August 11th, 2017 .

Would You Like to Super Subsidize That?

Pat Morden

 

It’s a familiar phrase at a famous fast food restaurant. When you give your order, the server will ask perkily, “Would you like to Super Size that?” Essentially, she is asking if you’d like a lot more fat and carbs, for a little more money.

 

At least in that case, you have a choice. But when it comes to the oil and gas industry, super subsidies are hidden. Ultimately, that means more and cheaper fossil fuels, and as a result, more greenhouse gases feeding the climate crisis.

 

But wait, you say, it’s the green energy sector that’s subsidized, not the well-established and prosperous fossil fuel sector.

 

Wrong. The Canadian government provides a variety of subsidies to oil and gas producers, totally about $3.3 billion per year.

 

An August 2017 study published in the journal World Development found that fossil fuel subsidies globally are a staggering $5 trillion per year. The total increased substantially between 2013 and 2015.

 

Why do subsidies matter? The International Monetary Fund nailed it in a 2014 report. “While aimed at protecting consumers, subsidies aggravate fiscal imbalances, crowd out priority public spending, and depress private investment, including in the energy sector. Subsidies also distort resource allocation by encouraging excessive energy consumption, artificially promoting capital-intensive industries, reducing incentives for investment in renewable energy, and accelerating the depletion of natural resources.”

 

Perhaps you remember the Trudeau Liberals promising to eliminate subsidies to oil and gas in the last election campaign? In March 2017, Auditor-General Michael Ferguson noted that while Canada has recognized that “inefficient subsidies” for fossil fuels undercut efforts to reduce greenhouse gases, the government hasn’t defined “inefficient” or taken any steps to eliminate subsidies.

 

Ontarians complain about the high cost of electricity, incorrectly blaming the increases on high prices for wind and solar energy. Meanwhile they enjoy low prices at the pumps. (By comparison, petrol in the U.K. averages $1.88 per litre and more than $2.50 per litre in Norway.)

Do we want to keep on Super Subsidizing oil and gas? Not if we want to reduce greenhouse gas emissions and mitigate the climate crisis. Not if we want to leave our grandchildren a livable planet.

 

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