Category Archives: International

Canada’s Green Economy needs public investment

Canada, Climate Change, Economics, Energy and Resources, International, Politics, Renewables
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Both the Intergovernmental Panel and Climate Change and the International Energy Agency have concluded that public policies, rather than the availability of resources, are among the key determinants for a shift from fossil fuels to clean technology development and deployment.  Public banks are critical agents for change along these lines.

Public financial institutions and the green economy around the world

Starting with some of the largest public banks, in July 2013, both the World Bank and the European Investment Bank announced that they will limit to the bare minimum investments in fossil fuel projects, while shifting the lion’s share of their respective energy investments to renewables.

The World Bank’s Jim Yong Kim – the first scientist to head the institution – said it is impossible to tackle poverty without dealing with the effects of a warmer world.  “We need affordable energy to help end poverty and to build shared prosperity. We will also scale-up efforts to increase renewable energy and improve energy efficiency – according to countries’ needs and opportunities.”

Based on perspectives not very different from that of the World Bank, in July 2013, The European Investment Bank (EIB), in line with the current European Union climate policy, announced it will implement new lending criteria that skew heavily towards renewables and screen out nearly all coal and lignite plants.

The significance of the EIB shift is illustrated by the fact that the EIB invests, lends and leverages $13.2B/year for energy initiatives.  The leveraging of EIB investments in turn fosters private financing, especially important for the capital-intensive offshore wind sector.  Many offshore wind projects have benefited from the low cost EIB loans in recent years.

In the UK, the Green Investment Bank, headquartered in Glasgow, was created in 2012 with $3.6B (£3B) in initial capital to carry it through until 2015.  Its mission is to respond to the specific financing challenges of commercial green infrastructure projects by tackling the finance gaps which remain despite the advent of new government policies.  Like the EIB, this mission includes leveraging its investments to bring in other lenders and investors.

To raise additional capital, GIB’s capital base is, and will be, regularly reinforced with pollution permit proceeds and the newly announced carbon tax revenues.  Beginning in the 2014-2015 period, bonds will be issued to raise additional capital.

In Germany, the state bank, kfw, is backing offshore wind development to the tune of $7.2B (5B€).

Meanwhile, the Chinese Development Bank (CDB) has been a key player in making China the world’s largest clean tech player.  In 2012, total investments in renewables was $67.7B, compared to its closest rival, the US, with $56B in investments in that same year.

The CDB is a formidable player, especially because it appears to have no limits on the billions of dollars with which to work.  About 2 years ago, the CDB committed a whopping $45B over 5 years to smart grid development and deployment.  Smart grid platforms are the key to the massive integration of intermittent renewable energy production, such as energy from wind and solar sources, by storing surplus energy for redeployment as required.

More recently, the CDB provided Goldwind, a state-owned wind turbine manufacturer, with $6B to finance international business development.  Similarly, Ming Yang, a smaller Chinese turbine manufacturer, acquired $5B from the CDB for loans and credit facilities between 2011 and 2015 to prepare for its entry into international markets.

This significant CDB support for China’s clean tech sectors has contributed to accusations of global clean tech dumping – specifically from the US and the European Union.  Both the US and the EU have responded to the alleged dumping by imposing steep tariffs on imports of clean tech products from China.

By contrast, Canada has taken an opposite course by being oblivious to the problem of dumping of clean techs by China.  To this effect, the proposed Canada-China trade deal stipulates that there will be no commercial barriers applied to environmental technologies.  Evidently, the Harper regime is prepared to give China what it wants, in order for Canada to sell tar sands oil them.  Either the Harper administration is unaware of the significance of China’s request, it simply does not care, or a combination of both!

Yet another innovative model for public financial institutions to support domestic clean tech manufacturing is that of Brazil’s Banco Nacional de Desenvolvimento Economico e Social.  As of January, 2013, Banco Nacional requires that wind turbine manufacturers source 60% of components in Brazil and produce or assemble in Brazil at least 3 of the 4 main wind technology components – towers, blades, nacelles and hubs – between now and 2016.  Under the Banco Nacional model, turbine makers have to meet the staggered manufacturing phases established by the bank, which will be stepped up every six months, until 2016.

Turning to the US, there the US Export-Import Bank, which represents 7 US government agencies, was created to finance renewable energy projects in emerging markets and, most important, to support the US clean tech industry with its requirement for 30% US content.  India, one of the bank’s 9 key markets, accounted for approximately $7B of the its worldwide credit exposure as of the end of fiscal 2011.  Another example of Ex-Im Bank loans was the $1B credit package to fund wind power development in the Mekong Delta, Vietnam, in collaboration with the Vietnam Development Bank.

Lastly, there is the pension fund green investment model, such as that established by Denmark’s Dong Energy. Dong is 75% owned by the Government of Denmark and is involved in 30% of all offshore wind projects in the world.  Currently, Dong uses Danish pension funds for its financial activity in offshore wind projects in Denmark and partners with the Japanese trading firm Marubeni for equity financing for projects outside Denmark.

