Big Oil gets big subsidies

  • April 17, 2008

{mosimage}CALGARY - The federal government continues to subsidize fossil fuel production at the cost of developing sustainable energy alternatives, according to a study released April 15 by KAIROS, an ecumenical church-based social justice organization.

KAIROS and Ecojustice, formerly Sierra Legal Defence, filed a petition with the Auditor General of Canada last November to release data confirming that the federal government is spending $1.5 billion in tar sand oil subsidies over a five-year period from 2007 to 2011, or $300 million a year.

The tar sands subsidy is part of a tax break called the accelerated capital cost allowance that is to be phased out by 2015. It lets tar sand operators defer taxes until all their capital costs have been paid off.

“Initially it looks like a good news announcement that this preferential treatment of tar sand industry will gradually be phased out, but it’s really just relief for billionaires,” said Albert Koehl, a lawyer with Ecojustice. “These companies are making billions in profits and they have this lazy phase out period and that doesn’t even start until after the Kyoto period.”

The report does not ignore the fact that in 2006 and 2007 the Conservative government committed $8.6 billion on 20 greenhouse gas initiatives over the next two to nine years, but it reports it’s less than the subsidies provided to the oil and gas industry from 1996 to 2002 when inflation is taken into account.

“There’s an obvious contradiction between giving money to the oil and gas industry and spending to reduce greenhouse gas emissions through other programs,” said Koehl.

“The subsidies to the tar sands alone will result in greenhouse emissions that are equal to all of Canada’s reduction programs,” said John Dillon, co-author of the study Pumped Up: How Canada subsidizes fossil fuels at the expense of green alternatives.

KAIROS suggests the government immediately cut the accelerated capital cost allowance for tar sands, redirect spending from oil and gas subsidies to programs promoting public transportation, improved vehicle technology, more efficient freight transport, retrofitting buildings and placing firm limits on greenhouse gas emissions from large industrial emitters and a carbon tax.

While the report targeted the tar sands, Greg Stringham, vice president of the Canadian Association of Petroleum Producers, said tar sands make up only four per cent of Canada’s share of greenhouse gases.

Stringham said that with or without the tax subsidy the tar sands will only continue to grow in the next 15 to 20 years, so the industry is looking at methods to increase production, but reduce gases, such as increasing its efficiency measures by refining tar sands with warm water rather than hot water to decrease energy use. He said companies are also looking at eliminating CO2 with carbon capture and storage technology that is putting the gaseous carbon dioxide from fossil fuels back in the ground rather than in the atmosphere where it is contributing to global warming.

Environment Minister John Baird has stated that Canada will not attempt to meet the first Kyoto Protocol greenhouse gas targets in 2012 and at this rate the report predicts Canada will fall short.

To combat climate change, the Conservative government has brought forward its Turning the Corner plan to reduce Canada’s greenhouse gas emissions an absolute 20 per cent by 2020.

“This is a realistic and tough target, similar to that being pledged in other countries around the world,” said Garry Keller, director of communications for the Ministry of the Environment.

Alberta’s oil and gas industry has long been opposed to the Kyoto Accord, having filed a formal objection to the former Liberal government’s plan to implement it, saying it will hurt the province’s oil and gas industry.

Within the industry some hold the opinion that Kyoto is irrelevant as temperatures are not really changing all that much and climate change is not the result of human actions.

“We have to look at what the majority of scientists are saying,” said Dillon, pointing to a United Nations’ 21-page report stating humans are the likely cause of global warming and with 90-per-cent certainty that global warming is caused by burning fossil fuels.

“There are climate change deniers and of course the industry is able to find one or two scientists to make that claim,” said Dillon.

Recently, environmental scientist Patrick Michaels addressed the large oil and gas companies at the Canadian Association of Oilfield Drilling. While Michaels agrees that global warming is real and the result of greenhouse gas emissions, he said the rate of global warming is quite modest and constant at a rate of 0.7 degrees per decade.

“The issue is one for which there is time to develop adequate responses and strategies,” said Michaels from his office in Washington, D.C., at the Cato Institute, a public policy research centre.

While there are skeptics everywhere, said Dillon, Christian church leaders support the reduction of climate change, including Pope Benedict XVI.

“There is no doubt that the Vatican has recognized the science around climate change and has asked Catholics to take this seriously,” said Dillon. “I have not heard strong voices in the Catholic Church that are among the climate-change skeptics.”

Climate change and global warming are issues that Christians should care about, he said.

“It’s a justice issue. It’s also a spiritual issue because our relationship with creation lies in harmony with God’s creation. It is a test of our fidelity to the Scriptures. We are put on the Earth not to destroy it, that’s a kind of sin.”

KAIROS is funded by Canada’s Catholic bishops through the Canadian Catholic Organization for Development and Peace, Catholic religious orders and the national churches of the Presbyterians, Anglicans, Christian Reformed, Mennonites, Quakers, Lutherans and United Church.

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