Kenneth P. Green and Ross McKitrick, Fraser Institute
In 2009, under the Premiership of Dalton Mc Guinty, the Ontario legislature passed the Ontario Green Energy Act (GEA), an act that aimed to increase Ontario’s use of renewable energy such as wind power, solar power, biofuels, and small-scale hydropower. The centerpiece of the act is a schedule of subsidized electricity purchase contracts—called Feed-in-Tariffs—that provide long-term guarantees of above-market rates for power generated by those renewables.
The GEA may have been well-intended, but a recent analysis published by the Fraser Institute, Environmental and Economic Consequences of Ontario’s Green Energy Act, demonstrates that the GEA has had disastrous impacts on Ontario’s energy rates and is going to seriously threaten economic competitiveness for the manufacturing and mining sectors. What little environmental benefit it is expected to generate could have been had at a fraction of the cost. Further, unless the province changes course, the GEA will saddle Ontarians with needlessly high energy costs for decades to come.
As our study demonstrates, the GEA will soon put the province at or near the top of North American electricity costs, with serious consequences for the province’s economic growth and competitiveness. Already the GEA has caused major price increases for large energy consumers and we’re anticipating additional hikes of 40% to 50% over the next few years. Because of these price hikes, we estimate that the manufacturing and mining sectors will be hard hit, with returns to investment in manufacturing likely to decline by 29% and mining by 13%. Read article