Unpacking Canada’s Fossil Fuel Subsidies

Their size, impacts and why they must go

Introduction

Oil, gas and coal are multi-billion-dollar industries, yet every year fossil fuel companies get billions in tax breaks and handouts that increase their profits even further. In a world that’s shifting to clean energy, Canada could get left behind if these subsidies don’t change. Fossil fuel subsidies also work against other climate change actions, incentivizing the very pollution we’re trying to stop. Canada committed to phasing out inefficient fossil fuel subsidies 10 years ago—but even after a decade there are still large subsidies to fossil fuel production. Taxes and subsidies are a complicated topic, so we created this website to explain federal and provincial subsidies in Canada. We’ll cut through the jargon, so you can understand what’s really happening, debate it, and propose solutions for Canadians and Canada’s economy.

WHAT ARE FOSSIL FUEL SUBSIDIES?

A subsidy is a financial benefit that the government gives, usually to a specific business, group or industry. There are debates about the difference between “subsidy” and the broader term “support,” but that’s a pretty good plain English definition. (It’s also roughly how the World Trade Organization defines the term.) This financial benefit can be a direct handout of cash or a tax break. Either way, it’s more money in the pocket of whoever receives the subsidy. Fossil fuel subsidies go to fossil fuel producers or consumers—whether it’s for extracting oil, shipping gas through a pipeline or burning fossil fuels for energy.

HOW MUCH DOES CANADA GIVE OUT IN FOSSIL FUEL SUBSIDIES?

It’s difficult to know, because federal and provincial governments haven’t come clean about how much they really spend on fossil fuel subsidies. From what we do know, it’s in the billions of dollars. That includes measures like special tax deductions and direct cash that governments hand to fossil fuel companies. You can find a list of some of the largest subsidies below. Examples of federal subsidies include tax breaks like flow-through shares, which incentivize oil, gas and mining exploration, and research and development support programs, like those provided by Natural Resources Canada. Examples of provincial subsidies include crown royalty reductions in Alberta valued at an average of CAD 1.16 billion and deep drilling and infrastructure credits in British Columbia valued at an average of CAD 247 million from 2015 to 2018.

WHAT DO FOSSIL FUEL SUBSIDIES COST ME?

Canada’s subsidies represent a lot of money. Let’s put it in perspective.

Wouldn’t you rather this money be spent on issues that matter to Canadians?

SO SUBSIDIES ARE EXPENSIVE AND THEY COST ME MONEY. IS THAT WHY THEY ARE A PROBLEM?

Yes, but it gets worse. Fossil fuel subsidies also undo the other climate change actions that Canada is taking. For example, the federal government recently introduced carbon pricing across Canada. By making carbon pollution more expensive, carbon pricing encourages us to pollute less. Just like Canada’s past success in stopping acid rain, putting a price on carbon pollution is a key part of the global fight against climate change. But through money and tax breaks, fossil fuel subsidies increase the same pollution that we’re trying to lower. Rather than making pollution expensive, they make it cheaper. This is like raising taxes on cigarettes to discourage smoking, while also giving tobacco companies tax breaks so they can make more cigarettes and profits. To make matters worse, fossil fuel subsidies disadvantage clean energy because they make it cheaper to produce or burn fossil energy. If even a small portion of subsidy savings were swapped to support renewable energy or energy efficiency, we could make a faster shift to an economically stable, climate-safe future. That sounds like a pretty good alternative compared to getting locked into dangerous climate change and unhealthy pollution!

IS THE GOVERNMENT DOING ANYTHING ABOUT THIS?

In short: a lot of talk, and some action, but not yet enough. At the provincial level, there have been very few efforts to reform subsidies. At the federal level, Canada committed to phase out “inefficient” fossil fuel subsidies way back in 2009, as part of the G20. Later, they said they’d phase them out by 2025. Canada still hasn’t taken the necessary steps to live up to these promises. The good news is that the federal government changed some of its tax policies over the past few years, which lowered some of the subsidies that fossil fuel companies can claim. They also pledged to phase out coal power by 2030. With 2025 right around the corner, we still have a lot of work to do—and fast. As part of its G20 commitment, the federal government is doing what’s called a “peer review” with Argentina. Through this process, Canada is evaluating “inefficient” federal fossil fuel subsidies. To inform the peer review, they even opened a public consultation on Canada’s non-tax subsidies. But overall, the process isn’t entirely clear, and we don’t know which subsidies will or won’t be considered “inefficient,” or even which subsidies will be reviewed. IISD is following the peer review process and will keep our readers updated as it progresses.

WHAT SHOULD CANADA DO?

To start, the federal and provincial governments should stop introducing new subsidies for fossil fuel companies. We also shouldn’t be extending the lifespan of any existing subsidies that are scheduled to expire. Second, governments should be up front with Canadians about how much money they spend on fossil fuel subsidies each year. Third, Canada should announce when it will end existing fossil fuel subsidies, to keep our G20 promise.

CAN YOU TELL ME MORE ABOUT THESE SUBSIDIES?

Here are some of the largest current subsidies in Canada.

