Energy self-sufficiency for New Brunswick, Part Five: Financing the transition
Published Tuesday, September 15, 2015, in the New Brunswick Telegraph Journal and the Fredericton Daily Gleaner.
If you’re a regular reader, you’ll know that several recent columns have focussed on how New Brunswick might become energy self-sufficient. They’ve covered adopting a culture of efficiency and resourcefulness; investing in a smart grid of renewable energy; using homegrown bioenergy, primarily wood, for heating; and the toughest one, transforming our transportation sector away from fossil fuels.
But there’s been one big missing piece: apparently, we’re a poor province, so how are we going to pay for it all?
Here’s at least one possible solution.
Earlier this month, the Department of Energy announced that it wants to develop more renewable energy projects in NB, and is seeking partners: specifically, First Nations communities, municipalities, universities, non-profit organizations, associations and co-operatives. The Department is looking for proposals totalling 80 megawatts of power. That’s about enough to power a city like Fredericton.
Of course, that will require some up-front investment.
According to Statistics Canada, in 2013, about 100,000 New Brunswickers contributed nearly $600 million to Registered Retirement Savings Plans (RRSPs) in 2013. On top of that, we have money squirreled away in workplace pension plans and thousands of Tax Free Savings Accounts (TFSAs).
In other words, collectively, we’re richer than we may think.
But here’s a downer: nearly all of that money ends up invested in companies outside of New Brunswick. True, as investors, we get the benefits of capital growth and dividends – but in the process, our money is creating jobs and underpinning economic growth elsewhere. (Plenty of people on Bay Street have New Brunswick investors to thank for their jobs.)
So, to recap: on one hand we have a need for investment in renewable energy in NB, and on the other hand we have a lot of NB money financing businesses elsewhere. Could there be an opportunity here?
It’s fair to say that RRSPs and TFSAs are popular in part because they provide tax benefits to contributors. So what would happen if there were significant tax benefits for investing in local renewable energy projects such as the ones the Department of Energy is looking for?
The Small Business Investment Tax Credit has long offered that option to businesses, but small private investors have not had a similar opportunity.
That’s about to change. Community Economic Development Investment Funds, or CEDIFs, are coming to New Brunswick. They will enable community-based organizations to raise money for local projects and ventures, and in return offer significant tax breaks to investors.
In other words, the very types of organizations the Department of Energy would like as partners in renewable energy projects will be able to establish CEDIFs to raise money, and will be able to offer investors up-front tax breaks in addition to whatever future dividends or income are generated by their ventures.
Imagine that: NB investment dollars funding NB renewable energy investments and generating dividends for NBers in the process. Win, win, win. It’s not pie in the sky; in Nova Scotia, CEDIFs have already been used to fund wind farms.
Full details are yet to be finalized, but draft CEDIF regulations have just been posted online for public review by our Department of Finance.
And – let’s think big. If CEDIFs can enable renewable power projects, why not other projects that could speed NB down the road to energy self-sufficiency, like ventures in efficiency, bioenergy, electric vehicles or even car sharing? As David Suzuki has said, “Things are only impossible until they're not.”
So let’s welcome Community Economic Development Investment Funds, and embrace their potential to finance the energy revolution that beckons.