and in 2012 Harper Conservatives said they still planned to eliminate what some are claiming... doesn't exist!
Except for Australia, Canada and Saudi Arabia G20 calls for phasing out 'fossil fuel
- Thread starter tay
- Start date
and in 2012 Harper Conservatives said they still planned to eliminate what some are claiming... doesn't exist!
Unlike you, I won't deny that a certain sector of the economy gets some kind of government support.
Keep dancing though.
It just keeps fueling the issue.
Ah ha! Paperwork. Subsidies require application. I am still waiting to see the application for the ones given to Evil Corp LLC.
Wynne giving Cisco cash is a subsidy. Does Evil Corp get cash like that?
Yes or no?
Yep.
This is real simple for most people. If the tax bill is X, and you get a tax credit or deduction from the government for your wonderfulness, it's a subsidy.
Anyone who says different is selling something.
Let’s cut government fossil fuel subsidies and free up billions for more productive investment
This week in London, the Overseas Development Institute launched a new report on fossil fuel subsidies in G20 countries. The report encourages national and sub-national governments to stop subsidising wasteful and inefficient fossil fuel extraction and use, and to move towards more sustainable sources of long-term economic growth. It describes federal and British Columbia government subsidies to the fossil fuel sector as a “reckless use of public funds.” In addition to significant tax subsidies for domestic natural gas and coal exploration, Canadian taxpayers are also subsidising fossil fuel exploration abroad, via financing from Export Development Canada which provided approximately $3.2 billion in financial support for overseas fossil fuel exploration projects between 2012-14.
Across the water in Venice, the Climate Policy Initiative published a complementary report, looking at the economic potential of industries and economies beyond the 20th century fossil fuel-centric industrial model. Globally, governments own over half of fossil fuel production and control as much as 70% of oil and gas production through companies that are wholly or majority owned by governments. In Canada, government ownership has been limited following privatizations in the energy sector, but federal and provincial governments (via taxpayers) provide billions of dollars a year for fossil fuel exploration and development via tax incentives, soft loans, and research and development assistance for oil sands technology.
Various subsidies to fossil fuels in Canada, calculated at approximately $2.8 billion in 2008, come mostly in the form of tax breaks, generous corporate law provisions and the use of “flow-through” share structures – which permit exploration and development expense tax credits to be transferred to investors via their shares - and direct spending on industry-related research programs, identified in the Auditor General’s 2012 report. Most of this government financial support is directed at oil sands, offshore, and other high-cost oil, gas and coal projects.
Let’s cut government fossil fuel subsidies and free up billions for more productive investment | Vancouver Observer
This week in London, the Overseas Development Institute launched a new report on fossil fuel subsidies in G20 countries. The report encourages national and sub-national governments to stop subsidising wasteful and inefficient fossil fuel extraction and use, and to move towards more sustainable sources of long-term economic growth. It describes federal and British Columbia government subsidies to the fossil fuel sector as a “reckless use of public funds.” In addition to significant tax subsidies for domestic natural gas and coal exploration, Canadian taxpayers are also subsidising fossil fuel exploration abroad, via financing from Export Development Canada which provided approximately $3.2 billion in financial support for overseas fossil fuel exploration projects between 2012-14.
Across the water in Venice, the Climate Policy Initiative published a complementary report, looking at the economic potential of industries and economies beyond the 20th century fossil fuel-centric industrial model. Globally, governments own over half of fossil fuel production and control as much as 70% of oil and gas production through companies that are wholly or majority owned by governments. In Canada, government ownership has been limited following privatizations in the energy sector, but federal and provincial governments (via taxpayers) provide billions of dollars a year for fossil fuel exploration and development via tax incentives, soft loans, and research and development assistance for oil sands technology.
Various subsidies to fossil fuels in Canada, calculated at approximately $2.8 billion in 2008, come mostly in the form of tax breaks, generous corporate law provisions and the use of “flow-through” share structures – which permit exploration and development expense tax credits to be transferred to investors via their shares - and direct spending on industry-related research programs, identified in the Auditor General’s 2012 report. Most of this government financial support is directed at oil sands, offshore, and other high-cost oil, gas and coal projects.
Let’s cut government fossil fuel subsidies and free up billions for more productive investment | Vancouver Observer
sub·si·dy
ˈsəbsədē/
noun
1.
a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
"a farm subsidy"
a sum of money granted to support an arts organization or other undertaking held to be in the public interest.
a grant or contribution of money.
synonyms: grant, allowance, endowment, contribution, donation, bursary, handout; More
2.
historical
a parliamentary grant to the sovereign for state needs.tax cred·it
noun
an amount of money that can be offset against a tax liability
Tax cred·it
noun
an amount of money that can be offset against a tax liability.
