Last year the Canadian government enjoyed a positive reception at the UN climate talks in Paris. After 10 years of climate inaction under a Conservative government, the international community anticipated the new Liberal government would mean good things for the nation’s climate governance.

But Canada’s contribution to the world’s first climate treaty remains “inadequate” according to a new report released by the Carbon Action Tracker in light of the climate talks.

The Paris Agreement, designed to limit global warming to as close to 1.5 degrees Celsius as possible, was signed in France last year and ratified, with incredible speed, less than one year later on November 4. Although a proud signatory of the agreement, Canada will not meet its climate targets, according to the new analysis.

Prime Minister Justin Trudeau adopted the same climate targets as the previous Stephen Harper government, pledging to reduce Canada’s emissions 30 per cent below 2005 levels by 2030.

“Under its current policies, Canada will miss both its 2020 pledge and its 2030 [Nationally Determined Contribution] targets by a wide margin,” Climate Action Tracker states.

The group estimates that based on current climate policies Canada’s emissions will increase by three to 18 per cent by 2030.

Last month Trudeau announced a national carbon tax that will price carbon at $10/tonne in 2018 and increase to $50/tonne by 2022.

But according to the analysis of four prominent environmental groups, Canada’s fossil fuel subsidies eliminate the supposed benefits of that carbon tax.

Canada Must Phase Out $3.3 Billion In Fossil Fuel Subsidies

“It makes no sense to put a price on carbon while continuing to give handouts to oil and gas companies,” Alex Doukas, senior campaigner and author with Oil Change International, told DeSmog Canada. 

“That's like pouring water on the fire with one hand while spraying gasoline on it with the other.” 

Doukas added Trudeau promised to eliminate fossil fuel subsidies when campaigning last year.

“Now his government has to deliver.”

Canada first committed to phasing out fossil fuel subsidies in 2009 along with other G20 nations. That commitment was later affirmed at a 2015 G7 meeting and named as a priority for Finance Minister Bill Morneau in a mandate letter from Trudeau.

“Unless Canada phases out massive subsidies to oil and gas companies, Trudeau’s carbon price will do little to encourage polluters to cut carbon emissions,” Dale Marshall, national program manager with Environmental Defence, said in Marrakech.

“The three billion dollars in annual subsidies could be put to much better use by investing in climate action, health care and other initiatives.”

In Marrakech, Minister of Environment and Climate Change Catherine McKenna participated in the Carbon Pricing Leadership Coalition, an international group pushing for more integrated market-based climate solutions.

“In light of Minister McKenna’s participation…we take the opportunity to remind Canada that leadership requires coherent fiscal policies,” Annie Bérubé, Director of Government Relations at Équiterre, said.

“Finance Minister Bill Morneau must announce a predictable phase-out of all remaining preferential tax treatment to the oil and gas sector starting in Budget 2017.”

Canada’s #ClimateAction Called ‘Inadequate’ at UN Climate Talks in #Marrakech https://t.co/KpTN378mXJ #cdnpoli @cathmckenna @JustinTrudeau

— DeSmog Canada (@DeSmogCanada) November 15, 2016

More Opportunity for Canadian Leadership at UN Climate Talks

She added there is some work to be done, however, to bridge the gap between Canada’s international climate commitments and decision-making domestically.

“This is a core question that Canada has to reconcile,” she said.

“Can we build a national climate plan that allows us to achieve the 2030 target with deeper reductions over time?”

Canada has come under harsh criticism recently for approving the Pacific Northwest LNG export terminal on the coast of B.C.  The LNG facility is estimated to be the largest single point source of emissions in Canada, adding the equivalent of 1.9 million cars to the roads.

Analysts have pointed out the approval of the LNG project is a serious obstacle to Canada meeting its climate commitments.

Flanagan said she sees an opportunity for Canada to really “do the math” on its climate targets.

“That’s really what this COP is about,” she said. “It’s about taking the rhetoric and turning it into plans that will drive the change we need to see.”

Image: COP22 signage in Marrakech, Morocco. Photo: Carol Linnitt/DeSmog Canada

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Montreal Mayor Denise Coderre announced Thursday the city's formal opposition to TransCanada’s proposed Energy East pipeline. The 4,600-kilometer west-to-east oil pipeline project would see 1,600 kilometres of new pipe built along the St. Lawrence River in Quebec and in New Brunswick.

