Natural Resources Committee on April 27th, 2010

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Some of your members work both sides of the border and some of them work internationally across the ocean. What signal was sent by the government to the wind industry, when the European regime and China and the United States are all ramping up their efforts to produce more wind power?

[Sean Whittaker]

It certainly has presented challenges from a competitiveness standpoint. Many of our members, many of the more active players in the wind industry, look at opportunities on a national basis. They look for signals coming out of individual countries at the federal level to see what the certainty is of that market. They'll look at investing $100 million in Canada and $100 million in Germany or the United States, and they'll look at the rate of return they can get there. Rates of return certainly have been made more advantageous with recent developments in the States.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

As it is right now, we are less competitive by a stretch. You talked about an investment ratio of 18:1 as between the U.S. and Canada. These numbers don't lie. Investors are going to sit and count the numbers and realize that Canada is not a place, as far as this federal government is concerned, to invest in alternative energies, particularly wind.

Other than being nice people, what incentive are we giving to industry at the national level to say to them, you should come here, not south of the border, and not into China, and not into Europe?

[Sean Whittaker]

As I said, we certainly felt there was a very compelling case for ecoENERGY. It has hurt our competitive position. Canada has an embarrassment of riches when it comes to wind. We have lots of hydro, we have lots of land, and lots of wind. We have a great manufacturing base that can easily be transformed into wind, so there are many positive benefits, but—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

And those are all the key elements: a manufacturing base, having a back-up on hydro, and being windy. We have all of these things.

You mentioned earlier the gap. The government has said we're going to put a price on carbon. We've heard that for awhile now. Apparently that policy is being written in Washington right now for us.

Between the gap in these incentives and having a price on carbon that will level the playing field between non-renewables and your industry and Mr. Scott's, can we survive the gap? There is a question whether, if the gap goes on too long, and there is no price on carbon, and it's promised and promised, and the environment minister goes to meetings and produces nothing, industry will.... I am concerned about flight. I am concerned about more manufacturing jobs leaving the country and Canada falling further behind in its efficiency and ability to put wind into the ground.

[The Vice-Chair, Liberal, Alan Tonks]

You have half a minute for your response to that, Mr. Whittaker.

[Sean Whittaker]

It is definitely a concern. What we've seen is that many of the provinces have really tried to step up and increase their competitiveness, but it's hard to do without a national ecoENERGY program.

Certainly a carbon market is something that we feel would level the playing field. But there is a need to provide certainty: just what is that market going to look like, when is it going to be introduced, and how will wind play into it? That's the kind of certainty the investors look for, and it will help to reduce the flight.

[The Vice-Chair, Liberal, Alan Tonks]

Thank you, Mr. Cullen.

Thank you, Mr. Whittaker.

Mr. Harris, you now have your seven minutes, please.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chair. Maybe you could give me a two-minute signal, so that I might share my time with Mr. Shory.

Mr. Whittaker, I have a few quick questions. You can give me some short answers or say you'll provide the information to me at a later late.

You mentioned earlier that although the R and D for wind power has been around for 15 to 20 years, the actual government investment started in about 2001. Did I hear you correctly?

[Sean Whittaker]

That's the direct investment, yes. The predecessor to ecoENERGY—which was for the same thing, 1¢ per kilowatt hour—started in 2001.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Okay. Prior to that, was it mainly private investors doing R and D?

[Sean Whittaker]

Yes.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Can you provide me with the numbers, annually since 2001, for government money that has gone into the wind energy industry? Can you get those numbers for me?

[Sean Whittaker]

I can certainly get them.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

That would be how much it was in 2001, how much in 2002, etc., right up to date.

[Sean Whittaker]

Yes.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I'd appreciate that.

You said that wind energy is producing about 2% of annual energy currently. How much revenue does this 2% energy that they're producing represent in dollars?

[Sean Whittaker]

Do you mean the revenue to the promoter or to the...?

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I mean to the facilities—the plants, the wind power farms. How much revenue does it produce?

[Sean Whittaker]

Take the case of a single turbine, a two-megawatt machine. It will cost you about $5 million to install. Out of that, the rate of return really depends on the investor; it's anywhere from 8% to 10%. There is a large part of it paid to the landowner or paid to the community. It really depends on the nature of the arrangement they have with the utilities buying it.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

I guess what I'm trying to figure out is how far we are away from wind farms and wind power being self-sustaining and actually making money. Unlike some of my colleagues over there, I'm a little bit concerned about the massive amounts of money that governments put into projects for energy.

A good example in the U.S.—we talked about the U.S. investment—is that over the past twenty to thirty years the U.S. has put massive amounts of money into bioenergy plants. That was over, say, two to three cycles of spending. Frankly, many of those plants are no longer in existence; the money just seemed to disappear down a black hole, until the next cycle came along. It hasn't been a very good investment. What's to prevent the same thing happening with the massive amounts of money the U.S. government is putting into wind energy power, as has been cited?

[Sean Whittaker]

Thank you very much for the question.

The quick answer to your first question is that as soon as there's a carbon market, that covers the cost gap.

The other thing is, as I mentioned, that from a purely economic perspective, $1 of ecoENERGY funding generates $8 of private sector investment, and it returns, just to the federal coffers, about $1.30.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

We don't have any numbers like that yet. Are you talking about when the carbon exchanges start up?

[Sean Whittaker]

No, this is right now: $1 of federal investment in ecoENERGY triggers right now about $8 of private investment, and it returns, by way of taxes and associated economic activity, $1.30.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

If you could provide me with the source of those numbers, I would appreciate it.