ˈsəbsədē/
noun
1.
a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
"a farm subsidy"
a sum of money granted to support an arts organization or other undertaking held to be in the public interest.
a grant or contribution of money.
synonyms: grant, allowance, endowment, contribution, donation, bursary, handout; More
2.
historical
a parliamentary grant to the sovereign for state needs.tax cred·it
noun
an amount of money that can be offset against a tax liability
Tax cred·it
noun
an amount of money that can be offset against a tax liability.
Yep. You know that to accountants, money that you get and money that you don't have to pay are the exact same thing?
The renewables business can be kick-@ss if you play your cards right.
I understand that one of the pipeline companies bought-up a bunch of wind turbines from the Ontario gvt... The beauty of it is that the gvt (Ont) has guaranteed a fixed return to the new owners whether or not the blades are turning
I want my cash subsidy MF... I'm not kidding
Read what you posted closely....
With a 600% mark up how can renewables fail? They can be bought direct without the 600% gouging?
from the Office of the Auditor General of Canada: --- 2012 Fall Report of the Commissioner of the Environment and Sustainable Development; specific to Chapter 4 of the report: A Study of Federal Support to the Fossil Fuel Sector
news release: Canada has taken positive steps to reduce federal subsidies for fossil fuels
Ottawa, 5 February 2013—Federal subsidies to the fossil fuel sector are declining in line with Canada’s international commitment, made in part to reduce greenhouse gas emissions, says Scott Vaughan, Commissioner of the Environment and Sustainable Development, in a report tabled today in Parliament. Fossil fuels are non-renewable sources of energy such as coal, oil and natural gas. The study was undertaken to provide Parliament with information on federal programs and activities that support the fossil fuel sector in Canada.
“At the G20 meetings in 2009, Canada committed to rationalize and phase out inefficient fossil fuel subsidies,” said Mr. Vaughan. “We found that the federal government has taken action in line with this commitment.”
The study found that direct federal spending to support the fossil fuel sector has decreased since 2000. Direct expenditures totalled $508 million during the five year period covered by the study. The study noted that support for cleaner technologies continues to increase. In addition, the government is phasing out some tax incentives that favoured the fossil fuel sector.
At the same time, the study identified a number of other tax incentives that remain in place and provide a significant amount of support for fossil fuel extraction. The estimated cost of tax expenditures that Finance Canada links specifically to the fossil fuel sector totalled $1.47 billion over the past five years. Over the same period, an additional $2 billion in tax expenditures is attributed to the oil, gas, mining, and clean energy sectors, in which fossil fuels represent a majority of revenue.
report details - Main Points:
The government has a broad range of programs that provide support to the fossil fuel sector. That support can be grouped into two main types: direct spending through various programs; and tax expenditures under the Income Tax Act, which represent the majority of financial support.
Based on the data that the government provided to us, the majority (97 percent) of direct spending to support the fossil fuel sector was for research and development, more than half of which related to clean technology. Other direct spending went to economic development activities. Total direct spending amounted to $508 million over the fiscal period 2007–08 to 2011–12. Extended over 30 years, this would represent a significant decline in direct spending support to the sector since the 30 years preceding our 2000 study of government support for energy investments.
The costs of tax expenditures are not as easily determined as are direct expenditures, due to limitations in data availability and the methodological challenges of developing cost estimates.
The estimated costs of tax expenditures that Finance Canada was able to attribute specifically to the fossil fuel sector amounted to $1.47 billion over the fiscal period 2006–07 to 2010–11, primarily relating to the accelerated capital cost allowance for oil sands projects. This tax expenditure is being phased out over four years. A number of other tax expenditures are also being phased out over varying time periods. The estimated costs of tax expenditures attributable to the oil and gas, mining, and clean energy sectors as a whole amounted to about $2 billion, accounted for largely by deductions for flow-through shares. Finance Canada was unable to estimate the proportion of this support that was attributable specifically to the fossil fuel sector. For other tax expenditures, such as the accelerated capital cost allowance for mining and Canadian exploration expenses, the Department was unable to provide an estimate of the costs.
Ottawa, 5 February 2013—Federal subsidies to the fossil fuel sector are declining in line with Canada’s international commitment, made in part to reduce greenhouse gas emissions, says Scott Vaughan, Commissioner of the Environment and Sustainable Development, in a report tabled today in Parliament. Fossil fuels are non-renewable sources of energy such as coal, oil and natural gas. The study was undertaken to provide Parliament with information on federal programs and activities that support the fossil fuel sector in Canada.
“At the G20 meetings in 2009, Canada committed to rationalize and phase out inefficient fossil fuel subsidies,” said Mr. Vaughan. “We found that the federal government has taken action in line with this commitment.”