These government and pension fund connections have translated into Dong being a very special kind of energy investor in that 85% of its current portfolio is associated with fossil fuels and 15% renewables – but its mission is to reverse this ratio by 2040.

Canada falling behind

With the examples of the World Bank, the European Investment Bank China, the UK Green Investment Bank, Germany’s kfw, the Chinese Development Bank, the US’ Ex-Im Bank and Brazil’s Banco nacional, showing the way to the effect that publicly funded investment institutions can play critical roles in assuring a migration to renewables and clean techs, the question to raise in Canada is as follows:  Why can’t Canada do similar things via the Business Development Bank of Canada (BDC) and Export Development Canada?

Indeed these Canadian investment vehicles offer excellent options for the financing the development of Canada’s clean tech sectors.  The BDC, like the other institutions mentioned in this article, could leverage its venture capital funds to attract additional support from Canada’s private banks and financial cooperatives.  What an excellent way to take on the challenge of reaching US equivalency with regard to 20% of venture capital activity in 2011 and 2012 going to clean tech sectors.

As well, the BDC could take a page from Brazil’s Banco Nacional de Desenvolvimento Economico e Social and include Canadian content requirements, thus assuring optimal benefits for Canadian economic development and job creation.  It is  conceivable that BDC-supported local economic development along these lines could fly under the radar of free trade agreements.

As for an approach for supporting Canadian exports of clean technologies, the models described like those of the Chinese Development Bank and the US Export-Import Bank, may be tough acts to follow, since these institutions have billions of dollars to work with. Nevertheless, the fact that the US Ex-Im Bank brings together 7 US national government organizations, suggests this US model could provide some insights for a made-in-Canada model.  For example, if the Canadian International Development Agency would partner with Export Development Canada, the Government of Canada would be able to support the setting up of clean energy micro-grids in isolated communities without necessitating the prohibitively expensive land infrastructure connections to distant, centralized electricity generation plants.

Canada’s pension funds could also have a role to play, along the lines of Denmark’s partially pension-funded Dong Energy. There are Canadian precedents for major investments of pension funds in clean tech sectors.  For instance, in February, 2013, the Caisse de dépôt et placement du Québec – the financial arm for Quebec’s pension fund – invested $757M to purchase half of Dong Energy’s 50% share in the world’s largest offshore wind energy project, the UK’s 850 MW London Array.  Just prior to that, in January, the Caisse purchased $500M in shares of 11 Invenergy wind farms in the US and Canada, representing 1500 MW and including 2 wind projects in Canada, one of which is in Quebec.

This raises a second question: why can’t the Canada Pension Plan Investment Board (CPPIB) create a clean tech portfolio to optimize Canadian participation in one of the world’s fastest growing industries for job creation, the clean tech sector?

From my previous dealings with the CPPIB, I know that their answer is that their job is to get the maximum return for pensioners and, consequently, no particular preference is given for Canadian investments. This is faulty logic for 2 reasons.

First, it is not unusual for investment vehicles to be associated with more than one objective.  Second, and most importantly, investments in growth sectors in Canada that offer high-paying jobs would bring additional revenues for the CPPIB in the form of greater contributions from both employers and employees – in addition to the traditional form of returns on investments.   Indeed, from time-to-time, the Caisse has adopted priorities for investments in Quebec with similar motivations.

It can be done

In conclusion: 1) innovative clean technology roles for the BDC and EDC to support and leverage venture capital and finance exports and 2) the creation of a clean tech portfolio for the CPPIB, could both significantly help Canada catch up to its competitors in the global migration to the high-growth and high-job creation green economy, all while making good money in the process.  Earnings from completed projects would in turn finance more projects.  These are opportunities that make good sense for Canada to embrace.

As Jack Layton used to say, “Don’t let them tell you it can’t be done.”

Will Dubitsky worked for the Government of Canada on sustainable development policies, legislation, programs and clean tech innovation projects/consortia. He lives in Quebec.

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Clean Tech Trade Wars: US, European Union vs. China and how FIPPA Hamstrings Canada

Energy and Resources, International, Politics, Renewables
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The following is an excerpt from Will Dubitsky’s 3-part blog on FIPPA.

Canada is shooting itself in the foot with the China-Canada trade agreement – the Foreign Investment Promotion and Protection Act (FIPPA). Specifically, a little known stipulation in the China-Canada trade agreement risks torpedoing the development of Canadian clean energy technology sectors. This stipulation calls for no commercial barriers on environmental technologies. Why is this dangerous?

Well, with Canada’s clean tech sectors still very much in an embryonic stage, FIPPA, as it presently stands, would impose severe limitations on Canada’s potential participation in the phenomenal growth of global clean technology sectors, because of the massive and highly subsidized dumping of Chinese clean technologies on global markets.

More precisely, while the 1) US response to this dumping has been to impose trade tariffs, running from 31% to 250% on solar tech imports from China, along with tariffs of 45% to 71% on imports of Chinese wind turbine towers; and 2) the European Commission in June 2013 announced provisional tariffs on imports of Chinese solar products, ranging from 37.3% to 58.7%. Canada is the only country dumb enough to accept, via FIPPA, a guaranteed exemption for environmental technologies from commercial barriers.

