Against the backdrop of changes in the fossil fuel industry, and the inevitable depletion of fossil fuel stocks, both the US and Canada have taken steps to enable alternative sources of power. The factors driving both the growth and demise of the fossil fuel industry include increasing demand, greater environmental consciousness and increasing public pressure against greenhouse gas emissions (GHG), and instability in oil-producing countries. In North America, while the transportation sector accounts for two-thirds of the fossil fuel consumption, heating and electricity generation account for about one-third. As the economy grows, limited natural gas supplies are the primary form of augmenting supplies for that one-third segment of energy consumption. Wind power is another viable alternative source to complement natural gas supplies. As such, regulations have been amended in both the US and Canada to enable greater wind power generation. In fact, the expectation was that the wind energy supportive regulation implemented in 2005 would promote an expected minimum of 8000 MW of wind energy generation in Canada by 2015. 

That amount would equate to roughly 16% of all the electricity to be produced by new generating facilities to be constructed in Canada. The growth in wind power generation outpaced that of fossil fuel generation by a very wide margin. Wind power’s popularity stems from the fact that it is clean, reduces air pollution, and the systems are easy to install. However, there are some concerns about windmills and their effect on nearby livestock and humans, prompting many of the systems to be installed offshore. This complicating factor was one aspect of wind power generation that required significant research and development. The tax incentives in both the US and Canada, serve to address both the growing popularity and need of when power, and the associated challenges in making wind power more pervasive and affordable.

1. What causal factors influence government regulatory policy?

2. How is regulation applied as an economic tool?

3. Are the agencies in charge of regulatory oversight always taking a sustainability-oriented view of their policy changes?