Fossil fuel and LNG subsidies in B.C., and an alternate viewpoint on the issue

The International Institute for Sustainable Development (IISD) maintains an ongoing initiative, the Global Subsidies Initiative , to research fossil fuel subsidies worldwide.  Their most recent publication relating to Canada is  Locked In and Losing Out: British Columbia’s fossil fuel subsidies. The authors calculate that BC’s fossil fuel subsidies reached  $830 million Cdn.  in 2017–2018, with no end in sight. Despite B.C.’s clean energy image, the report documents the significant new support granted by the current B.C. government to encourage the liquefied natural gas (LNG) industry.  Locked In and Losing Out calls for the provincial government to create a plan to phase-out its own subsidies, and coordinate with the federal government in its current  G20 Peer Review of fossil fuel subsidies, launched in 2019 and administered by Environment and Climate Change Canada.   In August 2019, the IISD also released its Submission to Environment and Climate Change Canada’s Consultation on Non-Tax Fossil Fuel Subsidies calling for Canada to re-affirm its long-standing  G7 commitment to reform fossil fuel subsidies by 2025 and provide a detailed action plan to achieve the goal.  

new labor forumAn alternate view

Sean Sweeney of Trade Unions for Energy Democracy takes an alternate view on fossil fuel subsidies in “Weaponizing the numbers: The Hidden Agenda Behind Fossil-Fuel Subsidy Reform” appearing in the January 2020 issue of  New Labor Forum. As might be expected, Sweeney challenges the findings and assumptions of the International Monetary Fund (for example, in a 2019 working paper by David Coady ). He also takes issue with some progressive analysis – notably, he cites  Fossil Fuel to Clean Energy Subsidy Swaps: How to Pay for an Energy Revolution (2019) and Zombie Energy: Climate benefits of ending subsidies to fossil fuel production (2017)  – both published by the International Institute for Sustainable Development (IISD).  After a brief discussion of the main concepts, Sweeney concludes:

“For activists in the North, making fossil-fuel subsidies a key political target is a mistake. It buys into the IMF’s obsession with “getting energy prices right” which targets state ownership and regulation of prices. Such an approach may lead to a more judicious use of energy, but it would not address the mammoth challenges involved in transitioning away from fossil fuels, controlling and reducing unnecessary economic activity, or reducing emissions is expeditiously as possible.

The problem is fossil fuel dependency, not underpriced energy. Raising the price without alternative forms of low-carbon energy available for all will not produce the kind of emissions reductions the world needs. This does not mean that progressive unions and the left should support subsidies for fossil fuels—especially when the beneficiaries are large for-profit industrial users or billionaire Lamborghini owners cruising the strips in Riyadh or Shanghai. But there is a need to be aware of what the IMF and the subsidy reform organizations are proposing, and what these proposals might mean for workers and ordinary people, especially in the Global South.”

 

 

 

Will the fossil fuel industry hijack energy policy in Canada’s election?

As the Canadian federal election campaign counts down to October 21, The Narwhal’s Explainer from September remains one of the most readable and interesting overviews of the parties’ energy and environmental platforms;  the survey responses from a consolidated questionnaire from the major environmental advocacy groups remains the most complete.  Climate activism has been a backdrop to the campaign: according to Fridays for Future Canada, over one million Canadians in 245 communities participated in climate strikes between September 20 to September 27 (a summary from Energy Mix gives more details).  On October 7, Extinction Rebellion began their demonstrations, blockading  bridges in Vancouver, Victoria, Toronto, Edmonton and  Halifax –  and according to the Vancouver  Star, pledging to escalate actions.

New publications regarding the fossil fuel industry:

Canada’s relationship with its oil and gas industry was the subject of a country profile of Canada published by Carbon Brief on October 8, providing the basic facts and figures.  The Narwhal published an Opinion Piece highlighting  the issue of fossil fuel subsidies:  “Canada’s fossil fuel subsidies amount to $1,650 per Canadian. It’s got to stop.” The article is based on a May 2019 report from the International Monetary Fund  which estimated Canada’s fossil fuel subsidies at close to $60 billion in 2015, despite the government’s G20 commitments to phase out “inefficient” fossil fuel subsidies. A related report by Environmental Defence and the International Institute for Sustainable Development in February, Doubling Down with Taxpayer Dollars , examined $2Billion in fossil fuel subsidies in Alberta.

