EnviroEconomics.ca

I had the pleasure of listening to Alberta’s Minister of Finance recently. She gave a good, but apologetic speech about how Alberta had to dip into the rainy day heritage (oil) fund to balance the books in the face of the global slowdown. While she is one of the luckiest finance ministers in the world, to not have to take her jurisdiction further into debt (ala Ontario), she is also one of the unluckiest. Why?

Economic obesity

At the end of the speech, she recognized an important oil type in the audience, and asked him a very good social planning question — what would you do to improve the welfare of Albertans? Well, this rather large balloon of a man slowly rose his hulk out of the chair and rumbled simply, “fix the oil royalty regime”.

And so it is no surprise to see today that the oil industry has launched a full scale marketing blitz looking for more oil subsides.

Big Oil makes case for carbon-capture subsidies

Based on calculations contained in the report, the ask is at least $3 billion in 2020, assuming a CCS cost of $150 tonne. With no national carbon price, the highest emitting sector in the country is asking for a subsidy of $85/ tonne.

While there is economic rationale due to market failures to support CCS innovation and learning by doing, the sheer size of this ask is ridiculous. Especially when so many Canadian emissions remain unpriced.