Give up fossil fuel subsidies when regions are in the red

The International Institute for Sustainable Development (IISD) has this week highlighted the government of Ontario in Canada as subsidizing fossil fuels to the extent of C$700 million, at a time when it is about to announce a deficit of C$ 11.7 billion.

This Institute (IISD) has issued a global warning on this before, when it listed the huge amount of subsidies globally in June that fossil fuels benefit from. The problem of most organizations which subsidize fossil fuels is that they are actually subsidizing electricity for the poor and needy, and it just happens to come from fossil fuels. When those subsidies are taken away, a variety of governments have tried, they often end up getting themselves voted out of office. Perhaps the Ontario government has nothing to lose given that it has run up such a huge deficit.

A new IISD report, The (Public) Cost of Pollution: Ontario’s Fossil Fuel Subsidies, show that in 2018/19, Ontario provided C$320 million in support through tax exemptions to fuels used by the aviation and rail industries, and another C$225 million to colored fuels commonly used in agriculture. It continues to spend millions to enable natural gas expansion.

But the IISD is perhaps barking up the wrong tree, as the Canadian central government is only slightly more “fossil fuel addicted” than Mr trump in the neighboring USA. It is Canada that is sponsoring the Alberta sands pipeline that will bring online the dirtiest form of fossil fuel, purely for regional gain in Alberta, at the cost of poisoning half of the land. Getting anyone in Canada to move against fossil fuel subsidies is a worthy aim, but an unlikely outcome.

“These subsidies represent large amounts of foregone public revenue that could be invested in everything from good jobs to education and health care. Spending money subsidizing fossil fuels encourages their use, increases pollution and hinders efforts to transition to a clean economy,” said Vanessa Corkal, Policy Analyst, IISD, and co-author of the report.

The report notes that some of these subsidies, such as agricultural fuel subsidies or fuel subsidies for remote communities, serve important social and economic goals. However, it also underlines that it is essential to consider alternative methods to meet these goals that do not contribute to climate change through subsidizing polluting fossil fuels with public funds.

“With the combined urgency of the need to balance the provincial budget and the need to address climate change, it is crucial that the provincial government examines all opportunities to ensure efficiency in public spending, including a review of fossil fuel subsidies, to ensure that each taxpayer dollar is spent effectively with the best possible outcomes,” said Philip Gass, Senior Policy Analyst, IISD. “Ultimately, the goal should be to transition Ontario to non-subsidized cleaner energy sources.”

The authors of the report recommend that, as a first step, Ontario should undertake a transparent self-review of fossil fuel subsidies and identify areas to improve policy efficiency. This review should consider both climate change impacts and the need to ensure value for money in the use of taxpayer dollars in a time of fiscal restraint.

The IISD is basically Canadian, but has people in China and around the world as well. Last month it echoed the May report from the International Monetary Fund, which showed that fossil fuel subsidies had globally reached some $4.7 trillion in 2015 and are heading for $5.2 trillion calculated for 2017, with the largest subsidizers being China, the USA, Russia, the European Union and India.