The Canadian Association of Petroleum Producers (CAPP)  Energy Platform – essentially  a “wish list” from the fossil fuel industry – calls for expanded production for oil and gas and Liquefied Natural Gas.  In report released on October 7, Environmental Defence estimates that the CAPP proposals would increase  oil and gas emissions by 60% from 2017 to 2030.  The report,  The Single Biggest Barrier to Climate Action in Canada – the Oil and Gas Lobby, documents the two types of barriers created by the oil and gas lobby: 1. the actual carbon emissions of the sector, which are responsible for 27% of Canada’s greenhouse gas emissions and for 80 % of the increase in Canada’s overall emissions; and 2. Industry campaigns and lobbying to block or weaken climate change policies.

env diefence re Oil-Lobbyin electionRegarding the economic benefits which the oil and gas industry claims, Environmental Defence states:  “… job creation in oil and gas is far from guaranteed even as the industry expands and reaps significant corporate profits. Despite growing production since 2014, almost 30,000 jobs (10 per cent of the workforce) have been axed in the oil patch in the following four years, with another 12,000 expected to be cut in 2019. That’s because oil and gas companies are moving increasingly towards automation, with the stated goal to “de-man” the industry. Meanwhile, the CEOs of companies such as Suncor, Encana, TransCanada, and CNRL rake in salaries north of $10 million per year.”

The report concludes: “ Canada is bigger than oil. The opportunities that are available to Canadian businesses, citizens, and governments get shortchanged when one industry is able to hijack public policy on energy development and environmental protection.”  Or, as Richard Heede wrote more bluntly in a new series in The Guardian called  The Polluters: “It’s time to rein in the fossil fuel giants before their greed chokes the planet” . Heede’s Opinion article is based on the latest research about the global fossil fuel industry by the Climate Accountability Institute.  The research found that “chiefly from the combustion of their products, the top 20 companies have collectively produced 480bn tonnes of carbon dioxide and methane since 1965 – 35% of all fossil fuel emissions worldwide in that time.”  The press release names the top 20 polluters, led by Saudi Aramco, Chevron, ExxonMobil, GazProm, and BP. All research and data is here .

Federal government announces $275 Million subsidy to LNG Canada in B.C.

Despite the ongoing contentious development of Liquified Natural Gas (LNG) in British Columbia and commitments to end fossil fuel subsidies, on June 24 federal Finance Minister Morneau  announced that the federal government will invest $275 million into LNG Canada’s $40 billion liquefied natural gas project in Kitimat: $220 million to be spent on energy-efficient gas turbines for the project, and  $55 million spent on replacing the Haisla Bridge in Kitimat. The announcement is summarized by the CBC in “Feds announce $275M ‘largest private sector investment in Canadian history’ — Kitimat, B.C.’s LNG project”

The Narwhal maintains an ongoing archive of excellent articles which chronicle the controversy over fracking and LNG in B.C,  here .  Two recent “must read” articles from: “6 Awkward Realities behind B.C.’s big LNG Giveaway”  (April 6)  which discusses the B.C. government’s move to bundle tax exemptions and cheap electricity rates into a $5.35 billion  incentive package for  LNG Canada in March 2019, and “B.C. government quietly posts response to expert fracking report” (June 28) which discusses the government’s  response to the report of its own  independent Scientific Review of Hydraulic Fracturing in British Columbia, released in February 2019. As noted in the Narwhal article, the panel was mandated to assess the potential impacts of fracking on water quantity and quality; on seismic activity, and on  fugitive emissions – but not on public health, despite concerns raised and the known scientific evidence.  According to the government news release,  a working group has been established to address the  97 recommendations made by the expert panel.

Some recent relevant reading about LNG and the fracking associated with its production: 

RE the Emissions of LNG: The New Gas Boom , published  on July 1 by the Global Energy Monitor, an international non-governmental organization that catalogues fossil-fuel infrastructure. The report states that a growing global supply of natural gas is on a “collision course” with the Paris Agreement, and that the increase in natural gas is driven largely by the North American fracking boom- with 39% of new development  occurring in the U.S., 35% in Canada.  The GEM report is discussed from a Canadian viewpoint in  “Global boom in natural gas is undermining climate change action: reportNational Observer (July 2)  and  “’Clean’ natural gas is actually the new coal, report says: Don Pittis” at CBC  .  Previous to the Global Energy Monitor report, Marc Lee had weighed in on the high GHG emissions of fracked natural gas in  “ LNG’s Big Lie”, an article in the Canadian Centre for Policy Alternatives Policy Note ( Lee’s arguments were also published in The Georgia Straight,  (June 17) and an OpEd in The Globe and Mail . )

