The NL Energy Plan: Sustainable, Efficient, Renewable

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1 The NL Energy Plan: Sustainable, Efficient, Renewable Energy efficiency is better than a free lunch it s a lunch you get paid to eat. Amory Lovins CEO, Rocky Mountain Institute Good evening Premier, Minister Byrne and distinguished panelists and guests. My name is Bruce Pearce. I believe you have a copy of my bio, but let me begin by saying a few words about the perspective I bring to this important discussion. Tonight, I will focus my recommendations on energy efficiency and conservation, and the leading role I believe that efficiency and conservation must play in NL s Energy Plan. To the Premier and Minister who represent a Progressive Conservative government, I point out that conserve is the root word of conservative. So I hope that what I am about to recommend will strike a chord with your own values. I ve worked for many years within governments and within communities to develop sustainable energy policies and initiatives. I m vice chair of Green Communities Canada, a leading community-based environmental solutions innovator with members across Canada, including the Conservation Corps NL. We are Canada s leading delivery agent of EnerGuide for Houses, and we helped develop the popular federal home energy retrofit incentive program, and more recently a new national low-income energy efficiency program. These investments of $395 million and $500 million, respectively, will retrofit 880,000 homes, cutting energy costs an average 30% and reducing greenhouse gas emissions by 4 tonnes per house annually. I m pleased to see that the NL government has recently announced its own Residential Energy Efficiency Program. I also represent the recently-formed Atlantic Canada Sustainable Energy Coalition, comprising existing environmental organizations in the region to foster the development of green energy strategies built on partnerships and broad-based support. We look forward to working with your government and our partners in the region. Before moving to NL in 1998, I worked as an advisor to municipal and provincial governments in Ontario to develop the Green Communities Initiative, the Toronto Atmospheric Fund and the Better Buildings Partnership. The many benefits of these initiatives have practical application for the development of a NL Energy Plan. They are renowned Canadian models that significantly improve energy efficiency, reduce costs and pollution, and create green jobs. They illustrate the point that energy efficiency and conservation should be leading, not trailing, elements of any modern, forward-looking energy plan. I hope to refer to these exciting initiatives in more detail before I conclude my remarks. All of the approaches I ve just referenced share common roots and I d like to suggest based on the inseparable ties between energy policy and the future of our planet, that similar roots should also underpin the province s Energy Plan. Which brings me to my recommendations: Bruce Pearce 1

2 Start with Sustainability 1. The Plan should be based, first and foremost, on sustainable development principles that envision a low carbon future this is the only way to truly achieve energy security. (NL s greenhouse gas emissions are up sharply, 15.5% since 2001, in part due to a 648% increase in primary energy production since The new Energy Plan should therefore be explicitly framed within and tied to existing Government commitments to reduce energy-related emissions under the New England Governors/Eastern Canadian Premiers 2001 Climate Change Action Plan, the 2005 Canada-NL MOU on Climate Change, and the 2005 NL Climate Change Action Plan). Sustainable development is not included among the Discussion Paper s principles or goals (pp ); nor is there a definition of sustainable development in Section 5 (Environment & Sustainable Development) these oversights must be corrected. Plan for the Long Term 2. Flowing from the starting principle of sustainable development, the Plan should be far reaching, long term and transformative it should therefore look far beyond the petroleum horizon to explore how we as a province can wisely use our resources to transition to a society powered by green renewables and efficiency. To achieve this, I encourage you to review Our energy future creating a low carbon economy, the UK s 2003 White Paper for sustainable energy and reduced emissions. It states: Because energy requires very long-term investment, we look ahead to 2050 to set the overall context. I offer the UK paper as an inspiration for the NL plan because it applies a more rigorous and comprehensive understanding of the need to embed energy policy within climate change action goals. To illustrate my point, the UK plan leads with the goal of reducing carbon emissions, and devotes a full chapter to energy efficiency (11 pages), while the NL Discussion Paper appears heavily weighted to address issues related to the petroleum sector (17 pages is devoted exclusively to the sector s regulatory, land tenure, labour market and training issues.) This underscores the fact that similar issues facing renewable energy and energy efficiency were notably absent in the NL document. This imbalance appears to stem in part from the framing of the principles and objectives in the NL paper. Engage All Sectors 3. The NL Energy Plan should truly engage Newfoundlanders & Labradorians on an ongoing basis. To this end, the Government should immediately establish a multistakeholder coordinating body, including community voices such as the Atlantic Canada Sustainable Energy Coalition and others, to keep shaping the Plan over the coming years to forge the necessary partnerships, broaden the dialogue and ensure that it is truly the people s plan. This body should work in collaboration with the roundtables being contemplated for the province s Sustainable Development Act and its Climate Change Action Plan. We really need to join hands to make it work. Bruce Pearce 2

