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Green Energy Act of Canada

Assessing the impact of the decision by the Government of Ontario to pass the Green Energy Act on its economic competitiveness. The essay outlines some of the challenges Ontario has faced that have resulted in a decline in its competitive position.

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Since the 19th Century Ontario's agricultural economy had began to diversify with development of manufacturing and commercial industries which were greatly enhanced by concurrent development of hydroelectric power and the exploitation of mammoth mineral resources. Ontario, the heartland province, was created from the British Province of Quebec by Constitutional Act of 1991 and roughly speaking it can be divided into three economic regions . The north region is the storehouse for the province's mineral wealth, the central region is the extractive industry and the south is a predominantly agricultural region. Its economic success has been based on cheap power, plentiful natural resources, skilled and well educated workforce and convenient transportation links to market elsewhere in Canada, United States and overseas. In 2001, per capita income was C$ 35,185 and distribution of Gross Domestic Product (GDP) among the economic sectors in Ontario was 2% primary ( extractive industries primarily mining, fishing and forestry), 32% secondary (manufacturing and construction) and 66% service(information service, real estate, banking and financial services). In 2006, the GDP was C$ 557.8 billion which accounted for 2/5 of the total GDP for Canada .

However, behind this backdrop of prolonged success is an ailing economy that has resulted in a decline in the competitive position of Ontario. The manufacturing sector is facing fundamental structural challenges even as offshore competition scales upwards . Other major challenges facing Ontario include the energy crisis. Most of the hydroelectric sources have already been tapped and although nuclear power generation as an alternative has been attractive since 1960's its support has declined over the safety issues and safe removal of nuclear waste. Natural gas which is the chief fuel for residential, commercial and industrial heating is largely imported from regions in Western Canada . The rising unemployment is also influential to the decline in economic growth: unemployment rate in 2006 in Ontario was 6.5% compared to the Canadian average of 7% and gradually rising .

Having outlined some of the challenges facing the Government of Ontario that have resulted in a decline it in its competitive position this paper will proceed to assess the impact of the decision by the Government to pass the Green Energy Act and its consequences on its economic competitiveness.

Green Energy Act:

The Green Energy Act (GET) includes the requirement for the responsible power purchase authority to grant obligatory purchase and priority of purchase of green energy projects.

GEA outlines a system of Advanced Renewable Energy Tariffs (ARET) as the primary procurement mechanism for clean and renewable energy distributed. The tariffs per kilowatt-hour of generation are based on key components of the French and German models:

The tariffs in the GEA are differentiated on the basis of: resource intensity; technology; project scale and location; prices set on the basis of cost and a reasonable return on investment; a no-cap on project size or program size; a no- cap on voltage; and 100% inflation protection at 2 levels - within the power purchase contracts and within the tariff program

The direct and explicit participation of First Nations and M├ętis as developers and owners in energy projects - generation, transmission, and conservation - so they benefit directly from the resulting economic advancement.

The establishment of a Green Energy Debt Finance Program (GEDFP) and a Community Power Corporation (CPC). The GEDFP is mandated to raise the financial capital required to meet the financial market short falls in the development of eligible and viable projects .

The GEA includes a Community Power Corporation to ensure the equal opportunity for participation of the community power sector in recognition of the additional social and economic benefits of these projects to Ontario communities and the people of Ontario as a whole.

The adoption of smart grid technologies, including energy storage, in order to transform Ontario's energy system from highly centralized to more distributed system.

A mandated commitment to a continuous improvement approach to conservation with a minimum 2.5% annual (compounding) reduction in energy resource needs from 2011 until 2027.

It includes policies that give priority for vulnerable consumers (including relevant industrial users) to reduce their energy burden through conservation, bill assistance, innovative utility policies and stronger consumer protection.

It includes streamlined regulatory and approvals processes to enable the rapid but prudent development of green energy projects across the province, reducing uncertainty and transaction costs to all involved.

The goals of the Green Energy Act is to make Ontario a global leader in the advancement of renewable energy, clean distributed energy and conservation, creating thousand of jobs, energy security, economic prosperity and climate protection. The Act aims to smooth the progress of development of a sustainable energy economy that protects the environment while engaging the communities and building a world-class green industrial sector. It aims to provide a renewably-powered electricity system ...

Solution Summary

Assessing the impact of the decision by the Government of Ontario to pass the Green Energy Act on its economic competitiveness. The essay outlines some of the challenges Ontario has faced that have resulted in a decline in its competitive position.

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