Community-led collectives help Canadians actively participate in the energy transition and benefit economically.
by Martin Boucher, Marc-André Pigeon, Julie MacArthur. Originally published on Policy Options
September 30, 2023
The climate crisis has driven an unprecedented Canadian wildfire season in 2023 with record-setting emissions and continent-spanning air pollution. As the human, environmental and economic costs mount, rapid, just and effective government climate policy is more urgent than ever.
The federal government has started to act with legislation passed in 2021. The Canadian Net-Zero Emissions Accountability Act sets a concrete target and milestones to achieve net-zero emissions by 2050.
Canada must achieve these objectives while maintaining efficient, stable, secure and affordable electricity grid infrastructure while doubling capacity by 2050. This is likely to be the most ambitious infrastructure undertaking this century.
The challenge will be to set out broad, national objectives, put them to work and make them real locally, where they matter to people’s everyday lives.
The question is not so much about what we need to do – reduce carbon – but how to do it and who needs to be part of the solution.
The answer, in part, may be renewable energy co-operatives (RECs). These community-led collectives offer Canadians an opportunity to actively participate in energy transition while reaping tangible economic benefits.
RECs have the potential to significantly contribute to Canada’s energy transition, but at present still occupy a small portion of the country’s energy market. Given Canada’s net-zero goals, these co-operatives, if enabled to scale up, could play a pivotal role in ensuring that the nation’s energy transition is effective, while creating opportunities for local involvement.
A census of renewable energy co-operatives
We conducted a nationwide census and built a comprehensive database to better understand the landscape of RECs in Canada. Building on earlier work by team members, we interviewed people who have direct involvement, such as board members and employees, to better understand the activities, motivations and effects of such co-operatives.
Canada had 49 active RECs in 2021, 44 per cent fewer than identified in the last major census in 2016. Two-thirds were in Ontario, although the numbers there also declined during the five-year period.
The data revealed that there was significant growth of renewable energy co-operatives in Canada between 2011 and 2013, largely attributed to Ontario and its feed-in-tariff (FIT) policy, which provided renewable energy producers with guaranteed prices for their output.
Outside Ontario, the formation of new RECs has been modest, mostly occurring in the 2000s. Figure 1 tells the story. Ontario accounts for the bulk of the sector and most of that growth took place in and around the province’s introduction of the FIT program.
What we heard from the sector
RECs in Canada are navigating a landscape dotted with obstacles and opportunities. Internal challenges include economic burdens such as high hiring and operational costs, low return rates and significant upfront costs for project initiation.
Beyond the financial aspects, RECs struggle operationally, particularly in recruiting members with accounting and legal expertise. These barriers haven’t stopped some organizations from making impressive strides – one reported raising nearly $70 million since its inception.
RECs confront additional external hurdles. In particular, cost-prohibitive regulations and a bias toward large-scale, centralized energy generation by provincial and federal governments are major roadblocks. Lack of awareness and understanding of the co-operative model further complicates the scenario.
Several catalysts have been identified that help RECs thrive despite their challenges. Small-scale generation programs, feed-in-tariffs and net metering, along with support from credit unions, played an important role in fuelling the growth of the sector.
What can be learned from other jurisdictions?
While Canada’s REC sector is small, experience in other jurisdictions suggests it can play a much bigger role in driving sustainable change in the energy industry.
One such case is the Brussels-based federation REScoop. Founded in 2014, REScoop has effectively advocated for over 3,000 RECs across Europe by supporting their formation, educating and providing tools for essential functions such as measuring contributions to climate change.
Countries and regions seeking to enhance their renewable energy capacities can draw insight from REScoop’s approach. Even in the face of jurisdictional challenges, collective action through an intermediary organization has proven to be a powerful tool.
Scaling up RECs can also involve informal networks of actors and innovation hubs. Multi-stakeholder networks within co-operatives provide the flexibility needed to adapt.
In Colorado, citizens accessed government funding and mobilized to develop a network of distinct and independent co-operatives in the solar industry. They created Namasté Solar for solar generation, Amicus Solar for bulk purchasing, Amicus O&M to provide equipment and maintenance and Clean Energy Credit Union and Kachuwa Impact Fund for investing and banking. These organizations support each other and help to upscale RECs.
Other organizations can support development of co-operatives. Through the power of collective action, they can advocate policy, build public support and provide education as well as act as a platform for expertise.
The policymaker’s dilemma
Policymakers allocate limited time, resources and political capital to achieve maximum impact. On the one hand, the effectiveness of RECs in fighting climate change is apparent. On the other hand, partnerships with larger private energy entities with substantial investments in wind farms and solar installations cannot be ignored.
Negotiating the balance between grassroots, co-operative movements and large-scale private investments creates a tangible dilemma.
Even policymakers who recognize the merit of supporting RECs may be tempted to prioritize short-term large-scale climate action at the expense of long-term social acceptance through community empowerment. This undermines the effectiveness of climate policy action in the long run.
This dilemma underscores the crucial need for RECs to scale up and for policymakers to think beyond the usual climate strategy actors.
Measuring success
Climate-change policy often boils down to measurement. Decision-makers aim for a renewable energy grid, strive for zero emissions, distribute carbon credits, provide tax breaks and survey the public’s views on these.
There is abundant evidence that RECs can contribute to those goals while generating important benefits such as empowerment, education, access to affordable clean energy and support of local businesses. The catch is a substantial gap in concrete evidence demonstrating the REC sector’s impact in Canada – something necessary to attract government support.
Moving ahead
Policymakers should consider encouraging the work of RECs, particularly as they work on creating innovation hubs and informal networks. A newly organized steering committee founded in May in Ottawa could assist.
Legal and regulatory frameworks promoting the growth and scalability of renewable energy co-operatives should be studied. Creating supportive policies that can enable them to operate effectively as small utilities (like virtual net metering) should be considered.
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Governments should also invest in more research to identify strategies for scaling up co-operatives. The insights gained could inform energy transitions not only in Canada, but globally.
Our research suggests RECs can provide a solution for tackling climate change that goes beyond large-scale private companies. By cultivating collective action there is a reason for optimism that this form of collective action can enable a more just and effective energy transition in Canada.
Derya Tarhan and Karen Miner contributed to this op-ed. Derya Tarhan is an assistant professor at the University of Toronto and a postdoctoral research fellow at Royal Roads University in Victoria, B.C. Karen Miner is the managing director of the International Centre for Co-operative Management at Saint Mary’s University in Halifax, N.S.
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This article first appeared on Policy Options and is republished here under a Creative Commons license.