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Fossil Fuels

Published on February 8th, 2016 | by James Ayre

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Canada Gives ~$46 Billion Per Year In Fossil Fuel Subsidies

February 8th, 2016 by  


Originally published on EV Obsession.

The Canadian government subsidizes the fossil fuel industry in the country to the tune of around $46.4 billion a year, according to a report from the IMF last year — with $1.4 billion of this referring to pre-tax subsidies, and a further $44.6 billion referring to externalized costs to society that aren’t accounted for.

image9What could these funds be used for rather than subsidizing the fossil fuel industry, one might ask. Certainly a good question, but what happens when one of the (if not the) primary industry of a country loses its government support? Without the country’s oil industry what would happen to the economy?

Arguably this is a question with implications that are now bearing down, regardless of how one feels about the oil industry — as the tar sands aren’t economical at current oil prices. And the Canadian economy does seem to be taking quite a hit now as a result. But is that reason enough to give the industry a free pass as far as covering its costs to society?

With that subject in mind, an interesting article recently laid things out in a pretty clear way:

And what could Canada do with another $46 billion each year? In terms of badly needed public transit, we could immediately pay for both the new Broadway SkyTrain line and the Bloor Street subway extension in Toronto, and still have $40 billion left over. There are also 120 kilometers of proposed light rail projects in the country we could finally build and only be down to $35 billion. Remember, these badly needed infrastructure investments are one-time expenses and the subsidies identified by the IMF rack up every year.

Other urgent needs include building and maintaining affordable housing, estimated to be about $3 billion annually. The public portion of a national pharmacare program might amount to an extra $1 billion each year (though it could also save us money too). That still leaves billions of annual public revenue that could provide tax relief to those shifting away from fossil fuels as well as transition training for displaced workers in our beleaguered oil sector.

So is Ottawa going to eliminate all $48 billion in giveaways identified by the IMF? Of course not. Politics is the art of the possible, and public opinion — while heading in the right direction — is not there yet.

For instance, $30 billion of our total subsidies flagged by the IMF are for petroleum. Canadians buy around 58 billion liters of gas and diesel each year. Covering all externalized costs of that fuel use would require additional taxes of about $0.50 per liter, a tall order even for a politician of Trudeau’s current popularity.

Of course all of this does assume that the fossil fuel industry in the country could continue to operate at a level that would allow these funds to be collected at all, when subjected to such high accountability (with regard to public health, climate change, air and water pollution, etc), which is something of an open question.

That said, oil prices will continue their volatile boom and bust cycle for quite awhile longer — likely until most economically recoverable reserves are run dry later this century, without significant changes to modern culture and lifestyles anyways, that is — so it seems likely that tar sands production will enter a boom phase again at some point.

With that in mind, forcing the industry to cover its own costs seems prudent. (Arguably the numbers quoted above don’t actually cover all of the damage that is done by the industry to human health and to the biological productivity of the wider environment though, it should be noted. Perhaps they should be higher.)

(Tip of the hat to “Ktowntslafan” on the Tesla Motors Club forum.)

Reprinted with permission.


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About the Author

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.



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