Subsidy name Who gives it? Who gets it? How much is it worth?*
LNG Canada investment** Canada LNG Canada CAD 275 million
Direct spending & budgetary transfers*** Canada Oil and gas companies CAD 318 million
Crown royalty reductions Alberta Oil and gas companies CAD 1.162 billion
Tax exemptions for certain fuels & uses in industry Alberta Industry CAD 298 million
Royalty reductions, including deep drilling and infrastructure credits British Columbia Oil and gas companies CAD 631 million
Reduced tax for aviation fuel Ontario Aviation Industry CAD 292 million
Tax exemption for coloured fuels used in agriculture Ontario Agricultural industry CAD 248 million
Fuel tax exemptions and reductions  Quebec Industry and other consumers CAD 301 million

* The exact amount changes from year to year, so unless otherwise listed, this is a yearly average based on estimates from the period 2015–2018 with specific data used for all years available and averaged. During periods of higher oil prices, royalty payments will also tend to be higher.

** The federal government announced this measure in 2019 to support liquefied natural gas development by LNG Canada in British Columbia.

***From fiscal year 2019–2020. For a full breakdown, see our most recent federal subsidy report.

†   From fiscal year 2018–2019, as listed in British Columbia’s Public Accounts.

‡ This amount is from fiscal year 2016–2017.

The IISD Global Subsidies Initiative has produced a wealth of information on subsidies to fossil fuels globally and in Canada.

You can learn more from this detailed report, which gives a full breakdown of fossil fuel subsidies by Canada’s federal government to 2019.

If you’re curious about provincial and territorial subsidies, you can check out reports we’ve done on British ColumbiaAlbertaNunavutOntario, and Quebec.

SOURCE

Why it’s time to end corporate welfare for Canada’s fossil fuel industry

Subsidies undermine our economy, add to the tax burden, and hinder innovation

Exact numbers relating to Canada’s total fossil fuel subsidy are difficult to come by, a fact exacerbated by a general governmental aversion to transparency. (Larry MacDougal/The Canadian Press)

Given our renewed national interest in pipelines and oil sands mines, consider some strange bedfellows: economists who agree with environmentalists that subsidizing the fossil fuel industry is a bad idea.

Eliminating fossil fuel subsidies would obviously help Canada achieve its emissions-reduction targets. What’s less obvious is how these subsidies undermine our economy, add to the tax burden, and hinder innovation.

In testimony before the U.S. House Committee on Science, Space and Technology’s energy subcommittee in 2015, for example, Mercatus Centre senior research fellow Veronique de Rugy argued all government subsidies to the energy industry — including those that benefit the fossil fuel sector — ought to be abolished.

The Mercatus Centre isn’t an environmental organization, it’s a libertarian think-tank of free-market fundamentalists. De Rugy’s three-part argument is that:

  1. Government lacks the incentive to manage private investors’ funds.
  2. Subsidies distort investment and economic activity, as they create an unfair advantage.
  3. Subsidies increase both the incentive to lobby and the power of special-interest groups.

In Canada, consistent subsidy has failed to either provide stability or kick-start major innovation when it comes to fossil fuels.

Exact numbers relating to Canada’s total fossil fuel subsidy are difficult to come by, a fact exacerbated by a general governmental aversion to transparency. The industry isn’t forthcoming, but the federal and provincial governments aren’t insisting on accountability either. It’s an unfortunate irony that Canadians in need of public assistance often face more exacting demands on their own accountability than the recipients of corporate welfare.

report by the Overseas Development Institute (ODI) from 2018 was critical both of Canada’s lack of a formal plan to phase out financial support for the oil and gas industries, and the general paucity of published reports detailing the support provided.

Pipe for the Trans Mountain Pipeline is unloaded in Edson, Alta., on June 18, 2019. (Jason Franson/The Canadian Press)

 

The ODI estimates an annual direct subsidy of $4.73 billion US ($6.3 billion Cdn) for 2016, the highest level in the G7  per unit of GDP. Other activities funded by Canadian taxpayers, such as the government purchase of the Trans Mountain Pipeline and work to expand it, add up to billions more.

A post-tax estimate includes direct subsidies, along with what fossil fuels cost in terms of their negative social impact, such as pollution and global warming. An International Monetary Fund (IMF) report places Canada’s post-tax subsidy to the fossil fuel industry from private and public sources at an astounding $43 billion US in 2015-16, an amount that would be equivalent to nearly one-fifth of the current federal budget. (On a global scale the IMF post-tax estimate is astronomical: $5.2 trillion US in 2016, or 6.5 per cent of global GDP.)

Environmental and economic impact

The Shell Scotford Refinery in Fort Saskatchewan, Alta., processes synthetic crude oil from the Shell Scotford Upgrader into products such as gasoline, diesel, jet fuel, propane and butane. (Shell Canada)

 

It’s an interesting point of common ground that both progressive environmentalists and economic libertarians oppose subsidies to the fossil fuel industry.

Globally, oil and gas producers are estimated to have lost $400 billion in market value over the past four years, and analysts running the gamut from Goldman Sachs to Jim Cramer are advising investors to put their money elsewhere.

Unfortunately for market purists and environmentalists alike, the fossil fuel industry in Canada has become so thoroughly politicized that ever-more-generous subsidies are being demanded by companies as the cost of doing business.

Consider the baffling pseudo-debate over Teck Resources’ now-withdrawn proposal for the Frontier Mine. Before Teck pulled the plug on the project last week, CEO Don Lindsay had already indicated the cost of a barrel of oil would have to rise by nearly half to make the $20 billion mine profitable. Yet the Trudeau Administration was prepared to green-light the project despite the obvious environmental concerns if it could get Jason Kenney to agree to emissions reductions.

