Thank you, Mr. Chair.
Good morning.
My name is Patrick Bateman. I am the Policy and Research Advisor for the Canadian Solar Industries Association.
CanSIA is a national trade association that represents approximately 650 solar energy companies throughout Canada. Our vision is that by 2025 solar energy will be a viable and mainstream energy choice for Canadian consumers without the need for government incentives.
On behalf of our membership, I thank you for the invitation to appear before the committee today and to expand on recommendations we made to the Senate Standing Committee on Energy, Environment, and Natural Resources last week as to how to achieve the objective set by the government and members of the House of securing Canada's future position as a clean energy superpower.
CanSIA's written brief outlines three recommendations. Today I wish to provide information to complement the first of these recommendations--that is, the recommendation to establish a multi-year 30% investment tax credit for solar energy technology.
In particular, I would like to speak to the necessity of evolving our current national policy framework instruments to reflect the rates for market share and competitiveness of the global solar energy market, the demonstrated success and popularity of investment tax credits for consumers and business markets in the United States, and the benefits that the implementation of a federal tax mechanism in Canada equivalent to the U.S. investment tax credit will bring.
In 2011 the Canadian solar industry is expected to employ a Canadian labour force of over 8,000, generate investment revenues approaching $2 billion, and to boast over 30 manufacturers of high-value solar energy equipment. To build on these early gains an efficient national incentive structure that succeeds in attracting and sustaining private investment in the solar energy value chain while still incenting sustained cost reductions and performance improvements is critically needed.
There are currently two prominent provisions under Canadian income tax regulations that seek to incent investments in solar energy technology. One is the accelerated capital costs write-off for certain capital expenditures, and the other is the full deduction or flow-through-share financing of expenses incurred during their development and start-up. These provisions are well intended but are not contributing to the realization of the full potential of the Canadian solar energy industry.
The market dynamic for solar energy technology is different from that of large centralized energy assets. The owners of and investors in distributed solar energy technologies are not always energy companies or commercial entities. They can also be households or families. Many successful residential solar programs have demonstrated the willingness of Canadian consumers to invest in solar energy technology for their homes. Neither of the aforementioned tax measures are extended to federal personal income taxes, thus this market remains unstimulated by federal tax policy.
Further, the deduction limitations of the aforementioned tax provisions mean that many of the commercial potential adopters of solar energy technology are also not incented, as many do not have sufficient tax liability to benefit from the incentive. Members will recall that CanSIA is proposing a multi-year 30% investment tax credit that is equally applicable to individuals, households, businesses, and industry. The benefits of such an incentive would be to broaden the accessibility of existing federal tax policy to incent the private sector, both small and large, to invest in solar energy technology, to introduce stability into the solar energy market, to incent long-term investment in job creation in the solar value chain for the solar energy industry, and to support public policy objectives for energy and environment.
The United States has had a 30% investment tax credit in place since January 1, 2006. It is available to individuals and businesses alike. It has evolved, been amended, and has been extended to reflect changes in the marketplace and the successes that it has driven. Experience in the U.S. has shown that the U.S. ITC is an extremely successful measure for driving industry growth. Since its implementation, installations have grown by 800%. Solar photovoltaic manufacturing capacity has quadrupled and the average cost to consumers has fallen sharply.
In the 12 months prior to August 2011, the American solar industry created 6,735 jobs bringing the current total to over 100,000. Compared with the overall economy, which grew by only 0.7% during that same period, the solar industry experienced 6.8% growth. The U.S. has benefited significantly from effective solar energy policy mechanisms. So too could Canada.
Thank you for your attention to the potential that accelerating the deployment of solar energy with amendments to Canada's solar energy tax policy would bring to Canada and Canadians.
Similar to other energy sector developments where governments have taken a leadership role, the federal government can contribute to a stable solar sector by introducing an ITC to meet consumer demand.
Finally, as job creation remains an important issue for governments across the country, we believe the solar sector can contribute to replacing jobs lost in other industries, like the automotive sector. We've seen many new solar manufacturing jobs created in Windsor--