"We are against it because it still represents significant environmental threats and too few economic benefits for greater Montreal," Coderre said in a press conference.

Groups opposed to the 1.1 million barrels-a-day project, which is significantly larger than TransCanada's Keystone XL pipeline, welcomed the announcement.

“Today, 82 municipal counsellors, representing 3.9 million citizens in the greater Montreal region, have issued a resounding ‘no’ to the Energy East project and to TransCanada Corporation,” Steven Guilbeault, Senior Director at Équiterre, said in a media release.

Coderre’s announcement came after 82 municipalities comprising the Communauté Municipale de Montréal (Montreal Metropolitan Community) voted this morning on whether to approve or oppose the project. Energy East’s proposed route would go through the northern municipalities of the greater Montreal-area.

“We’re really happy,” Audrey Yank, spokesperson for Montreal-based citizens-group Coalition Vigilance Oleoducs told DeSmog Canada. “It feels like a another small victory to give us hope.”

“TransCanada is asking us to bear all the risks of Energy East in exchange for very small benefits,” Yank said.

Energy East has faced stiff opposition in Quebec for over a year now. TransCanada’s plan to build an export tanker terminal in Quebec near the calving waters of endangered beluga whales was met by public outcry. Even Quebec Premier Philippe Couillard, who is not an Energy East opponent, suggested publicly TransCanada should look some place else for its terminal.

In the face of growing Quebec public opposition to the pipeline, TransCanada scrapped plans for building a terminal anywhere in Quebec last November.

But by canceling plans to build a terminal in Quebec, selling the project to Quebecers on the basis of economic benefits has become difficult. The Montreal Metropolitan Community conducted public consultations on Energy East last fall and the majority of those who participated were against the project.

In a 2015 poll, 57 percent of Quebecers expressed their opposition to Energy East.

Montreal is the first major city to come out against the project to transport oilsands (also called tar sands) bitumen across the country from Alberta to Saint John, New Brunswick. Winnipeg and Ottawa also sit along Energy East’s purposed route, but neither has shown the same degree of opposition as Montreal as of yet.

Ottawa-resident Mike Fletcher is hoping this will change soon.

“Ottawa has more risk and potentially less benefit than Montreal from this horrible proposal. The pipe through Ottawa is used, as opposed to proposed new pipe in Montreal,” Fletcher told DeSmog Canada.

“But so far Ottawa's reaction has been mixed. We are glad that the City will produce a letter of comment to the National Energy Board, but most of our municipal elected officials need to square up against Energy East,” Fletcher said. The 3,000 kilometres of the proposed pipeline situated west of Quebec is an existing natural gas line TransCanada plans on converting to oil.

Fletcher has played a key role in local group Ecology Ottawa’s campaign against the Energy East pipeline over the last two years. Ecology Ottawa was one of several environmental organizations targeted by a botched TransCanada PR campaign to undermine pipeline opponents in 2014.

Provincial governments in Alberta, Saskatchewan and New Brunswick support the project. Ontario, Quebec and Manitoba have all been guarded in their statements about Energy East, neither denouncing nor fully endorsing their provinces acting as a thoroughfare for the pipeline.

Ontario’s energy regulator examined TransCanada’s application for Energy East and concluded the project was not in the best interest of Canada’s most populous province.

Audrey Yank from Coalition Vigilance Oleoducs is concerned that Montreal’s analysis of the Energy East project does not cover the potential impacts the pipeline could have on climate change. 

“It appears the analysis does not address green house gas emissions. Climate change should be part of the analysis, especially after the Paris climate talks,” Yank said.

“We can’t build fossil fuels infrastructure that lasts 40 or 50 years if we need to get to a zero-carbon economy by 2050,” Yank told DeSmog Canada.

Montreal’s announcement comes amongst a flurry of protests and calls for Prime Minister Justin Trudeau to keep his election promise to initiate new regulatory reviews of Energy East and Kinder Morgan Trans Mountain pipeline in B.C. that will include climate impacts, and stronger recognition of First Nations’ concerns.

Image Credit: Ville de Montréal via Flickr

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An article published last week in the National Post that claims a “secret” deal was struck between oil companies and environmentalists has ruffled many feathers — from corporate big wigs in Calgary to environmental activists on the West Coast.

