Demand for renewable energy no match for high costs, uncertainty: Ernst &<br>Young

EIU survey reveals all eyes on government for incentives and a clear agenda

TORONTO, Jan. 18 /CNW/ - The time has never been better for Canada to replace carbon-based fossil fuels with alternative energy, but several challenges still stand in the way, according to a new study by the Economist Intelligence Unit, sponsored by Ernst & Young.

Renewable Energy in North America surveyed 132 executives in the US and Canada and found that the most significant drivers for renewable energy are public perception and government, while cost and technological immaturity are still significant barriers.

"We've seen a real willingness from the Canadian public to embrace the virtues of "going green" - but price is still a top consideration," said Cathy Cobey, Canadian Leader for Ernst & Young's Climate Change and Sustainability practice group. "Renewable energy is necessary for us to reduce our reliance on fossil fuels - including coal, natural gas and oil - but it must be priced competitively."

Despite recently announced government incentive programs, renewable energy still remains expensive for both consumers and suppliers in Canada, impeding the shift to new energy sources. Canadian suppliers are clearly concerned with the cost of generating renewable energy - with 64% saying high costs make renewable energy unattractive to their customers. It appears that their concerns are not unfounded, as 68% of energy consumers surveyed say their organization has not taken steps to develop and adopt a renewable energy strategy.

As a result, suppliers aren't moving quickly to add renewables to their portfolio. Only 38% of suppliers see growth of their renewable energy portfolio as a high or extremely high priority, with almost as many (34%), indicating that it is not as much of a priority.

"Corporate consumers are examining more than just cost when considering a switch," says Cobey. "Public opinion is the only concern to trump both profitability and social responsibility as a perceived driver towards renewable energy in the survey, and businesses should not underestimate its importance."

Fifty-seven percent of suppliers say that positive public perception is the biggest benefit to their organization incorporating renewables into its energy mix.

In order to make significant progress with renewables, both suppliers and consumers agree that government has a crucial role to play in providing the necessary impetus.

"If renewables are to meet growing public expectations, government must lead the way by setting a clear agenda," said Cobey. "This means providing enhanced education, regulation, investment in the right infrastructure, and incentives such as grants and tax credits."

Government regulation is particularly important in Canada, where 73% of supplier-respondents see it as a barrier, compared with only 42% in the US. What's promising, however, is that 46% of respondents say that recent policies or those being proposed in their country are a step in the right direction - although more incentives are needed.

So far, Canadian businesses have been slow to substantially invest in renewable energy. In order to meet international commitments related to climate change, Canada has a long way to go. Accelerating the adoption of renewable energy will take a concerted group effort by energy suppliers, corporate consumers and government.

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