Thank you, Mr. Chair. It's a pleasure to be here before the committee once again as you discuss the greening of Canada's electricity system. I believe you have the presentation slides before you.
Just to remind you, CanWEA is the national industry association for the Canadian wind energy industry. We have more than 300 corporate members, including wind turbine and component manufacturers, utilities, wind project owners and developers, and a whole range of service providers to the wind energy industry, including construction services, wind resource assessment services, and many others.
It's appropriate that the Wind Energy Association is here for this discussion today because wind energy clearly does green the electricity system. Wind is a renewable energy source; it produces no greenhouse gas emissions, air pollution, or water pollution; and it produces no toxic, hazardous, or nuclear waste. Even on a life cycle basis, studies have shown that a wind turbine will produce enough energy in less than a year to offset the energy used to create, build, and construct the turbine and its components, and to fuel the turbine, although some studies say it takes a year and a half. With a 20- to 25-year expected operating lifespan for a wind turbine, you're looking at quite a positive payback there.
Also from an environmental perspective, well-sited wind turbines have no significant impacts with respect to either noise, land use, or birds. I'd be happy to discuss that further if the committee wishes.
It's important to note that wind energy does more than simply green the electricity system. Ultimately, we want to move beyond the concept of greening and to the concept of moving toward sustainable energy and a sustainable electricity system. That requires more than just environmental attributes. It requires economic contribution, and wind energy provides that as well.
Wind energy creates investment on the scale of $2-million-plus per megawatt of installed capacity. In terms of job creation, it creates about ten and a half direct and indirect person-years of employment per megawatt of installed capacity. In addition to those benefits, wind energy is produced predominantly in rural areas. Rural areas have often been hard hit by declines in other natural resource sectors, whether you're talking about agriculture, forestry, or mining. It provides additional benefits to those communities by providing an industrial source for the tax base, which can make a very significant contribution, and through land lease payments to landowners who host wind turbines.
This is why you're starting to see initiatives such as the one taken by John Deere, the tractor manufacturer. John Deere has created a new business arm that is a wind farm development and financing arm. John Deere is working to help farmers in the U.S.—and soon in Canada—to obtain the financing required to be able to develop wind projects on their land. The wind in essence becomes a supplementary crop in addition to their existing crops, thereby providing an opportunity for family farms to stay in business longer, given the challenges that those operations face at this point in time.
Wind also contributes to consumers in terms of cost savings. There is no fuel cost associated with wind, so I should just add that you have a situation in which a wind project can give you a very high certainty in terms of what the cost of electricity from that project is going to be for a twenty-year period. You don't have that with all sources of electricity generation.
If you look forward, there's a broad international consensus, including among groups such as the International Energy Agency, that the cost of wind energy is still going to go down, because we haven't seen the peak in terms of technological development. We also know that the costs of other forms of electricity generation are likely to go up, whether it's coal or natural gas, as a result of environmental costs being incorporated, such as with hydroelectric developments, because they're increasingly further afield and require more transmission. In fact, in the United States at this point in time, there are a number of examples of where we have seen that people who signed up to join green power programs in the U.S. were paying a premium to be able to benefit from wind energy. They are now actually paying less than the rest of the rate base because the cost of conventional electricity has gone up at a faster rate.
Wind can be installed quickly and in a modular fashion. That's a savings for the electric utility system. You don't have to overbuild to try to meet some future demand. You can build in a modular fashion to meet actual increases in demand. And it's distributed generation, which can help to reduce the need for new investment and infrastructure.
I'll go through the next few slides quickly, as this is meant to be just an update.
Canada's installed capacity is just past 1,500 megawatts, but there has been rapid growth in wind energy. In 2002 we had an installed capacity of 236 megawatts. We've gone from 236 megawatts to 1,500 megawatts in five years. If we look forward, our estimate now is that with provincial targets and initiatives in place, Canada will have 5,000 megawatts of installed wind energy capacity by 2010, and 10,000 megawatts by 2015.
I've listed some of the provincial initiatives. I'd be happy to talk about them in more detail, but I want to spend a moment talking about the situation in Alberta.
Some of you may be aware that the Alberta Electric System Operator put in place a 900-megawatt cap on wind development, out of concerns associated with integrating wind energy into the grid in Alberta. Alberta has a very unique grid, in that it has very few interconnections to other jurisdictions. It has one major one to B.C., and that's about it. The Alberta Electric System Operator just issued a document called Market and Operational Framework For Wind Integration In Alberta. That document describes a series of tools that will be used in Alberta to facilitate wind integration, as has been the case in other jurisdictions around the world. These include wind energy forecasting, the use of balancing services, and the use of power management at wind facilities themselves. With those tools, the Alberta Electric System Operator has now said it feels it will be able to remove the 900-megawatt threshold. That's just an indicator that there is an opportunity in Canada to significantly expand wind penetration with the use of tools that have been adopted in other countries.