3 Conservation and Energy Efficiency Must be Pillars of NL Energy Plan It is a fact that, since 1970, efficiency and conservation have been a more important source of new energy for Canada than all other new sources combined. Canadians have pocketed billions of dollars in savings on their energy bills, and have avoided significant air pollution. Yet, too often, we overlook this history, and instead place energy efficiency at the bottom of our energy planning priorities while we pursue more costly strategies to generate new supply. I hope our province does not choose that path. The Discussion Paper (p. 48) seems to support this view, stating that adding any kind of new generation to our system is expensive and would likely cost more than existing facilities and that increasing energy efficiency would reduce pollution and other environmental impacts, as well as helping to stabilize energy bills. Yet the Paper disappoints by not providing the reader with the baseline information needed to make recommendations on this theme. There is no definition of conservation and energy efficiency (yet there is a brief definition of alternative energy ), and there is no sense of the potential for efficiency and conservation to contribute to future energy demands. This is particularly disappointing given the fact that such approaches have been well-documented globally, and we know, for example, that Canada s home efficiency programs deliver average annual energy savings of 30% to participants, and there are known performance benchmarks for efficiency programs in other sectors, too, which could have been referenced to aid the reader. In visible contrast with the lack of baseline information regarding conservation and energy efficiency, the Discussion Paper provides significant content (maps, charts, pages of text) forecasting the future potential of petroleum and large hydro. Before the Plan is finalized, this imbalance must be addressed and the true potential of conservation and energy efficiency must be more fully and seriously considered and articulated if the Plan is to truly reflect the relative merits of its proposed energy solutions. To this end, I offer the following recommendation, which should be addressed prior to the completion of the Plan. 4. The Department of Natural Resources, in collaboration with the Department of Conservation & Environment, engage an expert consultant with demonstrated knowledge and experience in profiling energy conservation/efficiency potential for senior governments, to complete a study that maps the potential for conservation and efficiency to contribute to NL s future energy needs (while addressing NL environmental, social, training & employment, and economic development policy objectives). As noted above, the Discussion Paper fails to define what is meant by conservation and energy efficiency. Definitions are lacking in Section 4.7 (Conservation and Energy Efficiency) and on the related Questions for Discussion page (15). The Glossary (Appendix E) and Section 4.7 Bruce Pearce 3

4 instead describe the term demand side management (DSM), a utility industry term not commonly used by the general public, which further confuses matters. 1/31/2006 Personally, I view conservation and energy efficiency as two distinct (yet related) approaches to managing energy. Conservation is a practice undertaken by individuals or groups to reduce consumption (i.e., turning down the heat), whereas energy efficiency is a design feature, often using technology, which achieves the same objective as conservation, with less reliance on individual behaviour (i.e., it turns down the heat for you). I ve provided below common definitions of conservation and energy efficiency sourced from an Internet search. I offer them as examples to be used in the NL Energy Plan. Conservation: Conservation is the management of resources such as energy so as to eliminate waste or maximize efficiency of use. A related and complementary concept is sustainability. Activities are sustainable if they can be maintained over time without depleting the natural resource base. While energy resources vary, sustainable use of energy requires a reserve that can be maintained and managed so as to ensure the supply for future generations. Sustainable activities do not reduce options or otherwise impoverish future generations. Energy Efficiency: Refers to programs that are aimed at reducing the energy used by specific enduse devices and systems, typically without affecting the services provided. Such savings are generally achieved by substituting technically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. According to the Northeast Energy Efficiency Partnerships in the US, a vast reservoir of energy efficiency is available in New England at a competitive cost of 3.1 cents/kwh or less. This is the same region that NL is linked to under regional climate change and energy agreements. The Partnerships study suggests similar untapped efficiency opportunities are also available in the provinces. Efficiency investments generate a return, or payback, far in excess of most conventional investments. For example, the City of St John s recently invested $2.1 million in energy retrofits to its municipal buildings and is saving $600,000/year in energy costs. The payback on this investment is less than 4 years. This case illustrates the point that efficiency programs (unlike new energy initiatives) can be financed from the resulting savings or previously wasted, unproductive expenditures. Once the payback is achieved, the permanent savings can then be invested in productive activities creating a so-called re-spending effect. Bruce Pearce 4

