Despite the Harper government's decision to downplay climate and energy issues at the G20 summit, there was no way to avoid a discussion of phasing out fossil fuel subsides. That's because leaders at the previous G20 summit, held in Pittsburgh in September 2009, decided to phase out these subsidies "over the medium term" — and specifically asked ministers to prepare implementation plans and timetables for discussion in Toronto.
The Toronto summit gave G20 leaders an opportunity to take the next step with their subsidy commitment by agreeing to a joint target and timeline. (That's exactly the approach that Stephen Harper proposed, and won agreement on, for reducing the G20's budget deficits.) And G20's Toronto declaration does refer to fossil fuel subsidies — but it doesn't set a common target or timeline. Instead, Paragraph 42 welcomes "the work of Finance and Energy Ministers in delivering implementation strategies and timeframes, based on national circumstances." It also encourages "continued and full implementation of country-specific strategies" and commits to reviewing "progress towards this commitment at upcoming summits."
The problem with a "country-specific" approach is that there's no common definition of what constitutes a subsidy, and no collective deadline for getting rid of them. So instead of a joint commitment with mutual accountability, you end up with a potluck, where everyone can decide for themselves what they want to bring. Some people will make a mouthwatering dessert, but others will merely pick up some ketchup chips en route to the party — or even arrive empty-handed.
Canada's Contribution
Officially, the G20 has not released countries' implementation plans and timeframes. But thanks to a leaked document published yesterday by the U.S. news service ClimateWire (subscription required), we now know that they prepared to do exactly that: the group drafted a 50-page annex listing the G20's plans and actions, with the words "Not for distribution until the Toronto summit" right on the cover.
Unfortunately, Canada's section does not make for inspiring reading. It offers no new plans to phase out any of the estimated $2 billion a year (as described in a previous blog post) in current tax breaks to oil and gas producers. Instead, it relies on a commitment from Budget 2007 to phase out a specific subsidy to the oilsands — a good decision, but one made long before the Pittsburgh commitment.
In other words, if the G20's approach is a potluck dinner, Canada arrived with some stale leftovers.
We can't say that we weren't warned. In late May, articles from journalist Mike de Souza described a leaked memo from the Department of Finance to federal Finance Minister Jim Flaherty. The memo gave the minister two choices:
• "Lead by example" in phasing out Canada's remaining tax breaks to the producers of oil, gas and coal. This was the option that the department recommended, for a number of very sound environmental and economic reasons.
• Make no policy change and instead "seek to minimize the commitment".
Just in case Minister Flaherty went against the department's advice and chose the second option, his officials provided him the arguments he could use to try to defend it. On page six of the memo, Finance officials suggest listing three older commitments as evidence of Canada's early action.[1] The government's 2007 decision to phase out the accelerated capital cost allowance to the oilsands could be portrayed as "a current action helping to fulfill the commitment," according to the memo.
It's very telling to compare that list with Canada's actual G20 submission: while the G20 document is a bit longer, the content is almost identical. You rarely get to see such clear documentation of a minister's decision to override his own officials' recommendations on the right course of action.
We outlined our concerns with Canada's approach at a media briefing over the weekend, and we're going to keep pushing the government to re-think its attempt to "minimize" the Pittsburgh commitment.
One argument we'll be making is to compare and contrast Canada's approach with President Obama's, because Canada's government often likes to say that it's harmonized with the U.S. on climate policy. But in his budget plan for this year (see Table 14.3 on p.30), President Obama has proposed phasing out 12 specific subsidies to the producers of oil, gas and coal, which they estimate will save a cumulative total of $38 billion from 2011 to 2020.
So it turns out that some countries did show up with goodies in hand to the G20's subsidies potluck. But despite the extra pressure of hosting the party, Canada wasn't one of them.
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VIDEO: Clare Demerse, Associate Director of the Pembina Institute's Climate Change program, discusses the government's position on fossil fuel subsidies at a G20 news conference in Toronto. (Video: Courtesy Climate Action Network)
[1] These are the elimination of the earned depletion deduction in 1989; the end of the favourable tax treatment provided to Syncrude, which took place in 2003; and the replacement of the resource allowance with royalty deductibility between 2003 and 2006.
