Thank you, Mr. Chairman.
I would also like to introduce Mr. Christian Vachon, a past president of CanSIA, who is here to assist in answering the committee's questions. I would also like to point out that we have briefing notes that I believe have been passed around. They provide some background information on solar energy.
The Canadian Solar Industry Association, CanSIA, represents the solar industry in Canada. We are a small industry, both in the context of Canadian society and in relation to the solar industries of other nations. In Canada, the solar industry employs about 700 people, while Germany's solar industry employs 50,000, and in China it is estimated that the solar industry now employs over 200,000 workers.
Canada is an energy-rich nation. We are fortunate to have a bountiful supply of energy resources, both renewable and non-renewable. Canada has invested and taken advantage of our non-renewable resources, and as a result our oil and natural gas reserves have contributed significantly to our high-level standing that we all enjoy. But these energy resources are finite. At some point--20, 30, or 100 years from now--they will not be able to meet all the energy needs of Canadians. Just like the sands in an hourglass, our carbon fuels are slowly running down. If we add more sand or restrict the flow, they still run down.
There are three questions this committee should consider in pondering the future energy policy of Canada. Over the next two decades, will energy prices go up or down? Do nations want to import more of our energy or less? Is the world getting more concerned about climate change or less?
We must look outside of Canada's borders to see what countries are doing that are not blessed with Canada's rich but finite non-renewable energy resources. These countries are facing now what Canada must face in the future. What we find is that solar energy is playing a major role in the energy policy of other countries.
Solar energy is now a $15-billion-a-year industry worldwide and is growing by 35% annually. The price of solar energy is dropping. It is the only energy source that has seen its price drop consistently over the last 20 years, and it will continue to drop. Our great neighbour to the south has recently announced a target of installing 10,000 megawatts of solar electricity over the next decade. Canada has no plans and no targets for solar electricity.
Germany, the world leader for solar electricity, installed over 600 megawatts last year. Canada installed less than two. In Austria, one out of every seven homeowners now uses solar to heat their hot water. The village of Bliesdorf in southern Austria, with 35,000 people, has a greater installed capacity for solar heating than all of Canada. China has a renewable energy law that requires every new building to use solar water heaters. As a result, China is the largest solar market in the world, with over 10,000 solar manufacturers. Canada has two.
The major solar firms now include names like Sharp, Sanyo, BP, Shell, and General Electric. Recently, the National Bank of Canada issued a report on our solar industry and recommended the solar industry as a major investment opportunity. Globally, solar energy is becoming big business.
What is Canada doing to prepare for the day when the price of solar will be cheaper than other energy supplies, when other nations don't need or want our energy, and when other countries are reaping their investments now in climate change technologies? In Ottawa, you cannot legally install a solar water heater in your home. In Calgary, you cannot send your solar electrons into the grid. In Vancouver, you do not have the right to the sunlight falling on your roof.
My message today is that Canada is not looking to the future of its energy supply, but rather is stuck in the past. The lack of government and political leadership in the past is creating serious problems for our children, who will have to compete with nations who have taken their energy future into their hands today.
While in the 1980s Canada was a world leader in solar, Canada now lags every one of our trading partners in our support of solar energy. While other nations have moved forward steadily, there have been 20 years of inaction in Canada. Now even many third world countries are surpassing us with their level of support.
There is no support for solar PV by the Canadian government. Canada invests only 14% of what other industrialized nations invest in solar electricity, and this is spent on R and D. So while other countries are investing money in building industry capacity and bringing proven solar products to market, NRCan continues to study solar as something for the future. As a result, sales in Canada are less than 20% of the international average.
Ontario is the shining light in Canada for solar, with a recently announced program that will see sales grow from 0.1 megawatts to 15 megawatts in five or ten years. But remember, Germany is installing 40 megawatts a month now.
NRCan officials continue to say that PV is not cost-effective for Canadians and not ready for the market in Canada, so what does NRCan know that the rest of the world seems to be missing?
Solar is supposedly included in class 43.1 of the Income Tax Act. It is a tax measure that allows renewable energy technology to be written off faster by companies, yet solar is the only renewable energy technology that has restrictions placed on its participation. Over 95% of solar applications are excluded from class 43.1. For the solar industry, class 43.1 is all about smoke and mirrors. Major changes are needed before class 43.1 is of benefit to the solar industry. We have been lobbying for those changes for ten years, so why is solar listed as being in class 43.1 when in fact it's not?
Finally I turn to REDI, the renewable energy deployment initiative. It is the only support for deployment that the solar industry has seen from the federal government since the mid-1980s. It is a small program with a budget of about $5 million this fiscal year. It's small compared to the support in other countries, but nevertheless it's all we've got.
The funds for REDI have been frozen since March by the government, under a review of all climate change programs. However, solar applications for industrial and commercial buildings, which REDI supports, are closely tied to the building industry's construction cycle. Sales are made in the spring for installation in the summer. What good is it if REDI funds are available this fall or winter, when the industry can't install its products at that time? Further, the freeze is creating uncertainty in the market, with potential buyers holding off making decisions. As a result, sales of solar thermal projects, though meagre by international standards, have plummeted this year.
If the government is committed to developing Canada's renewable energy resources, this freeze needs to be lifted before it does further irreparable damage to the solar thermal industry. If the government is truly committed to supporting renewable energies, then allow the REDI program to act as a transition program to these new support mechanisms that NRCan says it's working on and the government says it's intending to announce this fall. Currently there is little or no support for solar by the federal government, and the only program we have, REDI, is frozen and slated to end in March 2007.
What can the Government of Canada do to ensure that solar energy plays a role in the future energy supplies of Canadians? Renewable energy sources like solar are not just about cleaner air and climate change. Yes, solar has a major benefit for the environment, but it is also about energy security, providing a cheap source of energy in the future and providing jobs and wealth for Canadians.
There are four key recommendations I would like to share with you today.
One, solar is not just a clean air issue. It must be included in energy policy discussions. We cannot be left out again. Solar and all renewables must have a major role in the development of a national energy framework. We should be planning for 20 or 30 years into the future for Canada's energy. We must look to the future, and not just to the day after tomorrow.
Two, we need a firm commitment from government and consistent policies. The government needs to live up to the fine words and often-stated aspirations it expresses for renewable energies. Recently there have been encouraging words of support for solar from the minister and the deputy minister of NRCan, but we have two decades to catch up on. We now need real, not token, action.
Three, Canada needs to build solar capacity today so we'll be ready tomorrow when Canada will need new energy options. As a start, the budget for solar needs to be increased so it is comparable to that of our trading partners. While the actual federal budget for support for solar is unknown, we estimate it is less than $12 million annually. To put us in the middle of the pack of other nations, this needs to be increased to $75 million.
Finally, government support needs to go into getting solar into the hands of technicians. We do not need more study, more R and D, more technology development. I cannot stress this enough. The technology is here and proven now.
We need to follow the footsteps of other nations, who are 20 years ahead of us in their use of solar energy. We need help in developing the market for solar products. We need help in building industry capacity. We need help in getting Canadians to understand the advantages of our products.
As Canada's current energy resources run down, we must have other energy sources ready to replace them. Like every other energy source--like water power, like oil, like nuclear in the past--it will take decades for solar to become a major source of energy for Canadians, but this cannot be an excuse for inaction now.
I hope for the sake of my son, and the children and the grandchildren of the committee members in this room, that Canada does not let the sands of time run out on Canada's energy future.
Thank you.