The federal government and several provinces have adopted policies to encourage the expansion of renewable power generation. These include tax credits against investments and against sales, accelerated depreciation, property tax exemptions, and sales tax exemptions on equipment. Renewable Portfolio Standards mandating certain percentages of all generation be from renewables have spurred their growth in many countries and are now being introduced in Canada. In addition to strong energy revenues, renewables produce emissions credits and renewable energy certificates (RECs). Markets for these products have been introduced in many jurisdictions and both liquidity and prices have improved recently.

The renewable power sector has several attributes making it ideally suited for investments including:

•  returns exceeding those found with investments in conventional power projects (Currently Canadian power income trusts yield between 6.7 and 9.5%)

•  provincial government off-take partners resulting in strong Power Purchase Agreements, highly rated projects and high debt to equity ratios

•  up-side potential from RECs and emissions credits associated with projects

Ontario – The Ontario Renewable Portfolio Standard (RPS) requires that 5% (1350 MW) of the province's power comes from renewable sources by 2007 and 10% (2700 MW) by 2010. In addition, the Province of Ontario has recently released an RFP for 2,500 megawatts of new electrical generation capacity and/or demand-side management initiatives.

By 2020, it's projected that 18,000 MW of Ontario's existing electricity generating capacity will need to be replaced or refurbished, and that another 6,000 MW to 7,000 MW will need to be built or saved through demand-side measures just to keep up with economic and population growth. The Ontario government has also committed to eliminating all coal generation in the province by 2007 adding further pressure on the need for new, clean supplies of power. The expected $40 billion in Ontario energy infrastructure construction costs will be “one of the largest peacetime investments in Canadian history.”

British Columbia – The province has introduced a voluntary RPS targeting 10% of new generation from renewable sources.

Quebec – Hydro Quebec has issued an RFP to procure 1,000 MW of new wind power over 10 years.

Prince Edward Island - PEI introduced an RPS of 15% by 2010, 100% by 2015

In December 2001 the Canadian Federal Government announced this incentive to encourage the development of wind power projects throughout Canada. WPPI will provide financial support for the installation of 1,000 megawatts of new capacity over five years. The incentive is currently at 1 cent/ kWh and will decline to .8 cents/kWh for projects commissioned after March 31, 2006. This incentive will be available to electricity producers for the first ten years of a project.

The Liberal government will implement a three-part plan aimed at making Canada a world leader in using wind power. The objective is to ensure that clean, renewable wind energy will provide five (5) per cent of Canada's electricity. This will be done by:

• Encourage investment - A Liberal government will quadruple the objectives of the existing Wind Power Production Incentive (WPPI) from its current 1,000 megawatts (MW) target to a 4,000 MW target. The incentive to offset the cost premium is set at 1.2 cents per kilowatt hour of electricity production, an incentive which will gradually decline as the economic cost of wind power improves. The incentive is designed to be about half of the current estimated cost premium for producing wind energy.
  
• Develop the market - A Liberal government will promote the benefits and cost-effectiveness of wind power to increase consumer demand through a public education program and support for the stated targets. There will be a particular focus on small-scale projects in isolated communities currently using expensive diesel oil imported from southern Canada.
  
• Promote R&D - A Liberal government will increase support for R&D on clean energy sources generally, and particularly for wind power. We will create a Canadian National Wind Atlas, a crucially important data source for determining the optimal locations for wind farms. The Liberal government will also work with the provinces and territories to modernize standards for wind turbines and to create common guidelines for wind power policies, rule and regulations.

2. Nuclear Power

Ontario needs more nuclear power to meet energy demands.

A recent review panel chaired by former federal finance minister John Manley concluded in March 2004 that Ontario must build more nuclear power stations if it wants a reliable supply of electricity. This includes spending $600 million to finish rebuilding one of three dormant reactors at Ontario Power Generation's controversial Pickering A nuclear facility, the refurbishment of which has been plagued by delays and cost overruns.

