The global fossil fuel industry is big. It’s super big. Bigger than an oil rig and more influential than even Justin Bieber. It might not tweet as much, but its fingerprints have left their oily touch on almost every government office and even this Rio+20 conference is being sponsored by Petrobras, the largest company in the Southern Hemisphere by market capitalisation measurements.
But what this story doesn’t tell you, is that according to Avaaz and Oil Change International, this industry is propped up by $1 trillion worth of government subsidies globally. And it’s this government subsidy that has come into question here at Rio+20. In fact, there are those that believe that eliminating global fossil fuel subsidies might be one of the key ‘deliverables’ of the Rio conference. Governments are interestingly obsessed with ‘deliverables’ almost as much as they are over acronyms, regardless of whether they deliver on them or not.
In the lead up to Rio, there has been a lot of interesting movement on this issue. New Zealand has been outstanding, so too has Switzerland, Norway and a number of other EU states. They have even formed a ‘Friends of Fossil Fuel Subsidy Reform’ group which includes Costa Rica, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland.
On the other side of the coin, the G77 has been weary, the US has been dreary, and Canada and Australia have been busy building bridges between them - although I have heard them referred to as loopholes too. Saying that, I spoke with Donna Petrachencko today, the lead negotiator for Australia, and she assured me that Australia is “working closely with New Zealand on this issue to remove inefficient fossil fuel subsidies”.
In any case, I sat down with Amara Possian today to get a bit of perspective. Amara is an organizer with PowerShift Canada and has been tracking UN climate negotiations for quite some time. Considering how the negotiations are playing out, I thought it would be interesting to get an insider’s opinion on Canada, and to compare Australia and Canada’s unique roles in the ongoing negotiations on fossil fuel subsidies.
How powerful are fossil fuel subsidies in Canada and Australia?
Amara: “Canada currently gives $1.4 billion in subsidies to fossil fuel corporations through annual direct and indirect transfer of funds and liabilities or foregone government revenue. The federal government is phasing out the accelerated capital cost allowance for the tar sands, which currently costs taxpayers about $300 million per year. The remaining six targeted federal subsidies make up about $840 million annually in foregone tax revenue. The majority of these are designed to reduce the costs of exploration and development.”
Chris: In Australia, fossil fuels run the show. Our economy is basically a fossil fuel playground being fast tracked by subsidies from the mining trucks to the petrol tank. This is a big reason why our economy is so strong, but each year Australian taxpayers pay between $9 and $12 billion to subsidise fossil fuels.
What is your country’s position on subsidies?
Amara: At the G20 in 2009, Canada committed to phase out subsidies in the medium term but we have yet to phase out our largest subsidies - the Canadian Exploration Expense and the Canadian Development Expense. Our government also likes to play this little trick where they “end subsidies” by shifting them from one type of fossil fuel to another, most recently increasing subsidies to shale gas projects. In the lead up to Rio, the US and G77 have been calling for deletion of all language around fossil fuel subsidies, while Canada (along with our friend and negotiating ally Australia!) has been focusing on building in loopholes by weakening the text. Canada has been the champion behind the removal of binding and specific language around subsidies by changing “phase out” to “substantially reduce.”
Chris: Australia has also played an interestingly removalist role, but I am still unsure of whether or not this has been positive or negative. When I spoke with Donna today, she mentioned that it is “very positive” to see so much of the text being deleted, as it increases the chances of getting something done here in Rio. In many ways I think she is right, and this reflects the consensus building process here at the UN. But on the other hand, the urgency of the situation is critical not only in terms of ‘deliverables’ but also in terms of our climate, and the more text that includes binding targets and specific deadlines the better.
What implications does this have?
Amara: The first step to stopping climate change is to stop funding the corporations who are causing the problem. The fact that Canada hasn’t even kept its promise from 2009 to end subsidies sends a clear signal about our national priorities: we’re giving $1.4 billion to the richest corporations when we could be decreasing tuition by 57% across the country or getting a 60% head start on a national childcare program.
Chris: Recently, Greens Leader Christine Milne came out and said that the Australian government could save up to $9billion a year by cutting fossil fuel subsidies, and could redirect this money towards public school investment. There has also been discussions around reinvesting money into sustainability education programs in Australia through the AuSSi initiative which was cut last year. Cutting subsidies would undoubtedly impact on the mining sector, but considering they are the most profitable sector in the history of history, I think they would be fine. Redirecting this money into sustainability education programs would inevitably be a win win for the planet, and encapsulate the meaning of ‘sustainable development’.
What would you want to see happen here at Rio?
Amara: “Much has changed over the past 20 years and many countries can come to Rio with their heads held high, knowing that they have made progress since they all sat around this same table in 1992. Unfortunately, the situation in Canada is the exact opposite. In fact, tonight, our government is ramming through a budget bill that will effectively gut all of our environmental regulations. At the very least, I’m hoping Canada won’t stand in the way of other countries’ progress by continuing to hand out $1.4 billion to the fossil fuel industry.”
Youth, are taking action. PowerShift recently presented a motion to end fossil fuel subsidies to the All Party Climate Change Caucus on Parliament Hill and momentum is building domestically to end corporate polluter handouts.”
Chris: In the last Climate Change negotiations in Durban, Canada was awarded the fossil award for lifetime achievement in blocking and corrupting Climate negotiations. The last thing I want is for Australia to be grouped with Canada. But I also understand the desire for ‘deliverables’ and the need to be ‘diplomatic’. I would like to see fossil fuel subsidies eliminated with set targets to phase them out in the short term. I would like it to be legally binding - like the Kyoto Protocol but without that little opt out part. I would like this process to be just and equitable and ensure that it does not negatively affect people in nations like Nigeria and Malaysia who depend on subsidies. Making that happen is complicated. But climate change calls for urgent diplomatic creativity. Night before the assignment is due creativity. I would like to see Australia play a leading role on cultivating that creativity. I have seen it happen recently in discussions on SDG’s, but now I want to see it amplified 10 fold. I want Leonardo DaVinci to be in awe of our creativity and I want my children to be proud of the future we made possible by ending fossil fuel subsidies here at Rio+20….
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Amara: “I also want what Chris wants, recognizing that as long as Canada’s government is in bed with the oil industry, they’ll never be on board. I’d recommend Canada just go home.”
Chris: Who am I to block freedom of speech. But lets hope for creative leadership in the meantime.
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About the author
Climate researcher, political ecologist, activist and an award-winning slam poet from Australia.
