Rethinking Energy Conservation in 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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Contents |
Executive Summary
Under the Green Energy and Green Economy Act, 2009 (GEGEA), the Environmental Commissioner of Ontario (ECO) has a new responsibility to report annually to the Speaker of the Assembly on the progress of activities in Ontario to reduce or make more efficient use of electricity, natural gas, propane, oil and transportation fuels. The ECO is also required to review the progress in meeting any government-established targets to reduce energy consumption and increase efficient use of these fuels, as well as to identify barriers to conservation and energy efficiency.
The ECO’s first energy conservation report covers the period January 1, 2009, to December 31, 2009, and will be issued as two separate documents. This report is Volume One and covers the broader policy framework and operational issues affecting energy conservation in Ontario. It raises policy issues that need resolution, requests certain policy actions we believe necessary if the ECO is to fulfill its mandate, and points to potential gaps, weaknesses and uncertainties in the policy framework. Volume Two, a separate report to be issued later in 2010, will describe initiatives underway, assess the energy savings that have been achieved and measure progress on targets.
This report summarizes Ontario’s energy consumption trends, provides an overview of energy conservation and its benefits, and urges development of a comprehensive, multi-fuel energy conservation strategy. The report then examines the policy framework governing conservation on a fuel-by-fuel basis, looking at electricity, natural gas, propane and oil, and transportation fuels. Also reviewed are the conservation elements of the Green Energy and Green Economy Act, 2009, and the issue of targets and benchmarking for the energy sector.
Barriers to energy conservation expressed to the ECO by workers in the energy sector (utilities, building operators and conservation practitioners) are summarized, and several recent conservation initiatives that are particularly innovative and demonstrate leadership in advancing the practice of energy conservation in Ontario are highlighted. Readers are invited to visit the ECO website at www.ontarioenergyconservation.ca to contribute to the discussion and share their thoughts on barriers and initiatives.
The Policy Agenda
From the policy review in this report, four issues stand out that the ECO believes should set the energy conservation policy agenda.
1. Develop a comprehensive energy conservation strategy.
Several other provinces and Ontario municipalities have energy conservation strategies but Ontario does not. The Ministry of Energy and Infrastructure should make the creation of a comprehensive strategy applicable to all energy sources its first priority. The strategy should provide a definition of conservation to guide the measurement of progress; it should set objectives and targets as appropriate; and, the strategy should co-ordinate government-wide initiatives. Development of the strategy should incorporate public comment by posting it on the province’s Environmental Registry.
2. Stabilize electricity policy, and provide clarity and certainty to that policy.
There is a need for stability in Ontario’s electricity policy in order to consolidate the gains already made and to capture the potential created by the GEGEA. This does not mean there should be no further activity. Our report suggests some initiatives to be pursued as the GEGEA framework is implemented, but these are mostly refinements of the existing policy as opposed to new departures.
The GEGEA has been characterized as a “game-changer”. There is a need now, however, to pause, implement, evaluate and adjust. Most of 2009 was devoted to creating the GEGEA and implementing its renewable energy provisions. Conservation provisions (regulations and directives) of the GEGEA have been slow to emerge, and 2010 may be another year of instability, negatively affecting the energy savings achieved. Organizations tasked with delivering conservation would benefit from a multi-year commitment to the Green Energy Act (GEA) policy framework, together with the assurance of stable financing. Such a commitment would allow them to do the assigned job, as well as to be evaluated properly by policy makers and regulators.
The process for approving the proposed Integrated Power System Plan (IPSP) is in hiatus at the time of writing this report. It is essential that the issue of the proposed IPSP be settled. It must be determined whether the IPSP process will be resumed with revised conservation targets, or whether it will not be used at all, or whether another method, such as, a blended policy-making approach using the minister’s directive power and IPSP planning will be adopted.
3. Examine the role of benchmarking and energy targets.
To date, Ontario’s electricity conservation targets have been established using a fairly blunt approach. A provincial target is set for a given year, measured as a reduction in the peak or maximum amount of electricity (in megawatts). The overriding objective of system planning is to ensure that enough electricity is available to meet the highest expected peak demand. This approach places a high value on activities that reduce demand through temporary reductions or shifting the demand to an of-peak time, but may not necessarily reduce the overall consumption of electricity.
Quantitative targets are powerful tools because they provide a simple metric for measuring progress. The ECO believes that the government should review its approach to target setting, given the several targets and goals adopted by the province, and use a more integrated and nuanced approach that reflects all aspects of conservation.
The government should also implement reportable benchmarking by sector as the GEA enables the government to do. Following measurement and benchmarking, the ministry should also consider whether reforms to setting natural gas demand-side management (DSM) targets would be beneficial. It should also determine whether such targets should extend to other fuels (i.e., oil, propane, gasoline and diesel) not subject to regulatory oversight and, if so, how they would be implemented.
The development of a comprehensive conservation strategy would provide an opportunity to re-evaluate Ontario’s use of targets as a policy tool.
4. Ensure accountability, transparency and public input on energy directives.
Accountability, transparency and public participation are essential to maintaining energy consumers’ support for conservation. Under the current (and possibly under the future) regulatory framework, it is not clear that meaningful public scrutiny can occur.
In the absence of an approved IPSP, the minister has made extensive use of the directive power to require the Ontario Power Authority (OPA) to undertake conservation activities, without public input. The GEGEA expands the minister’s directive power over both the OPA and the Ontario Energy Board (OEB). This effectively removes a previous restriction on ministerial direction to the OPA: namely that the duration of the minister’s directive authority would be limited to the time period leading up to the passage of the IPSP, at which time the minister would relinquish this power. Thus, the lack of public review of conservation that has characterized the period before an approved IPSP will now persist. The minister will be free to set conservation and demand management (CDM) goals and budgets with little or no public input. The IPSP review process, if it resumes, will not need to consider the merits of initiatives directed by the energy minister.
The extensive use of directives to guide conservation action has also removed accountability for ensuring implementation of the desired actions.
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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. 2-4