The study found that direct federal spending to support the fossil fuel sector has decreased since 2000. Direct expenditures totalled $508 million during the five year period covered by the study. The study noted that support for cleaner technologies continues to increase. In addition, the government is phasing out some tax incentives that favoured the fossil fuel sector.
At the same time, the study identified a number of other tax incentives that remain in place and provide a significant amount of support for fossil fuel extraction. The estimated cost of tax expenditures that Finance Canada links specifically to the fossil fuel sector totalled $1.47 billion over the past five years. Over the same period, an additional $2 billion in tax expenditures is attributed to the oil, gas, mining, and clean energy sectors, in which fossil fuels represent a majority of revenue.
report details - Main Points:
The government has a broad range of programs that provide support to the fossil fuel sector. That support can be grouped into two main types: direct spending through various programs; and tax expenditures under the Income Tax Act, which represent the majority of financial support.
Based on the data that the government provided to us, the majority (97 percent) of direct spending to support the fossil fuel sector was for research and development, more than half of which related to clean technology. Other direct spending went to economic development activities. Total direct spending amounted to $508 million over the fiscal period 2007–08 to 2011–12. Extended over 30 years, this would represent a significant decline in direct spending support to the sector since the 30 years preceding our 2000 study of government support for energy investments.
The costs of tax expenditures are not as easily determined as are direct expenditures, due to limitations in data availability and the methodological challenges of developing cost estimates.
The estimated costs of tax expenditures that Finance Canada was able to attribute specifically to the fossil fuel sector amounted to $1.47 billion over the fiscal period 2006–07 to 2010–11, primarily relating to the accelerated capital cost allowance for oil sands projects. This tax expenditure is being phased out over four years. A number of other tax expenditures are also being phased out over varying time periods. The estimated costs of tax expenditures attributable to the oil and gas, mining, and clean energy sectors as a whole amounted to about $2 billion, accounted for largely by deductions for flow-through shares. Finance Canada was unable to estimate the proportion of this support that was attributable specifically to the fossil fuel sector. For other tax expenditures, such as the accelerated capital cost allowance for mining and Canadian exploration expenses, the Department was unable to provide an estimate of the costs.
Nice I found the subsidies. Who is subsidized?
4.55 This section describes the programs and activities identified as*direct spending support to the fossil fuel sector by*9 of the 10*departments and agencies. The descriptions include the amount of*support the entities provided for the period 2007–08 to 2011–12. Support provided by Finance Canada through the tax system is presented in the section Support through tax expenditures.
Natural Resources Canada
4.56 Natural Resources Canada conducts innovative scientific research and is an established leader in science and technology in the*fields of energy, forests, and minerals and metals.
4.57 Research and development. Natural Resources Canada provided the following funding:
$88*million for basic research to fill knowledge and technological gaps aimed at reducing environmental risks from fossil fuel production;
$10.1*million for research to improve production and transportation of fossil fuels; and
$215.7*million for clean technology research such as carbon capture and storage. This support went to academic institutions such as the*Institute for Sustainable Energy, Environment and Economy (ISEEE) at the University of Calgary; research associations such as*the Carbon Capture and Storage Research Consortium of Nova*Scotia; and federal science-based departments and agencies.
Natural Sciences and Engineering Research Council
4.58 The Natural Sciences and Engineering Research Council (NSERC) is an important funder of direct costs of research in the*natural sciences and engineering at Canadian universities and*colleges.
4.59 Research and development. Through peer-reviewed funding across a variety of sectors, NSERC provided a total of $70.9*million for research on fossil fuels. Research projects in the oil sands included restoration and remediation of surface mining sites, and the search for better ways to remove unwanted solids from oil wells and for substances that speed up chemical reactions to help extract more oil from the oil sands. Projects in other areas included research to provide the mining industry with better information to help it find and exploit new deposits, training for students wishing to work in the industry, and support to increase Canada’s competitive advantage in the mining sector. NSERC’s support for research and development broke down as*follows:
$6.4*million for basic research,
$26.2*million for production and transportation,
$9.9*million for research into exploration and extraction,
$17*million for clean technology, and
$11.4*million for reclamation and remediation.
National Research Council
4.60 The National Research Council (NRC) is a government research organization responsible for undertaking scientific and industrial research, publishing and selling scientific and technical information, and providing scientific and technological services to the research and industrial communities.
4.61 Research and development. Within the life sciences and frontier sciences areas, the National Research Council conducted research under the following objectives:
$2.8*million for basic research,
$2.9*million for clean technology research, and
$883,000*for reclamation and remediation.
4.62 Most of NRC’s fossil fuel research was related to engineering activities that fell across a variety of research objectives, and was conducted by the Industrial Materials Institute, the Institute for Fuel*Cell Innovation, and the Institute for Chemical Process and Environmental Technology (Case*Study*2). This accounted for $21.7*million, or 77*percent of NRC’s total expenditures on fossil fuels.