Teck’s Frontier oilsands project was planned for northern Alberta. The company pulled its application for the project on Feb. 23. (CBC News)

 

While politicians euphemistically refer to subsidies as “investment” and insist they are facilitating a transition to clean energy, there’s scant evidence this is the case. The entire idea of a ‘transitional fuel’ is absurd: if you burn it for energy, it’s adding to the emissions problem. Worse, according to the International Monetary Fund, subsidies encourage excessive consumption.

In a 2019 report, the International Institute for Sustainable Development minced no words: “fossil fuel subsidies are a key barrier to this transition.”

Energy companies have one responsibility: increasing shareholder value. How this value is created doesn’t fundamentally matter. Energy companies don’t have to limit themselves to fossil fuels, but subsidies that prop up struggling fossil fuels-based businesses create barriers to innovation, and to adaptation as markets change.

Inherently inefficient fossil fuel subsidies impede investment in clean energy technologies, ultimately undermining efforts to fight climate change.

Eliminating subsidies forces energy companies to transition to clean energy more quickly: innovative companies will swim while industry dinosaurs will sink. It’s cold and hard, but that’s the free market for you.

And it’s a false dichotomy that Canada must choose between fighting climate change and supporting jobs in Alberta. Both need to happen simultaneously.

Rather than pouring money down the hole of the fossil fuel sector, it could be used to retrain unemployed oil workers and build solar arrays, wind turbines and hydro-electric generating stations, with an aim to providing new jobs in all the regions adversely affected by over-reliance on non-renewable resource extraction.

Though this could also be considered a subsidy, the crucial difference is that renewable energy sources are a sustainable and growing industry, and don’t carry the expensive social and ecological burdens of fossil fuels — no heightened mortality rates due to air pollution, no orphan wells in need of clean-up.

Given the severity of the climate crisis and the increasingly untenable relationship between the fossil fuel industry and Canadian society, it’s unlikely axing subsidies alone will be enough to bring about fast, meaningful change in the energy sector. After years of fossil fuels subsidies, government intervention is now necessary to quickly build a clean energy production and distribution infrastructure sufficiently large enough to get all of Canada off fossil fuels. SOURCE


Why it’s time to end corporate welfare for Canada’s fossil fuel industry

Subsidies undermine our economy, add to the tax burden, and hinder innovation

Exact numbers relating to Canada’s total fossil fuel subsidy are difficult to come by, a fact exacerbated by a general governmental aversion to transparency. (Larry MacDougal/The Canadian Press)

Given our renewed national interest in pipelines and oil sands mines, consider some strange bedfellows: economists who agree with environmentalists that subsidizing the fossil fuel industry is a bad idea.

Eliminating fossil fuel subsidies would obviously help Canada achieve its emissions-reduction targets. What’s less obvious is how these subsidies undermine our economy, add to the tax burden, and hinder innovation.

In testimony before the U.S. House Committee on Science, Space and Technology’s energy subcommittee in 2015, for example, Mercatus Centre senior research fellow Veronique de Rugy argued all government subsidies to the energy industry — including those that benefit the fossil fuel sector — ought to be abolished.

The Mercatus Centre isn’t an environmental organization, it’s a libertarian think-tank of free-market fundamentalists. De Rugy’s three-part argument is that:

  1. Government lacks the incentive to manage private investors’ funds.
  2. Subsidies distort investment and economic activity, as they create an unfair advantage.
  3. Subsidies increase both the incentive to lobby and the power of special-interest groups.

In Canada, consistent subsidy has failed to either provide stability or kick-start major innovation when it comes to fossil fuels.

Exact numbers relating to Canada’s total fossil fuel subsidy are difficult to come by, a fact exacerbated by a general governmental aversion to transparency. The industry isn’t forthcoming, but the federal and provincial governments aren’t insisting on accountability either. It’s an unfortunate irony that Canadians in need of public assistance often face more exacting demands on their own accountability than the recipients of corporate welfare.

report by the Overseas Development Institute (ODI) from 2018 was critical both of Canada’s lack of a formal plan to phase out financial support for the oil and gas industries, and the general paucity of published reports detailing the support provided.

Pipe for the Trans Mountain Pipeline is unloaded in Edson, Alta., on June 18, 2019. (Jason Franson/The Canadian Press)

 

The ODI estimates an annual direct subsidy of $4.73 billion US ($6.3 billion Cdn) for 2016, the highest level in the G7  per unit of GDP. Other activities funded by Canadian taxpayers, such as the government purchase of the Trans Mountain Pipeline and work to expand it, add up to billions more.

A post-tax estimate includes direct subsidies, along with what fossil fuels cost in terms of their negative social impact, such as pollution and global warming. An International Monetary Fund (IMF) report places Canada’s post-tax subsidy to the fossil fuel industry at an astounding $43 billion US in 2015-16, which amounts to nearly one-fifth of the current federal budget. (On a global scale the IMF post-tax estimate is astronomical: $5.2 trillion US in 2016, or 6.5 per cent of global GDP.)

