In 2009 Canada promised the world at the G20 that
it would phase out subsidies to fossil fuels. Over five years later we have
not finished the job. To give the Harper Government some credit, before
2009 they did announce plans to eliminate 4 major subsidies worth about $879
(according to a July
10, 2014 Pembina Report.). Clear Federal subsidies
such as ACIT (Atlantic Canada Investment Tax Credit) and ACCA (Accelerated
Capital Cost Allowance) are in the process of being phased out. But there
are still about $1.4 Billion in provincial subsidies to that sector and as defined by the World Trade Organization,
the Federal Government is still heavily
subsidizing exploration and development. The CEE (Canadian Exploration
Expense), and the CDE (Canadian Development Expense) are an attempt to support
the very expensive and high risk efforts of companies to explore for new
reserves (for example in the Arctic). Pembina reports the value of CEE and CDE
subsidies at about $711 million in 2008 based on a report by Enviroeconomics Inc.
This does not take into account the
subsidy we are giving them by refusing to implement an aggressive, fair,
equitable, and effective price on carbon that would bring the government or—with
a fee and dividend approach, the people of Canada—up to another $34 billion a
year. Such a price might start as low as $10-30 per tonne and be
increased over time. ($34 billion would represent $212 per tonne and
would certainly encourage people to find alternatives to fossil fuels.)
If we are going to subsidize the oil
companies, we should be subsidizing them to aggressively clean up the tailings
ponds in the oil sands and generally clean up their mess after themselves.
Our current fossil fuel energy strategy seems to be to try to get as much
as possible out of the ground before they become stranded assets. Some
say the recent fall in oil prices is a cyclical thing. These things just
happen and oil will go up again. I am not an economist, but as an
ordinary citizen who reads and watches closely, I would like to offer a
different theory.
In the energy sector there are many
changes going on. There are so many factors in play, all in change, that
no one has any idea how this scenario will play out. There is a very
large and successful divestment movement led by 350.org that is having an
impact on larger investors. Recently professors at both UBC and McGill
voted to have their Universities divest from fossil fuels. More and more
people are getting off oil and gas and getting on to renewable energy all
around the world. We understand we have to aggressively reduce our use of
oil and gas and coal. Will demand continue to grow? Or is it
slowing and will it start to go down? If oil producers such as Saudi
Arabia, the US fracking industry, and Alberta Oil sands as well as Russia and
China all insist on increasing production the price will stay down. If
committed energy users stay focused on reducing consumption even though
oil is cheap because of the pollution current inventories will stay high and
prices cheap. The big question is -- when will EVERYONE, companies
included, realize that these energy assets have become stranded assets that
must be left in the ground?
Wouldn’t it be good if our economic
system supported real leadership from our oil and gas sectors to recognize the
truth of what is going on around them and to stop this last grasping for the
old gravy train from this industry. As happened with the apartheid
boycotts, our energy sector needs relief from the requirement to maximize
profits. The world community needs them to stop throwing good money after
bad. We must have a moratorium on drilling in the Arctic signed on to by
every nation bordering the Arctic Ocean. We don’t need any new pipelines
to continue to supply our current clients in the oil and gas sector. And
we need them to clean up their mess – and not dump it off on the taxpayer to do
for them after they collect on $711 million of tax deferrals, which they will
not have to pay because they were unable to bring their assets to er to the
market for sale.
Service stations in this country need
to transform to servicing and recharging electric vehicles, and Canada needs to
develop a leading edge electric auto sector. We need tremendous research
and development into state of the art storage systems for electrical energy,
and computer support networks for a complex, interactive, electric grid.
If the energy sector wants to make
money by exporting energy, let them get serious about investing in our
technologies and capacities in renewable energy. We have the renewable
energy capacity if we want to develop it. As a society we need to produce
and bring down the cost of geothermal technology to the point where every home
can be heated using a heat pump and a solar collector – or some other equally
low energy approach. People and communities don’t have to wait for big
energy to take the lead. All over Canada people are forming energy co-ops
like Solar Share in Toronto, or Ottawa Renewable Energy Co-op in Ottawa to
build the energy infrastructure of the future.
And our political leaders must begin to
plan for the changes that will be required in our cities in order to accommodate
this rapid change. Our lifestyles will change and our cities have to
develop in such a way as to accommodate those changes. All three levels
of government will be needed to help the Canadian population change their whole
system of heating homes. We still need much more aggressive conservation
and retrofit programs and they must be available to public housing as well as
to the private homeowner. We need to build food stores into every
neighbourhood and not assume everyone will have a car. We’ll be walking
and biking more. The Ecology Ottawa “complete street”
program is a prototype for all cities. And we will need a lot more public
transit.
Ontario is to be congratulated for
its clear, aggressive, and urgent strategy to bring Ontario into the
twenty-first century based on low use of fossil fuels. They are showing
great leadership. I hope the other provinces will come to the table with
equally great strategies and that we can all learn to work together to build a
strong Canadian economy in a low fossil-fuel world. The time to build the
Canada we want is now.
