It was my lowest moment. I was so depressed that I ducked out of sight for a few days. I even skipped the big annual Liberal fundraising dinner, where my friend Lawrence Bloomberg was chair. You see, I was the son of a proud man who had lain in a hospital bed for seven months with only the ability to move his eyes, and yet those eyes told me a lot about the loss of dignity he experienced at diaper-changing time. That taught me a lot, but it also left me unguarded and vulnerable. I was victimized by my own ill-advised openness.
A few months after this episode, Gerry Butts, the premier’s top aide, asked me if I would like to move to another portfolio. I hadn’t thought of that, asked for it, or hinted I wanted to move. Given that the health ministry accounts for 45 cents of every dollar the provincial government spends, and given that I was an unlikely candidate for the finance portfolio, anything else might seem to be a demotion. But Butts came to me with some intriguing ideas, including the merger of two important portfolios to create a super-ministry: energy and infrastructure OR energy and the environment. I knew I didn’t want to be environment minister because I viewed it as a regulatory department laden with files. I had seen Jim Bradley’s office when he was the environment minister in the 1980s. Bradley is an aficionado of paper collection (that’s a euphemism for a hoarder), and his office was overwhelmed with files. That was etched in my mind as I opted for “energy and infrastructure.”
The important point is that I was given the opportunity to decide what I wanted to do. That was a courtesy not often extended to a cabinet minister. I also got a heads-up that I was soon going to be leaving a place where I still had many irons in the fire. So I sat down with Jamison Steeve, by then my chief of staff, and, taking him into my confidence about the impending move, said: “Take a list of things we want to get done.” It was a long list, because I was intent on pushing as many things over the line as I possibly could. The bureaucracy in the health ministry must have wondered what the hell had gotten into me during my final weeks there. When you have spent five years in a portfolio, you really don’t want to leave a lot of undone stuff with your successor. He or she might not invest the same energy, interest, and motivation toward getting it done.
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I was appointed minister of energy and infrastructure in a mini-shuffle in June, 2008. To understand my time in the new portfolio, one has to recognize that I took over in the midst of the Great Recession of 2008–9. The energy and infrastructure ministry quickly emerged as the focal point of the government’s proactive response to that crisis.
There were two dynamics at play: 1) the government already had in place a plan to eliminate coal-fired power plants, both to cut down on pollution (and smog days) and to reduce our greenhouse gas emissions (the cause of global warming); 2) as a subnational jurisdiction, Ontario was extremely vulnerable to the recession because its economy was so reliant on one sector — the auto industry. The Green Energy Act, which I brought to fruition, was an attempt to leverage one to aid the other.
The project created in Windsor is an example of what was planned. At the height of the recession in 2008, the city was dependent on the auto industry, which was flailing at the time, and had one of the highest unemployment rates in the country. But Windsor became the home for as many as eight manufacturing plants supplying equipment for solar projects and wind turbines. And Windsor’s unemployment rate fell below the national average as a result.
As I was taking over the energy portfolio, I had a verbal mandate from the premier to move in the direction of green energy. “I like what we are doing on energy,” he told me, “but we need to do more on renewables.” To underscore the point, the day after I was sworn in he invited me to a meeting with environmentalist David Suzuki and Hermann Scheer, the father of Germany’s green energy transformation. Suzuki and Scheer both pushed us to pass a green energy act. “Use Germany as your example,” Scheer told us. “We have a strong manufacturing base, productive relations with labour, and progressive green policies. Ontario has a lot in common with us.” (Ever the heckler, I needled Scheer a little about Germany’s continued reliance on domestic coal.)
Soon after that, I went on the road to Europe and California to examine what other jurisdictions were doing. More than anything, I came away with the California example in mind. There, since their well-documented energy crisis, they have managed to cap per capita growth in energy use, whereas pretty much every other jurisdiction in the West has seen dramatic increases. That informed my mantra, quickly forgotten after I left, that the Green Energy Act was about the ability to make more green energy on the one hand and, on the other hand, for Ontarians to be able to use less electricity (in recognition of the fact that the unit price was going to rise).