In the US, the action taken by the US Dept. of Commerce in Fall 2012 followed 1) the bankruptcies of 4 US solar firms; 2) complaints filed by The Coalition for American Solar Manufacturing (CASM), representing 11,000 US workers and 150 US companies; and 3) complaints filed by the US Wind Tower Trade Coalition, representing 4 US wind tower manufacturers.

With 119,000 jobs in the US solar sector in 2012 – a 13.2% increase over 2011 – and 75,000 in the US wind sector in 2011, the US wanted to take swift action to address unfair trade practices affecting sectors experiencing solid growth in these difficult economic times.

In Europe, the European Commission (EC) took action on complaints from EU ProSun, a group representing 20 EU solar companies and the majority of European solar industrial capacity. In May 2013, the EC issued a “warning shot” by indicating it might open fair trade probes into Chinese mobile telecom equipment and in June 2013 the EC announced provisional tariffs on solar imports from China, stating that the dumping by China’s solar firms “caused thousands of Europeans to lose their jobs, and 60 European factory closures of which 30 were in Germany alone”.

For Europe, the job stakes are especially high in that its clean tech sectors represented 1.1 million jobs in 2011 – with 372,000 jobs in Germany alone. In effect, “illegal dumping” below the cost of production allowed China to capture more than 80% of the EU solar energy market “from virtually zero” only a few years ago.

Accordingly, beginning on June 6, 2013, the EC tariffs came into effect at a reduced rate of 11.8% for 2 months with the game plan being that, in the event of failed negotiations with China, the full provisional rate would be ramped up to an average of 47.6%, with the high end at 67.9% for the next 4 months. Subsequently, the EC would decide as to whether it would make the tariffs permanent.

In parallel, BSW, Germany’s solar trade association, is reviewing a trade case against China.

Notwithstanding Europe’s sabre rattling, it appears that the majority of European nations, Germany in particular, would prefer a negotiated settlement over trade wars.

China, for its part, initiated its counter-offensive, in July 2012, when it launched WTO anti-dumping and anti-subsidy investigations into allegedly unfair, low-priced US and South Korean polysilicon exports to China. Polysilicon is a key raw material for solar panels and 44% of the polysilicon used by Chinese solar manufacturers comes from the US.

Moreover, China registered a complaint with the WTO to the effect that $7.3B worth of Chinese renewable energy products have been subject to US tariffs in recent years, contrary to WTO rules. China also launched its own probe into subsidies of 4 US states and found they violate WTO rules.

The irony in all this is that, largely due to US polysilicon exports to China, the US had a $1.6B clean tech trade surplus with China in 2011. Specifically, when polysilicon, PV production machines and solar materials are factored in, the US held a $913M solar trade surplus over China in 2011.

Regarding China’s response to the EC’s June 2013 tariff initiatives, China’s polysilicon producers have called on Beijing to launch an anti-dumping investigation into European polysilicon imports, and urged Beijing to retaliate.

To add some colour to China’s sabre rattling, it has also indicated it would investigate the dumping of European wines in China. China did, however, acknowledge that Europe provided for a 2 month period of reduced tariffs.

Over the long run, however, Chinese manufacturers will likely to have an advantage in trade wars because of generous, cheap financing, lower production costs, scales of production which lower total costs, and an ability to refine silicon, make wafers and cells and build modules, as well as, or better than, any other group of manufacturers.

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Brazil, Russia force Olympic-sized wake-up call

International, Politics
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For years, the occasional Cassandra has tried alerting the world to the true nature, purpose and “legacy” of the Olympic Games – yet their warnings have fallen on deaf ears, muted by the cacophony of corporate advertising, saccharine network TV coverage and “patriotic” celebration.

All that may be about to change – thanks to the grave challenges facing two Games in development: Russia’s Sochi 2014 and Brazil’s Rio 2016. Their respective problems look like those of previous Games on steroids.

Projected costs for Sochi, still over half a year off, now top a record $51 Billion! In Brazil, runaway Olympic spending is a key grievance of protesters now marching in the streets. What began as a reaction to escalating bus fares has grown into a heated conversation about the government’s spending priorities. What Brazilians need now is better health care, schools and public transit, not shiny, new stadiums for the 2014 World Cup and 2016 Olympics, they declare.

While Vladimir Putin is unlikely to lose his grip on power over the preposterous bill for Sochi, according to Time, Brazil’s nationwide protests “could threaten President Dilma Rousseff’s re-election hopes next year” That would be a first. The Olympics playing a direct part in the ouster of a national leader.

It’s about time the Olympic Games are seen for what they really are – a multibillion-dollar racket designed to fleece taxpayers for infrastructure spending that benefits developers, while providing a global platform for corporate advertisers, supported by draconian, often unconstitutional protection from trademark violations.

