There are several policy asymmetries holding the geothermal industry back in Canada. However, we are getting closer to breaking ground and unlocking the industry through policy work. As Canada's voice for the geothermal industry, CanGEA has successfully advocated to introduce tax breaks for geothermal projects.
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Power Options
Coal: Alberta has announced it will have 30% renewable energy by 2030 and no more coal plants. Saskatchewan has announced it will have 50% renewable energy by 2030 but will still continue to use coal.
Natural Gas: Natural gas will be a large part of what fills the void left by coal, but it still produces substantial amounts of CO2, especially if the source is fracked natural gas. Further, once LNG exports swing into high gear, domestic gas prices could return to their traditional volatility.
Hydroelectric: Canada has derived substantial benefits from its hydroelectric heritage, but viable large scale hydroelectric sites are all but depleted. New research shows that large hydro projects have as high a CO2 emission impact as coal, due to the large amounts of methane released from decaying vegetation in flooded areas.
Wind & Solar: Keystones to any green economy, but the sun does not always shine and the wind does not always blow. Transmission and storage are necessary to integrate these resources into the grid.
Geothermal:
creates more jobs than equivalent sized coal and natural gas projects
can provide heat, electricity, and food security to Canada's northern, remote, and First Nation communities at a lower cost than fossil fuels
will never "run out"; geothermal power plants can run indefinitely with proper heat reservoir management
due to its “baseload characteristics, every additional megawatt of geothermal power may enable the installation of 3 to 5 megawatts of additional intermittent power like solar and wind on the grid” (GEA)
Argonne National Laboratories found, “In their 2010 life-cycle analysis of geothermal systems that hydrothermal binary plants have some of the lowest lifecycle emissions of any generating technology, including other renewables.”
While we need an all of the above approach, Canadians want economic growth AND sincere efforts to meet Canada’s commitments under the Paris agreement. That means that we simply cannot fill the void left by coal with natural gas and hydroelectric power, as they will not provide the CO2 reductions required, nor provide the most jobs per MW.
Policy Asymmetries Holding Back Geothermal Energy in Canada
Currently, British Columbia is the only province that has geothermal-specific legislation. However, BC Hydro’s 2013 Integrated Resource Plan and previous Government of BC documents openly acknowledge existing deficiencies with the province’s geothermal leasing process. The deficiencies have resulted in a de facto moratorium on land sales, despite tenure requests from industry.
Now exhausted, clean power incentive schemes, specifically, Alberta’s Small Research and Development Act and the Federal ecoENERGY Renewable Power Production Incentive (RPPI), included geothermal power. The problem is that a developer cannot take advantage of incentive programs if the process to obtain leases and permits are broken or absent.
At the federal level, tax incentives designed to promote resource development which are afforded to the mining and oil & gas industries, simply overlook the geothermal industry. This situation leads to the fact that natural gas fired power is significantly advantaged economically due to our tax code compared to geothermal energy, despite geothermal being a superior base-load option when CO2 and jobs/MW are considered.
Notable Policy Acheivements
CanGEA took issue with the de facto moratorium on land sales in BC despite tenure requests from industry. In response to our lobbying efforts, the BC Government undertook a handful of tenure requests and provided permits to several companies. However, no tenure has been granted in Canada's lowest hanging fruit geothermal resource base in NE BC. Further, there are dozens of land requests around the province that remain unprocessed.
In recent years CanGEA has cleared the way for significant project funding for developers. Numerous federal and provincial funds that were available to most green energy developers were historically not available to the geothermal industry. CanGEA successfully addressed these oversights. From these funds, 5 projects related to the geothermal industry qualified for a maximum of nearly $50 million. Such funding benefits all participants in the geothermal value chain.
CanGEA also successfully advocated to introduce tax breaks for geothermal projects. Under Schedule II of Canada’s Income Tax Act, if certain types of renewable energy and conservation equipment are included under Class 43.1, it then allows for a 30% accelerated capital cost allowance rate. Formerly, geothermal equipment was not included under Class 43.1.
Continued work is needed at all levels of government to create a vibrant geothermal energy industry.
