Congress Gives Big Pass on Canadian Hydro Power

WASHINGTON—The U.S. House of Representatives passed climate change legislation on June 26 that could change the face of energy production and use in the U.S.—a revolution that the sub-committee chairman responsible for the bill, Ed Markey of Massachusetts, likened to the advent of broadband Internet.

The American Clean Energy and Security Act, known to its supporters by the acronym ACES—but dubbed C.R.A.P. (Continue Ruining America's Prosperity) by some Republican opponents—passed by the small margin of 219 to 212. The measure may still be modified by the Senate.

Unfortunately for Canada, in a bill that rewards almost every type of green energy—wind, solar, geothermal, biofuels—hydroelectric power is not even considered a renewable energy resource and will not count toward new mandates requiring that American utilities start transitioning from carbon-based fuels to renewables.

In a sign that all politics continues to be local and in another shot at China and India that could end up haunting Canada, "rustbelt" representatives inserted a section that threatens to place tariffs on manufactured goods from abroad starting in 2020.

While some of the voting on the bill was based on whether the politicians came from states that produce coal or rely on coal for most of their electricity, National Journal analyst Ron Brownstein noted that the vote breakdown closely mimicked the results of last year's presidential election. Most of the House Democrats who voted against the bill represent districts carried by John McCain in the presidential race and most of the Republicans who voted in favour were from districts that voted for Obama.

Compromises had to be made to get some Midwest and rustbelt "McCain Democrats" on board, and one such measure is that the bill requires the president to make "border adjustments," namely adding tariffs to other countries' exported goods if that country fails to meet certain greenhouse gas reduction targets by 2020.

Not only is the congressional protectionist impulse growing in strength, plain old audacity is in plentiful supply as the same people who resisted global pollution reduction targets for so many years now threaten to penalize countries that don't follow their much belated lead.

Assuming the measure passes the Senate without radical changes, President Obama is expected to sign the bill before the 2010 mid-term elections, setting the stage for an election showdown on energy conservation—a prospect attractive to Democrats and Republicans alike as both believe they can fashion a strong message for their core constituencies.

While the "cap and trade" system of limiting industrial emissions has received the majority of news coverage, it is the renewable energy mandate that may have the greatest immediate transformational effect.

The bill requires that power utilities acquire 15 per cent of their energy from renewable sources by 2020, with an additional five per cent in gains to come from increased efficiency. To meet the renewable standards, utilities will earn credits by producing or purchasing power generated from renewable sources like solar, wind and biomass.

The rush to increase alternative power generation capacity should cause a massive spike in the renewables industry, leading to thousands of jobs in designing and building new generation facilities, reclaiming otherwise lost fuel sources and manufacturing large items like wind turbines.

"Smart grid" improvements will also encourage small-scale energy generation and allow homeowners to sell back excess power generated by solar panel installation, for example.

A major producer of relatively clean, renewable and abundant hydro-electric power, it would seem to follow that American utilities could increase imports of Canadian hydropower to help meet the new mandates.

Unfortunately, hydroelectric doesn't fit the bill—literally or figuratively—as far as American lawmakers go. The congressional definition of clean energy includes wind, solar, geothermal, renewable biogas and biomass, hydro-kinetic (wave) energy and "qualified hydropower."

Qualified hydropower is defined narrowly—additions of capacity resulting from new efficiency measures—but only if applied to dams built before 1992. One other exception allows for the addition of small hydroelectric capacity to dams currently used for water control, navigation or irrigation.

Canadian hydro—generated by large dams in mostly remote areas in Quebec, Manitoba and British Columbia—is not considered renewable or green and cannot be used to earn credit toward meeting the renewable standard.

While it would have been difficult to find allies in Congress, fighting to have hydro exports from Canada considered a renewable source of energy could have caused a bonanza in hydro producing provinces. Grid improvements to allow larger scale exports would have created hundreds of jobs while the exports themselves, already worth several billion dollars, would increase exponentially.

Energy Secretary Steven Chu, appearing with President Obama in an impromptu press briefing on Sunday, June 28, used some Canadian content to describe the intent of the ACES bill. Noting that Wayne Gretzky would skate to where he thought the puck was going, not where it had been, Chu argued that ACES would position the U.S. well in the climate change debate.

Canadians struggle when trying to follow the puck in Washington. Unless we are content to have hydropower co-exist with oil and coal on the non-renewable energy list, we'd better start skating over to the Senate, because that's where the puck will be next.

editor@embassymag.ca

http://embassymag.ca/page/printpage/canada_washington-7-1-2009