When subsidizing efficiency makes sense

New McGuinty shot… and the Dalton McGuinty pendulum swings back into “maybe he’s OK” territory again, with the Ontario premier’s latest environment-related announcement. This time, he’s promising $5,000 grants for energy-efficiency retrofits to Ontario houses and a tax break on energy-efficient home appliances.

This makes sense given the long-standing quirk of Ontario politics that providing cheap and abundant electricity is assumed to be a responsibility of the provincial government. In an effort to get coal plants closed and promote greener power, the government has been signing generous generation deals with solar, wind, and run-of-the-river hydro entrepreneurs for 42 cents per kilowatt-hour supplied to the grid, something like six times the market price of electricity on a day when the system isn’t strained. It adds up to billions in taxpayer support for green power.
But of course the cheapest and cleanest power is the power you don’t need to buy at all, and by that standard, $5,000 toward beefing up the insulation in an old house or knocking the sales tax off an efficient clothes dryer is small potatoes. Better would be the province withdrawing from guaranteeing cheap power, but that’s not likely to be a political reality any time soon.

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