Monday, February 7, 2011

Environmental Attributes For Sale: Desperate Times Call for Poorly Conceived Measures

The Financial Post has a short note today on the latest whimsy at the Ontario Power Authority (OPA) - selling Environmental Attributes.

Shortly after the closing of North America's only carbon trading market, The Chicago Climate Exchange, the Financial Post cites a bulletin from Borden Ladner Gervais LLP’s (BLG) Climate Change Group, who seem perplexed as to why this would happen now - and what the 'this' is?

There shouldn't be a lot of surprise.  It's been almost 2 decades since Maurice Strong's Ontario Hydro tried to account for environment factors through implementation of a Full Cost Accounting process, and a couple of years since the OPA went from a small group of system planners to be 20-30 times larger as it became obsessed with the NEGAWATT while writing contracts that pay private electricity suppliers about $2 billion a year more than the market would (the GA-OPA component of the Global Adjustment).

The OPA is not going to find dance partners to purchase whatever instrument they are selling, at anything other than a very depressed price.  Contrast this to Hydro Quebec's recent agreement with Vermont, in which it is specified that, "HQUS and the Vermont utilities will share any future revenues related to environmental attributes."

It's not a bad thing to have a vague notion that at some point in time there might be a monetary value placed on environmental attributes.  It is a a bad thing to think Ontario can determine, either in isolation or with the Western Climate Initiative, what that value might be.  Good or bad, we know at the moment there isn't much market value to these things.

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