Canada’s ‘carbo-state’

Many establishment politicians pay lip-service to the need to combat global warming. Canada’s Conservative prime minister, Stephen Harper, who defends the interests of the fossil fuel capitalists, doesn’t bother. But only a socialist alternative can really challenge the carbo-capitalists’ grip on Canadian politics, argues BILL HOPWOOD (CWI Canada).

Stephen Harper, the prime minister of Canada, has centred much of his economic and political strategy on making Canada the fifth-largest carbon exporter in the world. Even before the sharp drop in the price of oil, coal and natural gas, this strategy was damaging to other and more important parts of the economy. In spite of the dangers for humanity of climate change, the Canadian government, with the support of the provincial governments in British Columbia (BC) and Alberta, has been working to increase carbon exports even further.

The most recent report (2014) of the International Panel on Climate Change stated that changes to the earth’s climate are likely to cause "severe, pervasive and irreversible impacts for people and ecosystems". In spite of all the international conferences, however, global carbon emissions for 2014 were 40 billion tonnes, compared to 32 billion tonnes in 2010. Last year was the warmest on record, following 38 consecutive years of above-average temperatures.

Canada has the fifth-largest coal reserves in the world, and has increased production more than six-fold since the 1970s, to 65-75 million tonnes per year. More than $400 million is being invested to increase export capacity to over 82 million tonnes. Canada is also the world’s fifth-largest producer of natural gas. As conventional gas production declines, fracking has increased. This process is highly damaging to the environment because of the huge amounts of water mixed with toxic chemicals injected into the rock. This water is then contaminated. Fracking releases the highly reactive greenhouse gas, methane, needs large energy inputs to fracture the rock, and increases the likelihood of earthquakes.

Canada has the world’s third-largest reserves of oil, although most of it is in the form of tar-sand bitumen. This requires far more energy to extract, and water to process. It also causes much more environmental damage than conventional oil extraction. Tar-sands production is around two million barrels per day (2mpd), with the aim of increasing that to over 5mpd by 2030. There are five pipeline proposals to transport Alberta’s bitumen to deep-water ports in the Pacific Ocean, to northern BC, Vancouver, the Gulf of Mexico, and the Atlantic Ocean.

Therefore, Canada’s fossil fuel production is some of the most environmentally damaging in the world. Almost all the coal is extracted from huge open pits – with pollution to air, water and soil. The tar sands are infamous as one of the worst environmental disasters on the planet.

Overcoming barriers to export

Harper has faced many obstacles, including environmental regulations, Canadian scientists, First Nations and many people across the country, and has worked to weaken or remove them. Over the past seven years, the federal government has dismissed more than 2,000 scientists. It has cut back or closed down hundreds of programmes and world-renowned research facilities, which monitored smokestack emissions, hazardous wastes, food, oil spills, water quality and climate change.

The energy companies and their government have faced many legal and regulatory barriers to the rapid expansion of carbon exports, especially from Alberta’s tar sands. In January 2006, in Houston, Texas, a meeting organised by the Canadian and US governments explored ways to expand tar-sands production. One of the key concerns expressed were the regulations in place.

Since then, the government has dramatically ‘streamlined’ regulations, with the scrapping or gutting of many laws. This process has stepped up in the last few years. In 2011, Canada withdrew from the Kyoto protocol. The following year, it abolished the Canadian Environmental Assessment Act, replacing it with a much weaker body. This means that environmental assessments are no longer required for projects involving federal money, and the cabinet can overrule the assessment agency’s decisions.

The Canadian Environmental Protection Act was also weakened in 2012, as was the Fisheries Act, along with the Navigable Waters Protection Act. Before this change, over two million lakes and 8,500 rivers were protected. Now only 97 lakes and 62 rivers are protected. In 2013, the National Round Table on the Environment and the Economy was eliminated.

