‘Feed-in’ subsidies for renewable energy: do they kill jobs?

Tim Hudak wants to kill a program subsidizes renewable power suppliers. He claims it kills jobs. The Star tests the claim.

The Claim: PC leader Tim Hudak’s proposed “Million Jobs Act” calls for a halt to the province’s “feed-in” tariff program, which provides subsidies to renewable power sources such as wind and solar energy. He and his party believe the subsidies are too costly, drive up energy prices and stall job growth.

The Background: The Liberals’ Green Energy and Green Economy Act of 2009 ushered in controversial feed-in tariffs: long-term contracts with solar and wind suppliers at steady prices higher than those on the open market. The tariffs have been criticized a waste of money. Hudak calls for a plan that would halt any feed-in contract the Ontario Power Authority has entered with a large-scale renewable energy supplier that isn’t already connected to Ontario’s electricity grid.

There’s a debate over whether renewable energy drives up energy prices and stifles job growth in this industry. Earlier this year Environmental Defence, an action group that includes lawyers, scientists, and policy experts, hired a group to calculate the percentage of current electricity bills that can be traced to renewable energy.

Its report concluded renewables “continue to make up a relatively small part of the overall energy supply,” with their share of residential electricity costs expected to rise from 9 per cent currently to 16 per cent in 2024 and 12 per cent in 2032.

But the criticism of wind power is that Ontario ships it to U.S. markets at dirt cheap rates, yet pays more for the source here through tariffs.

The Verdict: Mixed.

Economist Finn Poschmann, vice-president of research at the C.D. Howe Institute, doesn’t mince words: he says subsidies for wind and solar energy are extremely expensive ways to get electricity, and individual Ontarians and business are paying through the nose for it. And that kills jobs.

“Clearly the expense of the Green Energy Act has dramatically driven up electricity costs — for households and especially for business. Higher input costs lead to less business investment in Ontario and fewer jobs,” he said.

“If there was a huge impetus toward innovation and hiring in the green energy sector, that would be a benefit that could offset the costs. There is, however, little evidence of success on this front.”

But Prof. Anil Verma, director of the centre for industrial relations and human resources at the Rotman School of Management, sees wind and solar as “nascent” industries that will likely grow and could become self-sustaining and create a healthy dose of new jobs.

He refers to the tariffs as “strategic investments” put into an industry that may not immediately show short-term gains. “Every government in the world is investing in these areas: China, the U.S., most of Western Europe, Japan. We’d be the exception (if we didn’t invest).”