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Kelly McParland: Another wheel flies off Ontario's green energy bus, and lands on 340 workers  
Posted (2017-07-20)

Excellent analysis!

Trent Gow 


McParland's article has less analysis and more free market ideology than I like with my morning coffee. You know I'm not a Liberal (or even a liberal), so I'm not defending Ontario's dysfunctional government here.

But I see nothing wrong with government spurring the kinds of economic development it (as our political representatives) thinks we need through legislation, procurement policies and tax law. There is no country that I can think of that doesn't do this (well, maybe Russia -- ironic eh?).

That said, I would agree with anyone who says the Liberals didn't manage the energy sector very well. Germany's, Scotland's and even China's move to renewables were much better managed. Intriguingly, Germany is apparently turning previously privatized power
 Systems over to municipalities as a revenue generator. But don't ask me how that works, because I haven't researched it.

There is one thing the free marketeers always omit and that's the impact of free trade agreements (gee, wonder why that is). In this case, a suit brought by Japan and the EU (with US support as a 3rd party) in 2010 through the WTO brought down Ontario's provision that 60% of equipment for green energy projects must be sourced from Ontario manufacturers. The suit was successful and Ontario had to change that measure in the Green Energy Act.

The Green Energy Act was passed in 2009, in the wake of the Great Recession and interest in the Ring of Fire in north Ontario peaking. With the falling dollar, it was reasonable to expect manufacturing would come back to Ontario. So it was not unreasonable to assume Ontario would soon require more energy than it had on tap. On the policy level, twinning a new manufacturing initiative (solar & turbines) with perceived need was not a bad idea.

Trouble was, NAFTA was 15 years old in 2009 and Ontario and US manufacturers, especially in the auto industry, who made the mad NAFTA dash to Mexico for the cheap labour (and to escape our high petro-dollar) had built their plants and had no intention of moving back.

In the meantime, demand for steel decreased, making the chromium, nickel and copper in the Ring of Fire suddenly not nearly as attractive. Not even the Chinese are pushing their way into that venture.

Auto manufacturing remains in MX and other kinds have not rebounded in Ontario; demand for commodities (and their processing) remains low, and we're now making more electricity than we can use. Surprise!

Quick fact checks at:

David McLaren
Twitter: @JDavidMcLaren

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