Rethinking Energy Conservation:A Conservation Strategy for Ontario
| In May, 2010, the ECO released its first Annual Report on the progress of activities in Ontario to reduce or make more efficient use of electricity, natural gas, propane, oil and transportation fuels. Click here for more information on this report, including videos and communications materials. | |||||
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To launch the formulation of a conservation strategy, the government must clearly state the public policy goals to be achieved through conservation, how each of the conservation categories (as listed in Figure 3) are expected to advance these policy goals, and the roles that policy makers in ministries should play. 4.1 Role of Government Ministries Many Ontario government ministries have the potential to advance energy conservation through their activities, as shown in Figure 4 below.
Figure 4: Conservation Role of Ontario Government Ministries
| Ministry | Mechanisms to Advance Energy Conservation |
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| Economic Development and Trade |
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| Energy and Infrastructure |
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| Environment |
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| Finance |
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| Government Services |
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| Municipal Affairs and Housing |
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| Natural Resources |
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| Research and Innovation |
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| Transportation |
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| Agriculture, Food and Rural Affairs; Education; Northern Development, Mines and Forests; Health and Long-term Care. |
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The Ministry of Energy and Infrastructure, which holds primary responsibility for the government’s energy conservation policy, is focused heavily, almost singularly, on electricity policy. This is a result of the many policy changes affecting the operation of the electricity system that have been introduced by successive governments in past decades. The impact of these policies has been exacerbated by a perceived need to replace or refurbish the existing generation infrastructure.
When energy conservation is examined broadly across the separate policies and initiatives of individual ministries, each tends to address conservation from its singular perspective with no overall coordination of objectives. The result is that ministries act within their “silo” of perceived responsibility. They pursue their own strategies and objectives, and there is a lack of overall policy direction.
| Fuel Switching: Driving in Different Directions? |
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| The Ministry of Energy and Infrastructure has asked the Ontario Power Authority to develop a plan to reduce demand on the electricity system through conservation activities, including fuel switching (from electricity to other fuels).
At the same time, the Ministry of Transportation (MTO) has encouraged fuel switching in the opposite direction to increased electrification of transportation by initiatives such as: rebates for purchase of electric vehicles (EVs), financial assistance to commercial fleets to purchase EVs and special access to parking and High Occupancy Vehicle lanes for EVs. Growing market penetration of EVs will increase electricity demand and may result in the need for higher targets for electricity conservation. There may be valid reasons for switching towards electricity for some end uses, and away from electricity for other end uses. However, it is not clear whether these fuel switching initiatives are being developed in a co-ordinated fashion that looks at the larger fuel supply picture. What is needed is a policy of resource optimization – a “smart” energy strategy that designates the use of each fuel to its most appropriate application(s). |
Government’s Influence on the Energy Sector
The lack of co-ordinated action on energy conservation results, partly, from a division of ministerial responsibility. It is also caused by the varying degree of control that the Ontario government can exert over different fuels, either directly or by setting policy and law to guide energy regulators.
Electricity and natural gas are both regulated fuels, overseen by the Ontario Energy Board (OEB), the provincial regulator of energy. The OEB does not regulate the oil and propane sectors or the use of transportation fuels.
The government develops policy and law that governs the operation of the electricity and natural gas sectors, and the OEB regulates these sectors to protect the public interest in a manner consistent with government actions. The OEB’s decisions are not subject to direct government oversight, although a decision may be subject to reversal by the courts if it is determined to be “unreasonable. ”
The OEB’s regulatory policy development is guided by government legislation, regulations and directives, but flows from the independent exercise of the Board’s discretion. Acting independently within its legislative mandate, the OEB formulates the detailed regulatory policy to implement the law and government’s policy objectives. Gas and electricity distributors, energy retailers, sub-metering companies and others must follow the rules set by the OEB through its regulatory decisions and technical codes. These codes and decisions are influential and authoritative, and thus the Board can be a powerful shaper of electricity and gas conservation.
In the electricity sector, the power of the Ontario government to shape the sector’s actions is further enhanced by two levers. First, it solely owns Hydro One, which offers conservation programs and smart metering to its customers. Second, it has the authority to direct the Ontario Power Authority to take various actions on the electricity system (e.g., to develop power system plans, undertake the procurement of supply and conservation resources, and to recover fees for these actions from electricity ratepayers).
In contrast, the government does not have direct regulatory authority over fuels such as oil, propane and petroleum products. Therefore, its influence on the behaviour of these fuel suppliers is by necessity more indirect. It exerts influence through such means as environmental and fiscal policy, financial incentives, provision of information, etc.
As noted, however, electricity represents a relatively smaller share of Ontario’s total energy consumption. Without action taken on other fuels, the full benefits associated with comprehensive action on energy conservation will not be realized.
Towards an Energy Conservation Strategy for Ontario
The ECO believes that the Ontario government’s approach to energy conservation policy and planning has, to date, been largely uncoordinated. It has been hindered by the lack of both a clear definition of conservation and an explanation of the goals to be achieved through energy conservation. This reduces the effectiveness of energy conservation efforts. In addition, it makes it difficult for the ECO to fulfill its reporting mandate to measure progress in reducing energy use.
The task of integrating activities by several ministries is critical to the strategy’s comprehensiveness. Co-ordination and monitoring through a central body within government may be preferable to a single ministry leading development of the strategy. Integrating the policies and activities of all ministries into an overall provincial energy conservation strategy would enable the province to set out long-term objectives based on an understanding of the complexities – like the need to coordinate multiple actors – of achieving them.
Development of the strategy should be participatory, including posting it on the Environmental Registry, to allow the strategy to benefit from the participation of Ontarians.
| Recommendation :
The ECO recommends that the Secretary of Cabinet direct the development of a comprehensive energy conservation strategy encompassing all major energy sources used in Ontario. The strategy should be developed with public input. |
To address the weaknesses that currently exist in the government’s approach to energy conservation – the lack of co- ordination, articulated goals and integration of energy sources – the ECO believes that the strategy should include, at a minimum, the following elements:
- A description of the government’s broader objectives to be achieved through energy conservation, potentially including environmental benefits, economic savings, energy security and societal resilience.
- A description of how different categories of conservation action, listed in the previous section, contribute to the strategy.
- Comprehensive coverage of all energy sources.
- The role of benchmarking and energy conservation targets in the strategy (our report discusses these in more detail in Energy Targets and Benchmarking).
- A mechanism for co-ordinating the strategy, both across Ontario government ministries and between the government and other sectors of society.
- An understanding of how the energy conservation strategy relates to the government’s Climate Change Action Plan.
- Resource optimization or a “smart” energy strategy that uses each fuel in its most appropriate application(s). Optimization also pursues conservation so as to achieve high amounts of savings that will endure and does not simply seek the cheapest available conservation measures.
- A “loading order” requirement that places pursuit of all cost-effective conservation actions as the first priority for policy makers, planners and regulators before they consider supply options.
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| Next section: Policy Framework Issues |
Citing This Article:
Environmental Commissioner of Ontario. 2010. Annual Energy Conservation Progress Report, 2009 (Volume One): Rethinking Energy Conservation in Ontario. Toronto, ON : Environmental Commissioner of Ontario. pp. 15-16
