Canada’s Dirty Old Deal

Last week the United Nations Environment Programme (UNEP) published an update for the G20 Summit on its call from earlier this year for a Global Green New Deal.  This update showed that Canada is close to the bottom in the stimulus funds it is committing to green economic areas.

According to the UNEP, only 8% of Canada’s stimulus spending is going to “green” areas (energy efficiency, renewable energy, sustainable transport, sustainable agriculture, and ecological infrastructure) compared to an average of 15% globally.  Canada’s stimulus funding for these green areas amount to only 0.17% of our GDP, far below the target of 1% that UNEP has called for.

We’re in 10th place of 13 countries and far behind Korea and China.   Canada has committed only $77 per person to green stimulus, compared to $166 per person in China $365 per person in the US, $420 per person in Australia and an impressive $1,238 per person in South Korea.  We’re getting leapfrogged by increasingly greener countries and left deep in the muck.

But it’s even worse than this.  Yesterday’s report on stimulus spending shows that only a piddling amount of this amount has even flowed.

The “green” stimulus areas in the 2009 federal budget consisted almost entirely of $1 billion over five years for a Green Infrastructure Fund and $1 billion for transformation to clean/green energy technologies, and specifically large scale carbon capture and storage projects.   (There’s a small amount for other areas, but some of this, such as $10 million for environmental indicators is an annually recurring expenditure).

According to the third report on the stimulus spending released on Monday, none of the $200 million allotted for green energy this year has yet been committed, and only $7 million of the $200 million for green infrastructure this year has been committed so far.   So that works out to probably less than a buck per person in green stimulus dollars flowing so far this year.

Perhaps the only so called green funding that seems to have flowed is funding for upgrades to Yukon’s Mayo B Hydro power plant and expansion of the electrical grid.   With some serendipity, controversy about this project and Yukon Premier Dennis Fentie’s lying about his plans to privatize these Yukon Energy assets will probably soon lead to the downfall of his conservative Yukon party government.

It’s true that this isn’t the only “green” stimulus funding that has flowed.  The third progress report also highlights the $1 billion the Harper government has committed since the budget to the Pulp and Paper Green Transformation Program, which will reduce GHG emissions while helping the pulp and paper industry to become “leaders in the production of renewable energy from biomass”.  It turns out that this impressive-sounding program is very simply a subsidy to pulp and paper companies of 16 cents for every litre of “black liquor” their mills produce this year.

“Black liquor” sounds like a potent prohibition era libation produced by backwoods stills or some type of toxic fuel.  It turns out that it is fuel produced from wood waste, sometimes mixed with diesel fuel.  And one of the most common adjective associated with the tax credit for it is “boondoggle“.   The US has had a 50 cents a gallon tax credit for mixing alternative fuels with conventional fuels for a few years.  This was meant to stimulate new measures in this area, but was soon taken advantage of by pulp and paper companies that have been producing and burning “black liquor” since the 1930s.   This turned into an unintended and unexpected golden windfall for pulp and paper companies, and a massive revenue loss for the US government.

There has been much talk in the US about ending this tax break because it hasn’t stimulated more green investment and in some cases may have even perversely increased use of diesel fuel because of the way, but it hasn’t been eliminated yet.  So what does the Harper government do?  Bring in a similar tax credit, worth about 60 cents a gallon.

There’s no question that the forestry and pulp and paper industry needs support, but I really don’t think this type of very expensive time-limited subsidy for something that is already being done , that won’t directly lead to any new jobs or new investment, is the best way of doing it.

But there’s a deeper tragedy.   Public infrastructure investments last for decades, sometimes 50 or 60 years and longer.  Much of what we build now will be in place past 2050, when industrialized nations should have reduced our GHG emissions by 70% or 80%.  We have what may be a once-in-a-generation opportunity to take advantage of our infrastructure deficit and invest in a low carbon infrastructure and create more energy efficient communities and industries with this stimulus spending.

Now is the time we absolutely need to make these changes and invest in green infrastructure, but we’re not doing it.  And it will take a lot more than just more green stimulus spending.  As I wrote more than two years ago before the financial crisis when I called or an Environmental New Deal, we need strong government leadership for this in a number of different areas.  It’s really great that the UN (and the ILO) are now pushing for a global green deal and many other countries are making much progress, but in Canada we continue to regress.