In Spain, I learned that green energy funded by fiscal subsidy from the state was a poor idea. But in Germany, I realized that all states find a way to subsidize the emergence of green industry. This reinforced my view that, in moving toward more green energy in Ontario, we should also pursue domestic content to create jobs.
I also got a huge boost from an active Green Energy Act working group, led by Deb Doncaster, a noted environmentalist. She chaired a group that was a coalition that included representatives of First Nations and Ontario’s farmers as well as environmentalists and global leaders in various forms of renewables. Part of the group — and also an attendee at the Scheer/Suzuki meeting — was an irrepressible environment professor at York University named Jose Etcheverry. He joined my trip to Europe and provided instant pushback in our many meetings. Also aboard was Saad Rafi, my incoming deputy minister at energy, who negotiated early leave from his private-sector job to tag along on the European tour. Rafi, with prior experience as deputy at other tough ministries like community safety and transportation, was returning to the public sector after a senior stint at Deloitte.
I also benefited from the appointment of Colin Andersen, former deputy minister of finance, to be CEO of the Ontario Power Authority (OPA), the agency that contracts with electricity suppliers on behalf of the government. Andersen was someone I had known socially for decades, and he was well regarded in the Premier’s Office, which choreographed our career moves. Unfortunately, for some odd reason Andersen’s predecessor, Jan Carr, had been given quarters elsewhere on the OPA’s executive floor to ease his transition from his $500,000-plus job. Carr used the platform to critique our green energy policies.
Carr wasn’t alone. As people saw the scale and scope of the proposed legislation, a variety of interests lined up against it. Energy is a multi-stakeholder area. First off, there is competition by fuel source for market share: nuclear versus wind, or hydroelectric versus natural gas. On top of that, there is a blend of Crown corporations (Ontario Power Generation [OPG] and Hydro One) working alongside (or against) the private sector. To boot, my predecessors had further entrenched the influence of the Power Workers Union by installing its leader on the board of Hydro One. Notwithstanding all this turbulence, I had wind at my back, so to speak, and I benefited from the earlier efforts of my predecessors, Dwight Duncan and Donna Cansfield, in the development of the Renewable Energy Standard Offer Program (RESOP) to make it easier for small renewable generating facilities to participate in the electricity system.
I gradually developed a sense that we needed legislation with two pillars: 1) incentives to make it easier to bring renewables online, and 2) incentives to encourage consumers to use less electricity. The latter involved, among other things, the implementation of time-of-use pricing, a key rationale for the earlier costly decision to install “smart meters” in people’s homes. This meant higher prices during peak hours, which drove up hydro bills for those too stubborn to adjust their air conditioning usage in the hot summer months.
(I acknowledge the rate hike has also caused hardship for low-income people. Indeed, the move away from coal was to have a consequence for low-income earners trying to pay for sky-rocketing energy bills, and I think the Wynne government made a mistake in addressing the issue with ac
ross-the-board subsidies rather than targeting relief to those most in need: low-income people, whether residing in rural and remote Ontario or in cold basement apartments in cities. In some cases, the installation of solar panels or other distributed electricity generation at demand source to reduce reliance on grid supply would have been the most cost-effective means of delivering real relief and enhancing grid reliability. This would also have been a great generator of employment.)
I introduced the Green Energy Act in February of 2009 and it was passed into law by the Legislature in May. It mandated a “feed-in tariff” for wind, solar, and other renewables, a “right to connect” to the electricity grid, and a streamlined approval process for green projects. On the conservation side, it required North American–leading efficiency standards for household appliances, energy audits before homes were resold, energy efficiency as a central tenet of the Ontario Building Code, and greening of government-owned buildings. Items like energy audits and enhanced efficiency within the building code were immediately subject to intense lobbying by the real estate and development industry, which delayed progress on these fronts. That was unfortunate. My former colleague in the Legislature, Phil McNeely, an engineer, was right to say that if a home should have a “walk score” telling us how easy it is to get along without a car, then it simply follows that a home should have a score that tells us how efficient it is in the use of energy.