On the attack

The Canadian government has stepped up attacks on environmental groups and has had a host of conflicts with First Nations. For many years the government largely ignored First Nations, leaving many, especially those living on reserves, in poverty, lacking basic infrastructure, even clean water, and with under-funded education. The main activity of the state was to criminalise aboriginal people while ignoring the racist attacks on their rights and even existence. However, with the drive to increase resource extraction, conflicts with First Nations have increased. Many of the resources are on land claimed by indigenous peoples or access passes through their lands.

Initially, Harper’s strategy was to find a few leaders he could cut deals with, while ignoring the majority of people. However, this has utterly failed and he faces rising opposition with the growth of the Idle No More movement and increasing numbers of Nations opposing the extractive rape of the land. Over 130 First Nations across BC have signed up to stop the proposed tar-sands pipelines from Alberta to the coast. Many Nations have set up blockades and occupations, and have issued court challenges to extraction projects. Harper has zigzagged between ignoring, trying to coax and cajole, and, if that fails, bullying First Nations to accept his agenda. After decades of under-funding for reserves, in 2014 the government launched an attack on First Nations’ finances, in the name of transparency, with the threat to cut off funding for core services.

The government has ordered the Canada Revenue Agency to audit environmental groups and other critics to see if they infringe charity rules. It provided an extra $13.4 million for this audit, which has looked at 52 environmental or progressive groups. This has required the audited organisations to devote large amounts of staff time and resources to the audit. It has contributed to a climate of fear of losing charitable status among many organisations. No charity on the right wing of politics has been investigated.

The government has criticised environmental groups for taking funds from abroad, implying that they are anti-Canadian, while never commenting on the billions of foreign money pouring in to the tar sands. Most alarming of all in today’s context, the government has increasingly linked environmentalists to terrorists. A Royal Canadian Mounted Police report in 2014 stated: "There is a growing, highly organised and well-financed anti-Canada petroleum movement that consists of peaceful activists, militants and violent extremists who are opposed to society’s reliance on fossil fuels". The report speculates, without any evidence, about "violent environmental extremists [who] engage in unlawful activity".

At the same time, the Conservative government has introduced legislation which allows the security agencies to collect information on and disrupt the activities of suspected terrorist groups. The new law would allow the infiltration of environmental groups, and defines "activity that undermines the security of Canada" as anything that interferes with the economic or financial stability of Canada or with the country’s critical infrastructure.

Subsidising fossil fuels

The federal and provincial governments hand out large bribes to the fossil fuel industry. The Pembina Institute, in 2010, estimated that the Canadian government gives tax breaks of $2 billion a year. The provincial governments are also very generous. BC’s auditor general stated that the province gave $587 million of incentives to the fracking industry in 2014. They will receive another $1.25 billion to drill deep shale-gas wells. The government has given subsides of $840 million since 2004 to build roads and pipelines. Alberta provides an estimated $1.1 billion in subsidies to the tar sands.

The BC government is also planning to build a huge hydroelectric dam on the Peace River, to generate 5,000 gigawatt hours a year, all of which will be needed to condense natural gas to a liquid for export. The dam is expected to cost around $10 billion, which will be a further subsidy from the BC people to the fossil fuel industry. As if the existing handouts are not enough, in February 2015 Harper announced a further federal tax break, worth at least $50 million, to encourage the export of liquefied natural gas from BC.

These figures ignore the external costs of the fossil fuel industry, including the damage to the local environment through extraction, harm to people’s health and the contribution to climate change. These costs are not paid by the energy companies, but are paid by local communities, people and the environment.

Harper’s administration has spent millions of dollars promoting the fossil fuel industry. An advertising campaign in the US in support of the Keystone XL pipeline, paid for by the Canadian government, cost $24 million. Further millions were spent successfully lobbying the European Union not to label the tar sands ‘dirty oil’. Canadian politicians and civil servants have held hundreds of meetings to persuade the US and Europe to favour tar-sands oil. Harper has visited Washington DC and New York many times, acting like a second-hand oil sales rep. Except he does it on the taxpayers’ expense – for example, a hotel bill of $65,582.91 for his September 2013 visit to New York.