4.55 This section describes the programs and activities identified as*direct spending support to the fossil fuel sector by*9 of the 10*departments and agencies. The descriptions include the amount of*support the entities provided for the period 2007–08 to 2011–12. Support provided by Finance Canada through the tax system is presented in the section Support through tax expenditures.
Natural Resources Canada
4.56 Natural Resources Canada conducts innovative scientific research and is an established leader in science and technology in the*fields of energy, forests, and minerals and metals.
4.57 Research and development. Natural Resources Canada provided the following funding:
$88*million for basic research to fill knowledge and technological gaps aimed at reducing environmental risks from fossil fuel production;
$10.1*million for research to improve production and transportation of fossil fuels; and
$215.7*million for clean technology research such as carbon capture and storage. This support went to academic institutions such as the*Institute for Sustainable Energy, Environment and Economy (ISEEE) at the University of Calgary; research associations such as*the Carbon Capture and Storage Research Consortium of Nova*Scotia; and federal science-based departments and agencies.
Natural Sciences and Engineering Research Council
4.58 The Natural Sciences and Engineering Research Council (NSERC) is an important funder of direct costs of research in the*natural sciences and engineering at Canadian universities and*colleges.
4.59 Research and development. Through peer-reviewed funding across a variety of sectors, NSERC provided a total of $70.9*million for research on fossil fuels. Research projects in the oil sands included restoration and remediation of surface mining sites, and the search for better ways to remove unwanted solids from oil wells and for substances that speed up chemical reactions to help extract more oil from the oil sands. Projects in other areas included research to provide the mining industry with better information to help it find and exploit new deposits, training for students wishing to work in the industry, and support to increase Canada’s competitive advantage in the mining sector. NSERC’s support for research and development broke down as*follows:
$6.4*million for basic research,
$26.2*million for production and transportation,
$9.9*million for research into exploration and extraction,
$17*million for clean technology, and
$11.4*million for reclamation and remediation.
National Research Council
4.60 The National Research Council (NRC) is a government research organization responsible for undertaking scientific and industrial research, publishing and selling scientific and technical information, and providing scientific and technological services to the research and industrial communities.
4.61 Research and development. Within the life sciences and frontier sciences areas, the National Research Council conducted research under the following objectives:
$2.8*million for basic research,
$2.9*million for clean technology research, and
$883,000*for reclamation and remediation.
4.62 Most of NRC’s fossil fuel research was related to engineering activities that fell across a variety of research objectives, and was conducted by the Industrial Materials Institute, the Institute for Fuel*Cell Innovation, and the Institute for Chemical Process and Environmental Technology (Case*Study*2). This accounted for $21.7*million, or 77*percent of NRC’s total expenditures on fossil fuels.
How much more evidence needs to be splashed in their faces for them to accept that they exist?
This is worse than climate denial.
This is worse than climate denial.
Atlantic Canada Opportunities Agency
4.63 The Atlantic Canada Opportunities Agency (ACOA) strives to create opportunities for economic growth in Atlantic Canada through enterprise and community development, as well as advocacy at the national level.
4.64 Research and development. Over 80*percent of ACOA’s support to the fossil fuel sector was provided to 13*projects through the Agency’s Atlantic Innovation Fund. This support included
$2.1*million for basic research,
$18.4*million for research into exploration and extraction, and
$933,000*for production and transportation.
4.65 Fossil fuel projects included research into applications of wireless systems in the petroleum industry, the use of magnetic resonance imaging (MRI) to analyze petroleum reservoirs, and the production of*ultraclean diesel. Support provided by ACOA to universities was highlighted in Case*Study*1.
4.66 Economic development. The Business Development Program and Entrepreneurship and Skills Development Program fund projects in a variety of economic sectors. In the fossil fuel sector, these included projects to expand marine and offshore operations, purchase equipment and infrastructure, fund staff training on new equipment, and develop in-house engineering expertise and pipeline capabilities. In total, these programs provided $4.5*million in small and medium enterprise development funding.
Industry Canada
4.67 Industry Canada works to improve conditions for investment, improve Canada’s innovation performance, increase Canada’s share of global trade, and build a fair, efficient, and competitive marketplace.
4.68 Research and development. Through the Technology Partnerships Canada program, Industry Canada provided $1.5*million to support exploration and extraction. Industry Canada also manages funding agreements with the Canada Foundation for Innovation and Genome Canada, which are independent non-governmental organizations responsible for allocating funding according to objectives outlined in their funding agreements. These agreements supported research and development as follows:
$7.5*million for basic research,
$448,000*for production and transportation,
$960,000*for research into exploration and extraction,
$6.6*million for clean technology, and
$368,000*for reclamation and remediation.
