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GEO-6 Regional Assessment for North America


“Today, clean energy technologies are providing real-world solutions—not only do they reduce the carbon pollution that causes climate change, but they also drive a domestic energy economy with technologies that are increasingly cost- competitive with existing conventional technologies, even without accounting for the climate benefits. Clean energy manufacturing and installations have also become major opportunities for American workers in the 21st century”.


Canada also provides a number of tax exemptions and deductions at the federal and provincial levels for fossil fuels. Examples of federal policies include development expense measures of approximately CAD 785 million, and accelerated capital cost allowances for bituminous sands projects estimated at CAD 122 million annually (Bast et al. 2015). There are also provincial policies in Alberta and British Columbia – the Alberta Crown Royalty reductions alone provided an estimated USD 578 million in 2014 (Bast et al. 2015).


Renewable energy policies in Canada consist of development support for renewable technologies, alternative


fuels


and carbon sequestration along with market incentives and federal renewable power purchases. The Purchase of Electricity from Renewable Resources (PERR) programme started in 2000 and ended in 2012. It consisted of C$25 million to encourage Canadians and Canadian organizations to purchase renewable energy. The federal power purchase requires 20 per cent of the power for federal operations to come from wind or solar. For businesses investing in renewable energy systems, the Government of Canada also provides an accelerated capital cost allowance under Class 43.2 in Schedule II of the Income Tax Regulations, to encourage investments in specified clean energy generation and energy conservation equipment. This provision allows the capital cost of eligible equipment acquired after February 22, 2005 and before 2020 to be deducted at a rate of 50 per cent per year (declining balance basis), thus providing for a greater deferral of taxation in the first years of a project’s life. In addition, certain intangible start-up costs associated with renewable energy projects (qualifying for Class 43.2), such as feasibility studies, engineering and design work are


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eligible for 100 per cent tax deductions or can be transferred to investors using a flow-through share agreement under the Canadian Renewable and Conservation Expense provisions in the Income Tax Regulations (Natural Resources Canada 2015a).


Canada has also provided renewable energy production incentives. For example, from 2000 to 2007, there was a 1 cent per kilowatt-hour incentive to produce wind energy (max of 1,000 MW) (Natural Resources Canada 2016a). In 2007, Canada enacted the ecoEnergy for Renewable Power programme, which encourages the generation of electricity from wind, low-impact hydro, biomass, photovoltaic and geothermal energy by providing a one cent per kilowatt production incentive during the first ten years of operation (Natural Resources Canada 2016b).


The ecoEnergy


programme is set to expire in 2021 (Natural Resources Canada 2016b).


The decline in policy responses in North America is illustrated by the relatively high number of subsidies that exist for fossil fuels. Legislative action to remove these policies has been lacking, despite international commitments by the G20 nations to phase them out (Bast et al. 2015; OAG 2012). However, incentives for renewable energy have propelled a revolution in the energy sector, leading to lower rates of greenhouse gas emissions and new job opportunities. This economic transition has the potential to continue to decarbonize the energy sector and lead the way to a future of renewable energy.


Energy efficiency policies


In the United States, a number of energy efficiency policies have reduced energy consumption. For example, the Corporate Average Fuel Economy (CAFE) Standards are designed to increase the fuel economy of cars and light trucks (US National Highway Traffic Safety Administration 2016). Proposed Phase 2 fuel efficiency and GHG emission standards for 2018-2027 are expected to result in a 1 billion metric ton reduction in CO2


emissions and reduced oil consumption of up to 1.8 billion barrels during the lifetime of


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