In a green Canada, fossil fuel subsidies must fade to black

In a green Canada, fossil fuel subsidies must fade to black

The movement to reduce greenhouse gasses is gaining momentum in Canada now that the new Federal Liberal government is joining British Columbia, which has been applauded for its carbon tax system, and Ontario and Quebec, both heavily subsidizing green technology; but as the world comes to grips with the frightening impacts of climate change, going green can be filled with financial pitfalls, as well as promise.

In the 1990s, “smog days” were common in Ontario’s urban centres. In 2002, then-premier Ernie Eves, a Conservative and direct successor to Mike Harris, pledged to rid Canada’s most populous province of coal-fired electricity plants by 2015. The last coal plant closed in Thunder Bay in April 2014, by which time the storyline had switched from ensuring cleaner air by producing less fine particulate matter and nitrogen dioxide, to cooling the planet by curbing greenhouse gas emissions. All the same, there were zero smog days in 2014, down from two the year before, 30 in 2012 and 53 in 2005.

As smog days fade from collective memory in Ontario, opposition grows to the intense subsidies Premier Kathleen Wynne’s Liberals continue to provide for solar and wind generation – $1 billion last year for wind alone. Ontario is painting green projects with red ink.

Alberta Premier Rachel Notley has announced her intent to target her own province’s coal plants, which still supply 38 per cent of the province’s energy, as pledged in the party’s election campaign last spring, part of their climate change strategy.

Ironically, former Alberta Conservative environment and finance minister Robin Campbell started his job as head of the Coal Association of Canada last Monday.

While Notley’s plans are praiseworthy and long overdue after years of Tory heel-dragging, her attention must also be focused on the over-abundant GHG emissions of the oilsands industry, which she envisions as an “international showpiece,” in order to pioneer advanced extraction technology as existing projects are expanded and new ones start up.

Resource extraction is what we do in Canada, and in Alberta especially, oil is what we know, but there be dragons here.

Just days away, the 2015 United Nations Climate Change Conference represents Prime Minister Justin Trudeau’s first major international engagement, one where he is likely to address his pledge to end fossil fuel subsidies. Environmental advocacy group Oil Change International and the Overseas Development Institute, a UK think-tank, have released a study showing that G20 countries still dole out US$450 billion to the fossil fuel sector every year despite pledging in 2009 to work toward phasing out the incentives.

In Canada, several fossil fuel subsidy programs are already under review and a special subsidy for the oilsands ran dry in January, but incentives to the liquid natural gas sector have ramped up. An average of $2.7 billion in subsidies find their way to oil, gas and coal operations every year in Canada, including $604 million in royalty reductions by Alberta and $981 million through the Canadian Development Expense for oil and gas. Another $2.7 billion in public finances is provided to fossil fuel extraction companies through Export Development Canada, more than three-quarters of it internationally. More alarming is a caveat from the report’s authors that “estimates in this analysis could represent as little as half the true amount of Canadian public finance for fossil fuel production.”

Oil companies justify the government handouts by arguing their industry is capital-intensive, requiring a lot of upfront cash for exploration and development. This begs the question: where is the sense in making it easier to extract fossil fuels when climate science shows we need to leave most of it – as much as three-quarters – in the ground to meet GHG reduction targets?

In Ottawa, Conservative Opposition leader, Rona Ambrose has been chiding Trudeau on his plan to run deficits to pay for programs, including massive investments in infrastructure. She should note that pouring billions in cancelled fossil fuel subsidies back into public coffers would, in a roundabout way, help get Canada back in the black.

Some of that infrastructure spending must be investments in green technologies aimed at retooling the economy based on a new energy source. Every country in the world has to do it.

Germany, which was Ontario’s model for its green energy program, moved away from both nuclear and fossil fuel energy generation, but realized after 14 years and half a trillion dollars that it has to rethink its subsidy programs for renewable electricity to make them affordable and effective.

Subsidies for green energy will be an essential catalyst to move wind and solar into the mass market and make them affordable. Those incentives often happen more at the provincial level, but it will be important for the federal government to play a major role, as we find the best way forward as a county in the new world economy.

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