Ontario’s bold renewable energy program contains excellent examples of policy that marries economic and environmental goals. Unique among programs that set a guaranteed price for electricity from renewable energy projects, Ontario’s program also boasts a domestic content requirement. Sixty percent of the value of wind and solar projects interconnected under the program must be sourced from within the province.
Ontario’s clean energy program encourages local ownership and distributed generation, in part to broaden support for renewable energy and in part to capture the increased economic impact generated from local ownership.
The domestic content requirement has already resulted in the promise of 43,000 jobs and dozens of new manufacturing plants to support the 5,000 MW of new clean energy. The public cost of these jobs compares very favorably with state and federal job creation strategies in the United States. If U.S. states were to emulate Ontario’s strategy the public costs would likely be significantly lower, given Ontario’s currently low retail price for electricity and its weaker wind and solar resources.
Ontario’s domestic content provisions have been challenged by Japan and others in a complaint to the World Trade Organization, although it is unlikely that a definitive ruling would occur before the program is implemented. American states could also be vulnerable to challenges under the commerce clause if they imitate Ontario, although economic development strategies that offer incentives to in-state business development (rather than barriers to out-of-state businesses) have been upheld in the past.
Ontario’s renewable energy driven economic development strategy, although still in its infancy, offers significant lessons to American states. With as much as 70 percent of U.S. renewable energy systems manufactured overseas, state policymakers could learn from Ontario’s success.