http://thetyee.ca/Opinion/2014/05/15/Canadas-34-Billion-Fossil-Fuel-Subsidies/
[multiple links in on-line article]
[$34 billion annually is about $1,000 per Canadian per year. It is
enough to pay off the entire Canadian national debt in less than 20
years, by itself. It is more than 10 times the projected federal
government deficit for the current fiscal year (2014-15: $2.9 billion).
Or, it's almost $1/litre of gasoline sold in Canada - currently
retailing at about $1.30 to $1.40 in most of southern Canada. It is
about a million electric cars at full retail, a year, which could
replace the entire national road fleet in less than 20 years). This
does not include the unassessed environmental damage subsidy.]
IMF Pegs Canada's Fossil Fuel Subsidies at $34 Billion
In such giveaways we're a world leader, a fact rarely noted when federal
budgets are debated.
By Mitchell Anderson, 15 May 2014, TheTyee.ca
While Canada slashes budgets for research, education and public
broadcasting, there is one part of our economy that enjoys remarkable
support from the Canadian taxpayer: the energy sector.
The International Monetary Fund estimates that energy subsidies in
Canada top an incredible $34 billion each year in direct support to
producers and uncollected tax on externalized costs.
These figures are found in the appendix of a major report released last
year estimating global energy subsidies at almost $2 trillion. The
report estimated that eliminating the subsidies would reduce global
carbon emissions by 13 per cent. The stunning statistics specific to
this country remain almost completely unreported in Canadian media.
Contacted by The Tyee, researchers from the IMF helpfully provided a
detailed breakdown of Canadian subsidies provided to petroleum, natural
gas and coal consumption. The lion's share of the $34 billion are
uncollected taxes on the externalized costs of burning transportation
fuels like gasoline and diesel -- about $19.4 billion in 2011. These
externalized costs include impacts like traffic accidents, carbon
emissions, air pollution and road congestion.
The report also referenced figures sourced from the OECD showing an
additional $840 million in producer support to oil companies through a
constellation of provincial and federal incentives to encourage fossil
fuel extraction. This brought total petroleum subsidies in Canada in
2011 to $20.23 billion -- more than 20 times the annual budget of
Environment Canada.
In comparison to other countries, Canada provides more subsidies to
petroleum as a proportion of government revenue than any developed
nation on Earth besides the United States and Luxembourg.
Natural gas consumption also enjoys billions in subsidies in Canada. The
IMF estimates that un-priced carbon emissions from burning natural gas
added up to $7.3 billion per year. There's another $440 million in
producer support and $360 million in other un-taxed externalities, all
of which tops $8.1 billion. This tax giveaway on natural gas alone is 44
per cent more than Canada provides in international aid every year.
What about coal? Canada consumes over 30 million tonnes per year. While
we currently export over half our domestic production, the IMF study
only considered externalized costs within our own country. They found
that the coal industry receives $4.5 billion in annual subsides --
almost all of this is un-priced carbon and sulfur dioxide emissions.
This generous largesse towards the dirtiest of fuels is about four times
what the CBC receives in public support every year.
Or we could spend that on...
What could Canada do with an extra $34 billion a year? Both Vancouver
and Toronto are struggling with how to fund long overdue upgrades to
public transportation. Subway construction comes in at about $250
million per kilometre, meaning we could build about 140 kilometres of
badly-needed urban subway lines every year. Light rail transport (LRT)
is about one-quarter of the cost of subways, meaning for the same money
we could build about 560 kilometres of at-grade transit infrastructure.
This foregone revenue in less than two years could fully fund the Big
Move transit plan for southern Ontario, providing affordable access for
80 per cent of people living from Hamilton to Oshawa. Toronto's transit
system has languished for decades. This sorely needed infrastructure
would save the average household thousands in wasted time sitting in
traffic, and Canada's economy billions in reduced congestion costs.
The proposed Vancouver subway line to the University of British Columbia
could be built using less than two months of the subsidies provided
every day to the energy sector. Forty kilometres of rapid transit in
Surrey could be had for about the same amount.
What about green energy infrastructure? Adding solar and wind capacity
provides some of the best job-generation per dollar of any option
available -- more than seven times the employment from an equivalent
investment in oil and gas extraction. Extrapolating the findings from a
2012 report on green jobs, $34 billion could create 500,000 person years
of employment and install more than 150,000 megawatts of clean
generating capacity. Canada currently ranks 12th in the G20 on green
energy investment and has been steadily falling behind our competitors.
Canada's infrastructure deficit of crumbling roads and outdated water
and sewage treatment is pegged at $171 billion. This backlog could be
wiped out in five years with the revenue we are subsidizing to the
energy sector.
Of course, not all things of value can be measured by bricks and mortar.
Thirty-four billion dollars each year could provide $10-a-day childcare
for 5.5 million children ages 0 to 5. Canada's child care costs are
currently the highest in the OECD.
No free lunch in energy costs
For all the complaining Canadians do about fuel prices, it's ironic to
note the IMF essentially says we are undervaluing the true cost of
gasoline by about $0.30 per litre. Compared to other nations, Canada
enjoys some of the cheapest gas in the developed world. Fuel in Italy
and Germany is almost double our price at the pump. Ever think it's odd
that bottled water at the gas station costs more than the fuel you just
put in your tank?
Consider for a moment all the costs of finding and extracting crude oil,
shipping it across the globe, refining it into gasoline and trucking it
to your neighbourhood. Not to mention the billions spent by some
countries projecting military power into volatile oil-producing parts of
the world and the very human price of those interventions. Additional
un-priced costs after petroleum is burned, such as climate change,
traffic congestion, road accidents and air pollution make gasoline
perhaps the most subsidized substance on Earth.
Every decision based on artificially low energy prices can have years of
unintended consequences. If gas is cheap, people will choose to buy cars
rather than take transit, clogging both our roads and emergency rooms.
Transportation accidents alone cost Canada $3.7 billion each year. Every
vehicle bought based on low fuel prices will produce years of carbon
emissions, and every owner over the life of that vehicle will have an
interest in voting for cheaper gas.
The opposite, of course, is also true. Less than half of Vancouverites
in their early twenties today have chosen to get a driver's license,
down from 60 per cent 10 years ago. Better public transit and more
expensive car ownership seem to be the main factors driving this
remarkable demographic shift.
The IMF can hardly be accused of being a left-leaning, alarmist
organization. Through this valuable research, they make the case that
there is no free lunch in energy costs, and we exclude these
externalized costs at our peril.
A country can be judged on what it chooses to tax and what it chooses to
subsidize. And by that yardstick, this nation currently seems to care
more about cheap energy than almost anything else. [Tyee]
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