Friday, 21 June 2013

The stupidity of Saskatchewan's "clean coal" project

  What happened to all the environmentalists in Saskatchewan? Are they only interested in nuclear power? Why are they all silent about Sask Power's ridiculous "clean coal" project? Are they all silent because this project was first pushed by the Saskatchewan NDP government?
Sask Power's Boundary Dam facility
   The final face of the carbon capture and sequestration project at Sask Power's Boundary Dam Station is being pumped by the mainstream media. Sask Power executives argue that we have hundreds of years of "cheap" coal to burn, why should we turn our backs on it? The NDP and the Sask Party agree. The project as it currently stands has a new coal-fired generator which is rated at 160 megawatts (MW). After the energy used to capture the carbon, it will produce between 100 and 115 MW to pump onto the grid. The total cost is reported to be $1.24 billion. What a bargain!
   The project is again being promoted by Bruce Johnstone, the financial editor of the Leader Post. Putting everything else aside, haven't these people ever heard of opportunity costs? If $1.24 billion was spent on other alternative energy projects, how much carbon dioxide would be saved? How many more jobs would be created? Since no one wants to take on this issue these days, and I am too busy to again visit the subject, here is a piece I wrote in 2007. There are very good alternatives to burning our grossly polluting coal.

“Clean Coal” is the Wrong Road to Take

by John W. Warnock

Regina Leader-Post
May 3, 2007

    Lorne Calvert’s NDP government and SaskPower seem determined to saddle the people of Saskatchewan with a new “clean coal” generating facility. The research has been done, the Estevan site has been chosen, and the project’s supplying corporations are on side. The 300 Megawatt (MW) plant will cost between $1.5 and $2.0 billion. But this is clearly not the best way to produce energy nor to reduce carbon dioxide greenhouse gas emissions.
    In the first place, coal fired generators are very inefficient, capturing only around 33% of the energy in the combustion process; the remaining two thirds of the energy produced is dissipated into the environment. This waste energy cannot be captured and used where power plants are far removed from industrial projects and population centres.
    The “clean coal” aspect of this project is the Oxyfuel system used to capture around 90% of the carbon dioxide, compress and chill it to liquid form, and then pump it deep into the ground for sequestration. Unfortunately, this is an expensive and inefficient process. Of the total 450 MW of electricity to be produced by the new plant, 150 MW will be used in the Oxyfuel and geological storage process. As many studies have argued, down the road carbon dioxide sequestration may permit the continued use of coal for power generation. But it is no solution to the current problem of greenhouse gas emissions and climate change.    
    Furthermore, the carbon dioxide extracted by the proposed SaskPower plant will be used to enhance oil recovery. The liquid carbon dioxide is pumped into the permeable oil bearing rock strata, is dissolved in the oil which reduces its viscosity, and it then sweeps the more mobile oil to the production wells. This is the system presently used by EnCana at Midale. Some of the pumped carbon dioxide escapes in this process. And of course this strategy completely undermines the goal of carbon sequestration as more petroleum is extracted and consumed, creating even more greenhouse gas emissions.
    Building a very expensive new power plant at Estevan further commits Saskatchewan and Sask Power to a highly centralized system of electrical power production and distribution. We have a great many alternative sources of energy, and their development requires a decentralized system. We must also plan for disasters which are caused by climate change. In January 1998 there was an ice storm in Quebec, and many areas were without power for several weeks. What would a similar event do to Saskatchewan?  How many people would die?

