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REGULATION EVENTS IN NORTH AMERICA

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At the Federal level, climate legislation stalled in 2010. Three prominent proposals for a Federal Renewable Electricity Standard (RES) emerged over the past year but did not garner enough bipartisan support to be submitted for a vote. Additionally, two new proposals to establish climate change legislation through CO2 cap and trade emerged in July but also failed to come to a vote.

The main agent of climate and environmental regulation was the Environmental Protection Agency. The EPA issued a plan for establishing greenhouse gas pollution standards under the Clean Air Act. Additionally, existing coal fired generators are increasingly likely to leave the market due to new and tightened air quality standards through the Clean Air Act. The EPA’s tightening of existing clean air pollutant caps (SOx, NOx) is expected to drive retirement of up to 60 GW of coal capacity. The agency also announced new strategies to curb mercury emissions from power plants and to curb the use of water for cooling in power plants. EPA also proposed the first-ever national rules to ensure the safe disposal and management of coal ash from coal-fired power plants.

In December 2010 President Obama signed off the “Tax Relief Bill” that includes the extension of many clean energy policies. This regulation is part of a broader tax bill that zeroes in the extension of expiring tax cuts put in place by the President George W. Bush Administration.

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In order to spur renewable energies development the law includes:

  • A one-year extension of the 1603 treasury grant program, thus entitling projects to receive cash grant equivalent to 30% of the eligible project costs. this regulation had been approved in 2009 as part of the economic stimulus bill. In order to benefit from this extension, projects will need to prove that they started construction in 2011 and will come on line prior to December, 31st 2012.
  • An increase in the bonus depreciation allowing projects to deduct 100% of the project value in one year (if operations start in 2011). For projects that start operations in 2012, the deduction will be at 50%.

States’ governments continue to be the primary driver of implementing legislation to support renewable energy. In 2010, twelve states proposed either creating a new Renewable Portfolio Standard (RPS) or increasing their RPS; these proposals passed successfully in five states. Only one state proposed a reduction in the RPS, a proposal which was ultimately unsuccessful.

The California PUC (Public Utilities Commission) ruled that the state’s investor-owned utilities can use tradable renewable energy credits to comply with California’s RPS. However, there are short term delays in implementation to legislation and regulatory uncertainty around the enforcement of the ruling.

CANADA

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Canada’s decentralized governance gives a leading role to the provinces for the implementation of renewable energy policies.

At the Federal level, the ecoEnergy for Renewable Power Program was introduced in 2007, replacing the former Wind Power Production Incentive (WPPI). this program provided an incentive of one cent per kilowatt hour to renewable projects starting operations between 2007 and 2011. Although this program was designed to remunerate projects for the first ten years of operation, the ecoEnergy was fully exhauste in 2009. The lack of federal policy instilled low confidence in investors and incentivized Canadian provinces to put in place their own renewable energies schemes. At a Federal level, wind farms may also benefit from tax policies as the accelerated capital depreciation that allows 50% depreciation per year.

Ontario is by far and away Canada’s wind power leader, being the first to cross the 1 GW of installed capacity mark. the Green Energy Act (GEA) passed by ontario’s liberal Government in May 2009 put the province at the forefront of wind development.

First and foremost, under the GEA, the Ontario Power Authority (OPA) introduced a feed-in tariff (FIT) system. a wide range of renewable technologies are awarded 20-year contracts with guaranteed electricity prices. The guaranteed price for onshore wind is C$135/MWh, with an extra cent added on for small-scale community projects. For offshore wind, the tariff rises to C$190/MWh.

The GEA, apart from being the first feed-in tariff in North America, streamlines the approval process for renewable energy facilities.

In november 2010, the Ontario Ministry of energy presented its long-term energy plan for the period 2010-2030. among other measures, the plan raises Ontario’s renewable target from 5.3 GW in 2025 to 10.7 GW by 2018 and contains a 50% local content requirement for projects after 2012.

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