There was also opposition from some unexpected sources, including the Toronto elite. That’s because the shorelines of our Great Lakes are the nexus of wind resource and wealth, in the form of cottages and other recreational properties. The property-owners, most of them well-off Torontonians, turned against wind power. I got it right in the neck from various friends — including my former cabinet colleague Greg Sorbara — who argued that they were appalled that the wind turbines ruined their views. And they found a sympathetic partner in the CBC.
Others believed the turbines would adversely affect their health and wasted untold millions of public dollars trying to shore up their arguments. I was somewhat sympathetic to these health concerns, so I used an abundance of caution in recommending the setbacks for wind turbines. I pushed for a distance beyond what the ministry of the environment had already approved for an earlier wave of wind farms, including Wolf Island.
Even solar farms — noiseless and, to my eye, as aesthetically pleasing as a field of corn — had their opponents. Now we all bear the cost for forcing solar farms to be set back from roads and hidden behind berms or rows of trees. Meanwhile, the same critics neither seem to care where nuclear waste goes nor acknowledge that green energy has no waste and no residual costs beyond its operational years.
Another target for the critics was an offshoot of the Green Energy Act: the Samsung deal. It actually emanated from the Premier’s Office, but I won’t say that it was foisted on me. I was an economic nationalist before Trump, and I had concluded that, if we were to make a big play in green energy, it needed to have an element of industrial policy. However, in order to force domestic content you need confidence that the suppliers would be here to meet market demand. And Samsung, the Korean-based conglomerate best known for its consumer products, was proposing to use its financial might to invest $7 billion in Ontario and develop the largest renewable cluster of green energy in the world: 2,500 megawatts, with a corresponding industrial supply chain. This included manufacturing plants producing wind towers and blades, solar panels, and transformers.
The deal was called a “disaster” by the opposition parties. It was, in fact, a calculated risk. Without the impetus from Samsung, there would not have been an ambitious green power initiative that attracted billions in foreign and local investment and enlivened a sector. Under the Green Energy Act, 60 percent of the overall content of green projects, consisting of both hard and soft costs, had to be sourced from companies based in Ontario. You could choose to bring in your panels from offshore, but that would mean engineering, financing, accounting, legal advice, and construction management would have to be local. It was a flexible framework that recognized the need for industrial jobs and the need to support white-collar professional businesses as well. Toronto, for instance, now has a global presence in renewable financing, fostered by the Green Energy Act.
I left the government before the Samsung deal was formally signed. But looking back, I have to say that Samsung more than fulfilled its commitments regarding investment and job creation despite significant reduction in the scope of their project by the government and a lot of harm to the company’s reputation. But one example of Samsung’s impact can be found on the Six Nations Reserve near Brantford, where a massive solar farm has provided huge economic benefits to the area.
However, the biggest criticism of the Green Energy Act was that it threatened Ontario’s economy and overburdened consumers by driving up the price of electricity. Much of this criticism was based on invidious comparisons between electricity rates in Ontario and in other provinces, as if we were all imbued with the same natural gifts of falling water. Our immediate neighbours, Quebec and Manitoba, are blessed with these gifts. Ontario is not, except for Niagara Falls, which supplies about one-quarter of our power.
Furthermore, every rate increase in Ontario gets attributed to renewables, which is crazy. Part of the reason for this is that the feed-in-tariff pricing of renewables is transparent, whereas in other sectors producers get to obfuscate about their all-in costs. The province’s electricity market supply is provided by a wide variety of sources — nuclear, hydroelectric, natural gas, and renewables — and each of these has an impact on prices, as have long overdue investments in transmission and distribution.