Seattle shows how it should be done
    Last January I was in Seattle doing research and I looked into the energy strategy of Seattle City Light, a municipal public utility. In the 1920s they built three dams on the Skagit River which serve as their base supply. They also contract for some power from the Bonneville Power Administration. In 1976 they opted out of the Washington Public Power Supply plan to build nuclear reactors and chose instead to promote conservation. In 2002 they contracted to purchase power from the Stateline Wind Project on the Oregon-Washington border.
    But the Seattle area has the highest annual population growth of any region in the United States. Therefore, in 2006 Seattle City Light produced an integrated plan for power development for the period 2007-2025. Over this period they will add 460 MW of electrical power. This will include 142 MW from conservation, 100 MW from geothermal development, 55 MW from additional wind sources, 25 MW from landfill gas, and 15 MW from biomass energy. The total projected capital cost of these additions is only $170 million.
    For many years Seattle City Light has been providing direct financial incentives to promote conservation and the purchase of more efficient appliances. They have a very basic demand management system: for the first 10 kilowatt hours (kWh) consumed a household pays 3.76 cents a kWh, above that the cost is 7.93 cents kWh. They are now promoting individual household and business production of solar, wind and biomass electricity. Through a net metering system households are paid market price for the energy they provide to the city grid. Households and businesses who install new generating facilities get city, state and federal rebates and tax incentives.
    Seattle City Light is only one example of how communities can shift to renewable energy. How long do we have to wait before a Saskatchewan government takes this issue seriously?

John W. Warnock is a Regina political economist and environmental activist.

Sunday, 16 June 2013

Are you being monitored by Big Brother?

It seems a bit strange that Canadians and Americans show surprise when a whistleblower reveals that the U.S. government and its NATO allies are monitoring all of their communications. This has been going on for years. Does anyone remember Echelon?

Here is a very brief description of the extent of this monitoring, from a chapter in my book, Creating a Failed State: The US and Canada in Afghanistan (2008):

National Security Intelligence  
     Paired with its new military deployment is the U.S. government’s attempt to enhance its ability to gather and use intelligence. Under the Patriot Act and similar legislation in other countries governments have expanded their ability to acquire information through wire taps. The U.S. government even monitors what books people borrow from libraries and the web sites they access while doing research.
    The U.S. military finances several key organizations which specialize in high tech intelligence-gathering, including the National Security Agency, the National Reconnaissance Office, and the National Imagery and Mapping Agency. The Defense Intelligence Agency and the Central Intelligence Agency do work in this area as well. In contrast to past systems of surveillance, there is no longer an emphasis on focusing on individual suspects. Today, the entire population is constantly under surveillance.
    Telephone calls, faxes, e-mails, Internet communications, telegrams and telexes are all sent by communication satellites under the control of Intelsat, which is ostensibly an international agency but actually  controlled by Lockheed Martin Corporation. The National Security Agency monitors all of this traffic. Communications utilizing short wave and very high frequency radio waves are monitored by a series of U.S. bases. Additional surveillance is carried out by the National Reconnaissance Office, under the  NSA, which operates a series of spy satellites. These also send back photo information. To this has been added the Space-Based Infrared System satellites which are part of the anti-ballistic weapons system.
    Using all of these capabilities, the U.S. intercepts all messages going through the copper cable and high-capacity optical fiber networks. The interception of fiber optic messages is done by a series of nuclear submarines. The United States also uses signals intelligence bases (Signit) to monitor communications. These are fields of antennas, satellite dishes placed at over 100 U.S. bases around the world.
    Many people who use the Internet are familiar with Echelon, which developed as part of the official Anglo-American political alliance that was founded at the beginning of the Cold War. The intelligence agencies of the United States, Great Britain, Canada, Australia and New Zealand have a classified agreement for the exchange of all security information. It is also known today as the “UKUSA signals intelligence alliance.” On a daily basis the Echelon program scans millions of conversations and messages for traffic patterns and key words, which are then tagged and sent for further analysis and surveillance. It is not only used for surveillance of potential foreign espionage or terrorism but also for domestic individuals and groups. Echelon operates and monitors around 120 intelligence satellites.
    The five countries not only share intelligence information; the agreement gives member countries the right to spy on each other and their respective citizens. No special advance permission is required. In one well-known instance, Prime Minister Margaret Thatcher had the Canadian Communications Security Establishment monitor the telephone conversations of her political opponents in the Labour Party.
    President George W. Bush told Bob Woodward that he was “fascinated” by the ability of the U.S. National Security Agency to listen to telephone conversations around the world and to intercept a whole range of other communications.