Environmental and economic impact

The Shell Scotford Refinery in Fort Saskatchewan, Alta., processes synthetic crude oil from the Shell Scotford Upgrader into products such as gasoline, diesel, jet fuel, propane and butane. (Shell Canada)

 

It’s an interesting point of common ground that both progressive environmentalists and economic libertarians oppose subsidies to the fossil fuel industry.

Globally, oil and gas producers are estimated to have lost $400 billion in market value over the past four years, and analysts running the gamut from Goldman Sachs to Jim Cramer are advising investors to put their money elsewhere.

Unfortunately for market purists and environmentalists alike, the fossil fuel industry in Canada has become so thoroughly politicized that ever-more-generous subsidies are being demanded by companies as the cost of doing business.

Consider the baffling pseudo-debate over Teck Resources’ now-withdrawn proposal for the Frontier Mine. Before Teck pulled the plug on the project last week, CEO Don Lindsay had already indicated the cost of a barrel of oil would have to rise by nearly half to make the $20 billion mine profitable. Yet the Trudeau Administration was prepared to green-light the project despite the obvious environmental concerns if it could get Jason Kenney to agree to emissions reductions.

Teck’s Frontier oilsands project was planned for northern Alberta. The company pulled its application for the project on Feb. 23. (CBC News)

 

While politicians euphemistically refer to subsidies as “investment” and insist they are facilitating a transition to clean energy, there’s scant evidence this is the case. The entire idea of a ‘transitional fuel’ is absurd: if you burn it for energy, it’s adding to the emissions problem. Worse, according to the International Monetary Fund, subsidies encourage excessive consumption.

In a 2019 report, the International Institute for Sustainable Development minced no words: “fossil fuel subsidies are a key barrier to this transition.”

Energy companies have one responsibility: increasing shareholder value. How this value is created doesn’t fundamentally matter. Energy companies don’t have to limit themselves to fossil fuels, but subsidies that prop up struggling fossil fuels-based businesses create barriers to innovation, and to adaptation as markets change.

Inherently inefficient fossil fuel subsidies impede investment in clean energy technologies, ultimately undermining efforts to fight climate change.

Eliminating subsidies forces energy companies to transition to clean energy more quickly: innovative companies will swim while industry dinosaurs will sink. It’s cold and hard, but that’s the free market for you.

And it’s a false dichotomy that Canada must choose between fighting climate change and supporting jobs in Alberta. Both need to happen simultaneously.

Rather than pouring money down the hole of the fossil fuel sector, it could be used to retrain unemployed oil workers and build solar arrays, wind turbines and hydro-electric generating stations, with an aim to providing new jobs in all the regions adversely affected by over-reliance on non-renewable resource extraction.

Though this could also be considered a subsidy, the crucial difference is that renewable energy sources are a sustainable and growing industry, and don’t carry the expensive social and ecological burdens of fossil fuels — no heightened mortality rates due to air pollution, no orphan wells in need of clean-up.

Given the severity of the climate crisis and the increasingly untenable relationship between the fossil fuel industry and Canadian society, it’s unlikely axing subsidies alone will be enough to bring about fast, meaningful change in the energy sector. After years of fossil fuels subsidies, government intervention is now necessary to quickly build a clean energy production and distribution infrastructure sufficiently large enough to get all of Canada off fossil fuels.  SOURCE

What a Liberal minority government means for Canada’s environment

From the carbon tax to fossil fuel subsidies, here are eight things we can expect from a minority government

PM Trudeau arrives in Biarritz. August 22, 2019.

…The Liberals could work with either the NDP or the Bloc Quebecois (or some combination thereof) and remain in power.

Both the NDP and the Bloc have strong environmental platforms — arguably stronger than the Liberals — so if anything the Liberals can be expected to take a stronger stance on environmental issues.

There’s much we don’t know, but here are a few things we can reasonably expect to happen on the environment file.

1) The carbon tax will stay in place

An escalating price on carbon has been the cornerstone of the Liberals climate plan and they’ll have plenty of support to keep the carbon tax in place. The NDP also promised a carbon tax, but vowed to take it a step further by removing exemptions for heavy polluters.

Meanwhile, the Bloc Quebecois proposed that Ottawa impose a carbon tax in provinces where greenhouse gas emissions per capita are higher than average and that the proceeds be paid to provinces where emissions are lower, creating a form of green equalization. Trudeau will almost certainly be concerned about Albertan alienation, so he’ll avoid getting involved in that plan.

2) About those fossil fuel subsidies …

Back in 2015, the Liberals promised to phase out fossil fuel subsidies over the “medium term,” but Environmental Defence estimates the federal government is still handing out $3.3 billion a year to the fossil fuel industry. The NDP and the Bloc Quebecois campaigned on a promise to eliminate fossil fuel subsidies, a policy that enjoys tremendous public support. Could they use their newfound power to push for this phase out to start sooner rather than later?

3) The Trans Mountain pipeline debate is unlikely to be re-opened in Parliament, unless …

While many of the opposition parties might want to re-open this debate, it’s hard to see an opening for them to do so given the pipeline is already approved. Even if the NDP, Greens and Bloc Quebecois wanted to force a confidence vote on it, the Conservatives would side with the Liberals on this one.

However, the Liberals still need to find $10 to $15 billion to build the pipeline.

