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How the Federal Budget Supports Smart Energy Communities

Mar 6, 2018

With the release of Federal Budget 2018 there were important commitments for clean technology, Indigenous Communities, and other policy measures, including updates to tax incentives for capital investments that will grow the Smart Energy Communities marketplace, including:

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$109 million over 5 years to implement, administer, and enforce the federal carbon pricing system.

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$416 million over 5 years for smart grid development, renewable energy technologies, and moving remote communities off of diesel.

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Tax support which extends accelerated deductions for the cost of eligible property assets acquired before 2025 for district energy, combined heat and power, wind, and solar. This represents an investment of $123 million over the 2017–18 to 2022–23 period.

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Funding for First Nations, Inuit, and Métis Nation through a new Indigenous Skills and Employment Training Program, housing strategies, as well as the recently announced Clean Energy For Rural and Remote Communities program.

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$925 million over five years allocated to the Natural Sciences and Engineering Research Council (NSERC), the Canadian Institutes of Health Research (CIHR), and the Social Sciences and Humanities Research Council (SSHRC). Some of this funding will support smart energy solutions research.

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$572.5 million over five years, with $52 million per year ongoing, to implement a Digital Research Infrastructure Strategy

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$236.5 million over five years, and $41.2 million per year ongoing, to further support Canada’s new National Cyber Security Strategy, which is needed for distributed energy resources.

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$58 million for zero carbon building construction and the adoption of energy efficient equipment as well as $420 million for retrofitting and renovating Ontario houses to become more energy efficient.

While support for clean technology remains necessary, just as needed and missing in this budget as well as provincial and territorial budgets, are investments that can support local governments, businesses, utilities, and others to adapt their business and operating models to a low carbon economy and, ultimately, support the establishment of low carbon communities.

In a recent presentation to the Standing Senate Committee on Energy, the Environment and Natural Resources, QUEST identified some of the impediments to the transition to low carbon communities with regards to how we use, move, and produce energy in our communities, and what is needed to ensure an enabling marketplace for Smart Energy Communities.

Three Impediments to Transitioning to a Low Carbon Economy

1. We Need to Better Support Our Communities

First, although the most impactful innovations for the establishment of low carbon communities are taking place at the local level, communities are not ready. Canada’s energy systems were designed more than 100 years ago and have only been incrementally modified since. This worked well, especially in the time of vertically integrated, centrally supplied generation models. But innovation is happening at a pace that is difficult for policy and regulation to keep up with, and communities, specifically local governments, utilities (gas, electric, and thermal), and the real-estate sector, have not yet put in place their models of delivery and operation, partnerships and networks needed to support this transition.

2. Communities Are Risk Averse

Second, communities, including local governments, utilities, and the broader real-estate community, which have a profound influence on energy end use, remain risk-averse to change and require evidence of success before investing. Communities require platforms and test beds for learning and benchmarking of programs, policies and processes to develop a business case and value proposition to support investment in technology as well as operational measures to transition to a low carbon economy.

3. We Have a Data Dilemma

Third, accurate energy data is needed for effective policy decision-making. It is well recognized that Canadian energy data is incomplete, varies in quality, lacks consistency, and is not widely or easily accessible which makes it very challenging for communities to know how they are progressing to be a low carbon community.  At the same time, accessing energy data is just part of the challenge. There has also been a surge in processes and methodologies for the reporting and tracking of GHGs in response to international standards, sub-national standards and even industry standards, which adds to the confusion for reporting on progress to a low carbon economy.

These challenges are not insurmountable. They can be course corrected in future federal, provincial and territorial budgeting and programming development activities by making investments in the following:

Three Key Areas For Future Investment

1. Invest in Measuring Progress

Gaining confidence and trust requires providing community champions and decision makers with the evidence of success stories, failures, and lessons learned in order to build trust and insights to support investment in measures that will allow for deep energy and GHG reductions, and ultimately, the transition to low carbon communities. To help address this need, QUEST and Pollution Probe launched the Smart Energy Communities Scorecard in November of 2017. The Scorecard is the first initiative in Canada to provide a standard approach for evaluating and benchmarking the progress of Smart Energy Communities with a focus on the policies and processes of local governments, utilities and the real-estate sector.

2. Invest in Enabling Implementation

The dialogue initiated as part of Generation Energy and the Pan-Canadian Energy Framework, on how to establish a low carbon economy is an important first step, that needs to continue to evolve. That dialogue needs to help us understand the practical costs of the transition and support the conversion of business and operating models for a low carbon economy.

A great example of how we can support businesses and local governments transition is through initiatives such as the Low Carbon Partnership. Climate Smart, Sustainability CoLab, The Natural Step, and QUEST ­have come together to form the Low Carbon Partnership which is seeking support to establish a national network that will work with up to 300 communities and 4000 small, medium-sized businesses to benefit from a low carbon economy.

3. Invest in Accessing Energy Data

Federal, provincial and territorial governments are well aware of the urgency to improve the quality and coherence of energy data collected. To support the establishment of a pathway for governments, consumers, energy providers, regulators and efficiency interests where energy data is collected, used, shared and reported at a high-level to improve accountability, QUEST established the Atlantic Canada Energy Data Roadmap. The Roadmap, developed in collaboration with all four Atlantic provinces, establishes a common vision, identifies the characteristics of a shared energy information system, and sets out policy options, model legislation and tools to support effective implementation.

Every region of Canada requires their version of an energy data roadmap. The federal government has a leadership and coordinating role and is best placed to support the establishment of a central energy data repository, such as the supported Canadian Energy Information Agency, that can work with all provinces and territories to report on the transition to a low carbon economy.

Communities across Canada are on the cusp of a major change as we implement a low carbon economy and Smart Energy Communities offer the path to help communities get there.  Supporting that shift will require investments which support a market transformation and enable local governments, businesses, utilities and others to effectively embrace and benefit from the advancements in how we use, move and produce energy in communities.

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