Montreal, April 7, 2016 – The government’s decision to stop making Quebec consumers pay for Hydro-Québec’s costly wind energy purchase policies, and its willingness to remain open to oil and gas production, are encouraging aspects of the new Quebec energy policy unveiled today.
The MEI was one of the first organizations to denounce the hidden subsidies to wind energy, with an Economic Note in June 2013.
“Our calculations showed that Quebecers pay $695 million a year to produce wind energy they don’t need, and that this energy is a lot more expensive than hydroelectricity. The current government seems to have taken these facts into account in this decision,” says Youri Chassin, Economist and Research Director at the MEI.
In 2015, the Régie de l’énergie confirmed that two thirds of Quebec consumers’ annual electricity rate hike was due to wind power.
In addition, the energy policy unveiled today welcomes oil and gas development. The announcement of the coming adoption of a law on hydrocarbons that will regulate the industry will favour companies with solid projects and encourage investment in this sector.
The MEI has pointed out on numerous occasions that if the Quebec government spent less money subsidizing energy projects that are not cost-effective, all while allowing the province’s resources—including oil—to be developed, taxpayers would be better off.
The policy reiterates, however, the government’s commitment to helping households and businesses that purchase new electric vehicles. If this means the maintenance of very inefficient subsidies, then this is a bad idea.
“If we want to reduce greenhouse gas emissions, we need to evaluate the costs and benefits of different methods, and choose the most efficient ones,” adds Youri Chassin. “The government has a duty to make rational decisions based on efficiency, and not centred on the artificial support of energy sectors that have high costs and low benefits. When it comes to electric cars, it should not repeat the same errors past governments committed with regard to wind power.”
As for the new umbrella agency for energy economics and the energy transition, the policy does not specify if the creation of this new agency will be balanced by the elimination of another bureaucratic structure of comparable size, as Philippe Couillard promised during the election campaign through a “break” on public spending.
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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its 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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