Saturday, 8 June 2013

Is there an alternative to the neoliberal regime?

We are now into the fifth year of The Great Recession. In all of the advanced capitalist countries economic growth rates lag and real unemployment remains high. Inequality of income and wealth steadily increases. This is the fallout from the neoliberal model of the free market and free trade. Margaret Thatcher insisted that There Is No Alternative (TINA). Is that true?

Great Britain, Ireland and the countries of Continental Europe show no signs of recovery. Governments all have consistently supported right-wing austerity policies. None of the major political parties have offered a different strategy. Surely, there must be a political alternative.

The new issue of Social Justice (Vol. 39, No.1) has some interesting articles on the struggles that are going on in Europe, “Conflicts within the Crisis.” There are several themes to these articles.

The European setting
First, capitalism in the advanced countries is now very much dominated by the FIRE sector: finance, insurance, and real estate. The central focus of the European governments, the European Union, the European Central Bank and the International Monetary Fund has been to prop up the banks at all cost. That is, of course, to defend the private investors in the large banks. The bad debt that the banks took on through real estate and the derivatives markets has been transferred to the governments. The socialization of private debt. Government programs must be cut to pay off this sovereign debt.

Second, the various European governments have been hindered in dealing with the crisis partly because of the loss of sovereignty. The European Union, the World Bank, the International Monetary Fund, and the World Trade Organization are strongly committed to defending the interests of capital and have significant powers over national governments. They are quite prepared to use their powers to punish governments which move to protect democracy and social justice.

Third, the social democratic parties and the leadership of the mainstream trade unions have adopted the same basic policies as the traditional right wing parties. Thus there is a monopoly of power in the hands of the ruling classes. It does not matter which of the major parties forms the government, the results are the same. Thus parliamentary government and electoral systems have lost legitimacy. This is reflected in the steady decline in voter turnout to around 50%.

Fourth, the existing governments have all adopted police state tactics, militarizing the police, using brute physical force against demonstrators, jailing dissenters, and moving to reduce historic civil rights and liberties. The same thing is happening in the United States and Canada.

The Crisis of Social Reproduction
The Great Recession has had an impact in Europe that has not reached North America. Unemployment has risen to levels not seen since the Great Depression of the 1930s. Youth unemployment is now over 25% in the European Union and around 50% in some of the southern countries.

There is a crisis of care, as wages for many have been substantially cut. Pensions have been cut. Unemployment insurance has been reduced. Social services have been cut. The welfare state is being steadily downsized. Who would have believed that this could happen? Only in the former Third World, under the impact of the Washington Consensus, known as structural adjustment.

Is there a future for social democracy?
Across Europe, beginning in Great Britain and Ireland, social democratic parties have joined with the rich and powerful to bail out the banks and impose the neoliberal package. Thus the traditional major party of the left, which was created by the organized working class, no longer offers any alternative. As Margaret Thatcher once said, her greatest achievement as Prime Minister was transforming the British Labour Party into another conservative party, i.e., a party of pro-business neoliberals.

In Greece and Italy, the social democrats went so far as to form an alliance with the traditional parties of the right and impose unelected pro-austerity technocrats to run the government! Who needs parliamentary elections?

The leadership of the mainstream trade unions have also lost their legitimacy. They refuse to cut their ties to the social democratic parties even when their parties, in government, cut the programs that were enacted to provide security for those working for a wage and a salary. In Greece, the trade union leadership declined to support a general strike against "their government." The rank and file was forced to take the lead.

Struggling to find an alternative
Given the paralysis in the economy and in representative government, it is no surprise that in Europe the disaffected have turned to extra-parliamentary opposition. As we have seen in Greece and the other southern countries, mass demonstrations and general strikes have become the political opposition.

