Renewable energy credits
New municipal financing sources can come from the sale of emission reduction credits, renewable energy (green) certificates, or energy efficiency (white) certificates. For example, to encourage innovation outside of regulated sectors, such as utilities, emissions trading systems allow for emission reductions or removals in non-regulated sectors, including municipalities.
Once the emission reductions or removals have been approved by the regulating body, they are allocated to the entity that implemented the project as credits or offsets, which can then be sold into the emission trading system. The Ontario Emissions Trading Code, for example, defines the process to apply for emission reduction credits, including what technologies are acceptable.
Renewable energy projects, including wind, solar, biomass, landfill gas.
- Trading systems can lower emissions if financial and regulatory backstops for non-compliance have "teeth" and the negotiated emission limits are low enough to assume best practices and continued involvement.
- Municipalities could sell the efficiencies gained through municipal retrofit programs, transportation emission reduction programs, etc. to third parties as a revenue source.
Barriers and challenges
- There is an additional layer of administrative costs for a municipality to track and trade emissions.
- Certain renewable energy projects may not be supported by the general public, e.g. wind farm controversies, etc.
- A white certificate (energy efficiency) trading scheme is not currently available in Canada.
Resources and notes
- A Municipal Guide to Wind Power Development in Ontario — Reference Book
- The Ontario Power Authority's Community Energy Partnership Program provides grants to community groups interested in developing renewable energy projects.
- The Province of Ontario's Municipal Renewable Energy Program provides support to municipalities for extra costs associated with new renewable energy projects.
- The Community Energy Partnerships Program (a different program from above) provides grants of up to $200,000 for community renewable energy projects. Municipalities cannot apply directly, but any municipality that is part of a community as defined by the program rules is eligible for funding.
- Edmonton, AB, is considering a number of financial tools to support renewable energy projects.
- BC Hydro's voluntary renewable energy certificate program sells renewable energy certificates to private and institutional sectors.
- ENMAX, a wholly-owned subsidiary of the City of Calgary, AB, offers its Greenmax program to residential and commercial customers. ENMAX uses the premiums to offset the costs of new wind power development
- White certificates allow energy providers to "purchase" efficiency from customers or third parties. Although not currently used in Canada, municipalities that make energy efficiency gains through retrofits, reductions in transportation emissions, etc. could sell efficiency credits to other entities.