Lorne Gunter May 6, 2011 – 11:46 AM ET
Last month, Bloomberg New Energy Finance, announced that investment in alternative energy in Europe fell 34% in just the first three months of 2011. Why would it fall by a third in so short a time? Because European governments have begun withdrawing the huge subsidies they pay to green-energy companies, and massive tax dollars are about the only thing that make most green-energy projects make economic sense.
Much of the investment in alternative energy is obviously what’s called “subsidy farming,” i.e. planting a little money in a project in the hopes of reaping a harvest of taxpayer-subsidized profits because, if left to market forces, green energy makes little sense.
If you want to know what’s ahead for Ontario taxpayers and electricity consumers, just look at what’s going on in Europe. Thanks to Premier Dalton McGunity’s green-energy dreams, Ontarians, like Europeans, will be paying big bucks for all types of energy — including old, cheap sources such as coal and hydro – and getting little more “clean” energy than now.
Ontario’s green-energy plan, introduced in 2008, was always dependent on the “if you build it, they will come” theory. If only enough tax dollars could be used to subsidize the construction of wind farms and solar panels and algae ponds for biodiesel, eventually there would be enough of these clean sources to make them economically viable competitors to coal and oil.
I like to call this the magic wand approach to energy reform. If a government merely wishes hard enough for green alternatives — if it spends enough taxpayer money and makes enough high-minded announcements, convenes enough expert and stakeholder panels to reinforce its ideas — its wishes will come true, whether or not they are practical, feasible or financially sustainable.
That has very definitely been the case with Dalton McGuinty’s green scheme: He and his government have pledged billions to new energy projects over the next couple of decades. This was an easy promise to make, because the billions were not his. His plan was to have Ontario residents and companies pay premiums of up to 40% for electricity to fund solar, wind and bio energy. More would be extracted from taxpayers as needed.
Now most of the alternative-energy projects are dead — less than four years after they were announced — and all that is left are the high (and rising) energy prices charged to pay for them and the potential for billions more from taxpayers to pay off the contracts made with green-energy companies.
Building giant farms of wind turbines in Ontario’s Great Lakes was about the last green dream to evaporate in the cold light of day. It went “poof!” in February when the Ontario Liberals conceded there was too little evidence that wind power was economically viable, so it abandon its efforts to ring the provinces shorelines with unsightly commercial windmills. The government had abandon solar power last fall, leaving scores of farmers and small private investors with unusable solar panels on private property around the province.
Of course, Ontario is not the only jurisdiction to be stung by its politicians’ green ambitions.
Last week, the BBC and Telegraph both reported that the British government is paying subsidies of up to $2 million a day to Scottish wind farms when they produce more energy than the power grid can absorb. On one especially windy day in April, some companies were paid upwards of $500,000 each to shutdown their turbines.
This may prove how good wind farms can be at producing electricity (when the wind is blowing, that is), but it also demonstrates the impracticality of most alternative sources. The power some of them produce may be impressive — when the weather conditions are right — but the weather is unreliable.. And even when these farms are producing lots of power, there is too little transmission capacity to bring their power to market. Building the farms before the infrastructure exists to get the power from A to B is putting the environmental cart before the economic horse.
When politicians, such as Mr Guinty, seek to plan the energy future based on touchy-feely environmental sentimentality — rather than solid science and sound engineering — the peoople who will end up paying are consumers and taxpayers.