In 2015, 10,000 megawatts of wind would represent about 4% of Canada's electricity demand. Around the world, we already see countries in which wind energy meets 20%, 8%, or 6% of electricity demand. We're looking at a decade from now, so there's no doubt that we're still behind the world leaders in this area, but things are changing. The 9,000 megawatts of wind energy to be built between 2005 and 2015 would produce almost 20% of the electricity generated by facilities constructed in that decade. That gives you a sense of where wind energy is fitting into utility planning decisions at this point in time, but 10,000 megawatts certainly only scratches the surface of Canada's potential.
In the next slide, I've highlighted the current federal initiatives with respect to wind energy development: the ecoENERGY renewable power program, the Canadian renewable conservation expense, and accelerated capital cost allowance provisions. All of them are very important for the wind industry, but we can build on those existing efforts. We can do so in an effort to have the federal government move forward with provincial governments to pursue the more ambitious targets now on the table.
There are several things we offer for thought and reflection in that regard. First, allow wind energy to participate in any domestic emissions trading system for greenhouse gases, through either an allocation of allowances or through allowing the creation of greenhouse gas offsets from wind energy. It's our view that as the costs of environmental degradation and environmental pollution are reflected in the marketplace, this will decrease the need over time for government support in terms of allowing these technologies to move forward and penetrate into the marketplace. Ultimately, the market will be able to facilitate this, but the market actually has to reflect the real costs of different generating sources.
The federal government could build upon existing measures and develop a more comprehensive wind energy strategy. This could include initiatives such as enhanced green power procurement at the federal level; streamlining of environmental assessment processes; investment in research and development, and not just in technology but also in policy-related R and D; and public education and outreach around wind and renewable energy and their contributions to Canada's electricity system. Ultimately the federal government will also have to consider federal policies to support options in light of the fact that the ecoENERGY renewable power program is likely to be committed well before its current expiry date of 2011.
There are also opportunities to look at wind development on other scales and in other jurisdictions. The Canadian Wind Energy Association is developing a proposal for a remote communities wind incentive program, and I'd be happy to provide more details of that to the committee. This program has been developed out of a recognition that existing support structures will not facilitate the deployment of wind energy in northern and remote communities. Those existing structures simply do not recognize the increased costs associated with electricity generation in those circumstances. There is a real desire and need to facilitate the deployment of wind energy and other renewable energy sources in these communities, because most of them are currently getting their electricity from diesel fuel, which is extremely expensive and also polluting.
There are a number of unique challenges with northern and remote communities—logistical, technical, and capacity-building challenges—and that's why the incentive we're proposing includes both a capital investment incentive, on a dollar-per-kilowatt basis, as well as a production incentive, such as the ecoENERGY renewable power program, on a cents-per-kilowatt basis, to overcome financial and other barriers to moving this forward.
It's a low-cost program. Our estimate is that for a $74 million contribution over a 15-year period, such a project could facilitate the deployment of 34 wind energy projects in remote and northern communities. These could reduce diesel costs by $375 million over the same period, reduce greenhouse gas emissions, and provide some economic opportunities in those communities. Again, I'd be happy to discuss that further.
Canada does have a tremendous wind energy opportunity. We're facing a situation right now where we still have increasing electricity demand throughout the country and increasing concern about the environmental impacts of conventional electricity generation. Wind energy can green the electricity system and build an industry.
In 2006, wind energy directly employed 163,000 people around the world. Global investments in new capacity for wind energy, installed in 2006, was worth $23 billion U.S. Wind energy now provides power for 22.5 million homes worldwide. This is what has happened in the last decade. The next decade will be much more aggressive, and there will be a much more rapid expansion of wind energy going forward.
Canada remains far behind at this point in time. If Canada wants to take on the label and name of a sustainable energy superpower, as has been referenced at different points, more needs to be done.
On the last slide, I provide some information on our annual conference and trade show, in which the committee may have an interest. It's the largest single renewable-energy event in the country. Last year, we had 1,200 delegates and 130 exhibitors related to the wind energy industry in the trade show. There's additional information on our website.
I've tried to keep my remarks brief. Thank you very much.
