Newspaper article The Canadian Press

Environmental Groups Call Subsidies to Fossil Fuel Industry an 'Anti-Carbon Tax'

Newspaper article The Canadian Press

Environmental Groups Call Subsidies to Fossil Fuel Industry an 'Anti-Carbon Tax'

Article excerpt

Fossil fuel subsidies an 'anti-carbon tax:' report


A study suggests Canada's attempts to set a price on carbon are being undercut by subsidies to the fossil-fuel industry.

A coalition of four environmental groups have summed up tax exemptions, investment credits and royalty breaks used by the fossil- fuel industry and compared the total against emissions data from Environment Canada.

The "carbon subsidy" averages out to the equivalent of $19 per tonne of carbon dioxide.

That almost equals the price on carbon Alberta plans to implement next year, doubles the proposed initial federal price and negates two-thirds of British Columbia's $30 carbon levy.

"These subsidies undermine the notion of a price on carbon, which is intended to give incentives to reduce our fossil-fuel use and move toward cleaner use of energy," said Dale Marshall of Environmental Defence, one of the groups involved in the study.

Still, some warn ending those benefits wouldn't reduce emissions much and would chase investment out of the country.

The report calculates the total cost of fossil-fuel subsidies at about $3.3 billion a year. Nearly $1.2 billion comes from favourable federal tax treatment of oil and gas exploration and development projects.

There's no reason for that, Marshall said. Research suggests many of current oil and gas reserves already mapped will have to be left in the ground if climate change is to be kept under two degrees of warming.

"We know from the science that the vast majority of the reserves that are already there can't be exploited."

The second-biggest subsidy comes from Alberta, which provides $1.1 billion through forgone revenues from royalty reductions. The rest comes from a mix of federal and provincial tax credits and other subsidies.

Marshall said governments should be working to gradually scale down the industry, not encourage its growth. …

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