Harper rejects advice to budge on oil patch tax breaks
Prime Minister Stephen Harper speaks with U.S. President Barack Obama during a plenary session at the G20 summit in Toronto on Sunday, June 27, 2010. (Sean Kilpatrick / THE CANADIAN PRESS)
The Canadian Press
Published Sunday, June 27, 2010 4:20PM EDT
TORONTO - Prime Minister Stephen Harper rejected advice from his officials to eliminate tax incentives for the oil patch on a weekend that saw the world's most powerful leaders disdain fresh attempts to combat climate change in favour of fighting deepening deficits.
The G20 countries promised at their last meeting in Pittsburgh to examine where governments were subsidizing fossil fuel consumption and production and then move to eliminate those subsidies.
U.S. President Barack Obama's told fellow leaders in a letter last week that he wanted to see his summit colleagues make progress on the issue.
But the entire G20 opted to do little on fossil fuel subsidies and pay lip service to the issue of climate change that had seized centre stage of these summits for much of this decade up until last year's recession.
The Department of Finance recommended over the spring that Harper lead by example and get rid of tax incentives that encourage oil and gas production.
But documents obtained by The Canadian Press, to be released in conjunction with the final G20 communique on Sunday, show the prime minister opted instead to reiterate actions taken in the past rather than volunteer any additional gestures.
According to the documents, the Canadian "action plan" on fossil fuels consists mainly of phasing out accelerated capital cost allowances for oil sands production -- a measure that was first announced a few years ago and put on a faster track in the 2010 budget.
"The accelerated CCA for oil sands projects will be phased out over the 2011-2015 period," says the Canadian plan.
The phase out of the accelerated capital cost allowance was first announced in the 2007 budget and "could be cited as a current action helping to fulfill that commitment," says a March memorandum prepared for Finance Minister Jim Flaherty.
"If Canada undertakes no reforms, it would eliminate the need to co-ordinate action internationally, though justifying inaction could be challenging if others are taking action," says the March memo to Flaherty.
Canada has been widely accused of being an international laggard on the environment and the oilsands have been the target of international campaigns in the United States and Europe for being a source of dirty oil.
At last year's global climate summit in Copenhagen, environmental groups predictably gave Canada several "fossil of the day" awards.
"As BP's oil disaster continues to wreak havoc in the Gulf, the G20's first step to reduce fossil fuel subsidies is the right move to make" said Phil Radford, Executive Director of Greenpeace US. "But unfortunately in Toronto, I am not seeing the visionary leadership that would shift those resources to developing a new clean energy economy."
The G20 statement that emerged from the Pittsburgh summit in 2009 called on energy and finance ministers to report back on a timeline "for acting to meet this critical commitment" on eliminating fossil fuel subsidies.
Environmental groups said the final G8 communique contained vague language on climate change. The leaders said the issue remained "top of mind," and backed the United Nations-led efforts to secure a new climate change treaty.
Harper said he and his fellow leaders had "good discussions" on the topic but that it was best dealt with within the confines of the UN.
The prime minister has faced criticism for attempting to minimize discussion of climate change at the G8 and G20 summits. Harper has said that the grouping needs to stay focused on the economic recovery.
At one point in the weeks leading up to the twin summits, Harper declared that all other issues besides the economy were a "sideshow."
Mexican President Felipe Calderon updated G20 leaders Sunday on the progress towards a legally binding treaty to reduce greenhouse gas emissions ahead of the Cancun summit that he will host later this year.
On a visit to Ottawa last month, Calderon turned up the heat on developed countries to make progress, saying climate change was having significant negative effects on his country, including water shortages.
"In Mexico, we cannot wait," Calderon said, standing beside Harper. "We cannot wait for the developed countries to make a decision."
Countries are negotiating a global-warming pact ahead of the next UN climate summit in Mexico this December. Many hope the Cancun summit will seal a tentative but vague deal reached last year in Copenhagen.