compendium re frackingIn the U.S.   in June 19, The sixth edition of the Compendium of Scientific, Medical, and Media Findings Demonstrating Risks and Harms of Fracking  was published by Physicians for Social Responsibility and Concerned Health Professionals of New York. Written by scientists, doctors and journalists, it is an analysis of original research studies published from 2016-2018 on the health impacts of fracking . One of the most impactful statements from the press release: “The notion that natural gas can serve as an intermediate “bridge fuel” between coal and renewable energy is fallacious and now disproven by new scientific evidence showing that methane is a more powerful greenhouse gas than formerly appreciated and escapes in larger amounts from all parts of the extraction and distribution process than previously presumed, including from inactive, long-abandoned wells. Grossly underestimating methane emissions threatens to undermine the efficacy of efforts to combat climate change.” A summary press release is here ,  or see the Common Dreams article “’We Need to Ban Fracking’: New Analysis of 1,500 Scientific Studies Details Threat to Health and Climate”   (June 19).

International Energy Agency report, LNG Market Trends and their Implications   (June 20) provides statistical analysis of the changing Asian markets for LNG.

Budget 2019 provides modest funding for climate change improvements – Just Transition, electric vehicles, energy efficiency

budget2019Updated March 25, 2019 with reactions.

No clean economy vision is evident in the  pre-election budget , Investing in the Middle Class, delivered by Canada’s Finance Minister on March 19.  The National Observer has a Special Report on Budget 2019 , composed of  twelve focused articles covering the range of notable provisions. Mitchell Beer provides a good summary of the Budget’s climate-related provisions, in “Morneau’s Pre-Election Budget Boosts ZEVs and Energy Retrofits, Extends New Fossil Subsidy”  in the Energy Mix (March 20).  Elizabeth May, leader of the Green Party is quoted in that article, and says that the climate provisions are “pathetic” – a similar reaction to that of Environmental Defence,which states more diplomatically that “funding for climate change in this budget does not match the scale of the challenge”. Similarly, the Canadian Centre for Policy Alternatives reaction judges the climate provisions as “modest efforts to move forward on greening the economy”, although calls the just transition plan “an important precedent.”  The Canadian Labour Congress reaction is a lengthly commentary on many worker-related initiatives  – including the issue of Just Transition.

UPDATED: Hadrian Mertins-Kirkwood weighed  in with his overall analysis, in “Budget fiddles while climate crisis burns” (March 20), judging the initiatives as modest and inadequate to the urgent task – with the greatest disappointment being the ongoing support to the oil and gas industry.  Similarly, Climate Action Network Canada  states that “business as usual policy is no longer acceptable to respond to the climate crisis and the level of climate action that citizens, students, workers and communities are urgently demanding.”

On the issue of Just Transition:  The Budget plan text on Just Transition reiterates the previous Budget’s pledge of $35 million over five years for Just Transition of coal workers.  In its reaction, the Canadian Labour Congress  acknowledges the new pledge of  $150 million in infrastructure funding to directly assist resource-based municipalities, but quotes Hassan Yussuff, Co-Chair of Canada’s Task Force on Just Transition: “… Canada’s unions are looking forward to working with the Minister of Natural Resources as the newly named lead minister, but are disappointed to see that the government has not addressed key Task Force recommendations to support workers, in terms of income, training and reemployment needs. Without this, workers will be left behind.”

More details appear in  “Coal workers get cash in budget but lack of details risks ‘major blowback”  in the National Observer (March 19), including that the  $150 million infrastructure funding will not flow until the 2020-2021 fiscal year.  Funds  will be delivered by Western Economic Diversification Canada at a rate of $21 million a year over 4 years,  and the Atlantic Canada Opportunities Agency , at a rate of $9 million a year for 4 year.

On the issue of fossil fuel subsidies:  The government  reaffirmed its long-standing (and unfulfilled) commitments to phase out fossil fuel subsidies , and pledged to establish an expert committee to examine the issue. Here is the reaction from the Stop Funding Fossils Initiative: “This year marks the tenth anniversary of Canada’s G20 commitment to phase out fossil fuel subsidies. Yet, despite moderate progress in the 2017 budget, Canada remains the largest provider of fiscal support to oil and gas production in the G7 relative to the size of its economy…. the Government of Canada has doubled down on fossil fuels by introducing billions of dollars in new subsidies in the past year. Budget 2019 allocates a further $100 million over four years to the Strategic Innovation Fund, aiming to help the oil and gas industry reduce emissions. ”

