Ontario’s Cap-And-Trade Plan Raises Solar’s Profile


The Canadian Solar Industries Association (CanSIA) has come out strongly in support of Ontario's plan to implement a cap-and-trade system similar to those enacted by Quebec and California.

While the final details on the mechanisms and pricing for Ontario's program are still under review, John Gorman, president and CEO of CanSIA, says the province has taken a big step toward a new energy economy that particularly benefits the solar sector.

‘Ontario is the third-largest solar market in North America, with over 2 GW of installed capacity over the last six years,’ Gorman says. ‘This speaks to the experience and the maturity of the industry. It is absolutely reflected in the very aggressive pricing for solar that we're seeing.’
The lower costs of solar have resulted in a gradual reduction in subsidies. Ontario has been moving away from a feed-in tariff (FIT) scheme and toward competitive procurement. According to Gorman, the FIT program succeeded in creating a very effective and robust solar sector that can deliver low prices for the province.

A year ago, Ontario became the first jurisdiction in North America to completely eliminate coal-fired plants from its generating assets. Those plants that were not shuttered were converted to burn other fuels, including biomass. Power industry observers generally credit the move as being responsible for Ontario hitting its carbon emissions target of 6% below 1990 levels by 2014.

Gorman says the cap-and-trade system is essential for Ontario to reach its emissions goal of 15% below 1990 levels by 2020. ‘I think it's important to point out that before the introduction of this cap-and-trade system, we were very much in danger of not hitting that 2020 target,’ he says.

Prior to cap-and-trade, solar power was evaluated almost entirely in the context of electricity planning. With the advent of carbon pricing, solar power has become a significant factor in the much larger discussion of climate change policy in the province. Such discussions extend beyond electricity generation to encompass the building, infrastructure and transportation sectors.

‘Solar is unique in that it is able to help power all of those sectors and help them achieve their carbon-emissions reductions,’ Gorman says. ‘Now, you're going to see solar start demonstrating its value and its application to achieving emission reductions and empowering all sorts of different sectors.’

Advocates say carbon-pricing schemes, such as cap-and-trade and carbon taxes, serve the purpose of taking the ‘externalities’ associated with fossil fuels into account. According to this argument, burning fossil fuels harms health and the environment in ways that are not considered in the cost of producing a kilowatt-hour of electricity. As a result, carbon-pricing schemes balance the playing field for green, renewable generation sources.

‘What the cap-and-trade system does is create an incentive in many different sectors to lower their emissions profile,’ Gorman says. ‘In the electricity sector, that puts direct pressure on coal- and gas-fired generating facilities by essentially making them responsible for the externalities of health, insurance, climate change and extreme weather events. So, it helps level the playing field on the electricity side by putting a cost on those externalities and recognizing that non-emitting and renewable sources have value.’

Ontario is expected to announce its pricing and trade mechanisms this fall. One reason the province went with a cap-and-trade system is so it could integrate its carbon market with those of Quebec and California. The larger and more diverse the market, the argument goes, the fewer the risks and more stable and reliable it will be.

Of course, another result of a carbon market is the revenue it generates from carbon emitters. The government of Ontario has said that some of those funds will be used to further develop clean energy technologies and practices. Some of these areas include helping families use less energy, building more public transit, and helping factories and businesses reduce greenhouse-gas pollution.

For its part, CanSIA is also interested in seeing some percentage of those funds directed to the solar sector. ‘What we're saying is, 'Do as California and Quebec have done,'’ Gorman says. ‘Take that money and reinvest it in technologies that are going to make renewables economically competitive and Ontario a leader in the new energy economy. It's a virtuous circle.’

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