy Program in 1982 Environmental and business groups (including Cdn Council of Chief Executives) have called for a new National Energy Strategy Major elements would include oil sands, fracking, national electric grid, renewables, smart grid, carbon pricing, and conservation 8

CARBON PRICING Supported by environmentalists, NRTEE and even CCCE BC leading North America with carbon tax Energy taxes big part of Denmark’s success Could be either carbon tax (price known but quantity not) or cap and trade (quantity known but price unknown) 9

CONSERVATION Five Types ◦Behavioural Conservation (no change in technology) ◦Energy Efficiency (technical improvements) ◦Demand Response (time of use) ◦Fuel substitution (increases use of other fuel) ◦On-site generation (excludes FIT contracts in Ontario) 10

BENEFITS OF CONSERVATION 11

EMPLOYMENT BENEFITS 12

ENERGY EFFICIENCY RETROFITS ARE GOOD INVESTMENTS Source: adapted from Ehrardt-Martinez, Karen and John ‘Skip’ Laitner: « The Size of the U.S. Energy Efficiency Market: Generating a More Complete Picture ». Washington, D.C., American Council for an Energy Efficient Economy, May 2008, page 29. Energy Efficiency Investment Risks and Returns Average Annual Return 0% 10% 20% 30% 40% 40% 30% 20% 10% 0% Common stocks Small company stocks Risk Index (year-to-year volatility) Major Energy Efficiency retrofits Corporate bonds Canada savings bonds

OTHER BENEFITS OF GOING GREEN 93% reported greater ability to attract talent 81% saw greater employee retention 87% experienced improved workforce productivity 75% reported improvement in employee health 100% experienced increase in goodwill/brand equity Source: McGraw Hill “Business Benefits of Green Buildings”.

SIGNIFICANCE OF BARRIERS

ONE SOLUTION:ENERGY PERFORMANCE CONTRACT -Involves: a building owner and energy service company (ESCO) -Savings financing: comprehensive measures with guarantees that the energy savings will be sufficient to finance the cost of the project -Performance guarantee: Transfers technical and financial risk to ESCO -Used since mid 80’s; Canadian government created Federal Building Initiative in 1992

ILLUSTRATION OF EPC 17

EPC NOT MORE EXPENSIVE THAN TRADITIONAL PROCESS EPC Procurement Traditional “Piecemeal” Procurement Performance Guarantee Fee Performance Guarantee Fee Financing Charges Financing Charges Additional Procurement Processes Additional Procurement Processes Additional Human Resources Additional Human Resources Opportunity costs for differed projects Opportunity costs for differed projects Less Energy Savings resulting from: Less Energy Savings resulting from: Lost time Lost time Fragmented Approach Fragmented Approach No Monitoring and Verification No Monitoring and Verification No Savings Guarantee No Savings Guarantee

YORK UNIVERSITY $39.5 million project, 85 buildings, 2 campuses Campus-wide energy audit and utility analysis in $5 million projected annual savings

CULTURE OF CONSERVATION 20

FINAL THOUGHTS Women represent 70% “Green Champions” in OPA segmentation of electricity consumers You must be the change you wish to see in the world Mahatma Gandhi Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it is the only thing that ever has. Margaret Mead 21

DISCUSSION Peter Love Adjunct Professor Sustainable Energy Initiative York University 22