“The public financing of the project does seem to present a bit of a pickle,” said Kai Nagata of Dogwood, a B.C. democracy group. “It doesn’t seem likely the NDP/Bloc/Greens could vote for a budget with pipeline construction funds, but the Conservative party probably couldn’t stomach voting for everything else.”

Nagata added: “Even the Conservatives should be philosophically uncomfortable with borrowing money, in a deficit, to spend on corporate welfare.”

4) Buh-buy single-use plastics

The Liberals promised to start phasing out single-use plastics starting around 2021. The NDP, meanwhile, wants to intensify that approach by straight-up banning single-use plastics by 2022. Any which way, single-use plastics such as bags and straws are likely going the way of the dodo.

5) Full steam ahead on conservation

The Trudeau government has made significant progress toward meeting its Aichi Biodiversity targets: it pledged to protect at least 17 per cent of terrestrial area and inland waters, and 10 per cent of its oceans, by 2020. A flurry of big new protected areas has moved that along.

The Liberals have also committed to conserving 25 per cent of Canada’s land, freshwater and ocean by 2025 and to working toward conserving 30 per cent by 2030. They also plan to advocate for countries around the world to set a 30 per cent conservation goal.

Additionally, the Liberals have identified the opportunity to reduce emissions by 30 megatonnes by 2030 using natural climate solutions that support efforts to better manage, conserve and restore forests, grasslands, agricultural lands, wetlands and coastal areas — as well ad by planting two billion trees.

The NDP and Greens have also committed to the goal of conserving 30 per cent of land, freshwater and oceans by 2030.

So, watch for more Indigenous protected areasnational parks and marine protected areas.

6) Expect more electric vehicles

The Liberals have set a target of 30 per cent of all light-duty vehicles on the road being electric by 2030. The Bloc Quebecois also support measures to require manufacturers to sell more electric vehicles. And the NDP support maintaining the $5,000 federal incentive for electric vehicle purchases while eliminating federal sales tax on them. One way or another, electric vehicle incentives are here to stay.

7) A lot of Albertans are going to be outraged

With Conservatives winning a higher percentage of the popular vote than the Liberals nationwide, and winning every seat in Alberta and Saskatchewan except for one, Westerners are rightly going to be upset about ending up with so little say in Ottawa. How that will manifest is yet to be seen, but I’d wager a bet it ain’t gonna be pretty.

8) Will electoral reform have its moment in the sun?

The NDP and Greens have long supported a move to proportional representation — an electoral system that would ensure the allocation of seats is more in line with the popular vote than our current first-past-the-post system. With the Conservatives being the latest losers under the first-past-the-post system, one has to wonder if there might be a cross-party push for a referendum on modernizing our electoral system.

Much more will become clear over the coming weeks and months, but for now what we know is that the Liberals will have to work with some combination of the NDP and Bloc Quebecois — and that means that if anything, they’ll have a stronger mandate to take bold action on the climate crisis.

BC Wastes $1 Billion A Year In Fossil Fuel Subsidies. The Madness Continues: Fossil Fuel Subsidies Equal $1,650 Per Canadian

The Madness Continues: Fossil Fuel Subsidies Equal $1,650 Per Canadian, Below2C

Prime Minister Justin Trudeau’s vow to phase out ‘inefficient’ subsidies for coal, oil and gas still hasn’t happened — despite the escalating costs of the climate emergency.

According to a new International Monetary Fund (IMF) report, Canada subsidized the fossil fuel industry to the tune of almost $60 billion in 2015 — approximately $1,650 per Canadian.

Yet subsidizing one of the world’s wealthiest industries is folly. Such subsidies not only hurt Canadian taxpayers and the economy — they also exacerbate the climate emergency.

Indeed, the G20 countries have already agreed that subsidizing fossil fuels is irrational in a warming world — and have called for action to eliminate inefficient fossil fuel subsidies that distort markets.

The problem is that subsidies encourage the production and wasteful consumption of fossil fuels all while impeding the shift to cleaner renewables.

3 Ways Canada Subsidizes Fossil Fuels

For these reasons, during the last election campaign Justin Trudeau sensibly committed to “phase out inefficient fossil fuel subsidies.”

The problem is that government has not yet delivered on this promise.

A new 2019 report by Canada’s Auditor General reveals government’s review of such subsidies is “incomplete and not rigorous,” is “not based on all relevant and reliable information” and “did not consider economic, social and environmental sustainability over the long term.”

Canada continues to subsidize the fossil fuel industry in myriad ways. First, it provides tax breaks under the federal Income Tax Act. For example, in 2015 the federal government introduced a new accelerated depreciation rate for equipment used in LNG facilities, which was a change proposed by the Canadian Association of Petroleum Producers.

Second, government provides funding to the fossil fuel industry at favourable rates through direct financing and loan guarantees. A recent example is Export Development Canada’s administration of a nearly $5 billion loan to support the government’s controversial purchase and operation of the Trans Mountain pipeline.

Ottawa has no plan to recoup that principal cost from industry — and is also subsidizing half the interest expense with taxpayer dollars.

Third, Canada provides direct funding to the fossil fuel industry through research, development and other services provided by federal agencies.

For example, the federal government is paying $1.5 billion for the Oceans Protection Plan, an initiative to safeguard bitumen transport through the Port of Vancouver. This plan was necessitated by new oil tanker traffic — and should be paid for by oil shippers.

