Community-led renewable energy co-ops can play an essential role in getting climate pollution under control by helping Canadians actively participate in the energy transition and benefit economically, concludes a new post for Policy Options.
The climate crisis has driven an unprecedented Canadian wildfire season in 2023 with record-setting emissions and continent-spanning air pollution, write authors Martin Boucher, Marc-André Pigeon, Julie MacArthur. As the human, environmental, and economic costs mount, rapid, just, and effective government climate policy is more urgent than ever.
In 2021, the federal government’s Canadian Net-Zero Emissions Accountability Act set 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, then 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.
Renewable energy co-operatives (RECs) may be part of the answer. These community-led collectives offer Canadians an opportunity to actively participate in the 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 impacts of such co-operatives.
Canada had 49 active RECs in 2021, 44% 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 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.
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 rates of return, 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 more than 3,000 RECs across Europe by supporting their formation, educating, and providing tools for essential functions such as measuring contributions on 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. Multistakeholder 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 scale up RECs.
Other organizations can support development of co-operatives. Through the power of collective action, they can advocate policy, build public support, provide education, and act as a platform for expertise.
The Policy-Maker’s Dilemma
Policy-makers must allocate limited time, resources, and political capital to achieve maximum impact. On one hand, the effectiveness of RECs in fighting climate change is apparent. On the other, 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 clear dilemma.
Even policy-makers 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. In the long run, this undermines the effectiveness of climate policy action.
This dilemma underscores the crucial need for RECs to scale up, and for policy-makers to think beyond the usual climate strategy actors.
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 and other policy measures.
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 for 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.
Policy-makers should consider encouraging 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.
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, private companies. There is a reason for optimism that this form of collective action can enable a more just and effective energy transition in Canada.