The US Energy Administration lauds Canada as a world leader in renewable energy. A full 60% of Canada’s electricity comes from renewable sources and, as a result, Canada enjoys the reputation of being renewable-friendly.

However, at the same time that geothermal energy is revealing itself to be one of the world’s most important solutions to meet increased energy demand, geothermal companies find BC a difficult place to develop projects. Experts point to factors including both the intractability of native land claims and stubborn geology. Also, the lack of government investment and incentives to support development of the important geothermal industry may be creating an impenetrable ceiling for the industry in this province.

Sierra Geothermal Power Corp (TSX.V:SGP) for example is a local geothermal company that has its corporate offices in Vancouver, but all its projects in Nevada.

President and CEO of Sierra explains, “BC falls short of opportunities because the incentives don’t quite measure up to what we’re getting state-side, which are the Renewable Energy Credits and the Production Tax Credits. It’s a challenge [to develop projects in BC], it’s not that we’re not interested.”

“I’ve often said we’ll be producing power in Nevada before we actually have a project in BC, which is unfortunate. We’re still pursuing opportunities here, but it’s certainly challenging,” said Thompson, who earned his B.Sc. Honours degree in geology at UBC.

If there’s any doubt about what British Columbians might be missing by not encouraging the local geothermal industry, a study by 18 experts out of Massachusetts Institute of Technology (MIT), published in 2007, turned out proof that the ultimate potential of the geothermal industry could go a long way to ending our dependence on fossil fuels. A new type of geothermal technology called Enhanced Geothermal Systems (EGS) have the potential to generate enormous amounts of power.

EGS involves simulating geothermal systems seen in hot water occurrences close to the earth’s surface. Creating an EGS involves drilling about six kilometres below the earth’s surface to hot rock.

According to Jefferson Tester, a professor at MIT who chaired the report, EGS could produce 100,000 MW of electricity in the U.S., a number roughly equivalent to the country’s current electricity from hydro or nuclear. And Geothermal is a particularly important renewable source because it is baseload power, which means that it can be produced quite literally all the time, unlike wind and solar, which are weather dependent.

Geothermal represents such important potential for energy generation that the MIT report concludes that necessary government investment will be money well spent.

While geothermal has energy potential that wind and solar do not, it requires more capital up front to meet high drilling costs. Government should pony up some of the difference, argue some geothermal proponents.

“[In the geothermal industry there is] a very high risk ratio in the drilling. It’s a lot more expensive to test drill down to six kilometers than it is to put up a wind turbine. I think we need to have really good capital write-off incentives for all exploration activities,” says Guy Dauncey President of the BC Sustainable Energy Association.

“I think the [Canadian] government should actually be doing what the Australian government is doing and giving multi-million dollar support for the geothermal industry in a partnership with the government,” Dauncey continues.

Geothermal experts from MIT concur that government involvement is both necessary and worthwhile, “Our feeling is that the amount of real and perceived risk associated with the early adopters of the first generation plants would be too high to find total private investment in this,” said Jefferson Tester professor of Chemical Engineering at MIT, who chaired the preparation of the geothermal report.

Government investment in renewable energy has been piloted in Europe to excellent effect. Governments in Europe offer feed-in-laws where anyone producing green energy is guaranteed access to the grid, and payment at a rate that will render their project profitable.

The result? Germany and Spain lead the world in renewable energy.

While government incentives for renewable energy in BC are scanty, the oil and gas industry receives substantial government subsidies. The government has budgeted $263 million per year in oil and gas subsidies (2007), while spending only $25 million for renewables.

“If that [oil and gas subsidy] went into geothermal we could leap into the global lead in geothermal overnight,” said Dauncey.

Although start up costs of an Enhanced Geothermal System are high, advocates of geothermal argue that it is also expensive to build new coal mines, which the US Energy Information Administration says we’ll have to do if we’re going meet projected skyrocketing energy demand. And that doesn’t factor in the costs associated with building a clean coal mine.

“The cost [of a clean coal mine] is crazy,” Sierra Geothermal’s Gary Thompson explains. “It would put them out of business. It’s almost double the cost per MW.”

Junior companies like Sierra Geothermal and many others are in a position to harvest the low hanging geothermal fruit—hydrothermal sources of geothermal power found in shallow reserves of hot water in specific locations across the world. BC’s coast does have known shallow reserves, Meagre Creek near Whistler is one example, but they’re not currently being developed.

Instead, these companies look to Nevada and California where the geothermal industry is developing with government support in the form of incentives, large capital investments and commitments to R&D.