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BC’s Clean Energy Act Promises Clean Energy and Cleantech Stimulus

Through its recently enacted Clean Energy Act (CEA), the BC government has set the stage for a protracted stimulus to the province’s clean energy and cleantech sectors. The CEA strengthened existing clean energy policies and enshrined them into law, clearly indicating the current government’s intention to build a strong low-carbon future.

The CEA is broad legislation that encompasses 16 energy objectives, the implementation of which will have varied implications for cleantech and clean energy companies. Some such objectives include: achieving energy self-sufficiency; increasing use of demand-side measures (conservation and energy efficiency); decreasing waste by encouraging the use of waste heat, biogas and biomass; reducing greenhouse gas emissions to specified limits; increasing the province’s reliance on clean and renewable energy; and fostering the development of emerging clean and renewable energy technologies.

Certain goals legislated by the CEA will have the greatest impact on the cleantech sector. The CEA sets aggressive greenhouse gas (GHG) emissions reduction targets that will take effect in 2012 and become increasingly stringent in 2016, 2020 and 2050. Because over 90 per cent of the province’s energy generation already comes from clean or renewable sources, these targeted GHG emissions reductions will likely be concentrated in the transportation, fossil fuel production, residential and industrial sectors. As these sectors account for about two-thirds of the provincial GHG emissions, it is likely that further policies and regulations will be introduced in an effort to provide additional incentives for both commercial and individual customers to adopt new carbon-reducing technologies.

The CEA ensures that BC Hydro will focus on demand-side management (DSM) measures, as the new legislation requires that expected increases in energy demand be reduced by 66 per cent through such conservation and efficiency initiatives. As a first step, the CEA requires BC Hydro to install a province-wide network of smart meters by the end of 2012, allowing for time-of-day energy-pricing and encouraging conservation during peak periods. Such time-of-day pricing will encourage residential, commercial and industrial energy users to engage in significant energy efficiency retrofitting, as well as to adopt new smart appliances and other machinery that communicate with smart meters to avoid elevated energy prices during peak periods.

The CEA also empowers the provincial government to require BC Hydro to implement a feed-in tariff (FIT) program. To this end, the BC government recently sought public comments on its FIT Consultation Paper, with a view to bringing a FIT Regulation into force in early 2011.

As proposed, BC’s FIT program differs significantly from programs in operation in other jurisdictions. For example, Ontario’s FIT program offers long-term electricity-purchasing contracts for projects that largely employ proven clean and renewable technologies, with a goal of enabling the rapid and large-scale adoption of renewable energy sources to displace coal-fired generation.

Because BC already obtains over 90 per cent of its electricity from clean or renewable sources, the proposed BC FIT program instead focuses on enabling emerging renewable and clean energy technologies. As such, the proposed BC FIT program would apply to emerging technologies such as gasified biomass, biogas, geothermal, in-stream hydrokinetic and ocean energy. Established technologies, such as run-of-river hydro, solar and wind generation, would be eligible for the FIT only in remote, off-grid areas.

The CEA, along with its forthcoming regulations, has directed British Columbia down the path to a low-carbon future. By combining clean energy goals and mandated conservation and efficiency initiatives, the CEA will provide a lengthy stimulus to the province’s clean energy and cleantech sectors. Expect that British Columbia will continue to add "green collar" jobs throughout the coming years.

McCarthy Tétrault Notes

A number of other changes to the BC clean energy regulatory environment are in the works. Additional regulations under the CEA will take shape over the coming months, including the formation of a First Nations Clean Energy Business Fund.

It also remains to be seen whether the BC FIT program will continue as a standalone program, or if it will be integrated with BC Hydro’s current Standing Offer Program (SOP). BC Hydro has been conducting its two-year review of its SOP, with a view to exploring changes to pricing and eligibility rules (including the potential to include innovative and/or near-commercial projects). Perhaps BC Hydro’s SOP will be reformulated to enable FIT projects to transition into SOP contracts after FIT contracts expire.

Despite uncertainty regarding forthcoming regulations and program design, the CEA helps British Columbia maintain strong clean energy and cleantech sectors, and will foster rapid growth in these new cornerstones of the provincial economy.