At the same time, much talk is happening provincially, nationally and globally about a possible cap-and-trade system: Ontario has mumbled about a potential interprovincial program with Quebec; Stephen Harper's government is bound to join up with any system that comes out of the American government (which I assure you, will be a cap-and-trade system); and the climate change summit in Copenhagen in just a few days will have a large cap-and-trade facet to it. For renewable energy project developers, this could mean cashing in on the carbon credits they'd receive for their "emissions-free" projects. They could sell their credits to the less-green folks out there.Renewable energy developers should be licking their chops. Serious money could be made from two different angles.
But hold your horses. Ontario's independent energy manager, the Ontario Power Authority (OPA & delivery agent of the Feed-in-Tariff) has a nice little clause written into the FIT contract. Under section 2.10 of the contract it reads that "the supplier hereby transfers and assigns to...the OPA who thereafter shall...retain all rights, title, and interest in all Environmental Attributes associated with the Contract Facility during the Term of this Agreement."
In layman's terms, the OPA keeps everything that might contribute to potential carbon credits, which in its terms is an "Environmental Attribute".
You could easily criticize the OPA for doing this, especially for no direct cost in exchange. But the OPA claims that no price can be put on it at this time because their is such uncertainty in what the carbon credits could be worth.
But really, who can fault them? The government is providing huge swaths of money for these projects, so any chance of reclaiming some of that without really harming anyone isn't really out of the question. Furthermore, it could inevitably end up making the FIT program considerably cheaper, if, say in a few years, the government decides to sell its carbon credits on a carbon market to recoup some of its costs.
This is not a new policy from the OPA. Some of its conservation-demand management programs -- like the Power Savings Blitz program where $1000 worth of lights are given to businesses for free -- have the same "Environmental Attribute" clause written into them.
For now it is not a problem, mostly because a significant carbon market does not exist and nobody really knows about the OPA contract clause. But give it a few years and you can be sure that some people might be a little up in arms when they decide to sell their carbon credits only to find out they don't own them.
I agree with most of your posting, with one exception.
ReplyDeleteThe level of transfer of carbon credits (or Environmental Attributes in the language of the OPA) is in relation to the amount of $ contributed by both the participant of the program and the OPA.
For example, in the PowerSavingsBlitz program (shortened to PSB), the customer transfers all the Environmental Attributes for the increase in efficiency of the lighting to the OPA. Any $ amount that could be attributed to the environmental attribute is small compared to the 1000 dollar giveaway and the year over year savings in Hydro.
For example, let's say my business participates in the PSB program and gets 1000 dollars worth of lights that saves $300 worth of Hydro year after year. Any carbon credits I would/could receive in the future are surely not going to be worth 1000+(300 times 10 years).
As well, the clause in the contract says the transfer of carbon credits exists for the life of the lights.. typically 8 to 10 years.
Contrast this with the ERIP program (Electricity Retrofit Incentive Program) also from OPA. This is for larger businesses above 50kW peak draw. That program provides rebates for efficiency measures (e.g. $80 for a lighting fixture upgrade). Any Environmental Attributes are split between the OPA and the customer based on the $ committed to the upgrade by both parties. Pretty fair in my opinion.
With FIT and microFIT I also believe that the transfer of Environmental Attributes to the OPA is a good thing and helps to offset the subsidy of power generation. Most of us are already paying an additional charge on our Hydro bills for Environmental Offset costs... so we are paying part of the subsidy already.
As long as we are all in this together and the OPA is accountable and not-for-profit then I feel good about it. If I see some group or business extracting $ from the system without adding any value then that is when I get upset.
Interesting discussion that I am sure will become more interesting when the US figures out their carbon economy more clearly.
The feed in tariff incentive sounds great and all. But such subsidies should be closely monitored since the resources to pay those are coming from the people through tax.
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