Of course, the International Olympic Committee, though clearly a “for-profit” operation, pays no taxes. It exists, on many levels, outside the laws of the countries in which it operates. A pretty sweet deal they’ve enjoyed all these years.

Olympic critics have long been dismissed as unpatriotic Debbie Downers. The Olympics, after all, are about the triumph of the human spirit, the celebration of amateur athletic achievement, those precious moments like the one when Canada’s son scored against the Americans in overtime of the Gold Medal hockey game. I was in Whistler Village, watching Sid the Kid on the big screen when it happened, surrounded by 5,000 rejoicing compatriots, covered from head to toe in red and white. It was electric, unforgettable.

But that is not what the Olympics are about – at least not anymore.

Let us not forget the role Greece’s $11 Billion Olympic folly played in its present-day financial woes. It’s been all downhill for the country since it hosted the Athens Games in 2004. As this Bloomberg story notes:

With public debt totaling €168 billion in 2004, it’s clear that the Olympics alone did not bring about an economic collapse. Yet the Athens Games epitomized the structural problems that bedeviled the country for decades. It’s not just a question of how much money was spent on the Olympics, it’s also how it was spent and where it came from. After a period of austerity to tighten up its finances and qualify for euro entry in 2001, the Greek government loosened the purse strings once it entered the single currency. The games were just one of several areas where public spending was unchecked and funded by unsustainable borrowing.

Canada has been no stranger to Olympic-related fiscal issues. It took Montreal three decades to pay off its debt from the Games.

In BC, we’ve cleverly hidden much of the true infrastructure costs of the 2010 Games as public-private-partnership contracts – along with other assorted expenses the government is loathe to publicize – in a $100 Billion secret debt category, euphemistically labelled “contingencies and contractual liabilities”.

The intellectual leader of the anti-Olympic movement in Vancouver, Dr. Chris Shaw, wrote a fine book on the subject, aptly titled Five Ring Circus – which filmmaker Conrad Schmidt followed up with a companion documentary.

In his book, Shaw catalogues and foresees the gentrifying effects of the Games on social housing in Vancouver and the diversion of tax dollars toward otherwise unjustifiable infrastructure projects to open up real estate opportunities for developers. He describes a symbiotic relationship between local property and construction magnates hungry for taxpayer-subsidized infrastructure and IOC “vultures endlessly circling the globe, waiting for local developers in the various countries to bring down the prey, the local citizenry.”

The IOC gets its tax-free profits, corporate sponsors get their global audience, media get their ratings, and the developers get the long-lasting prize: new roads and bridges to open up previously inaccessible or low-value land to development – plus billions of dollars of government construction contracts. “Tying the Games to such projects,” Shaw writes, “suddenly imbues them with a different aura, and all previous rationality about real costs versus potential benefits goes out the window.”

Shaw also predicted the unconstitutional creation and application of laws designed to sweep trademark infringement and unseemly vagrants off Vancouver’s streets, lest our image be tarnished or the IOC and its corporate partners offended. For their efforts, Shaw and his colleagues were harassed at their homes and places of work by overzealous Games security forces.

The 2002 Salt Lake City Games brought the corruption of the bidding process into full view, as lead organizers admitted to bribing the IOC’s selection committee, forcing the resignation of key Salt Lake organizers. As subsequent investigations would reveal, this was far from the exception, rather the rule in the Olympic bidding process. In the wake of the Salt Lake Scandal, a senior Swiss IOC official, Marc Hodler, alleged that bribery has featured extensively in Games votes since at least 1990 – including the selection of Nagano 1998 and Sydney 2000.

According to a 2004 BBC story, “IOC vice-president Kim Un-Yong was sentenced to two-and-a-half years in jail on corruption charges. He was found guilty by a South Korean court of embezzling more than $3m from sports organizations he controlled, and accepting $700,000 in bribes.”

This systemic bribery and corruption appear to extend to corporate partners as well. According to Bloomberg, the world’s largest mining company, BHP Billiton, is currently under investigation in its native Australia, regarding its “dealings with foreign officials, including Chinese dignitaries, under a multimillion-dollar hospitality and sponsorship program at the 2008 Olympics.”

Will the excesses of Sochi and the social unrest spawned in part by Rio lead to major changes on the Olympic front? Hard to say; the IOC has demonstrated a teflon-like ability to deflect all manner of controversy in the past – from bribery and corruption to a litany of high-profile doping scandals.

Maybe this time is different. Perhaps the broader civil uprisings the Olympics are now getting roped into in Greece, Brazil – and, who knows?, one day maybe Russia – will finally change the Games.

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First Nations Slam Harper Government’s Legal Argument for Canada-China Trade Deal

First Nations, International, Politics
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The following statement was issued by the Union of BC Indian Chiefs in response to the Harper Government’s rebuttal to a case being brought by the Hupacasath First Nation against the proposed Canada-China Trade Deal.

