(OTTAWA) A coalition of national environmental organizations and the former Chair of Parliament's environment committee today filed a petition with the Auditor General of Canada demanding an investigation into billions of dollars of federal subsidies to the oil and gas industry. The petition highlights federal tax breaks and other subsidies that promote one of the country's largest sources of greenhouse gas (GHG) pollution and cancel out spending on Canada's effort to meet its emission reduction target under the Kyoto Protocol. Sierra Legal Defence Fund filed the petition on behalf of Friends of the Earth Canada, the Pembina Institute, and Charles Caccia.
"Canada cannot meet its commitment under the Kyoto Protocol unless tax subsidies to the oil and gas industry are eliminated," said Charles Caccia, the long time Liberal chair of Parliament's environment and sustainable development committee. "These subsidies encourage greater greenhouse gas emissions and undermine Canada's drive to meet its Kyoto targets."
Estimated federal tax subsidies to the oil and gas sector are $1.4 billion per year, based on the latest available data. Most of the subsidies are in the form of tax breaks under Canada's Income Tax Act. In the period, 1996-2002 these tax subsidies amounted to a staggering $8 billion. Between 1990 and 2003 Canada's GHG emissions increased by 24%, with a significant part of the increase attributable to the oil and gas industry.
" Since 1997 when Canada first agreed to its Kyoto target, the federal government has been spending $2 on oil and gas industry tax subsidies -- and indirectly promoting greenhouse gas emissions -- for every $1 it has spent on reaching its Kyoto goal," said Sierra Legal lawyer Albert Koehl. "We are asking the obvious question of how this can possibly be part of a consistent government policy."
" The federal government has a unique opportunity to show international leadership by shifting tax subsidies for the oil and gas industry towards initiatives such as renewables and conservation that will reduce emissions," said Marlo Raynolds, executive director of the Pembina Institute. "This would not only help Canada meet its obligations under Kyoto but prove to the world that Canada is a fitting host for the world climate change conference in Montreal later this year."
The petition warns that Canada's current Kyoto implementation plan shifts responsibility to the public for emission reductions instead of requiring the largest polluters to carry an equitable share. Under the proposed plan, Canada's largest industrial polluters, including the oil and gas industry, are being asked to reduce emissions by only 36 megatonnes (Mt). If large industry were required to reduce emissions by an amount proportionate to its 50% share of Canada's emissions, its 36Mt target would need to be increased to 135Mt.
"Instead of heeding the calls to reduce oil and gas subsidies the federal government is intent on perpetuating them," said Beatrice Olivastri of Friends of the Earth. "The big winners are the oil and gas companies and the big losers are the taxpayers and those committed to achieving the Kyoto target."
The petition is to the Commissioner for the Environment and Sustainable Development -- within the Auditor General's Office -- for action from the federal Ministers of Finance, Industry, Natural Resources, and Environment. It calls for the elimination of the counterproductive federal tax subsidies to the oil and gas industry and an equitable distribution of the responsibility for reducing emissions under Canada's Kyoto plan.
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For further information, please contact:
Albert Koehl, Lawyer, Sierra Legal Defence Fund, (cell) 416-573-4258 or 416-368-7533 ext. 26
Charles Caccia, c/o Institute of the Environment, 613-562-5800 ext. 1041
Matthew Bramley, Pembina Institute, 819-483-6288 ext. 26
Beatrice Olivastri, Friends of the Earth, 613-241-0085 ext. 26
Background Facts:
Canada's Kyoto commitment
- In 2005, Canada released its climate change plan entitled Project Green - Moving Forward on Climate Change: A Plan for Honouring our Kyoto Commitment"1
- According to Project Green, the gap between actual emissions and projected emissions will be at least 270 megatonnes (Mt) by the time of the Kyoto implementation period of 2008-2012 (if emissions continue to increase on a business-as-usual basis).
- In 1990, the base year for the Kyoto Protocol, Canada's total greenhouse gas (GHG) emissions were 596Mt.
- Canada committed at Kyoto in 1997 to reduce its total emissions to 6% below 1990 levels -- or to 560 Mt -- by 2008-2012.
- Total Canadian GHG emissions increased by 24% between 1990 and 2003. 2
- Canada ratified the Kyoto Protocol in 2002.
The contribution of oil and gas emissions:
- In 2003, the oil and gas industry as a whole contributed 139Mt (19%) of Canada's total GHG emissions, of which the upstream sub-sector (largely resource extraction) contributed about 111Mt. These total figures represent a net increase of 2% from 1990.
- This rise in emissions is a result of the increased production of natural gas and heavy oil since 1990, largely for export to the U.S.
- Since 1990 there has been a 180% increase in the net energy exported from Canada accompanied by a 115% increase in GHG emissions associated with those net energy exports.
- Much of the current growth in Canada' oil and gas industry is in oilsands development.
- Oilsands extraction produces at least twice the GHG emissions of conventional oil extraction per barrel.
- Not included in the increase of emissions from oil and gas is the land use changes of converting forest areas (which absorb CO2) to oil and gas production facilities (which produce CO2).
Continued Subsidies to the Oil and Gas Sector
- According to a recent study by the Pembina Institute, the federal government tax expenditure on the oil and gas industry totaled just over $1 billion in 1996 and $1.4 billion in 2002 (both in constant 2000$).
- The total federal tax subsidies for the period 1996-2002 amounted to almost $8 billion.
- In 2002, one day after Canada ratified the Kyoto Protocol, the federal Minister of Natural Resources guaranteed to the Canadian Association of Petroleum Producers (CAPP) that required emission reductions would be based on emissions intensity as opposed to actual emissions. This would transfer to taxpayers most of the responsibility for extra industry emissions caused by higher-than-projected production.
- The Minister also guaranteed the oil and gas industry a cost ceiling of $15.00 per tonne of GHG emission reductions.
- Under Canada's proposed Kyoto plan Canada's largest industrial polluters -- called Large Final Emitters (LFEs) and including the oil and gas sector -- are required to reduce overall emissions by only 36Mt of the projected compliance gap of 270Mt by 2008-2012.
- Therefore, the GHG reductions required of LFEs amount to only about 13% of the compliance gap, even though LFEs contribute an estimated 50% of Canadian GHG emissions.
- Numerous organizations, including the OECD, have criticized Canada for its oil and gas tax subsidies.
2. This figure comes from the most recent government data in Canada's 2003 Greenhouse Gas Inventory, submitted to the UNFCCC on May 27, 2005. See: Canada's climate action plan released in April 2005 is based on 2002 emissions data, which accounts for some of the discrepancies in numbers between the plan and 2003 emissions data.
