Ontario’s Fit 3.0 Program Lowers Domestic Content Requirements for Renewable Energy, Discourages Wind Projects

The final version 3.0 of Ontario’s Feed-in Tariff Rules, posted on October 9th, includes reductions to the minimum domestic content requirement levels (MDCR) in order to move towards compliance with the World Trade Organization ruling of May 2013. The levels of domestic content have been lowered from 50% to 28 – 19%, depending on the solar (PV) technology used. For on-shore wind projects, the MDCR has been lowered from 60% to 20%. Furthermore, minimum domestic content levels will no longer be required throughout the entire project, but only during the development and construction phases. According to the Minister’s letter of direction, further changes will follow.

An article in North American Wind Power discusses the new FIT program and concludes that wind power projects will suffer. He notes, “As long as the Small FIT cap remains at 500 kW, the FIT program is no longer accessible to wind developers, except for those using small-scale turbines”, and “The greater latitude given to municipalities in the location and siting of wind farms may make permitting more difficult for developers and preclude the siting of wind farms in municipalities that have a strong anti-wind bias.”

LINKS

Ontario Power Authority FIT 3.0 documents are available at:http://fit.powerauthority.on.ca/newsroom/october-9-2013-FIT-3-final-documents, with an August 16, 2013 background document about Domestic Content Regulations at:http://fit.powerauthority.on.ca/newsroom/august-16-2013-program-update, and the Minister’s Letter of Direction at:http://powerauthority.on.ca/sites/default/files/page/DirectionAdministrativeMatters-renewables-Aug16-2013.pdf

“Political Football: Ontario Sacks Large-scale Wind” in North American Wind Power (October 2013) at: http://nawindpower.com/issues/NAW1310/FEAT_01_Political-Football-Ontario-Sacks-Large-Scale-Wind.html

Local Content Requirements Promoting Green Growth in China and Around the World

A paper released on June 3rd by the International Centre on Trade and Sustainable Development “attempts to refocus the LCR debate around the ultimate question of whether this measure can play a role in achieving green industrial growth in general, and RE deployment and innovation in particular. ” The authors set out the arguments for and against the use of LCR’s, examine their use by China in the wind energy industry, and describe (in less detail) examples in Ontario, Quebec, Spain, Italy, France, Greece, Croatia, the US, India, Brazil, South Africa and Turkey. A concluding section deals with the WTO role. Ultimately, the authors call for more rigorous research into the effect of local content requirement policies on the creation of jobs in the renewable energy industry.

LINK

Local Content Requirements and the Renewable Energy Industry – A Good Match? By Jan-Christoph Kuntze and Tom Moerenhout is available at: http://ictsd.org/i/publications/165193/?view=details

Ontario Green Energy Act Loses Final Appeal at WTO

The World Trade Organization has upheld its original decision and ruled that the domestic content regulations of Ontario’s Green Energy Act violate international trade law.  Existing contracts signed under the Act will continue, but the WTO decision calls for the Green Energy Act to be amended to remove the requirement for local production in future renewable energy contracts.   “Ontario loses final WTO appeal on Green Energy Act” by Shawn McCarthy, Globe and Mail (May 6) is at http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/ontario-loses-final-wto-appeal-on-green-energy-act/article11731010/  .

A summary of the WTO proceedings, including a link to the review decision (file #WT/DS412), in English and French is available from the WTO at http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds412_e.htm  . The Council of Canadians reaction is at “Ontario urged to defy unreasonable WTO ruling against Green Energy Act” at http://www.canadians.org/media/trade/2013/06-May-13-2.html , and the United Steelworkers union also urges Ontario to continue to fight, stating that “This is just the latest example of trade agreements being used to override our sovereignty and our freedom to implement environmental and economic development initiatives.” (see press release at http://www.newswire.ca/en/story/1159683/wto-ruling-must-not-end-fight-for-green-jobs-steelworkers ).

The Ontario Ministry of Energy has not yet made a formal response to the decision; however, in a related announcement on May 6th, it announced a 6-month review of the regional energy planning process to be more inclusive of municipal and local input.  (See http://news.ontario.ca/mei/en/2013/05/new-ontario-government-strengthens-energy-planning.html ).