Imagine it’s Monday, April 2, 2007. The Wind Power Production Incentive (WPPI), a federal government subsidy that pays wind power producers 0.8 cents for every kilowatt hour they feed into any Canadian power grid, wrapped up last Friday. It wasn’t renewed.
But rather than ending federal financial support for zero- and low-emitting electricity generation technology, the Conservative government ramped it up, big time.
The Conservatives announced a billion dollars worth of power production tax credits. Not a direct subsidy like the WPPI, but a major incentive nevertheless to any power company looking to quickly buy down the capital cost of an expensive generating plant. It’s a major boost for the Canadian wind power industry.
After skimming the Conservatives’ press release, power experts will surely point out that there’s no way wind generators in Canada will ever earn so much from electricity sales that they owe a billion dollars in taxes. But when the experts read the fine print in the press release, they’re impressed.
The press release puts wind at the forefront of its message, but in reality wind is just one of the technologies that qualify for the tax credit. Nuclear and gasified coal also qualify.
As I have pointed out in this blog, nuclear is where we will get the biggest greenhouse gas (GHG) reductions in the electricity generation sector. And since every modern power system needs the ability to turn some generators off and others on in order to manage minute-by-minute transmission congestion problems and maintain system stability, every power system needs some form of generation capacity it can turn on and off at a moment’s notice. I.e., some of its generators must be gas-fired. Hence the government’s desire to also encourage investment in gasified coal generation: it provides the needed system flexibility while cutting the GHGs of conventional pulverized coal by two-thirds.
Therefore the government’s tax credit ensures major new investment in proven GHG-reducing technologies. This is no bet; it’s a sure thing.
From today (April 2, 2007) forth, every Conservative stump speech trumpets the Canadian government’s support for wind power, “and other low- or zero-emission technologies,” as the way forward on climate change.
That’s how I’d approach it if I were the Prime Minister. Good policy is good politics. But he’s the one who won the election, and it is his decision.