4.69 Research areas included unconventional sources of oil and gas,*such as the oil sands, and greener production and extraction of fossil fuels.
4.70 Industry Canada also manages a funding agreement providing a*one-time grant to the Canada School of Energy and Environment located in Calgary, which included $6.75*million supporting the fossil fuel sector. This funding aimed to enhance collaboration and knowledge dissemination in energy and environmental research, and to facilitate technology transfer and commercialization by funding proof of principle projects (early research products being moved into application or commercialization).
Sustainable Development Technology Canada
4.71 Sustainable Development Technology Canada (SDTC) focuses on adding sustainability to Canada’s fossil fuel sector. To this end, it operates two*funds that focus on developing and demonstrating new technologies as they prove their viability in full-scale, real-world situations. The SD Tech Fund supports projects that address climate change, air quality, clean water, and clean soil. The NextGen Biofuels Fund supports the establishment of large demonstration-scale facilities for the production of renewable fuels. We did not include the latter fund in this study because biofuels were outside its scope.
4.72 Research and development. SDTC provided $23.7*million in support to the fossil fuel sector through a variety of clean technology projects. Carbon capture and storage, enhanced oil recovery methods (Case Study*3), and technologies to better identify gas leaks are examples of the types of projects SDTC has funded.
It looks like fed agencies are getting the subsidies Flawssy.
Western Economic Diversification Canada
4.73 Western Economic Diversification Canada was established to improve the long-term economic competitiveness of western Canada. Its programs support a wide range of initiatives, including innovation and research, business development, and community economic development.
4.74 Economic development. Through programs such as the Western Economic Partnership Agreements and the Canada Saskatchewan Northern Development Agreement, Western Diversification Canada provides contributions to small businesses, universities, research institutes, and industry associations. The Western Diversification Program is the main program through which the organization makes investments in the economy. In all, the Department provided support to the fossil fuel sector amounting to $2.3*million for small and medium enterprise development, $2.1*million for training, and $4.7*million for industry development.
4.75 Research and development. Through its various programs, Western Diversification Canada also supports research and development. Most of this funding is provided through Western Economic Partnership Agreements, which are multi-year federal–provincial funding commitments. Support for research and development in the fossil fuel sector through these agreements and other programs totalled
$2.8*million for basic research,
$1.3*million for exploration and extraction,
$863,000*for production and transportation, and
$4.6*million for clean technology.
Canadian International Development Agency
4.76 The Canadian International Development Agency (CIDA) funds international development programs and projects through contributions to Canadian and international institutions. It also enters into contracts with Canadian companies to provide assistance in implementing programs and projects.
4.77 Economic development. Through a single project, CIDA provided a Canadian industry association with $2.4*million to help governments of developing countries better manage their fossil fuel sectors.
Foreign Affairs and International Trade Canada
4.78 Foreign Affairs and International Trade Canada supported the*fossil fuel sector through direct spending related to research and*development.
4.79 Research and development. The Global Opportunities for*Associations program contributed money to support national associations carrying out new or expanded international collaborations in research and development, for the benefit of the entire industry. Foreign Affairs and International Trade Canada also provided grants through the International Science and Technology Partnerships Program (ISTPP) and the Going Global Innovation program. Through*these programs, the Department provided
$53,500*for basic research,
$77,000*for production,
$15,000*for reclamation and remediation, and
$65,000*for clean technology.
And now for the Tax Credits
Support through tax expenditures
Department of Finance Canada
4.80 The aspects of the Department of Finance Canada’s mandate most relevant to this study include developing tax policies and providing economic advice to the federal government. The Department also prepares the federal budget, administers the transfer of federal funds to provinces and territories, and monitors economic and financial developments in Canada.
4.81 Tax expenditures. Most of the tax expenditures that support the fossil fuel sector identified by Finance Canada for this study are accelerated deductions. Accelerated deductions encourage investment by allowing businesses to write off the capital cost of certain assets faster than if those costs were written off over the useful life of the asset, reducing taxes payable in the short term. These deductions do not affect the overall taxes a corporation pays in the long term, but allow a corporation to defer its taxes to a future taxation period.
4.82 In the years between the Commissioner’s 2000*study and this study, Finance Canada continued to review the effectiveness of its tax expenditures related to the fossil fuel sector. A number of such expenditures—for example, the Resource Allowance and the Transitional Arrangement for the Alberta Royalty Tax Credit, were phased out by*2007. Other expenditures that have been or are being phased out are noted in the following paragraph (indicated by *).
