Climate change summit destined to fail

How 50,000 delegates will be able to agree on anything is a mystery

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VICTORIA, B.C. Nov. 16, 2015/ Troy Media/ – The odds are stacked against the delegates from 190 countries who will convene in Paris to seek a deal to cut global greenhouse gas emissions.

Never mind that the meetings that begin on Nov. 30 mark the 21st time that delegates to the annual UN climate change Conference of the Parties (COP) have attempted to reach an agreement.

Or that the pre-conference rhetoric is typically apocalyptic and overzealous. For example, the Pope has issued an encyclical calling for urgent action against climate change. And International Trade Union Confederation general secretary Sharan Burrow has called for expansion of the conference’s goal beyond “zero carbon” to “zero poverty.”

How 50,000 delegates to the climate change summit can agree on anything remains a mystery, particularly given the attitude of many developing countries toward curbing greenhouse gas emissions.

In Canada, as in most developed economies, the focus is on carbon pricing, which usually means fuel taxes. But fuel taxes aren’t exactly new. The federal government collects more than $6 billion a year in taxes on motor fuel and the provincial governments collect another $8 billion. These taxes represent about one-third of the price Canadians pay at the pumps.

Since the Kyoto Accord in 1990, almost all growth in global emissions has come from developing countries. The challenge facing COP21 is that many of those developing countries actually subsidize hydrocarbon use rather than taxing it.

An Organization for Economic Co-operation and Development (OECD) report published last year found that fuel subsidies in 40 countries totalled a staggering US$548 billion. Not surprisingly, those countries are among the world’s fastest growing carbon emitters. They are led by China, whose emissions have quadrupled since 1990, and India, where they’ve tripled.

In Venezuela, Saudi Arabia, Iran, Algeria, United Arab Emirates and Indonesia – the countries with the most highly subsidized fuel prices – annual emissions growth has averaged 250 per cent since 1990. Retail gasoline prices in these six countries average just 31 cents (U.S.) per litre.

More sinister is the thriving black market in subsidized fuel. In Venezuela, the price of gasoline is just two cents per litre. Every day, thousands of vehicles carry subsidized fuel across the border from Venezuela into Colombia, where pump prices are 35 times higher at 70 cents per litre. That amounts to a huge subsidized fuel leakage that adds emissions not accounted for in global statistics. In India and several other countries, similar diversion of subsidized fuels to non-subsidized users takes place.

And what about the allegation that countries like Canada subsidize their fossil fuel industries? A recent IMF report alleges that such subsidies total a staggering US$5.3 trillion per year and that Canada provides its industry with $34 billion per year in “direct subsidies and internalized costs.”

Who knew? Certainly not the energy industry.

A look beyond the headline reveals a bizarre and misleading calculation. It turns out that the $34 billon includes government failure to collect “externalized costs” of $19.4 billion on oil-based fuels due to such impacts as traffic accidents and carbon emissions. The IMF adds another $7.3 billion per year of “unpriced carbon emissions” from burning natural gas and $4.5 billion for coal. How they arrive at these “unpriced” cost estimates isn’t revealed. And even if such leaps of logic had any validity, it’s not energy producers who burn the stuff, so it’s consumers who get these “subsidies.”

The IMF report added another billion of alleged Canadian subsidies for “incentives to encourage fossil fuel extraction.” But those so-called incentives are simply normal tax measures that allow every business to deduct costs, which in the case of the oil and gas industry include exploration and development expenditures, the same way a factory owner is allowed to amortize the cost of his factory.

Apparently to the IMF, failure of governments to tax is equivalent to a subsidy.

This preposterous study, prepared as the IMF’s key contribution to COP21, never mentions the actual fuel subsidies cited in the OECD report.

With input like that, what are the chances of dealing with real issues like the fact that many of the countries attending would rather subsidize carbon than tax it?

Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations. Gwyn is included in Troy Media’s Unlimited Access subscription plan.

Read more Gwyn Morgan


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