OTTAWA (Reuters) - It is no surprise that Ontario is the target of an international green energy trade dispute, the Canadian province’s energy minister said on Wednesday, given the formidable growth of its renewable power sector.
Ontario, Canada’s most populous province and the country’s economic heartland, is the target of a Japanese complaint to the World Trade Organization about renewable energy equipment.
The dispute centers on Ontario’s year-old Green Energy Act and its local procurement requirements for project approval, which Japan argues are a “prohibited subsidy”.
“We’re not surprised at all, given the attention that Ontario’s efforts to become a global leader in green energy have generated internationally,” Minister of Energy Brad Duguid said in an interview with Reuters.
“That being said, we are confident that we are consistent with our trade obligations and we believe it’s a good thing, as we build green energy projects across Ontario, that we’re creating hundreds, if not thousands, of jobs.”
It is not yet known when Japan’s complaint will move to consultation talks, the next step in the WTO process.
Ontario’s Green Energy Act, which includes generous rates and long-term contracts for renewable power projects, aims to create jobs and help eliminate coal-fired generators, the province’s biggest single source of greenhouse gases.
It has a made-in-Ontario quota that requires up to 50 percent of all project inputs to come from the province.
Developers had complained it was difficult to get financing for their projects, because a decision on domestic content was made just before commercial operations began. Bankers wanted to know much sooner if the project would meet the procurement requirement.
Ontario changed the rules earlier this year so that project plans that meet the domestic content quota could get up-front verification, Duguid said.
“Financing today, given the global economy, is challenging for any project, but what we’re seeing is the projects are getting built and they are getting financing,” he said.
The province’s plan to eliminate coal-fire plants by 2014 and cut greenhouse gas emissions included new natural gas-fired plants to serve the highly populated Toronto area.
However, last week, Ontario canceled a planned TransCanada Corp C$1.2 billion natural gas-fired plant near Toronto saying the region now has adequate power supplies.
The government said that 8,000 megawatts of new supply and conservation efforts made TransCanada’s 900 MW plant unnecessary and that new transmission lines could be built if the need arose.
The plant had also run into strong opposition from area residents, who complained it would be too close to homes and schools.
The province is not reviewing any other planned natural gas plants for cancellation, Duguid said.
It is working toward a late autumn, or year-end deadline to issue a 20-year energy plan.
Ontario has come under fire for rising power costs, which some critics blame on the rich rates given renewable power producers.
The government plans a “significant” property and energy tax credit for homeowners, which it hopes will calm that anger.
Under the scheme, expected to take effect later this year, more low- to middle-income residents will get tax relief, Duguid said.
Reporting by Susan Taylor; editing by Rob Wilson