5 Yet, in NL, every time something is built, renovated or manufactured without incorporating maximum efficiency, we miss important opportunities and lock in our energy consumption at higher levels for years to come. I know something about this from my former role with the Conservation Corps managing a home energy efficiency enterprise. According to Natural Resources Canada, in 2005 only 1.2% or 1,965 units of NL s pre-1985 housing stock of 185,000 units has had an EnerGuide for Houses rating. Only 162 of these households have completed the recommended efficiency upgrades. The province must play a role in boosting these results. Currently, I help community-based housing groups access funds to construct and operate shelters and supportive housing in St John s under the National Homelessness Initiative. These groups can t afford high construction costs, nor can they afford high energy costs resulting from cheap construction. They face a catch-22 without assistance to address the incremental capital costs of efficiency at the front end. The federal Commercial Building Incentive Program (CBIP) does just that, and we used it when constructing the $2 million Choices for Youth shelter in St. John s in 2004, qualifying it for a grant based on high energy performance. During this process we were surprised to learn ours was one of only two buildings in the province that has used the CBIP program since it was created in It took a homeless shelter to help lead the way. But what about all the other commercial, industrial and institutional buildings being built out there? Our province must play a role better promoting existing energy efficiency incentives for them, and adding its own incentives to boost participation. A quick search of the Department of Natural Resources website reveals no mention of energy conservation or efficiency, or programs supporting such efforts, or links to programs elsewhere that can assist Newfoundlanders & Labradorians. A further review of counterpart websites in Nova Scotia, PEI, New Brunswick even oil-rich Alberta reveals that all of them describe policies and program offerings for energy conservation and efficiency. The following recommendations are designed address this notable gap in the NL department s mandate, which must be addressed by the NL Energy Plan. Implement Appropriate Funding Reflecting the Many Values of Energy Efficiency 5. Flowing from my recommendation above that the Plan lead with a commitment to sustainability, the Government should back that commitment with the appropriate resources by establishing an Endowment Fund to provide grants and loans for energy efficiency and renewable energy initiatives in the province (potentially levering resources from the energy sector, particularly from non-renewable resource revenues, as well as from the federal Climate Partnership Fund). The fund should be modeled on the $26 million Toronto Atmospheric Fund (which I played a role in developing). Established from the sale of municipal land in 1991, the Toronto endowment fund has financed at no taxpayer expense carbon dioxide emission reductions of 225,000 tonnes, and $17.5 million in cumulative energy savings for the city. These activities also created construction jobs, and reduced operating costs for Bruce Pearce 5

6 homes and businesses, thereby improving social equity and economic competitiveness. The Fund also supports innovation and new technologies, such as the Deep Lake Water Cooling system, which has replaced rooftop air conditioners in the city s financial district, reducing electricity use by 75%, freeing 60 megawatts from the power grid, and eliminating 40,000 tonnes of carbon dioxide (equivalent to 8,000 cars). Imagine if we had an investment fund here that was dedicated to delivering energy-saving solutions for Newfoundland & Labrador. The Premier has indicated that he wishes to create a legacy using some of the Atlantic Accord revenues and future petroleum royalties establishing such an Endowment Fund from a portion of these proceeds would create such an enduring legacy while addressing multiple public policy goals. 6. The Government should establish an Energy Efficiency and Conservation Agency, to help consumers lower energy bills, provide financial incentives to help families make better energy choices, provide incentives to improve energy conservation, and increase competitiveness for business and industry in the province. In fact, the mandate just referenced was taken verbatim from New Brunswick Premier Bernard Lord s announcement in October 2005 of such an agency in his province, with an annual budget of $5 million. I have a copy of the NB enabling legislation with me. Another model is that of Efficiency Vermont, the only state-sponsored utility in the US that doesn t sell an ounce of power it instead provides efficiency services and energy savings to customers statewide, with remarkable results. 7. The Government should consider pursuing the following actions, already being contemplated under the New England Governors/Eastern Canadian Premiers emerging Strategy for Energy Efficiency and Renewable Energy (to be considered at the leaders summit in May 2006): Adopt appliance and equipment efficiency standards and building efficiency codes; The provider of last resort electric service should include energy efficiency among its resources; Amounts dedicated in policy for efficiency should be expressed as minimums (regulatory decisions based on evidence can justify a greater investment commitment); Distribution company regulation should focus on least cost distribution system planning that identifies (a) parts of the system that are likely to need costly system upgrades, and (b) evaluated energy efficiency and other customer-side resources that can defer these upgrades for the same or lower cost; Support a process by which net income lost to utilities due to successful energy efficiency investments is restored after the fact; Support sales tax or feebate incentives for newer energy efficient products (building in revenue neutrality if necessary); Support investment tax credits for the incremental cost of selected energy efficient products; and Establish provincial conservation targets consistent with NL Climate Change Action Plan and NEG/ECP Climate Change Action Plan commitments. Bruce Pearce 6

