In a surprise move on Friday, February 11th, Ontario’s Ministry of Environment (MOE) announced that it was halting the development of all offshore wind projects in the Canadian side of the Great Lakes.

Citing unspecified environmental concerns, the MOE indicated that it will cancel all the existing Crown land lease applications for offshore wind development in the Great Lakes that do not yet have an Ontario Feed-in Tariff contract with the Ontario Power Authority, including those with Applicant Record status.

At this stage, it is unclear what process will be undertaken by the Ontario Government to study environmental concerns in the Great Lakes or what the actual basis of the environmental concerns which caused the current policy reversal are. In a similar move, Ontario previously halted offshore wind projects to study environmental concerns in 2006 and then lifted that moratorium early in 2008.

Also unclear are the legal rights which Crown land lease applicants and Ontario Feed-in Tariff program applicant may claim as a result of their reliance on Ontario’s stated objectives in the establishment of the Feed-in Tariff Program. Based on the attractive pricing made available for offshore wind projects under Ontario’s Feed-in Tariff Program, numerous companies have invested substantially in offshore wind development across the province.

Ontario currently generates about 1,500 megawatts of power from land-based wind farms and, according to a recent study by the Conference Board of Canada, has the potential to develop 2000 MW of offshore wind power within the next 15 years, creating between 55,000 and 62,000 person-years of employment.

Ontario’s surprise moratorium came within days of the opening of Virginia’s Offshore Wind Technology Center in Chesapeake, Virginia and the announcement by the US Federal Government of $50.5 million in development funding for projects that support offshore wind energy deployment and the creation of several high priority Wind Energy Areas in the mid-Atlantic.

As offshore wind energy developments proceed in Quebec, Nova Scotia, New Brunswick, British Columbia, Newfoundland and Labrador, New York, Illinois, Pennsylvania, Ohio, Michigan, Minnesota, Indiana and virtually all other coastal jurisdictions in Canada and the United States, Ontario may have ceded an early lead in this arena.