Welcome to the home of our new Green Economics Blog. My name is Amy Taylor and I am one of two economists on staff at the Pembina Institute. The other economist, Mike Kennedy, and I will be making posts to this blog on a regular basis. We hope you will check back to see our latest thoughts on everything green economics!
Green Economics may not sound very exciting, but the truth is we are working on some of the most interesting issues of our time. What is the true value of a tree from both an economics and ecological point of view? How do we ensure pollution costs are paid for by polluter instead of families and taxpayers? How can we put a price on carbon pollution so that the oil industry pays for its pollution and the Alberta economy evolves into a diverse, healthier, greener economy capable of employing our kids well into the future?
These are among the many topics we tackle in our work at Pembina, and in this blog we plan to bring you into our discussions. At Pembina, we are seeking ways to use economics to help build the world we want to live and raise our children in. Through this blog, you can be part of our solutions.
Feed-in Tariffs
One economic tool with the potential to help countries and provinces diversify and clean up their energy supplies is a feed-in tariff. A feed-in tariff establishes a predictable price at which power producers can sell renewable energy into an electricity power network. It's a way of providing support for renewable energy and then letting the market pick the solutions. The benefits — including new, clean energy jobs and a cleaner environment — are significant.
A prerequisite for a feed-in tariff is the ability to participate in the market — something Alberta's electricity system is already set up to do. A feed-in tariff could be just the trick for spurring renewables to their full potential in the province. Environment Minister Rob Renner has said the idea "has some merit" (Alberta Legislature Hansard, November 3, 2009).
Our research indicates that a well-designed feed-in tariff is the most effective policy mechanism to facilitate greater deployment of renewable energy. Jurisdictions leading the world in renewable energy and clean energy jobs, such as Germany, Denmark and Spain, have all used feed-in tariffs as the cornerstone of a comprehensive approach to support renewable energy.
Ontario just passed the Green Energy and Green Economy Act and are using feed-in tariffs; they expect their green energy industries to boom. Prince Edward Island has launched its own limited feed-in tariff, as have Hawaii, Vermont and several municipalities in the United States.
Momentum around this important policy tool is growing. Even China and India passed feed-in laws in 2009! Canadian provinces need to secure their seat on the feed-in tariff bus, not only to facilitate the transition to a greener electricity future, but also to take advantage of other benefits such as job creation, economic development and export opportunities.
Green the Grid
Did you know that more than 70% of Alberta's electricity comes from coal — a highly polluting fossil fuel? Yet, Alberta has massive opportunity to green the grid through increased efficiency and use of renewable power sources.
Pembina's analysis shows that Alberta's future electricity demand can be satisfied by clean and renewable energy sources. That means we can phase out our existing fleet of coal plants and avoid greenhouse gas and other emissions associated with new coal plants.
There is huge opportunity in this province to make renewable energy Alberta's New Advantage. We just need the right set of policies to make it happen.
A feed-in-tariff can be part of the solution.
Amy was director of the Pembina Institute's public sector services group until 2010.