7 6. Lever Partnerships Before concluding, I should stress the important role of partnerships in pursuing a successful, comprehensive energy conservation and efficiency strategy for NL. I m not asking Government to go it alone this is why I recommend the creation of a multi-stakeholder coordinating body to guide the Plan (#3 above). There are enormous untapped opportunities for partnerships with federal and municipal governments, other states and provinces we do business with, the public and private energy sector and utilities, labour, environmental groups and communities. Everyone has something to invest in the strategy. Our utilities, for example, can play a much stronger role than they currently do. In the US, they invest significantly in federal and state efficiency programs, as they do in Quebec and Ontario. In fact, the Ontario Energy Board approved $160 million in conservation expenditures by utilities, with the goal of supporting ratepayers to reduce the province s electricity use by 5% by In this way, utilities provide ratepayers with the tools they need to protect themselves from ever-rising energy costs. In Newfoundland & Labrador, our PUB and utilities have generally avoided playing such a role. As a result, utility efficiency programs have tended to remain under-developed. Yet between 2004 and 2005, for example, Newfoundland Power raised residential rates over 15%, without any new countervailing investment strategy to help its customers cut energy costs. We need to find a way to cultivate partnerships between utilities, their ratepayers, and government to share the cost (and benefits) of energy efficiency programs. 8. The mandate of the PUB and the role of utilities and ratepayers must be revisited in the broader context of the NL Energy Plan and the NL Climate Change Action Plan and recommendations explored to more fully engage these partners in strategies to reduce energy consumption. 9. Labour market development issues facing energy efficiency and renewable energy must also be explored and addressed collaboratively, with the NL government taking a leadership role. The human resources and skills needed to foster the growth of these sectors must be made a priority issue to be addressed under the NL Energy Plan, tied to related initiatives under the Canada-NL Labour Market Development Agreement, the NL Innovations Strategy, the NL White Paper on Post- Secondary Education, the NL Rural Secretariat and the NL Climate Change Action Plan. 10. Decide Who Leads Finally, I urge the Government to decide internally which department is going to lead the charge on energy efficiency and conservation, and receive the resources to do the job well. Will it be the Department of Natural Resources, or the Department of Environment & Conservation? It is currently unclear which department is the logical provincial counterpart to Natural Resources Canada s Office of Energy Efficiency. Bruce Pearce 7

8 Perhaps the best solution in terms of existing departmental mandates and business lines would be to entrust renewable energy policies and programs to the Department of Natural Resources, which already has a strong energy development focus (and seems to be taking the lead, with NL Hydro), while entrusting energy efficiency and conservation policies and programs to the Department of Environment & Conservation. Thank you for listening to my recommendations I look forward to working with you. Submitted by: Bruce Pearce Vice chair, Green Communities Canada NL member, Atlantic Canada Sustainable Energy Coalition 91 Pleasant Street, St. John s, NL A1E 1L5 T (709) F (709) E bpearce@nl.rogers.com Bruce Pearce 8

9 Summary of Recommendations 1. The Plan should be based on sustainable development principles that envision a low carbon future framed by existing provincial commitments under the NEG/ECP Climate Change Action Plan, the Canada-NL Climate Change MOU, and the NL Climate Change Action Plan. 2. The Plan should be far-reaching, long term and transformative signaling a complete shift to renewable energy and energy efficiency by The Government should immediately establish a multi-stakeholder coordinating body, including the Atlantic Canada Sustainable Energy Coalition, to keep shaping the Plan over the coming years. 4. Prior to the completion of the NL Energy Plan, the Department of Natural Resources, in collaboration with the Department of Environment & Conservation, should complete a study mapping the potential for energy conservation and efficiency to contribute to NL s future energy needs. 5. The Government should establish an Endowment Fund to provide grants and loans for energy efficiency and renewable energy initiatives in the province. 6. The Government should establish an Energy Efficiency and Conservation Agency to help consumers lower energy bills, and provide financial incentives to improve energy conservation. 7. The Government should consider pursuing the recommendations being developed under the New England Governors/Eastern Canadian Premiers Strategy for Energy Efficiency and Renewable Energy to be considered at the leaders summit in May See Recommendation #7 (page 6). 8. The mandate of the PUB and the role of utilities and ratepayers must be revisited and recommendations explored to more fully engage these partners in strategies to reduce energy consumption. 9. Labour market development issues facing energy efficiency and renewable energy must also be explored and addressed collaboratively, with the NL government taking a leadership role. 10. The Government should clearly assign responsibility and resources for conservation and efficiency policies and programs to the Department of Environment & Conservation; leaving renewable energy policies and programs to be led by the Department of Natural Resources (in collaboration with NL Hydro). Bruce Pearce 9