(Coincidentally, the 2019 Annual Fossil Fuel Report Card  was released on March 20, revealing  that global banks have invested nearly US$2 trillion in fossil projects since the Paris Agreement was signed, and Canada’s Bank of Montreal, RBC, ScotiaBank and CIBC  are amongst the worst offenders. )

On the issue of electric vehicles: Budget 2019 included a number of policies  aimed at speeding  up EV adoption, including a  2040 deadline to phase out new internal combustion vehicle sales, and consumer rebates for purchases of electric and hybrid vehicles ($5000 for purchases under $45K).  Despite recent reports that EV supply is restricting purchases, the government did not institute a mandatory sales mandate for car manufacturers. Businesses will be allowed to deduct the full value of a new ZEVehicle  worth up to $55,000 in the year they purchase it.  The government also pledged $130 million over the next five years  to build electric vehicle charging stations – specifically including workplaces in the named locations.  The National Observer summarizes these proposals in “Canada proposes rebates for electric cars, voluntary sales mandate”. 

UPDATED:  Unionists and local politicians staged a protest rally at the Windsor plant which manufactures the Chrysler Pacifica Hybrid on March 22. CTV Windsor  reported  that leaders of Unifor Local 444 and local  NDP politicans are  infuriated that the consumer incentives carry a price limit set at $45K  – excluding the Canadian-built Pacifica Hybrid, priced at $54,000.  The  CBC also reported  “Federal rebate on electric cars will push consumers to buy American, NDP says” .  And an Opinion piece by Will Dubitsky,  “Stalled: why North American lags as China and Europe lead the way on electric vehicles”  in the  National Observer (March 20)  calls the EV purchase incentives “a halfway measure offering less than the consumer rebate programs elsewhere,” and judging the $130 million over five years  for charging and refuelling stations “mediocre” compared to equivalent commitments in California and the EU.

On the issue of infrastructure and the built environment:  The text of the government’s announcement relating to energy efficiency is here , and a Backgrounder: Strong Communities, Affordable Electricity and a Clean Economy  is also relevant.     Initiatives include $1.01 billion in funding, immediately, to increase energy efficiency in residential, commercial and multi-unit buildings – in the form of financing and grants to retrofit community buildings, financing for municipal initiatives to support home retrofits, and financing to improve energy efficiency and support on-site energy generation in affordable housing developments .  Funds will be administered through the Green Municipal Fund of  the Federation of Canadian Municipalities.   Macleans magazine summarizes this, as well as infrastructure funding, in “Cities are billion-dollar winners in Budget 2019”   which states that “the biggest single new spending item in the budget is a $2.2 billion “one-time transfer” through the federal Gas Tax Fund. That money doubles the usual federal-municipal transfer through that mechanism. The windfall is intended to address “serious infrastructure deficits” in municipalities and First Nations communities.”

 

Canada at COP24: Summary and reaction

COP24-table of delegatesIn the wee hours of Saturday December 16, after a dramatic extension of negotiations, the Katowice Climate Change Conference of the Parties (COP24) concluded with the adoption of  the Katowice Climate Package.   The meetings had brought together over 22,000 participants, including nearly 14,000 government officials, over 7,000 representatives from UN bodies and agencies, intergovernmental organizations, and civil society organizations, and 1,500 members of the media.  What was accomplished?    IISD Reporting Services provides an overview summary of accomplishments,  and a 34-page compilation of official decisions . For a more readable general overview, the UNFCC summarizes and links to the highlights in a release on December 14 , including reports and developments of civil society participants. Next steps for the international negotiators: Another round at  COP 25 in Chile in November 2019.  In preparation, UN Secretary-General Antonio Guterres will convene a Climate Summit in New York City in September 2019 .

Canadian reaction to COP24:  As characterized by Elizabeth May, leader of Canada’s Green Party – there was a dual agenda at the COP24  meetings: first,  to agree on  the “Paris Rule Book”,  which will govern a shared approach to calculating and reporting on the specific items required under the  Paris Agreement, and secondly, to respond to the urgency and dire warnings of the October IPCC report to hold global warming to 1.5 degrees C.  Recognizing the difficulty of achieving any level of agreement in the politically fraught atmosphere of 2018, reaction in Canada and internationally was generally positive and aimed to put the best light possible on the failure to resolve other points, such as more ambitious GHG reduction targets.

