Beer: If Fossils ‘Don’t Need Handouts’, Let’s Do Something About Fossil Fuel Subsidies

Federal Opposition leader Andrew Scheer’s mid-December claim on behalf of Canadian fossils that “we don’t need handouts” was a great invitation to rescind the billions of dollars in subsidies the industry happily takes from federal and provincial coffers, The Energy Mix publisher Mitchell Beer argues in a post this week for Policy Options.

“We don’t need handouts,” Opposition Leader Andrew Scheer told a December 19 town hall meeting in Nisku, Alberta. “We just want to get back to work.”

“Quite right,” Beer responds. “Let’s make 2019 the year we do something about those handouts.”

Scheer “was reacting to Canadian taxpayers’ latest gift to the fossil fuel industry: a C$1.6-billion financial package bestowed by the Trudeau government in response to a deeply uncertain global oil market,” he writes. “But give credit where it’s due. Whatever his motivation, Scheer’s comment shone a light on one of the biggest barriers to the long-term sustainable employment that Albertans and all other Canadians need and expect.”

Although “it doesn’t quite match with the fossil fuel industry’s carefully crafted reputation for rugged individualism and free-market capitalism,” he adds, the only question about Canadian fossil fuel subsidies is how much they’re actually worth: $3.3 billion in 2015, according to the Winnipeg-based International Institute for Sustainable Development (IISD), $5.2 billion as calculated by Oil Change International and the Overseas Development Institute, or an eye-popping US$46 billion, according to a 2015 analysis by the International Monetary Fund (IMF) that factored in the environmental and health costs of pollution exposure.

And while the routine subsidies in the IISD inventory can wax and wane, based on fossils’ exploration activity in a given year, “2018 was still a banner year for the industry, with a parade of one-time supports” that far exceeded IISD’s list. Greatest hits included:

$4.5 billion to Houston-based Kinder Morgan Inc. to buy out the Trans Mountain pipeline, plus the additional interest charges taxpayers will incur as a result;
A ruling that exempted about 80% of fossil fuel emissions from the federal carbon price;
Alberta’s new carbon tax exemption for its oil and gas sector;
Alberta’s decision to nearly double its Petrochemicals Diversification Program to $1.1 billion from $600 million, allocate another $500 million to petrochemical feedstock infrastructure, and spend $1 billion over eight years on heavy oil upgrading;
$5.35-billion in tax incentives that British Columbia introduced to sweeten the deal for the Royal Dutch Shell-led consortium behind the $40-billion LNG Canada megaproject, supported by $1.275 billion from Ottawa;
Making federal Finance Minister Bill Morneau’s new Accelerated Investment Incentive available for oil and gas;
Alberta’s announcement that it would acquire a new fleet of oil trains to get another 120,000 barrels per day of crude oil to market —followed by Trudeau’s statement that Ottawa would consider helping with the purchase;
$260 billion in unfunded liabilities from Alberta’s oil and gas facilities that will become a taxpayer subsidy to whatever extent the original owners walk away from their responsibilities.

“Then there’s the inconvenient reality that Canada’s financial backing for fossil fuel producers through the Export Development Corporation exceeded its support for clean technology companies by 12-fold between 2012 and 2017,” Beer writes, “a period when the world’s cleantech markets were getting serious, and Canada was falling behind in an emerging global race.”

So what a relief, he says, to hear Scheer’s “rallying cry” that “we don’t need handouts”!

Beer also points to the second half of Scheer’s comment to the town hall in Nisku, where he “channelled some very old, wise thinking about community economic development” in precisely the wrong direction. “Give a province $1.6 billion [and] you might feed them for a couple of weeks,” Scheer said. “Let them build a pipeline to get our energy to market and you can feed them for a generation.”

Those lines “were adapted from a widely cited proverb about building resilience and self-sufficiency—exactly the opposite of what happens to communities caught on the roller coaster of a declining global fossil fuel market,” Beer writes.