In defence of green energy, I ask you to consider the comparative cost of nuclear power. First off, while green energy has been panned as expensive and unnecessary due to the fact that we now have an electricity glut, we should be blaming the Pickering nuclear plant. That tired old plant (it opened in 1971) continues to churn out expensive electricity at prices (and risks) we can ill afford. As the Green Energy Act was envisioned, the corresponding Ontario Long-Term Electricity Plan had Pickering long since closed. But for reasons unbeknownst to me the government decided to keep it going, probably under pressure from OPG, the government-owned operator. Hundreds of millions of dollars are being spent to keep Pickering sputtering along while producing electricity we can’t use or store. Nuclear power has many tremendous attributes and it has been a pillar of power in Ontario for half a century, but lost in all that is the tremendous challenge presented when you have too much of it.
This is not to mention just how expensive nuclear power really is when you consider capital and long-term waste costs, not just operating expenses. We are still paying a big price for cost overruns on past nuclear plants, notably Darlington. (Initially estimated at $3.9 billion, it finally came in at $14.4 billion.)
I had the prescience to stop the province from buying two new nuclear reactors by refusing to sign any pending contract. I had inherited a request for proposals (RFP) for the new reactors, but in my view we already relied too much on nuclear power, which now supplies more than half our electricity. Beyond this issue of proportionality, the biggest drawback for nuclear power is its sheer cost: the reactors are so expensive that previous governments have had to take them off book to be able to pay down their huge capital costs. And Darlington has made every government since nervous about the potential for cost overruns.
To try to limit the government’s exposure to future cost overruns on new nuclear reactors, the RFP required the applicants to take on the risk themselves. And, as might have been expected, the applicants built any potential cost overruns into the pricing of their bids, with staggering results. The situation was exacerbated because Atomic Energy of Canada Ltd. (AECL), with its CANDU technology, had always been Ontario’s sole supplier of reactors. That led to skepticism among AECL’s foreign competitors (the few that remained in the field) about whether they would get a fair shake. Put another
way, an RFP without much competitive tension is a bad omen when you are trying to make the province’s single biggest purchase in a generation.
The winning bid came in at $30 billion, or more than double the cost of Darlington for a plant half the size.
My mind was made up: the price was just too high to proceed. But I still had to convince the premier, who had seemed determined to install new reactors. I am not sure who first put the idea in his head. There are a lot of old white guys in the energy sector, and they love nuclear power. As a province, we also seem to be locked into the idea that nuclear power is cheap. (It is only if you discount the capital expenditure and the cost of waste disposal.) Plus we are proud that the CANDU reactors in operation in Ontario are Canadian-designed and engineered. However, the next generation of CANDUs was still on the drawing board and unproven, and the federal regulator had signalled it would not approve any more of the old CANDUs. (Opinions on that have since changed, I am told.)
To my eyes, there was no political upside in building new reactors, whether CANDU or a foreign design. I would have been happy to put a spike right through the project. But I took it as far as was politically possible at that time and recommended it be shelved indefinitely. McGuinty replied: “Show me that won’t impact the reliability of electricity supply or the phasing-out of the coal-fired plants or impair Ontario’s economic future.” I had good answers to all those questions, and I got the sense the premier had already reached some similar conclusions. History has proven us correct.
A reasonable consensus against buying new reactors had also formed at cabinet. There was no backlash from other ministers, including Dwight Duncan, who had initiated the RFP process. But there was some unrest in the eastern GTA (around the Pickering and Darlington plants), where there is an extraordinarily intense network (including municipalities, unions, media, and suppliers) in favour of nuclear power. That is understandable. Any decision NOT to build new reactors was going to have some negative impact on their local economy. This caused some angst for the regional MPPs in the Liberal caucus. As it happens, however, the decision (made after my departure) to spend $12.8 billion refurbishing the Darlington plant will soften the blow for those looking for economic benefit from the spending and ongoing operations.
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