Murray’s spark and the knowledge gap

Ontario’s Minister of the environment and Climate Change delivered a speech at the Economic Cub today which followed a report in the Globe and Mail on a leaked draft document featuring his government’s plan to create a new body with a sweeping mandate to overhaul energy use in the province.

The writer of the article in the Globe, Adrian Morrow, tweeted live from the speech, including:

  • “Please stop buying internal combustion engine cars,” Murray exhorts his audience. “Next time you buy a car, go electric.”

  • [Minister] says auto execs tell him switch to electric cars “isn’t going to work. But they have no alternative”

Somebody should remind the Minister about a number of things, but particularly that his government just recently incentivized Toyota to move off of electricity from Ontario’s relatively clean grid to produce it’s own electricity, from natural gas.

From a December 2014 report:

“With our planned natural gas cogeneration project, we can cut energy costs, reduce our local electricity demand and improve efficiency while reducing the production cost of our vehicles,” says Pete Leonard, facility manager at the Cambridge and Woodstock Toyota Motor Manufacturing Canada (TMMC) Inc. plants.

…the reasons for Toyota’s $27-million combined CHP project are multifold. First, the Cambridge area is underserved in electrical capacity, and the projected generation of 10 megawatts (MW) from the CHP plant will reduce demand on both local and provincial power grids. According to Leonard, about one third of Toyota’s energy use will be off the grid in late 2015 when the CHP plant comes online.

Second, natural gas cogeneration makes sense in Ontario, where gas prices are currently low and expected to remain so for several years.

The article implies the reason Toyota moved with the project is “the spark gap – the difference in electricity and natural gas prices.” The spark gap would be higher in Ontario now due to the government’s electricity sector meddling of the past decade.

Toyota probably had other incentives to move consumption off-grid to its own, natural gas-fired generators, though -from the Ontario government. The IESO lists Toyota as participating in the Industrial Accelerator Program, and that program’s Process & Systems stream does include Combined heat and power, so I assume the government had encouraged a move from electricity to natural gas and then, within a year of that project being complete, admonished the industry for not switching their mostly gasoline fueled product to run on electricity.

I’d assume the IESO is providing at least $10 million to Toyota. Their incentive is 40% for natural gas generation with a $10 million maximum per project, but Toyota’s $26 million spend is likely considered two projects.

And of course the IESO wouldn’t be providing Toyota with funds from some magic pot, but the pot collected for whimsical spending through the global adjustment mechanism – which drives up electricity bills, and thus widens the spark gap.


 

Addendum – April 29

Adrian Morrow’s follow-up article features an auto industry representative, in my interpretation, dismissing Murray as an impotent diva that can be worked around, and continues to show Murray stuck in 2008 with absolutely no understanding of the jobs or economic issues on spending gobs of money on very, very, low quality initiatives.

Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada, points out that the action plan is coming at a time when the province is trying to win new investment from some auto makers whose assembly plants in Ontario are under threat of closing.

“Strangely misguided commentary by the Environment Minister is not going to undo the balanced partnership between the auto sector and this government,” Mr. Volpe said. “We have publicly supported Ontario’s climate change initiatives from their inception, and still enjoy a solid working relationship with the Premier and the Minister of Economic Development.”

… Mr. Murray suggested the province can better meet its targets using subsidies. He said he would soon announce programs to “help finance both your new net-zero car and your new zero heating and cooling home.

“It will be one of the biggest economic boons in Ontario, North American history, because we have to retrofit every building we ever built,” he said.

Mr. Murray also surprised the room when he said he believed the province would eventually move away from nuclear power, its primary source of electricity. Over time, he said, he believes the grid will become more diffuse, with many buildings and homes generating their own power, such as with solar panels.

Green Energy Act (GEA) part two, brought to you by the current representative of the same voters of Toronto Centre that brought us GEA part one.

That has not been a good riding for Ontario.

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