4.83 The following tax expenditures were available to the fossil fuel sector during the study period:
Earned depletion*. This incentive was designed to encourage corporations to undertake exploration and development. This incentive entitled corporations in the oil and gas and mining sectors to an extra deduction of up to 33.3*percent of certain expenses. Although it has been phased out, companies are still entitled to deduct depletion amounts earned before*1990. This expenditure was estimated to cost $50*million in the*2006–07 fiscal year, decreasing to between $5*million and $6*million annually over the rest of the study period.
Canadian exploration expense*. This is a cost incurred to determine the existence, location, extent, or quality of a crude oil or natural gas reservoir or mineral resource not previously known to exist. The cost also includes pre-production development expenses incurred to bring a new mine into production. Expenses are deductible at a rate of 100*percent in the year incurred. Under a neutral tax system, successful exploration and pre-production expenses would normally be capitalized and amortized over the life of the asset. Budget*2011 announced that development expenses incurred to bring a new oil sands mine into production, which had been treated as Canadian exploration expenses, will gradually be treated as Canadian development expenses (meaning they would be deductible at the lower rate of 30*percent annually), with implementation to occur between*2013 and 2016. Estimates for this expenditure were not available.
Canadian development expense for oil sands resource properties*. Canadian development expenses (CDE) can be deducted at the accelerated rate of 30*percent annually. Before Budget*2011, the costs of acquiring oil sands properties could be treated as CDE. This rate was more rapid than that provided to similar expenses in the conventional oil and gas sector. Budget*2011 announced that such expenses would no longer qualify as CDE. Estimates for this expenditure were not available.
Flow-through share deductions. Flow-through shares are a government-authorized tax shelter. Corporations can transfer certain unused tax deductions to investors who, in addition to receiving an equity interest in the corporation, are entitled to claim deductions for Canadian exploration and development expenses (described in previous bulleted points). Investors are typically willing to pay more for such shares because of the flow-through tax deductions allowed. Flow-through shares are a financing mechanism used mostly by corporations without sufficient income to make immediate use of the available tax deductions. Cost estimates for this expenditure included the mining and clean energy sectors, and ranged from $220*million to $530*million annually over the study period.
Reclassification of expenses under flow-through shares. Small corporations in the oil and gas sector are entitled to reclassify the first $1*million of Canadian development expenses passed on to shareholders under a flow-through share agreement (deductible at 30*percent) as Canadian exploration expenses (deductible at 100*percent). This expenditure was estimated to cost $8*million in the*2006–07 fiscal year, but to generate revenue (a negative expenditure) of between $7*million and $15*million annually between*2007–08 and*2010–11.
Deductibility of contributions to a qualifying environmental trust. Corporations that are required to set aside funds in environmental trusts—to ensure that adequate amounts are available to conduct restoration activities at the end of operations—are allowed to deduct those contributions as expenses in the year the contribution is made instead of when the costs of restoration are actually incurred. Cost estimates for this expenditure included the mining and clean energy sectors and were less than $3*million annually over the study period.
Accelerated capital cost allowance (ACCA) for oil sands*. This incentive was provided to improve cash flows to oil sands projects, to allow Canada to compete with other jurisdictions in securing large investments, and to promote the development of the oil sands. Budget*2007 announced the phase-out of this measure over four*years, beginning in*2011. At the time of Budget*2007, the costs of this expenditure were forecast to be on average $300*million annually over the study period.
Accelerated capital cost allowance for mining. This incentive is similar to the ACCA for the oil sands (described in the previous bulleted point), but remains in place for the mining sector, including coal mines. Estimates for this expenditure were not available.
4.84 Finance Canada does not collect the data necessary to calculate the portion of tax expenditures attributable specifically to the fossil fuel sector. However, the Department was able to provide aggregate estimates of the costs of some of the previously noted tax expenditures attributable to a group of sectors, including mining, oil and gas, and clean energy. Based on data available from Statistics Canada, fossil fuels represent a majority of the revenue generated by this group. Exhibit*4.7 shows the estimated cost of each tax expenditure, where available, over the study period
Why so much spent on greening up oil?
4.63 The Atlantic Canada Opportunities Agency (ACOA) strives to create opportunities for economic growth in Atlantic Canada through enterprise and community development, as well as advocacy at the national level.
4.64 Research and development. Over 80*percent of ACOA’s support to the fossil fuel sector was provided to 13*projects through the Agency’s Atlantic Innovation Fund. This support included
$2.1*million for basic research,
$18.4*million for research into exploration and extraction, and
$933,000*for production and transportation.
4.65 Fossil fuel projects included research into applications of wireless systems in the petroleum industry, the use of magnetic resonance imaging (MRI) to analyze petroleum reservoirs, and the production of*ultraclean diesel. Support provided by ACOA to universities was highlighted in Case*Study*1.
