Topic Canada should subsidize renewable energy options such as wind and solar power in order to increase the share of renewables in Canada’s energy balance. Introduction Canada government subsidizes a number of socially beneficial services, including health care, education and energy services. Subsidies to the energy sector mainly are for oil and gas production, however, they are not all socially beneficial[figure 1]. In fact, they have negative impact for the environment and hinder developments of environmentally friendly alternative energy options.
Indeed, Canada’s implementation of the Kyoto Protocol is seriously threatened by continued government support for oil and gas production, a sector with large and rapidly growing greenhouse gas (GHG) emissions. There are two main reasons for us to switch to renewable energy. First, there are exhaustible supply of alternatives, non-renewable energy; Second, the earth’s limited assimilative capacities. Benefits Increase usage of renewable energy sources will provide a wide range of benefits to Canada’s environment, economy and society.
There are some important reasons why Canada government should support the development of renewable energy technologies. Renewable energies are environmental friendly, they do not contribute to climate change, air pollution, acid deposition, or large-scale habitat destruction, and they do not face the safety and waste disposal issues characteristic of nuclear power. For example, such as biomass, it simply releases the CO2 and absorbs back when their feedstock is growing, so the net effect on the atmosphere is zero.
In contrast, the combustion of fossil fuels release greenhouse gases to the ozone and contribute to climate change by affecting the composition of our atmosphere. The National Center for Atmospheric Research conclude, there is no doubt that the composition of the atmosphere is changing because of human activities, and today greenhouse gases are the largest human influence on global climate. Canada has unlimited supply of widely available renewable energy resources, like solar and wind.
Renewable energy technologies can be implemented cost-effectively in a number of applications, including solar water heating, space heating and cooling with heat pumps, passive solar design, micro-hydro electricity generation and remote power generation with solar and wind technologies. Renewable energy sources can also help to diversify Canada’s energy portfolio – an important consideration, as Canada’s carbon-intensive economy will become a liability with the implementation of the Kyoto Protocol.
Renewable energy sources are the fastest growing energy sources in the world – the quantity of electricity produces by wind and solar power globally has increased by 20% and 16% per year, respectively, in the 1990s. Costs With government’s subsidies we are able to implement more renewables projects. However, the subsidies come from higher taxes now or in the future, because people engage in activities to avoid taxation, the cost of the tax exceeds the revenue yielded by the tax, this is known as deadweight loss[figure 2].
Deadweight loss is wasteful but they are an unavoidable part of any kind of government subsidies, unless the subsidy is use to correct a market failure. Government subsidy will increase public spending and reduce the net benefit of the subsidy. Switch to renewable energy also have a huge impact on the labour market. Whether renewable energy generates more jobs or destroys current jobs, it depends on the labour intensity.
Many green jobs are substitutes for existing jobs, an increase in electricity generation from wind, solar, or biomass will substitute for energy from coal-fire plan, which in turn will reduce employment in coal mining and processing. The labour intensity for renewable energy is much higher in the renewable energy sector. High labour requirement can be beneficial and problematic. It is obvious that higher labour requirement is beneficial because it will tend to increase employment. However, it can also be problematic because it confuses an end (goods and services valued by consumers) with a means (labour).
Increase in energy price will cause price distortion and result of inefficient production in the market, it tend to reduce consumers and producers’ net benefit, and it lead a higher production cost to domestic goods, which will become more costly to compete in the world market. Policy Implication In case to shift Canada’s energy balance toward renewable energy without externalities, we need government’s actions. One possible way is to raise tax on the amount of carbon emitted to the atmosphere.
If taxes are appropriately calculated, they can help raise the marginal costs of producers of non-renewable energy to equal the social and environmental costs that their activities create. Countries such as Norway, Sweden, Denmark, the United Kingdom, Finland, Switzerland and the Netherlands have already adopted carbon taxes. Sweden, for example, raises US$1 billion per year from its carbon tax and approximately US$10 billion per year in energy taxes, some of which is part of a “tax shift” that goes to help develop renewable energy.
Paul Anderson, the CEO of a major carbon-dioxide emitting power company in US, he said “reducing greenhouse gases has become a worldwide political and social imperative… It is an imperative where American leadership is not just needed; American leadership is required. ” Barriers There are several barriers before Canada is ready to increase renewables in its energy share. The main barrier is that Canada governments have not yet been willing to make a long-term commitment.
They have for the most part failed to implement any significant policies to encourage the development of renewable energy in Canada. From figure 3 we can tell that our federal government reacted to two energy crises by spending more money on non-renewable energy. In total, it spends $40. 4 billion on non-renewable energy and only $0. 2 billion on renewable energy. This failure to act ignores the fact that many other energy sources developed in Canada have received significant government support.
Canada’s oil sands, off-shore oil and nuclear industries would not exist today had federal and provincial governments not provide generous research and development support as well as significant direct financial contribution, low-interest loans, loan guarantees, or special tax treatment to the implementation of specific projects. As the International Energy Agency notes, “renewable energy can play a much bigger role and the pace of installation can be accelerated… but that will occur only if renewable energy gets the same policy advantages that conventional fuels have received and continue to receive.  Without new federal and provincial government support, the Canadian renewable energy industry is unlikely to expand significantly beyond current level.
Conclusion Energy is the lifeblood of the economy. The result of scientific assessments around climate change and other environmental issues it has recently become clear that the environmental impacts associated with conventional energy sources will necessitate a shift to cleaner and less carbon-intensive renewable energy technologies. The benefits from shifting to renewable energy are far more than the costs; it is also Pareto Improvement for our society as a whole.
U. S President Obama said “to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy ”.