The Ultimate Subsidy – Buying a Pipeline

Prime Minister Justin Trudeau visited Victoria in April of 2018 to reiterate the federal government’s support for the Trans Mountain pipeline and commitment to the Oceans Protection Plan.

Yet now, taxpayers will pay up to $6 billion for the plan over the next 20 years.

The Social Costs of Fossil Fuels

The Madness Continues: Fossil Fuel Subsidies Equal $1,650 Per Canadian, Below2CCredit: Collection of images from CC sources, Below2°C.

Finally, there is the $60 billion subsidy that the IMF focused on — the “social costs” of carbon that governments pay, instead of fuel producers.

Lacking adequate carbon taxes, governments continue to pick up the tab for the impacts of climate change — for example, repairing damage from extreme weather events, building new levees, sea walls and storm sewers and paying for wildfire control and increased health costs.

Massive Upside of Eliminating Fossil Fuel Subsidies

Fortunately, implementing carbon taxes and eliminating fossil fuel subsidies will pay off in the long run.

The IMF estimates that elimination of global fossil fuel subsidies would reduce CO2 emissions by 28 per cent and reduce premature air pollution deaths by 46 per cent.

Equally important, the IMF concluded that elimination of subsidies would actually result in a net economic gain. Eliminating fossil fuel subsidies will be a win for both the environment and for the economy.

In sum, Canada needs to implement robust carbon taxes to pay for the massive climate change costs that society now confronts.

Just as important, Canada must finally follow through on its specific promise to phase out inefficient fossil fuel subsidies.

After all, claiming to fight climate change while subsidizing fossil fuels is as crazy as brushing your teeth while eating Oreos. It may make you feel virtuous, but it isn’t going to work. SOURCE

RELATED:

Fossil Fuel Subsidies – Dumbest Policy Of Our Times
Where Are Canadian Fossil Fuel Subsidies Coming From and Going To?

Canada’s fossil fuel subsidies amount to $1,650 per Canadian. It’s got to stop.

Prime Minister Justin Trudeau’s vow to phase out ‘inefficient’ subsidies for coal, oil and gas still hasn’t happened — despite the escalating costs of the climate emergency

Alberta's oilsands North of Fort McMurray.

According to a new International Monetary Fund (IMF) report, Canada subsidized the fossil fuel industry to the tune of almost $60 billion in 2015 — approximately $1,650 per Canadian.

Yet subsidizing one of the world’s wealthiest industries is folly.

Such subsidies not only hurt Canadian taxpayers and the economy — they also exacerbate the climate emergency.

Indeed, the G20 countries have already agreed that subsidizing fossil fuels is irrational in a warming world — and have called for action to eliminate inefficient fossil fuel subsidies that distort markets.

The problem is that subsidies encourage the production and wasteful consumption of fossil fuels all while impeding the shift to cleaner renewables.

For these reasons, during the last election campaign Justin Trudeau sensibly committed to “phase out inefficient fossil fuel subsidies.”

The problem is that government has not yet delivered on this promise.

A new 2019 report by Canada’s Auditor General reveals government’s review of such subsidies is “incomplete and not rigorous,” is “not based on all relevant and reliable information” and “did not consider economic, social and environmental sustainability over the long term.”

Canada continues to subsidize the fossil fuel industry in myriad ways. First, it provides tax breaks under the federal Income Tax Act. For example, in 2015 the federal government introduced a new accelerated depreciation rate for equipment used in LNG facilities, which was a change proposed by the Canadian Association of Petroleum Producers.

Encana gas wellA natural gas well pad with numerous wells for fracking near Farmington, B.C. The LNG industry in British Columbia is the recipient of numerous tax breaks and exemptions. Photo: Garth Lenz / The Narwhal

Second, government provides funding to the fossil fuel industry at favourable rates through direct financing and loan guarantees. A recent example is Export Development Canada’s administration of a nearly $5 billion loan to support the government’s controversial purchase and operation of the Trans Mountain pipeline.

Ottawa has no plan to recoup that principal cost from industry — and is also subsidizing half the interest expense with taxpayer dollars.

Third, Canada provides direct funding to the fossil fuel industry through research, development and other services provided by federal agencies.

For example, the federal government is paying $1.5 billion for the Oceans Protection Plan, an initiative to safeguard bitumen transport through the Port of Vancouver. This plan was necessitated by new oil tanker traffic — and should be paid for by oil shippers.

Justin Trudeau Trans Mountain Oceans Protection PlanPrime Minister Justin Trudeau visited Victoria in April of 2018 to reiterate the federal government’s support for the Trans Mountain pipeline and commitment to the Oceans Protection Plan. Photo: Carol Linnitt / The Narwhal

Finally, there is the $60 billion subsidy that the IMF focused on — the “social costs” of carbon that governments pay, instead of fuel producers.

Lacking adequate carbon taxes, governments continue to pick up the tab for the impacts of climate change — for example, repairing damage from extreme weather events, building new levees, sea walls and storm sewers and paying for wildfire control and increased health costs.  MORE

 

As Society Unravels, the Future Is Up for Grabs

As civilization faces an existential crisis, our leaders demonstrate their inability to respond. Theory of change shows that now is the time for radically new ideas to transform society before it’s too late.