4.66 Economic development. The Business Development Program and Entrepreneurship and Skills Development Program fund projects in a variety of economic sectors. In the fossil fuel sector, these included projects to expand marine and offshore operations, purchase equipment and infrastructure, fund staff training on new equipment, and develop in-house engineering expertise and pipeline capabilities. In total, these programs provided $4.5*million in small and medium enterprise development funding.
Industry Canada
4.67 Industry Canada works to improve conditions for investment, improve Canada’s innovation performance, increase Canada’s share of global trade, and build a fair, efficient, and competitive marketplace.
4.68 Research and development. Through the Technology Partnerships Canada program, Industry Canada provided $1.5*million to support exploration and extraction. Industry Canada also manages funding agreements with the Canada Foundation for Innovation and Genome Canada, which are independent non-governmental organizations responsible for allocating funding according to objectives outlined in their funding agreements. These agreements supported research and development as follows:
$7.5*million for basic research,
$448,000*for production and transportation,
$960,000*for research into exploration and extraction,
$6.6*million for clean technology, and
$368,000*for reclamation and remediation.
4.69 Research areas included unconventional sources of oil and gas,*such as the oil sands, and greener production and extraction of fossil fuels.
4.70 Industry Canada also manages a funding agreement providing a*one-time grant to the Canada School of Energy and Environment located in Calgary, which included $6.75*million supporting the fossil fuel sector. This funding aimed to enhance collaboration and knowledge dissemination in energy and environmental research, and to facilitate technology transfer and commercialization by funding proof of principle projects (early research products being moved into application or commercialization).
Sustainable Development Technology Canada
4.71 Sustainable Development Technology Canada (SDTC) focuses on adding sustainability to Canada’s fossil fuel sector. To this end, it operates two*funds that focus on developing and demonstrating new technologies as they prove their viability in full-scale, real-world situations. The SD Tech Fund supports projects that address climate change, air quality, clean water, and clean soil. The NextGen Biofuels Fund supports the establishment of large demonstration-scale facilities for the production of renewable fuels. We did not include the latter fund in this study because biofuels were outside its scope.
4.72 Research and development. SDTC provided $23.7*million in support to the fossil fuel sector through a variety of clean technology projects. Carbon capture and storage, enhanced oil recovery methods (Case Study*3), and technologies to better identify gas leaks are examples of the types of projects SDTC has funded.
It looks like fed agencies are getting the subsidies Flawssy.
Western Economic Diversification Canada
4.73 Western Economic Diversification Canada was established to improve the long-term economic competitiveness of western Canada. Its programs support a wide range of initiatives, including innovation and research, business development, and community economic development.
4.74 Economic development. Through programs such as the Western Economic Partnership Agreements and the Canada Saskatchewan Northern Development Agreement, Western Diversification Canada provides contributions to small businesses, universities, research institutes, and industry associations. The Western Diversification Program is the main program through which the organization makes investments in the economy. In all, the Department provided support to the fossil fuel sector amounting to $2.3*million for small and medium enterprise development, $2.1*million for training, and $4.7*million for industry development.
4.75 Research and development. Through its various programs, Western Diversification Canada also supports research and development. Most of this funding is provided through Western Economic Partnership Agreements, which are multi-year federal–provincial funding commitments. Support for research and development in the fossil fuel sector through these agreements and other programs totalled
$2.8*million for basic research,
$1.3*million for exploration and extraction,
$863,000*for production and transportation, and
$4.6*million for clean technology.
Canadian International Development Agency
4.76 The Canadian International Development Agency (CIDA) funds international development programs and projects through contributions to Canadian and international institutions. It also enters into contracts with Canadian companies to provide assistance in implementing programs and projects.
4.77 Economic development. Through a single project, CIDA provided a Canadian industry association with $2.4*million to help governments of developing countries better manage their fossil fuel sectors.
Foreign Affairs and International Trade Canada
4.78 Foreign Affairs and International Trade Canada supported the*fossil fuel sector through direct spending related to research and*development.
4.79 Research and development. The Global Opportunities for*Associations program contributed money to support national associations carrying out new or expanded international collaborations in research and development, for the benefit of the entire industry. Foreign Affairs and International Trade Canada also provided grants through the International Science and Technology Partnerships Program (ISTPP) and the Going Global Innovation program. Through*these programs, the Department provided
$53,500*for basic research,
$77,000*for production,
$15,000*for reclamation and remediation, and
$65,000*for clean technology.
And now for the Tax Credits
Support through tax expenditures
Department of Finance Canada
4.80 The aspects of the Department of Finance Canada’s mandate most relevant to this study include developing tax policies and providing economic advice to the federal government. The Department also prepares the federal budget, administers the transfer of federal funds to provinces and territories, and monitors economic and financial developments in Canada.