"We believe that the project should move forward and that it can be completed on budget," said Manley. "It is the quickest, least-expensive means for Ontario to meet some of its important energy supply needs."

The provincial government set up the review panel under the former federal finance minister to look into ways of fixing Ontario Power Generation. The province fired senior managers at the debt-ridden electrical utility in December. The utility has had to contend with a growing demand for electricity. At the same time, its generating capacity has been diminished by maintenance and repair programs, like the one at the Pickering facility, which are running years late and billions of dollars over budget.

The report also recommends that the power generating utility remain in public hands, but with the private sector brought on board to help finance new nuclear technology. It also recommended that the utility should get out of the alternative energy business, leaving it to the private sector to develop new sources of power.

The report also recommended splitting the company into two divisions, with one responsible exclusively for nuclear plants, and that the corporate headquarters be moved out of Toronto. On Wednesday, Ontario's Energy Minister Dwight Duncan estimated that an overhaul of the generating system could cost as much as $40 billion. Duncan described the project as possibly "one of the largest peacetime investments in the history of this country."

Canadian Nuclear Products:

Canada is one of only a few countries that has developed and successfully marketed a nuclear electricity generating system around the world. Through the CANDU business, Canada retains its option to use nuclear power to avoid massive quantities of greenhouse and acid gas emissions. CANDU reactors supply about 12% of Canada's electricity and are an important component of clean-air energy programs on four continents.

Atomic Energy of Canada Ltd. designed and developed the CANDU pressurized heavy water reactor, the MAPLE reactor dedicated to the production of medical isotopes, the MACSTOR used fuel storage facility, and manages construction of plants and facilities worldwide with international partners. CANDU reactors have been operating in Canada since 1962, and abroad since 1972. CANDU units have been constructed in North America, South America, Europe and Asia. There are 34 CANDU reactors completed or under construction worldwide.

There are many concerns lately over the mitigation of greenhouse gas emissions from combustible energy producing plants and the availability of clean energy capacity. To help meet public concerns about energy security and air quality, as well as the need for cost-competitive electricity generation, AECL has developed the ACR TM (Advanced CANDU Reactor), AECL's next-generation CANDU nuclear power plant, which features an evolutionary design and revolutionary economics.

3. Oil and Natural Gas

Canada is the ninth-largest producer of crude oil in the world. The oil sands contain more than the proved oil reserves of Saudi Arabia and in 2000, Canada exported natural gas representing about 15 per cent of the total U.S. demand.

Natural gas-fired power plant construction is on the rise in Canada, preparing for a three-fold increase in gas power generation in the next decade, as predicted by the Canadian Energy Research Institute. PanCanadian Petroleum, TransAlta, EPCOR, and ATCO Power are all in various stages of developing new (mostly cogeneration) gas-fired plants in Alberta and Saskatchewan.

• Canada is the third-largest producer of natural gas in the world.
• Canada produces about 6.3 cubic feet of natural gas annually, and exports about 3.3 trillion cubic feet to the U.S.
• Canada has a huge, undeveloped energy, including major natural gas deposits in offshore areas.
• Canada has huge potential of coal bed methane and tight gas
• In 2000, 30% of Canada's primary energy consumption was natural gas. This is has increased from 3% in 1950.

Some key facts about Canada's upstream oil and natural gas industry:

• Canada is the third-largest producer of natural gas and the ninth-largest producer of crude oil in the world.
• The upstream sector is the largest single private sector investor in Canada.
• Industry payments to governments have averaged close to $8.5 billion per year over the last ten years. In 2002, the oil and gas industry contributed an estimated $11 billion to government revenues in the form of royalty payments, bonus payments and income taxes. 
• Canada's crude oil and natural gas trade surplus contributed $26 billion to Canada's merchandise trade balance of $55 billion in 2002.

•  Canada produce more than 20% of North America's crude oil and natural gas but account for only 10% of its consumption.