The government subsidies, lobbying and advertising, and the removal of environmental standards all demonstrate that the fossil fuel industry in Canada is not simply a product of market forces. It is the outcome of decisions by politicians to favour one section of the economy – at the cost to others.

Economic and environmental disaster

Although the fossil fuel industry receives large subsides it provides relatively few jobs. It is true that the Alberta tar sands do provide employment, but this huge environmental disaster zone provides far fewer than many other sectors. Even green energy jobs are catching up, with a fraction of the government support. Clean Energy Canada reported in 2014 that, "in 2012 there were 23,700 direct clean-energy sector jobs and 22,340 direct oil sands jobs".

Of course, there are more indirect jobs based on the tars sands. According to Statistics Canada, in 2012 the total number of jobs in oil and gas extraction was 57,305, with a further 70,000 in supporting jobs, yet in BC only 3,000 people are directly employed in oil and gas extraction. Over 2013 and 2014, the province’s net gas royalty receipts (after deducted subsidies) averaged $2.5 million a month, which is less than one tenth of one percent of BC government revenues.

Canada has vast natural resources and, from the first colonisation, has been an exporter of raw materials – from fur and timber to grain, and now carbon. Since 2000, the total value of Canadian exports has risen from $386 billion to $443 billion and carbon products have doubled in value from 14% to 28% of total exports. Over the same time, the value of manufactured goods and wood products has declined sharply.

This decline paints a grim picture of the costs of Harper’s economic policy. Between 2000 and 2010 Canada lost 570,000 manufacturing jobs. One example of the disaster, and insanity, of the energy exporting policies is the fate of the iron and steel industry. The main ingredients for making iron are iron ore, coal and limestone, all of which Canada has in abundance and which it exports. Until 1990, Canada was a net exporter of steel. Now, net imports account for 20% of steel used in Canada – mostly from the US, but also from China, Japan and South Korea. The policy of shipping raw materials half way round the world and then importing back the manufactured steel is an environmental and employment disaster.

By 2007, all of Canada’s steel mills were taken over by foreign-owned businesses, and many have been closed down. Hamilton, once the steel capital of Canada, no longer makes steel! This story is repeated across many industries as more and more of the economy relies on exporting unprocessed raw materials and then importing finished products. Most of the tar-sands production is exported as bitumen, with the refining taking place in the US, Europe and Asia.

The forestry industry was once a mainstay of the economy. As recently as 2000 it was the single-largest contributor to Canada’s trade surplus, outperforming the auto, oil and gas industries. In September 2004, 308,664 Canadians earned a living from logging, papermaking and wood products manufacturing. A decade later, the industry employed just 190,651 people. All across Canada mills have closed and jobs have disappeared. This in not due to a drop in demand for wood products and paper, in fact demand is up worldwide, although it has shifted from North America and Europe to Asia.

Harper’s strategy of basing the economy on the export of carbon was always a disaster for the climate and for humanity. It was also never a good economic policy, if the aim was to improve people’s living standards. But this was not Harper’s aim – as all his attacks on public services, trade union rights, etc, clearly demonstrate. His strategy, at best, would enormously enrich the fossil fuel industries, with a few well-paid jobs in this sector. Now, with the sharp drop in fossil fuels prices, this strategy is in tatters.

The only thing saving Harper is the lack of a campaign in support of a well-developed programme to provide good jobs in converting to a clean energy economy with massive public investment in public transit, building insulation and good quality public services. The barrier to this transformation is not technical or a lack of resources. The technology already exists to meet the world’s energy needs from clean energy. Canadian non-financial corporations are sitting on over $626 billion of dead money that they refuse to invest. This money, if under democratic public control, would go a long way to transforming the economy.