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How Much Climate Transition Would $50 Billion Buy? Energy Mix Readers Respond to Fossil’s Subsidy Demand

After Cenovus Energy CEO Alex Pourbaix made his pitch for C$52.5 billion in taxpayer subsidies to decarbonize production in the Alberta tar sands/oil sands, we asked Energy Mix readers how else they would spend that money to drive faster, deeper carbon cuts. The community delivered.

Corporate Knights Research Director Ralph Torrie came back with the most complete reply, a fully-formed media release for the announcement that might have been (and, with a federal election now under way, could still be?).

“The Government of Canada today announced that it is buying the lifetime employment contracts of all 6.500 employees of Cenovus/Husky and will be retraining and redeploying them in the retrofit of buildings and the construction of the electric vehicle infrastructure, clean electricity supply, and transmission infrastructure Canada needs to transition to zero carbon,” Torrie wrote. “Even at an average annual salary of $150,000 for the next 30 years, the buyout will cost $29.3 billion, just over half as much as the $52.5 billion in government support the company was seeking to decarbonize its operations through a less effective approach.”

“The excitement among Cenovus employees on hearing the news was palpable,” Torrie continued in his faux release. “Interviewed at the plant gate as he came off shift, long-time Husky employee Joe Welder was beaming. ‘This is fantastic: a good salary, job security like we have never had in the oilpatch, and an opportunity to apply my training and skills to fighting the cause of this crazy weather we have been getting,’ he said. ‘And I won’t have to hang my head when my children and grandchildren ask me what I did during the Great Transition.’”

Iron & Earth Executive Director Luisa Da Silva reached the same conclusion from a slightly different starting point.

“If Canada is to move to net-zero and take action on climate change, judge not the messenger—listen to and welcome the voices of all players in this transition,” she told The Mix in an email. “$52.5 billion? That will just about be enough to transition Canada to net-zero—if we start now. For a prosperous transition, Canada should plan to invest $20 billion in repositioning and pivoting businesses, $10 billion on upskilling workers, $10 billion on tax offsets and incentives, and $22 billion on green infrastructure and strengthening ecosystems and carbon sinks.”

“Oil and gas companies are prepared to shift away from fossil fuels—fantastic,” Da Silva added. “The federal government needs to lead the deliberate and managed transition to net-zero and show its leadership. No more excuses, the ball is in your court—make the transition to net-zero happen now.”

Sheila Regehr, co-chair of the Basic Income Canada Network, said a fraction of Pourbaix’ subsidy target—one year’s worth, to be exact—would give Cenovus employees and everyone else the flexibility to find their own place in the transition off carbon. That initial year of funding would bring federal and provincial governments together to plan a basic income system, and give Finance Canada the wherewithal to get it organized—something it got done in just two weeks when the Canada Emergency Response Benefit (CERB) was set up in response to the COVID-19 pandemic.

“Once it’s running, the money is there for it and it will pay for itself,” she told The Mix. “All you need is the initial investment money to bring everybody together and figure out how to roll this basic income out. After that, once you take all the money that’s already in the system and reprofile it, you don’t need a whole lot more to make it work.”

The basic income pilot project introduced by the previous provincial government in Ontario “saved and changed people’s lives,” Regehr added. “You get people able to contribute to the economy, able to do a better job of managing everything about their lives, including adjustments to the way they manage environmental issues.”

And for households and communities that now depend on the fossil fuel economy, “a basic income gives them another choice. They can make the transition to new ways of work, new ways of operating, because there are many ways we can all contribute to reducing energy use and carbon. If we’re working to be less dependent on fossil fuels, there are all kinds of other things we need to be doing, and for people to do those things, they need sustained income security.”

[Energy Mix Productions and the Basic Income Canada Network are two of the lead organizations behind the Green Resilience Project, a series of community listening sessions on the links between income security, local climate impacts, and a just transition for fossil fuel workers and communities.]

Kim Perrotta, executive director of the Canadian Health Association for Sustainability and Equity (CHASE), proposed pouring the funds into energy retrofits for buildings. “Much of this work would not happen without grants or interest-free loans,” she wrote. But “it will create many jobs, cut air pollution in urban centres, cut greenhouse gases. 

If the funds are “properly directed”, she added, the retrofits would “provide cost savings for consumers, and healthier indoor environments for low-income households and institutions that need protection from heat waves.”

By contrast, one climate and sustainability communicator compared Pourbaix’ subsidy demand with a tobacco company’s research claim a couple of decades ago that its product saved money for the health care system, since smokers died younger.

Delta Management Group CEO Grant Pitchford noted that $1 billion in fossil fuel subsidies “produces a lousy 2,700 jobs,” compared to 50,000 that would be created by solar incentives—with a 1.6-year payback on the investment. Over five years, he said, that investment “can happily scale” to $10 billion.

“And here’s the add-on bonus,” Pitchford wrote. “That solar energy from each $1-billion investment would produce enough clean electricity to power all the homes in Ottawa for the next 25 years with clean electrical power costing just 10 cents per kilowatt-hour, displacing electricity from a variety of less clean sources and helping us drop our GHGs. In coal-heavy provinces, this is huge impact.”

$1 billion spent on energy efficiency would produce 20,700 jobs, $2.4 billion in energy savings, and $3 billion in economic activity, he added.

Pitchford also proposed a tiered retail tax system to “send a very clear signal as to what is okay—and what is not.” In that system, for example, an electric lawn mower would be subject to just 2% sales tax, while a two-stroke, gas-powered mower would pay 20%.