On April 4 the Canadian Geothermal Energy Association (CanGEA) presented the case for equalizing the treatment of geothermal energy under federal tax rules and other programs. Speaking to the Standing Committee on Natural Resources in Ottawa, CanGEA Director Alison Thompson and Policy Manager Alex Kent thanked the government for recognizing geothermal heat in its recent budget, but hastened to demonstrate how more effort will be required to put geothermal on a footing equivalent to other energy sources. CanGEA also identified parts of existing government programs – such as the Geological Survey of Canada – that can help geothermal energy become an active part of the Canadian economy. As per its mandate, the organization highlighted the benefits to Canada of geothermal development, focusing on job growth and northern resiliency potential.
CanGEA stressed how Canada lags far behind the US and Mexico in terms of geothermal development, despite having similar natural resources.
Specific recommendations focusing on improving the finance-ability of new geothermal project investments included the following:
Financing Risk: Existing Tools
• Allow geothermal projects to claim Canadian Resource Property (CRP), which will reduce the cost of permits and leases.
• Allow geothermal projects to claim test equipment in the same fashion wind power can (Canadian Renewable and Conservation Expense).
• Allow geothermal to claim transmission expenses as other renewables can (Accelerated Capital Cost Allowance Class 43.1/43.2).
• Grant geothermal energy production incentive as the wind and solar industries have received.
Financing Risk: New Tools
• For at least the next 5 years make convertible grants available for geothermal projects. The grants convert to low interest loans upon the project success.
• Offer guaranteed low interest loans with loan forgiveness for failed projects as is done in Europe. Interest paid on loans covers the defaults.
• Ask that the federal government become net zero energy through the purchase of renewable power and heat credits.
• Create a large initial buyer for renewable heat & demonstrate government’s commitment to renewable energy.
For an analysis of what the latest federal budget means for the geothermal energy industry, readers are invited to contact CanGEA. The CanGEA website contains a number of resources of interest including event listings and links to a participatory online policy letter at www.powearthful.org
APPrO members are specifically invited to take part in CanGEA events to learn more about the industry and the investment opportunities. More information on CanGEA events is available online at http://www.cangea.ca/events.html.