Oil Sands Truth: Shut Down the Tar Sands

Emissions for the poor, subsidies for the rich

Emissions for the poor, subsidies for the rich
Latest budget continues the Harperite pattern of tax breaks for large-scale Green House Gas emitters.
Dateline: Monday, March 03, 2008
by Albert Koehl

The Harper government is sometimes accused of favouring the rich while ignoring the poor — even cozying up to wealthy oil barons at the expense of regular Canadians. Consider the climate change file alone. The government's recent budget effectively assured wealthy oil and gas corporations that all of the federal tax breaks they currently enjoy, amounting to about $1.4 billion each year, would remain in place until at least 2010.

In stark contrast, one of the Harper government's first acts in office was to abruptly eliminate a $500 million program, the Energuide for Low Income Households, designed to help poor families do home retrofits to reduce energy use and greenhouse gas (GHG) emissions.

The federal government continues to match, virtually dollar for dollar, subsidies to oil and gas corporations that produce GHG emissions, with spending on programs to reduce GHG emissions.

There is no doubt that low income households (and many middle income ones for that matter) need help to reduce energy use. First of all, energy bills are on the rise. The poorest Canadian households already spend 13 percent of their income on energy bills, compared to about 4 percent of income for other households. The inability to pay energy bills is the second leading cause of tenant evictions.

Globally, the cancelled EnerGuide program would have helped 130,000 low income households achieve potential GHG reductions of 3.4 tonnes annually per home. Green Communities Canada, a group that delivers energy efficiency programs, estimated that the $500 million government investment would have produced $1 billion in energy savings, retrofit jobs, and other benefits — not to mention the obvious environmental payback.

Although the EnerGuide program was introduced by the previous Liberal government, partisan politics alone cannot explain its elimination. The Harper government also scrapped another energy conservation program directed at higher income households, but quickly re-introduced it under a different name.

Ironically, the low income fund was likely to pay the biggest GHG reduction dividends, since poorer families often live in leaky homes and can't afford energy efficiency improvements without outside help.

Oil and gas corporations don't need federal handouts. In 2006, the industry made $31 billion in profits. The price of a barrel of oil today hovers near $100. And while the industry gorges itself on record profits, its out-of-control tar sands projects disgorge massive amounts of GHGs and also poison the water, land and air.

At first glance, the 2007 federal budget seemed to finally acknowledge the absurdity of spending taxpayer money to promote oil and gas projects and associated GHG emissions. The budget actually included the phase-out of the Accelerated Capital Cost Allowance (ACCA), a generous subsidy for tar sands projects, noting that "this preferential treatment is no longer needed."

Although these words suggested a new direction, the fine print largely confirmed business as usual.

Tar sands projects that were started before March 2007 would continue to benefit from the ACCA while the slow phase-out for other projects would not even begin until 2011, and stretch to 2015. (By that time, government subsidies that the industry has begun demanding for carbon capture and storage projects might well dwarf current handouts.) The Pembina Institute, an Alberta-based think tank, calculates that 90 percent of tar sands projects currently on the books will therefore receive substantial federal subsidies.

Finance Minister James Flaherty devoted numerous pages of his budget to comforting oil and gas CEOs about the eventual phase-out of the ACCA. In fact, the budget — perhaps borrowing from Depression-era programs — called the phase-out conditions "transitional relief."

If the inequality in the government's treatment of rich polluters and poor households indicates government priorities, then the future is bleak for Canada's most vulnerable. Global warming will affect them first, and most dramatically. Hurricane Katrina made this clear.

As the chair of the UN's Intergovernmental Panel on Climate Change (IPCC) recently commented: "It is the poorest of the poor in the world, and this includes poor people even in prosperous societies, who are going to be the worst hit."

The overall federal spending numbers are not promising either. We estimate that for the 2007-08 and 2008-09 fiscal years the Harper government will spend almost as much on oil and gas industry tax breaks ($1.4 billion annually) as it does on all climate programs combined ($1.6 billion annually). In other words, the federal government continues to match, virtually dollar for dollar, its subsidies promoting oil and gas corporations, and their GHG emissions, with spending on programs to reduce GHG emissions.

Unfortunately, the Harper government squandered an opportunity in its recent budget to change its spending priorities, even show up the Liberals who also greased oil and gas corporations with taxpayer subsidies when they were in power.

Instead it decided that providing "relief" to billionaires with generous tax breaks was more important than giving a helping hand to the poor, and to fighting global warming.

Albert Koehl is a lawyer with Ecojustice (formerly Sierra Legal), a Canadian environmental law organization.

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