Fraser Institute study says more comprehensive and independent cost/benefit information is needed.
TORONTO — Billions of dollars worth of energy conservation subsidies have been doled out in Ontario over the decades, but a Fraser Institute study finds there is no verifiable evidence the benefits outweigh the costs.
“Queen’s Park is betting heavily that conservation programs will effectively and cheaply manage power needs in the coming decades, yet the plans for these programs rely on unsubstantiated and overly optimistic claims,” said Ross McKitrick, professor of economics at the University of Guelph and study co-author.
The study has little independent provincial data to go on so it instead relies on US experience to suggest conservation costs are understated and outweigh the benefits.
The public policy think tank, which is frequently critical of Ontario government policy, examines energy conservation programs in the province such as smart metering, home retrofit rebates for insulation and caulking, and subsidies for consumers who purchase energy-efficient appliances in its Demand-Side Mismanagement: How Conservation Became Waste report.
The report notes in 2013, the Ontario Power Authority (OPA) spent almost $400 million on conservation and closely related programs, in addition to federal, provincial and municipal programs such as the City of Toronto’s Home Energy Loan Program.
Another $3.1 billion has been earmarked for these OPA programs (now transferred to the Independent Electricity System Operator) over 2015 to 2020.
Citing a 2015 Berkeley University study, the think tank notes it found the US Weatherization Assistance Program – a home retrofit program – predicted 2.5 times more energy savings than were actually realized. Moreover, the cost of the program per household was about twice the value of the energy savings.
Noting what he describes as the government’s poor track record of estimating cost and energy savings, and the billions of dollars being spent on conservation programs, McKitrick calls for more comprehensive and objective information about the costs and benefits.
Click here for a copy of the report.