Green energy “investments” are really expenses paid for by taxpayers and consumers

Montreal, November 13, 2013 – In reaction to the recent publication of a report by the Pembina Institute and Équiterre on the development of the oilsands and their impact on the Canadian economy, the Montreal Economic Institute (MEI) reminds us that the green energy “investments” called for by these organizations are actually expenses, since the forms of energy in question are not cost-effective.

“The term ‘investment’ implies a return on the money invested, which is not the case for most green energy. Subsidies for green energy go to an industry that in return provides more expensive energy. So both taxpayers and consumers come out losers on the deal,” explains Jean-François Minardi, public policy analyst at the MEI.

In Quebec, subsidies for wind power have led to annual net losses on the order of $695 million. The Fraser Institute, for its part, estimates that Ontario’s wind power subsidies generate an annual loss of around $200 million. What’s more, a 2009 Ontario law on green energy resulted in a $1.1-billion bill according to the province’s auditor general. In Europe, “green solutions” that produce expensive energy are facing increasing opposition.

“Canada gets almost no benefit from its green energy expenditures,” points out Mr. Minardi. “In the short term, current technologies are simply not up to the challenge of replacing hydrocarbons and other traditional energy sources for numerous sectors of economic activity.”

The policies recommended by ecological groups are mostly solutions for commercializing costly, inefficient means of producing energy that are likely to become obsolete with further technological innovations. A sustainable, long-term transition toward renewable energy will happen when green energy becomes less expensive than the alternatives.

What the Pembina Institute does not say in its report is that its proposal would entail costs for everyone. Already, Canadians pay various fuel taxes as consumers in addition to subsidizing inefficient energy as taxpayers. The MEI has published several Notes on the subject, which are available on our site.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Interview requests: Jasmin Guénette, Vice President, Montreal Economic Institute / Tel.: 514-273-0969 ext. 2231 / Cell.: 514-603-8746 / Email: jguenette@iedm.org