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Common sense says shift subsidies away from oil
Can anyone explain why the Canadian government is subsidizing the fossil fuel industries?
Why are some of the most world’s most profitable companies receiving what amount to public handouts when we are supposedly living in a time of austerity?
Last year the International Monetary Fund published a report on global energy subsidies that analyzed 176 countries. It concluded the world’s developing and industrialized economies are subsidizing the energy sector at a rate of $1.9 trillion per year, accounting for 8% of total government revenues. Globally, 95% of these subsidies were directed to oil, gas and coal.
In Canada, the federal government subsidizes the fossil fuel industries to the tune of more than $20 billion per year.
Is that what the free market looks like?
Not surprisingly, the bulk of these subsidies are going the oil sector.
According the IMF report, energy subsidies are hurting the economy, the environment, and regular people.
Subsidies crowd out public spending on infrastructure, health, education and the social safety net, while driving up budget deficits and the public debt.
They discourage private investment in the energy sector, artificially promote capital-intensive industries, encourage excessive energy consumption, and reduce incentives for investment in renewable energy.
Not only that, the IMF report found energy subsidies mostly benefit wealthier households, who tend to consume more energy than poorer ones.
Remember, we live in an age when wealth concentration at the top has reached levels not seen in generations.
Simply phasing out subsidies to the fossil fuel industries would reduce global CO2 emissions by 13%, conclude the report’s authors, which would go a long way in helping Canada and other industrialized economies meet their international commitments.
So what is the solution?
If our political leaders are keen on picking winners and losers, then why not shift these public subsidies from the fossil fuel industries to clean energy, and give the next generation a chance in the fight against climate change?
Shifting to a greener economy could even boost employment.
Blue Green Canada, an alliance of trade unions and environmental organizations, estimates that redirecting $1.3 billion in existing federal subsidies from the oil and gas sector to renewable energy and energy efficiency would create an additional 18,000 jobs.
And these would predominantly be blue-collar jobs in manufacturing, construction and trades.
As numerous studies have pointed out, investments in clean energy — such as wind and solar — are more effective at creating jobs than the fossil fuel industries. Whereas $1 million invested in the oil and gas sector creates about two jobs, the same investment in clean energy creates about 15 jobs.
Not a bad deal.
It is about time our decision-makers finally showed some leadership on this issue by eliminating the public handouts to the fossil fuel industries and kick-starting the transition to a cleaner, more sustainable economy. Because the current policy does not make sense.
Rob Douglas writes monthly for the Cowichan News Leader Pictorial. He can be reached at email@example.com