Last week the Federal Court of Canada heard oral arguments from the Hupacasath First Nation and the Harper Government on Hupacasath’s legal action regarding the Canada-China Foreign Investment Promotion and Protection Agreement (FIPPA). In response to First Nations concerns of infringement on their inherent Aboriginal Title and Rights and lack of consultation the Hupacasath First Nation was compelled to launch a court challenge under Section 35 of the Canadian Constitution.

The Government of Canada argued that there must be causal link between the ratification of FIPPA and the adverse effects on Hupacasath First Nation Title and Rights to proceed with consultation.  Furthermore, the Harper Government held that no Aboriginal group had requested consultation with respect to any of the Canada’s 24 FIPPAs with other countries or that negotiations with respect to Canada-China FIPPA had been available to the general public via the Department of Foreign Affairs and International Trade website since 2008.

“It is well-documented that FIPA was negotiated in secret and First Nations and Canadians first heard about this agreement when it was signed in 2012.  This agreement is significantly different then the other 24 FIPPA’s Canada references.  China already has and will continue to grow its investments, assets and projects in Canada and consequently we take all the risk in this agreement.  It will allow foreign investment to trump the Title and Rights of First Nations and take full advantage of Canada’s much weakened environmental standards,” said Chief Bob Chamberlin, Vice-President of Union of BC Indian Chiefs.

“It is unbelievable that Canada has argued that consultation requires a ‘request’ from a First Nation.  The Constitution and common law require the Harper Government to meaningfully consult and accommodate our interests where a decision has the potential to infringe our inherent Title and Rights as guaranteed by section 35 of Constitution Act, 1982.   Consultation does not require a ‘request,’ written or otherwise to trigger the Harper Government’s fiduciary duty to consult First Nations,” Councilor Marilyn Baptiste, Secretary-Treasurer of the Union of BC Indian Chiefs stated, “Canada endorsed the United Nations Declaration on the Rights of Indigenous Peoples in 2010 which states that ‘Canada shall consult and cooperate in good faith with indigenous peoples in order to obtain their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them”, clearly Canada has failed to do so in this matter.”

Grand Chief Stewart Phillip, President of the Union of BC Indian Chiefs concluded, “First Nations and Canadians are extremely concerned with FIPPA and its wide implications including infringements on our inherent Title and Rights and the ability to allow foreign corporate interests to take advantage of the weakened environmental protections to proceed with the rapid expansion of resource development on un-ceded First Nation territories.  Through this agreement, China will be granted protection and would thus greatly increase their investment in the development of the Alberta tarsands, pipelines, mining projects and other resource development projects, all at great risk to our Aboriginal Title, Rights and Treaty rights, but ultimately at great cost to the environment that all British Columbians and Canadians share and treasure.  We will fight to defend this valued legacy that represents the ultimate birthright of our children and grandchildren.”

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New report: Canada-EU trade agreement threatens fracking bans

Economics, Energy and Resources, Fracking, International, Politics
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The Council of Canadians, along with the Transnational Institute and Corporate Europe Observatory, released a report this week examining the threat that a proposed Canada-EU free trade deal would have on a community’s ability to implement fracking regulations and fracking bans on both sides of the Atlantic.

Canada began negotiations with Europe on the Comprehensive and Economic Trade Agreement (CETA) in 2009 and hope to conclude the agreement by this summer. As Canadian negotiators visit Brussels this week to continue negotiations, the report, The Right to Say No: EU-Canada trade agreement threatens fracking bans, warns the proposed investment protection clauses in the agreement would jeopardise governments’ ability to regulate or ban fracking.

The report draws attention to Lone Pine Resources’ lawsuit against Quebec’s fracking moratorium under the North American Free Trade Agreement (NAFTA). Last fall, Lone Pine Resources, a U.S.-funded energy firm, filed a notice of intent to challenge Quebec’s moratorium on fracking under NAFTA and is asking for $250 million in compensation.

Fracking, or hydraulic fracturing, is a controversial process that uses massive amounts of water mixed with sand and toxic chemicals to blast apart shale rock or coal beds to extract natural gas or oil. Fracking fluid can contaminate drinking water with substances that cause cancer and organ damage, and affect neurological, reproductive and endocrine systems. Safely disposing of fracking wastewater is incredibly difficult. Fracking has also been linked to earthquakes and methane leaks that exacerbate climate change.

“The Right to Say No” looks at how CETA threatens fracking bans, the North American companies already invested in Europe and the state of fracking in both Canada and Europe.

The report is timely as the County of Inverness in Nova Scotia voted Monday to pass a by-law banning fracking within county limits. Cumberland County in Nova Scotia has also passed a motion banning fracking. Burnaby, B.C., Niagara-on-the-Lake, Ontario and a number of Quebec municipalities have passed resolutions calling for the protection of water sources and provincial moratoria. Nova Scotia is not issuing permits until their review on shale gas is complete and Quebec has implemented a moratorium within the province.

With the growing community opposition to fracking, we’ll likely see more by-laws banning fracking in the coming years and it’s crucial that we protect communities’ right to say no to fracking. An appellate panel of the New York Supreme Court recently upheld municipal bans on frackingin the state of New York. So while it’s not a Canadian example, the New York Supreme Court decision is a strong precedent for respecting municipalities right to ban fracking in North America.