Image result for resilience: As Society Unravels, the Future Is Up for Grabs

Of all the terrifying news bombarding us from the burning of the Amazon, perhaps the most disturbing was the offer of $22 million made by France’s President Emmanuel Macron and other G7 leaders to help Brazil put the fires out. Why is that? The answer can help to hone in on the true structural changes needed to avert civilizational collapse.

Scientists have publicly warned that, at the current rate of deforestation, the Amazon is getting dangerously close to a die-back scenario, after which it will be gone forever, turned into sparse savanna. Quite apart from the fact that this would be the greatest human-made ecological catastrophe in history, it would also further accelerate a climate cataclysm, as one of the world’s great carbon sinks would convert overnight to a major carbon emitter, with reinforcing feedback effects causing even more extreme global heating, ultimately threatening the continued existence of our current civilization.

Macron and the other leaders meeting in late August in Biarritz were well aware of these facts. And yet, in the face of this impending disaster, these supposed leaders of the free world, representing over half the economic wealth of all humanity, offered a paltry $22 million—less than Americans spend on popcorn in a single day. By way of context, global fossil fuel subsidies (much of it from G7 members) total roughly $5.2 trillion annually—over two hundred thousand times the amount offered to help Brazil fight the Amazon fires.

Brazil’s brutal president Bolsonaro is emerging as one of the worst perpetrators of ecocide in the modern world, but it’s difficult to criticize his immediate rejection of an amount that is, at best a pittance, at worst an insult. True to form, Donald Trump didn’t bother to turn up for the discussion on the Amazon fires, but it hardly made a difference. The ultimate message from the rest of the G7 nations was they were utterly unable, or unwilling, to lift a finger to help prevent the looming existential crisis facing our civilization.

Why Aren’t They Doing Anything?

This should not be news to anyone following the unfolding twin disasters of climate breakdown and ecological collapse. It’s easy enough to be horrified at Bolsonaro’s brazenness, encouraging lawless ranchers to burn down the Amazon rainforest to clear land for soybean plantations and cattle grazing, but the subtler, and far more powerful, forces driving us to the precipice come from the Global North. It’s the global appetite for beef consumption that lures Brazil’s farmers to devastate one of the world’s most precious treasure troves of biodiversity. It’s the global demand for fossil fuels that rewards oil companies for the wanton destruction of pristine forest.

There is no clearer evidence of the Global North’s hypocrisy in this regard than the sad story of Ecuador’s Yasuní initiative. In 2007, Ecuador’s president, Rafael Correa proposed an indefinite ban on oil exploration in the pristine Yasuní National Park—representing 20% of the nation’s oil deposits—as long as the developed world would contribute half the cost that Ecuador faced by foregoing oil revenues. Initially, wealthier countries announced their support for this visionary plan, and a UN-administered fund was established. However, after six years of strenuous effort, Ecuador had received just 0.37% of the fund’s target. With sorrow, the government announced it would allow oil drilling to begin.

The Yasuni National Park is now open to oil exploration, following the Global North’s inaction. (Audubon/Neil Ever Osborne)

The simple lesson is that our global leaders currently have no intention to make even the feeblest steps toward changing the underlying drivers of our society’s self-destruction. They are merely marching in lockstep to the true forces propelling our global civilization: the transnational corporations that control virtually every aspect of economic activity. These, in turn, are driven by the requirement to relentlessly increase shareholder value at all cost, which they do by turning the living Earth into a resource for reckless exploitation, and conditioning people everywhere to become zombie consumers.

This global system of unregulated neoliberal capitalism was unleashed in full fury by the free market credo of Ronald Reagan and Margaret Thatcher in the 1980s, and has since become the underlying substrate of our politics, culture, and economics. The system’s true cruelty, destructiveness, and suicidal negligence are now showing themselves in the unraveling of our world order, as manifested in the most extreme inequality in history, the polarized intolerance of political discourse, the rise in desperate climate refugees, and a natural world that is burning upmelting down, and has already lost most of its nonhuman inhabitants.

How Change Happens

Studies of past civilizations show that all the major criteria that predictably lead to civilizational collapse are currently confronting us: climate change, environmental degradation, rising inequality, and escalation in societal complexity. As societies begin to unravel, they have to keep running faster and faster to remain in the same place, until finally an unexpected shock arrives and the whole edifice disintegrates.

It’s a terrifying scenario, but understanding its dynamics enables us to have greater impact on what actually happens than we may realize.  MORE

Fossil Rebellion

In the midst of climate breakdown, governments around the world are funding and protecting the fossil fuel industry

Climate activists from the Extinction Rebellion group demonstrate during protests outside the Bank of England in London last week © Bloomberg

The tragedy of our times is that the gathering collapse of our life support systems coincides with the age of public disservice. Just as we need to rise above self-interest and short termism, governments around the world now represent the meanest and dirtiest of special interests. In the United Kingdom, the US, Brazil, Australia and many other nations, pollutocrats rule.

The Earth’s systems are breaking down at astonishing speed. Wild fires roar across Siberia and Alaska, biting, in many places, deep into peat soils, releasing plumes of carbon dioxide and methane that cause more global heating. In July alone, Arctic wildfires are reckoned to have released as much carbon into the atmosphere as Austria does in a year: already the vicious twister of climate feedbacks has begun to turn. Torrents of meltwater pour from the Greenland ice cap, sweltering under a 15°C temperature anomaly. Daily ice losses on this scale are 50 years ahead of schedule: they were forecast by the climate models for 2070. A paper in Geophysical Research Letters reveals that the thawing of permafrost in the Canadian High Arctic now exceeds the depths of melting projected by scientists for 2090.