From Canadian sources:COP24 delivers progress, but nations fail to heed warnings of scientists”  (Dec. 15) from the Climate Action Network Canada; “The Hard Work Starts Now as COP Delivers Incomplete Rule Book, Low Ambition”   from the Energy Mix (Dec. 18); “Environmental activists frustrated COP24 deal not strong enough” at CBC ; and from Greenpeace Canada  “COP24 ends without firm promises to raise climate action and ambition.”   More critical comments come in “Trudeau government fails to take bold action at COP24 to avoid climate breakdown” (Dec. 16)  and  “McKenna’s global carbon market plan more charade than genuine climate action”   both  by Brent Patterson in Rabble.ca.  On December 14, CBC broadcast an interview with Elizabeth May , where she asks  “Do we want to survive or not?” , criticizing the focus on bureaucratic process which interfered with addressing the fundamental question of how to reduce emissions.

What did Canada achieve at COP24?:  Canada’s  Minister of Environment and Climate Change pledged to improve Canada’s emission reduction targets on December 5 before she travelled to Katowice, and once there, signed on to the statement of the “High Ambition Coalition” , (along with    the Marshall Islands, Fiji, Ethiopia, EU, Norway, U.K., Germany,  New Zealand and Mexico), pledging to enhance their Nationally Determined Contributions under the Paris Agreement by 2020.

Regarding coal phase-out, the government’s official  statement  was issued on December 13,  highlighting  Canada’s continuing leadership role in the Powering Past Coal Alliance, which was co-founded by Canada and the U.K. in 2017.   On  December 12, Canada made good on its 2016 pledge to phase out traditional coal-fired electricity by 2030 by publishing the final regulations for that effort in the Canada Gazette .

Regarding Just Transition:  Previous WCR posts (Dec. 6  and Dec. 11  ) summarized the many Just Transition publications and events at COP24.  Canada, along with 40 other jurisdictions, was a signatory to the  Solidarity and Just Transition  Silesia Declaration  put forth by host country Poland.  In the Climate Action Network Canada  press release at the conclusion of COP24, Donald Lafleur, Executive Vice-President, Canadian Labour Congress is quoted by Climate Action Network as saying:   “Canada’s trade unions applaud Canada and other parties for signing on to the Solidarity and Just Transition Silesia Declaration. We hope to see a commitment to a just transition that is tied to human rights and helps drive a more ambitious climate action plan designed to keep global warming below 1.5 degrees.”  The Environment and Climate Change Minister joined the Canadian Labour Congress and the Just Transition Centre at the side event,  Unions in Action on Just Transition,  on December 10, yet she did not release the recommendations of the federal Task Force on Just Transition for Canadian Coal Power Workers and Communities .  Personal testimony of Just Transition came  from Roy Milne, a coal miner and the president of United Steelworkers Local 1595 in Wabamun, Alberta, who calls himself part of the first group at the first coal mine to be  phased out in Canada. “Some jobs in new energy industries come with a pay cut of $50K: coal miner” is an interview with Mr. Milne, was broadcast on CBC’s The Current on Dec. 13, in which he states that currently, “a basic operator earns $80,000-$100,000 per year, with additional benefits and a defined pension scheme. An electrician retraining as a renewable energy technician would go from that salary to $45,000-$50,000 per year.”

Other issues: The Minister’s  own Statement at the conclusion of COP24 says that “Canada also played a leading role in laying the groundwork for a global carbon market, to help mobilize the billions of dollars of investments needed to tackle climate change” and “ Canada took part in the Carbon Pricing Leadership Coalition, encouraging all countries around the world to use the most cost-effective tool to reduce emissions.”  The details of that global carbon market remain unspecified.  In another press release,  the government announced that it will support increased participation by Indigenous people in international climate talks, by  providing  $800,000 over four years to to enable the creation of the Indigenous Peoples Focal Point at the United Nations Framework Convention on Climate Change. “The Focal Point will coordinate and lead work on issues related to Indigenous Peoples and climate change, promote awareness of Indigenous perspectives on climate change, and serve as a technical expert and advisor.”

And yet, with all the pledges and announcements, it must be noted that right after COP24, on December 18, the government of Canada announced    a $1.6 billion aid package for Alberta’s oil companies.  The National Observer article summarizes this in “Sohi announces $1.6 billion to help Alberta oil patch”  and quotes Minister Sohi: “ These are commercial loans, made available on commercial terms. We have committed to phasing out inefficient fossil fuel subsidies by 2025, and we stand by that commitment.” However, as stated in a press release from Environmental Defence    “At COP24 in Katowice, Minister of Environment and Climate Change Catherine McKenna announced that Canada would increase the ambition of its targets to cut carbon pollution. Less than two weeks later, her Cabinet colleagues, Minister of Natural Resources Amarjeet Sohi and Minister of International Trade Diversification Jim Carr, are using public money to make Canada’s already-weak targets even harder to achieve.”