The EU and Canada must exclude an investor-to-state dispute settlement process in the agreement, or not only will they be hamerping communities’ democratic right to determine their own environmental laws but Canada and EU countries could also find themselves targets of CETA lawsuits.

The report is available in English and French.

Emma Lui is a water campaigner with the Council of Canadians based in Ottawa. Emma’s work focuses on the Great Lakes, human rights, water privatization and the connection between energy and water.

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Audio: Rafe Mair talks WATER + POWER Tour on CBC Kamloops

Canada, International, Politics, Western Canada
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Common Sense Canadian co-founder Rafe Mair appeared on CBC Kamloops Tuesday morning to discuss his upcoming tour, titled “WATER + POWER: The Future of BC’s Energy, Environment and Democracy.” A former Socred MLA and Environment Minister from Kamloops, Mair returns to his old community this evening to kick of afour-city tour in the lead-up to the BC election on May 14. “This is not like ordinary elections,” Mair told host Shelley Joyce. “We now are facing these enormous pipeline and tanker problems and we’re facing the bankruptcy of BC Hydro.”

The discussion – which begins at 7 pm on April 23 at the Desert Garden Seniors’ Centre in Kamloops – will cover everything from proposed oil and gas pipelines to fracking, Site C Dam, Liquefied Natural Gas (LNG) and private river power projects…to an alternate vision for managing BC’s resources and economy to the benefit of the public and environment.

AUDIO here

Click here for more event details.

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First Nation taking on Canada-China trade deal needs your help

First Nation taking on Canada-China trade deal needs your help

Economics, First Nations, International, Politics
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A legal challenge underway by a BC First Nation may hold the last, best hope in the battle to protect Canada’s resources, environment and democracy from the Canada-China trade deal, known as FIPPA (Foreign Investment Promotion and Protection Agreement). But they need the public’s support in order to see their costly court case through.

The Hupacasath First Nation from Vancouver Island is heading to court this month in an attempt to block the controversial trade deal by asserting its infringement on the nation’s tile and rights. The Hupacasath’s representatives argue their constitutional rights to consultation have been violated by the deal and the manner in which it is being brought in. FIPPA would have a detrimental effect on this and other nations’ title and rights, as it entrenches the rights of Chinese investors above and beyond Canada’s First Nations and citizens.

FIPPA would mean Canada’s environmental laws and the concerns of the public are trumped by access to resources for Chinese companies –for a 31 year period once it’s ratified.

For instance, for the Hupacasath, a proposed coal port in nearby Port Alberni would be built by Compliance Energy, a Chinese company, thus, receive special protections from environmental or public health concerns. The same applies to logging, mines, private hydro projects, roads and any other Chinese-driven industrial development “promoted and protected” by FIPPA.  Inevitable oil spills from tankers destined for China would also impact the Hupacasath and other nations’ traditional way of life on the land and water.

To help fund their $150,000 legal bills, the Hupacasath are running a crowd-funding initiative, which you can support here.

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Mother Nature, US Govt Chase Shell Out of Arctic

Energy and Resources, International, Oil&Gas, Politics, Water and Hydrocarbons
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The Shell drilling rig that ran aground, The Kulluk (Greenpeace photo).
The Shell drilling rig that ran aground, The Kulluk (Greenpeace photo).

Shell Oil, the first energy company granted coveted Arctic drilling permits by the US Government, is shutting down operations for all of 2013, nearly as quickly as they began. Shell’s hand is being forced by the Interiror Department, following a scathing report which castigated the company for a series of misadventures in 2012 and early 2013.

The cancellation of this year’s drilling program represents an about-face from the confident predictions made last year by the Shell executive heading up the operation, David Lawrence. The Arctic drilling would be “relatively easy”, Lawrence told Dow Jones at the outset of Shell’s foray into Alaska’s Beaufort and Chukchi Seas.

The report by the Interior Department, released earlier this month, found Shell was unprepared for Arctic drilling and failed to properly oversee its contractors. Department Secretary Ken Salazar put it succinctly on a telephone press conference discussing the report. “Shell screwed up in 2012,” remarked Salazar, who stipulated that future drilling would be contingent on more detailed plans and an independent audit of the company’s management systems.

http://www.youtube.com/watch?v=sV4UY52FegU

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Despite PM’s Assurances, Floodgates Open to Chinese Govt as Encana, PetroChina Partner

Canada, Energy and Resources, Fracking, International, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western Canada, , , , , , ,
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“For the right price, anything is for sale” -Anthony Lambert, President and CEO of a Canadian arm of Chinese state-owned Sinopec, known as Sinopec Daylight Energy

Canadians are seeing red this week after a series of announcements reinforce concerns about the loss of Canadian resources and sovereignty.