The other main political development is the grass roots movements, begun by young people, tied together by the social media. In Europe there was strong support for the street movements of the Arab Spring. A similar movement was prominent in Greece. The massive occupation of city squares across Spain, the 15M and the indignados, were another example. The call for a "Democratic Revolution" reflects the disaffection of European citizens with mainstream politics, representative government and the priority of the free market. “They call it democracy, but it is a dictatorship!”

The rejection of the current political system has resulted in the determination of the youth in particular to construct “new democratic organizations and institutions.” But there are limits to “leaderless resistance,” as we have seen throughout North Africa. There comes a time when grassroots democratic dissent has to shift to formal political organization if there is going to be change.

Saturday, 1 June 2013

Cameco uses dummy corporation to avoid taxes

Cameco's operation at Cigar Lake, SK
For the past few months the media has been carrying stories on how large transnational corporations are using offshore dummy corporations to avoid paying taxes in the countries where they are actually based. The corporations identified include Apple, Microsoft, Staples, Hewlett-Packard, Starbucks, Google, Amazon, and many more.

This is nothing new. The collapse of energy giant Enron Corporation in 2001 revealed to the general public all the tricks of the modern transnational corporation. Indeed, executives from oil and gas corporations denounced U.S. government actions against Enron and its corporate officers, arguing that these practices were common to all in the industry.

Do Saskatchewan corporations dodge taxes?
What about the large corporations that have major operations in Saskatchewan? A few years back when I was researching Saskatchewan’s oil and gas industry I asked the provincial ministry of finance if any of our corporations used similar practices. I was given the brush off. This was a federal and not a provincial responsibility. No answers were forthcoming.

But now we have clear evidence that these practices are used by Saskatchewan based corporations.  In early May of this year it was revealed that the Canada Revenue Agency has challenged the practices of Cameco Corporation. While this story made the national press, it seemed to escape the attention of the Saskatchewan media and our political leaders.

Cameco as a case study
In 1999 Cameco created a subsidiary, Canada Europe Ltd., and located it in Zug, Switzerland. Switzerland is well known as one of the favourite low tax hosts for corporations seeking to avoid paying normal corporate tax rates. Cameco “sells” the uranium it extracts in Saskatchewan to Cameco Europe at the very low prices that were set in 1999. Cameco Europe then sells the uranium at the market price. CRA reports that Cameco is allocating its profits to Cameco Europe and recording very low profits for its operations in Saskatchewan.

The Ontario media reports that over the past ten years Cameco has avoided reporting income of $4.9 billion which allowed it to save $1.4 billion in federal corporate taxes. The corporate tax rate in Switzerland is 5% compared to 27% in Canada.

The Globe and Mail (May 1, 2013) reports that a study of Cameco by Veritas Research Corporation concluded that Cameco in Saskatchewan “performed virtually all operating functions” for Cameco Europe. They concluded that all of Cameco Europe’s profits should have been declared in Canada and taxed at Canadian levels.

Why pay taxes in Saskatchewan?
In Saskatchewan the uranium industry enjoys very low royalties and taxes. In recent years annual  uranium sales have exceeded $1 billion. But total royalties and taxes paid to the provincial government have averaged only around eight percent of sales.

Why should this matter? When corporations do not pay taxes to the provincial government, programs are cut or else revenues are raised by additional taxes on individuals. In this boom period for Saskatchewan, royalties and taxes on resource extraction are still among the lowest in the world, and our governments are cutting services.

 It is most important for corporations operating in the area of extraction of non-renewable resources to pay high taxes. The reality is that all the large corporations operating in the resource extraction area in Saskatchewan have a majority of their stock held by people who do not live here. In fact, most of them are majority owned by shareholders who live outside the country. A system of low resource royalties and taxes on corporate profits means the surplus rent from resource extraction does not flow to the owners of the resource, the people of Saskatchewan, but flows out of the province and the country.