JEFF RAMBHARACK, 08 OCT 2010

In my conversations about renewable energy, regardless of the jurisdiction and how we got on the topic, the conversation always leads to the same three questions:

1. “What’s the best renewable energy source?  Wind?  Solar?  Something else???”
2. “Don’t renewables cost more?  Who’s going to pay for them?”
3. “What’s the deal with nuclear?”

I’m going to focus mostly on the second question in this blog post.

Cost is touchy and can also be deceptive.  A lot of us want clean energy but can’t afford to provide it for ourselves out of our own pockets.  And we don’t want the government to subsidize it because that will come out of taxpayer pockets, right?  We argue that market instruments only work if the government creates a level playing field and that we should leave things the way they are.  However, the table below shows that the Canadian federal government subsidizes the fossil fuel sector immensely and has done so over the last several decades.

Source: ISEEE, The Role of Renewable Energy in Alberta’s Energy Future

We tend to think of fossil fuels as extremely lucrative and needing no nudges to meet our energy needs and bring in revenue but what about the $40.4 billion boost between 1970 and 1999 that helped to get things rolling?  In comparison, renewable energy gets $12 million/year, less than 1% of the amount received by the fossil fuel industry. In other words the Canadian federal government gives over 100 times more money to dirty fossil fuel that it gives to renewable energy. Clearly, the playing field is tilted excessively in favour of dirty fossil fuels.

What if there were no subsidies?  It’s harder to find projected costs for Canada but the U.S. Department of Energy is very transparent about what they expect electricity to cost.  Projections for 2016 are that coal with carbon capture and storage (CCS), the cornerstone of the “clean coal” initiative, will have a levelized cost of $129.30/MWh.  Wind will have levelized cost of $149.30/MWh and is that cost is expected to drop quickly in the following years.  Hydroelectricity will cost $119.90/MWh.  Geothermal energy will cost $115.70/MWh.  Biomass will cost $111.00/MWh.  Nuclear energy is listed at $119.00/MWh, comparable to hydroelectricity.  The answer to the second question, then, is that cleaner energy is not necessarily more expensive.  In fact, it’s already competitive with dirty energy without subsidies and it’s expected to get even cheaper.

The third question about nuclear energy could be the topic of many blog posts, so I’ll only refer to the costs in the federal spending table.  We need to ask ourselves if we would rather spend $850 million cleaning up radioactive waste or investing in genuinely clean energy.

Renewable energy, like any other energy, is not free but we need to shake the perception that it is out of reach.  In fact, according to the U.N. Environment Program, 60% of all newly installed power capacity in Europe in 2009 was renewable. In the US, renewables constituted 50% of new capacity in 2009.  Considering the world as a whole, renewables will represent 50% of new electricity installations this year or 2011!  

If clean energy, and all of its benefits, is something that we want in Alberta, we just need to ask for it and make the choice.  We need to ask for a level playing field between renewable energy and fossil fuel, whether that means increasing subsidies for renewable energy or even removing the subsidies for fossil fuels.  We need to choose clean energy sources, which would bring in new revenue, jobs, and economic diversification.  Seeing that the costs are comparable for coal, wind, hydroelectricity, geothermal, and biomass, what do you think the next power generation plant in Alberta should be?