The focus has been the Alberta Tar Sands, but natural gas plays are also in the mix. Four days after Stephen Harper boldly stated that the CNOOC/Nexen and Petronas/Progress takeovers marked the “end of a trend and not the beginning of one,” one of Canada’s largest oil and gas companies, Encana, announced a joint venture in a 4-plus billion dollar gas play in which PetroChina will have a 49.9 percent stake. A “minority” position such as this is seemingly an end-run on the “new,” yet unexplained criteria dictating the level of Chinese/foreign investment the Harper government would support.

CNOOC’s Nexen bid was a full takeover of a Canadian-based company with international holdings, however its mainstay is the Alberta oil patch and part of that takeover also includes a percentage of Syncrude. These companies have enjoyed years of Canadian taxpayer subsidies and support to make them profitable. The benefits of that multibillion dollar effort will now accrue to a Chinese “SOE”, or State Owned Enterprise, turning Canada into what the Alberta Federation of Labour’s recent detailed report describes as “China’s Gas Tank”.

Those supportive of foreign SOE investment in Canadian resource plays dismiss the concerns raised as unwarranted paranoia. A sort of “Reds under the bed” fear being mocked by folks like Bob Rae, outgoing liberal leader and supporter of Chinese investment. But this dismissive attitude shared by the supporters of such investment neglects the heart of the matter.

Joseph Stalin once said, “When we hang the capitalists they will sell us the rope we use,” which is in keeping with the Sinopec President’s view that “anything is for sale at the right price.” This point is pivotal. Chinese investment by SOE’s seems counter-intuitive to a “free enterprise” approach – a central plank in the ideologically driven agenda of Stephen Harper. So why does he abandon such principles along with his base and run far from the centre over to what many view as the extreme left?

It is largely due to the fact that SOEs have deep pockets and are paying real, serious, above-market premiums to snatch up Canadian oil and gas assets, which is enriching longstanding players in the patch and their investors. And it is true that they are doing so because there is profit to be made, and not simply in owning Canadian resources raw and sending them home to China.

But it’s really about the age-old geopolitical game of control over the world’s resources, exploiting them elsewhere while leaving one’s own in the ground, as United States has historically done (however, now you will note that they too are falling prey to exploitation and export of their “Homeland” resources.) All of which will fuel the growth of China’s economy into what people are proclaiming will be the world’s largest economy in as soon as a decade or two.

China has a stake in many nations around the globe and the forces that historically “nation build” are at work once again in boosting China to the forefront of the world, unfortunately their model has even less trickle down to the Chinese people, as they often live in squalor and cities that could house millions remain empty.

To accommodate this agenda the Harper government has created a very attractive investment “climate” in the Tar Sands. A much-reduced royalty rate, heavy subsidies, a gutted environmental regime, paralyzed environmental assessment processes. All this while accruing decision making to the top. Cabinet (read Chairman Harper) will decide cross-border pipelines, terms of trade and investment deals, criteria for foreign investment, and he has taken measures to lock in the new legislative framework dictating resource development and exploitation for decades to come.

During the minority reign of the Harper administration, he oversaw the single largest divestiture of a “public asset” in our nation’s history when he constructed the offloading and privatization of Petro Canada. The result was a gift to industry, a huge loss to Canadian taxpayers and it closed the public window we had on this industry from well to pump. Which is why Harper was so precise with his language when he approved the CNOOC/Nexen and Petronas/Progress takeovers.

Indeed, the first thing out of his mouth at the press conference announcing the approvals was, “To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.” However that is precisely what is occurring, no matter how you slice it.

But Harper ignores this reality and doubles down on his bold misrepresentation of the facts, “It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not.”  And they should not, Harper realizes its not what Canadians want, which is why he takes to the mike and says these things. So why does he do the exact opposite?

Foreign investment is already a serious issue in the oil and gas industry in Canada. Forest Ethics recently released a brief explaining how Canada’s major oil and gas players are on average 71% “foreign owned.”  In fact, the major players in the patch are almost entirely foreign owned; it is only the Canadian-based companies that bring that percentage down from fully foreign ownership. But even those Canadian-based companies are owned by foreign interests in the majority. All of this equals an exodus of cash from the country, only outdone by the flow of oil, gas and other raw resources.

If Canadian companies cannot find the money to invest in the oil and gas patch, despite outgoing Bank of Canada Governor Mark Carney’s criticism that corporate Canada is sitting on over 600 billion dollars of “dead money” and Canadian “SOEs” needed to be sliced, diced, demonized and sold off, why are Chinese SOEs all the rage?

Jim Stanford, a highly respected, independent-minded Canadian economist, suggests the notion that Canada cannot capitalize its own resources and must therefore rely on foreign investment is balderdash. Moreover, the Conservatives still boast that Canada and its banking industry are a pillar of stability in a sea of insecurity and crashing economies. All of which runs counter to the oft-repeated cliché that “we need” this foreign investment, and is instead looking much like a foreign takeover of not only our resources but our sovereignty.