4.81 Tax expenditures. Most of the tax expenditures that support the fossil fuel sector identified by Finance Canada for this study are accelerated deductions. Accelerated deductions encourage investment by allowing businesses to write off the capital cost of certain assets faster than if those costs were written off over the useful life of the asset, reducing taxes payable in the short term. These deductions do not affect the overall taxes a corporation pays in the long term, but allow a corporation to defer its taxes to a future taxation period.
4.82 In the years between the Commissioner’s 2000*study and this study, Finance Canada continued to review the effectiveness of its tax expenditures related to the fossil fuel sector. A number of such expenditures—for example, the Resource Allowance and the Transitional Arrangement for the Alberta Royalty Tax Credit, were phased out by*2007. Other expenditures that have been or are being phased out are noted in the following paragraph (indicated by *).
4.83 The following tax expenditures were available to the fossil fuel sector during the study period:
Earned depletion*. This incentive was designed to encourage corporations to undertake exploration and development. This incentive entitled corporations in the oil and gas and mining sectors to an extra deduction of up to 33.3*percent of certain expenses. Although it has been phased out, companies are still entitled to deduct depletion amounts earned before*1990. This expenditure was estimated to cost $50*million in the*2006–07 fiscal year, decreasing to between $5*million and $6*million annually over the rest of the study period.
Canadian exploration expense*. This is a cost incurred to determine the existence, location, extent, or quality of a crude oil or natural gas reservoir or mineral resource not previously known to exist. The cost also includes pre-production development expenses incurred to bring a new mine into production. Expenses are deductible at a rate of 100*percent in the year incurred. Under a neutral tax system, successful exploration and pre-production expenses would normally be capitalized and amortized over the life of the asset. Budget*2011 announced that development expenses incurred to bring a new oil sands mine into production, which had been treated as Canadian exploration expenses, will gradually be treated as Canadian development expenses (meaning they would be deductible at the lower rate of 30*percent annually), with implementation to occur between*2013 and 2016. Estimates for this expenditure were not available.
Canadian development expense for oil sands resource properties*. Canadian development expenses (CDE) can be deducted at the accelerated rate of 30*percent annually. Before Budget*2011, the costs of acquiring oil sands properties could be treated as CDE. This rate was more rapid than that provided to similar expenses in the conventional oil and gas sector. Budget*2011 announced that such expenses would no longer qualify as CDE. Estimates for this expenditure were not available.
Flow-through share deductions. Flow-through shares are a government-authorized tax shelter. Corporations can transfer certain unused tax deductions to investors who, in addition to receiving an equity interest in the corporation, are entitled to claim deductions for Canadian exploration and development expenses (described in previous bulleted points). Investors are typically willing to pay more for such shares because of the flow-through tax deductions allowed. Flow-through shares are a financing mechanism used mostly by corporations without sufficient income to make immediate use of the available tax deductions. Cost estimates for this expenditure included the mining and clean energy sectors, and ranged from $220*million to $530*million annually over the study period.
Reclassification of expenses under flow-through shares. Small corporations in the oil and gas sector are entitled to reclassify the first $1*million of Canadian development expenses passed on to shareholders under a flow-through share agreement (deductible at 30*percent) as Canadian exploration expenses (deductible at 100*percent). This expenditure was estimated to cost $8*million in the*2006–07 fiscal year, but to generate revenue (a negative expenditure) of between $7*million and $15*million annually between*2007–08 and*2010–11.
Deductibility of contributions to a qualifying environmental trust. Corporations that are required to set aside funds in environmental trusts—to ensure that adequate amounts are available to conduct restoration activities at the end of operations—are allowed to deduct those contributions as expenses in the year the contribution is made instead of when the costs of restoration are actually incurred. Cost estimates for this expenditure included the mining and clean energy sectors and were less than $3*million annually over the study period.
Accelerated capital cost allowance (ACCA) for oil sands*. This incentive was provided to improve cash flows to oil sands projects, to allow Canada to compete with other jurisdictions in securing large investments, and to promote the development of the oil sands. Budget*2007 announced the phase-out of this measure over four*years, beginning in*2011. At the time of Budget*2007, the costs of this expenditure were forecast to be on average $300*million annually over the study period.
Accelerated capital cost allowance for mining. This incentive is similar to the ACCA for the oil sands (described in the previous bulleted point), but remains in place for the mining sector, including coal mines. Estimates for this expenditure were not available.
4.84 Finance Canada does not collect the data necessary to calculate the portion of tax expenditures attributable specifically to the fossil fuel sector. However, the Department was able to provide aggregate estimates of the costs of some of the previously noted tax expenditures attributable to a group of sectors, including mining, oil and gas, and clean energy. Based on data available from Statistics Canada, fossil fuels represent a majority of the revenue generated by this group. Exhibit*4.7 shows the estimated cost of each tax expenditure, where available, over the study period
Why so much spent on greening up oil?