While record temperatures in Europe last month caused discomfort and disruption, in Southwest Asia they are already starting to reach the point at which the human body hits its thermal limits. Ever wider tracts of the world will come to rely on air-conditioning not only for basic comfort but also for human survival: another feedback spiral, as air-conditioning requires massive energy use. Those who cannot afford it will either move or die. Already, climate breakdown is driving more people from their homes than either poverty or conflict, while contributing to both these other factors.

recent paper in Nature shows that we have little hope of preventing more than 1.5° of global heating unless we retire existing fossil fuel infrastructure. Even if no new gas or coal power plants, roads and airports are built, the carbon emissions from current installations are likely to push us past this threshold. Only by retiring some of this infrastructure before the end of its natural life could we secure a 50% chance of remaining within the temperature limit agreed in Paris in 2015. Yet, far from decommissioning this Earth-killing machine, almost everywhere governments and industry stoke its fires.

The oil and gas industry intends to spend $4.9 trillion over the next 10 years, exploring and developing new reserves, none of which we can afford to burn. According to the IMF, every year governments subsidise fossil fuels to the tune of $5 trillion: many times more than they spend on addressing our existential predicament. The US spends 10 times more on these mad subsidies than on its federal education budget. Last year, the world burnt more fossil fuels than ever before.

An analysis by Barry Saxifrage in Canada’s National Observer shows that half the fossil fuels ever used by humans have been burnt since 1990. While renewable and nuclear power supplies have also risen in this period, the gap between the production of fossil fuels and low carbon energy has not been narrowing, but steadily widening. What counts, in seeking to prevent runaway global heating, is not the good things we start to do, but the bad things we cease to do. Shutting down fossil infrastructure requires government intervention.

But in many nations, governments intervene not to protect humanity from the existential threat of fossil fuels, but to protect the fossil fuel industry from the existential threat of public protest.

In the US, legislators in 18 states have put forward bills criminalising protests against pipelines, seeking to crush democratic dissent on behalf of the oil industry. In June, Donald Trump’s government proposed federal legislation that would jail people for up to 20 years for disrupting pipeline construction. MORE

 

Just 10% of fossil fuel subsidy cash ‘could pay for green transition’

Redirecting small portion of subsidies would unleash clean energy revolution, says report


Extinction Rebellion environmental activists in Leeds last month. Ending fossil fuel subsidies has long been seen as vital in tackling the climate emergency. Photograph: Ian Forsyth/Getty Images

Switching just some of the huge subsidies supporting fossil fuels to renewables would unleash a runaway clean energy revolution, according to a new report, significantly cutting the carbon emissions that are driving the climate crisis.

Coal, oil and gas get more than $370bn (£305bn) a year in support, compared with $100bn for renewables, the International Institute for Sustainable Development (IISD) report found. Just 10-30% of the fossil fuel subsidies would pay for a global transition to clean energy, the IISD said.

Ending fossil fuel subsidies has long been seen as vital to tackling the climate emergency, with the G20 nations pledging in 2009 to phase them out, but progress has been limited. In May, the UN secretary general, António Guterres, attacked subsidies, saying: “What we are doing is using taxpayers’ money – which means our money – to boost hurricanes, to spread droughts, to melt glaciers, to bleach corals. In one word: to destroy the world.”

The new analysis shows how redirecting some of the fossil fuel subsidies could decisively tip the balance in favour of green energy, making it the cheapest electricity available and instigating a rapid global rollout.

The Hidden Subsidy of Fossil Fuels

“The IMF  report adds that there is actually another kind of subsidy, which it calls a post-tax subsidy. This subsidy reflects the difference between “actual consumer fuel prices” and the full societal and environmental costs of a fuel.”

A new report says that the world subsidized fossil fuels by $5.2 trillion in just one year. But that calculation is less tidy than it seems.


HAZIR REKA / REUTERS

Governments around the world spend an enormous amount of money every year making it cheaper for fossil-fuel companies to exhaust the planet. But they’re not spending nearly as much as a recent report may make it seem.

The International Monetary Fund recently updated its comprehensive report on global fossil-fuel subsidies. It arrives at a staggering conclusion: In 2017, the world subsidized fossil fuels by $5.2 trillion, equal to roughly 6.5 percent of global GDP. That’s up half a trillion dollars from 2015, when global subsidies stood at $4.7 trillion, according to the IMF. If governments had only accounted for these subsidies and priced fossil fuels at their “fully efficient levels” in 2015, then worldwide carbon emissions would have been 28 percent lower, and deaths due to toxic air pollution 46 percent lower.

The report suggests a morally grim situation: As the planet careens toward climate catastrophe, governments are forking over trillions of dollars—one-fifteenth of the global economy!—directly to oil, coal, and gas companies. But the challenge of combatting climate change through politics is much more difficult than some tidy math can make it seem. This calculation suggests that recalibration would be simple. If we only cut those subsidies, then carbon pollution would plunge, and we’d be much further along in addressing the climate challenge. MORE