This is where the Canada-China Foreign Investment Promotion and Protection Act (FIPA) comes in. This government continues to claim that somehow FIPA is good for Canadian investment in China, yet there is no evidence of that. Preeminent Canadian economist Diane Francis, a polar opposite to Jim Stanford, would probably agree with him on this one, as she has suggested the FIPA should be ripped up. Meanwhile, even Canada-US free trade architect Brian Mulroney states that we are still at least a decade away from free trade with China.

So why FIPA? Why now? In corporate parlance this amounts to a “Friendly Takeover”, as both entities agree there are “synergies” with the syncrude and are supportive of the entire notion, therefore it’s not a hostile takeover.

In promoting this deal, the Harperites will tell you that we have dozens of other FIPAs and this one is simply just another one. However that too is very misleading. The others are largely with countries where Canadian-based companies, typically mining companies, are operating.

Once again, these companies maybe Canadian-based, but they are largely foreign-owned, and they base themselves in Canada because our legislative environment is accommodating to their agenda. Canada is to mining what Switzerland is to banking and the FIPAs we negotiated are in most cases as draconian for the less-developed nations as the Chinese FIPA is for us.

These FIPAs guarantee the exploitation of mineral rights in less developed countries, for Canadian-based mining companies, and ensure the governments are removed from the equation, unable to protect the environment or increase royalty rates. In fact, the governments are reduced to cheerleaders on the “promotion” side of these agreements. Any move to regain sovereignty, charge respectable royalties, protect the environment or impose any restrictions on unbridled exploitation is met with severe financial penalties, meted out by a new corporate judiciary established by these agreements, which works in secret and is entirely profit-motivated.

This is exactly what is happening to Canada with the Chinese FIPA.

However, a huge push back has occurred and Harper seems frozen in his tracks on this one.

After having restructured the very fabric of the nation with two omnibus bills – the largest we have ever seen – he has still not ratified the agreement. Ironically, Omnibus bills have been used very sparingly in history. In 1971 Liberals used the practice to establish the “Department of the Environment,” and then again in 1982 to establish Trudeau’s infamous “National Energy Program.” The Conservatives fought it then and had the bill divided into eight different sections. On the other hand, Conservative governments have used the practice more. They used it once to enact NAFTA, and now twice since Harper obtained his majority – for the opposite purpose of omnibus bills of old, which established our internationally-renowned environmental practices and the nation-building, sovereignty-securing laws of Trudeau’s NEP.

As we pointed out in painstaking detail here at the Common Sense Canadian, the recent Omnibus bills run contrary to the FIPA treaty process and, in our opinion, render it null and void. This could be at the very heart of the delays we are now experiencing. There were many petitions and expressions of outrage, however, the argument we forwarded was indisputable and has put the Harper Cabinet in a box. And now we have an opportunity to follow up and here is why.

If FIPA is ratified, it will mark the end of Canadian sovereignty in the oil and gas patch. It will also ensure that China becomes the major driver of activity in both oil and gas. The terms are so favourable for “Chinese investment” that it will force partnering with them on resource plays as evidenced in the recent PetroChina/Encana joint venture announcement. The FIPA offers such attractive terms that partnering with any other private companies or SOEs would put one at a disadvantage. This essentially makes the draconian FIPA terms the new de facto law of the land and not simply a bilateral investment agreement. Can you imagine the Harper government or any other government making laws – or restoring those recently stripped away – which apply to everyone but Chinese companies?

I raised these points and many others in my submission to the FIPA environmental assessment process and we encouraged you to do the same. The campaign was picked up by savvy internet politicos who run Leadnow and similar organizations. The end result was thousands of submissions to various levels of government on this issue, on top of the 100 thousand-plus petition signatures these groups garnered against FIPA. Others chimed in as well, and the result so far has been positive.

However there is still an opportunity to communicate once again our adamant disapproval of the FIPA agreement. It is important we do so in order to send a message loud and clear that we do not approve locking in subsidies, much-reduced royalty rates, much-diminished environmental processes and reduced protection for over thirty years – an eternity in terms of the timeline required to liquidate our oil and gas  resources.

It may have made sense in the beginning to give the resource away and subsidize its growth, in an effort to get a capital-intensive exercise on a solid economic footing, but at a time where balanced budgets elude us, debt is racking up at any amazing pace and our standard of living is eroding, we cannot afford to allow these conditions to persist so long into the future. It will spell our demise.

So take the time and visit this link related to the Chinese FIPA and share these concerns with them. At this point the Minister of Industry has stated uncertainty around the ratification of FIPA, therefore we need to continue to apply pressure in order to at the very least delay, if not entirely avoid, ratification of this treaty. Our future and our kids depend on it.

You can visit this link and copy and paste the letter there, as it is still relevant and they invite more comments to that final FIPA Environmental Assessment, despite the closing of the public window for submissions.

Comments on this report may be sent by email, mail or fax to:

Environmental Assessments of Trade Agreements
Trade Agreements and NAFTA Secretariat
Foreign Affairs and International Trade Canada
125 Sussex Drive, Ottawa, Ontario K1A 0G2
Fax: (613) 992-9392
E-mail: EAconsultationsEE@international.gc.ca

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