According to Claudia Cattaneo’s story, Alberta’s climate change plan — which introduced a carbon tax, phased out coal-fired electricity and put a cap on oilsands emissions — was “the product of secret negotiations between four top oilsands companies and four environmental organizations.”

I’m not sure how secret any of that was given that all of those players could clearly be seen on stage with Alberta Premier Rachel Notley when she announced the plan, but the story goes on to state: “The companies agreed to the cap in exchange for the environmental groups backing down on opposition to oil export pipelines, but the deal left other players on the sidelines, and that has created a deep division in Canada’s oil and gas sector.”

The remainder of the story goes into how various oil companies have their knickers in a twist over the deal.  You’d think environmentalists would be dancing in the streets about that, but no — it’s actually hard to say who’s more outraged: environmentalists, who bristle at the idea of a secret deal and who don’t think the agreement is strong enough, or oil companies, who don’t think the new regulations will help them gain the market access they’re so desperately seeking.

Let’s just all hold our horses for a second.

First off, let’s look at the source. Cattaneo has spewed quite a bit of industry drivel over the years and her interpretation of Canada’s energy politics leaves much to be desired. Has she exhibited much understanding of how social movements actually work? Nope.

Secondly, was there a deal to stop opposition to oil export pipelines? There were at least five environmental groups on stage for the announcement: Forest Ethics, the Pembina Institute, Clean Energy Canada, Equiterre and Environmental Defence.

Forest Ethics has publicly stated that its campaign against Kinder Morgan’s Trans Mountain pipeline won’t change.

Environmental Defence’s executive director Tim Gray told DeSmog Canada that its work on pipeline issues from a climate, water, biodiversity and community impact perspective will continue. The organization is now looking to the feds for a revised review process for pipelines, which includes a climate test that takes into account all infrastructure, including trains, and respects Alberta’s cap on oilsands emissions.

The Pembina Institute’s executive director Ed Whittingham told DeSmog Canada that Pembina’s oilsands advocacy work will continue. Pembina’s advocacy around pipelines has always been out of concern for upstream impacts — not surprising for a group founded in Alberta, on the heels of a deadly sour gas well blowout.  While many of Pembina’s climate-related concerns have been addressed by Alberta’s climate plan, “lots of air, land and water concerns remain,” Whittingham said.

Clean Energy Canada never campaigned against pipelines in the first place. And Equiterre couldn’t be reached, but I’d hazard a guess they’re in the same boat as the others.

So, sounds to me as though there was no deal of the sort that Cattaneo described.

Thirdly, even if there was a deal, a deal with four environmental groups wouldn’t be worth the hypothetical notepad it was jotted on given the breadth of opposition to new oil pipelines in this country — from municipalities like Vancouver and Burnaby to First Nations to grassroots activists to the umpteen environmental groups that weren’t on that stage.

“People who think climate policy in Alberta will ‘buy market access’ through B.C. don’t understand concerns around Indigenous rights, tanker traffic, oil spills or the grossly unequal distribution of economic risk and benefit,” said Kai Nagata, energy and democracy director at B.C.-based Dogwood Initiative.

It’s not helping the industry’s case that a landmark study released on Tuesday by the U.S. National Academy of Sciences confirms that diluted bitumen, such as that carried by Kinder Morgan’s Trans Mountain pipeline, sinks in water if not cleaned up immediately, making for a nightmare scenario.

The study, Spills of Diluted Bitumen from Pipelines: A Comparative Study of Environmental Fate, Effects, and Response, concluded that diluted bitumen poses unique risks compared to other blends of crude oil.

Which brings me back to my point: the pipeline deal-breaker in B.C. has always been the risk of oil spills. Alberta’s action on climate change doesn’t move the needle on that.

Now, to the climate plan itself. Many environmentalists aren’t terribly impressed with it. Take this revealing infographic by Barry Saxifrage, which shows how Alberta’s emissions will continue to grow until 2030. (Canada has promised to reduce emissions 30 per cent from 2005 levels by 2030.)

However, we must take into consideration that Alberta has already issued permits for another six million barrels a day of oilsands production. The new cap means that, at current emissions levels, three million barrels of those barrels will stay in the ground. That’s a seriously bold move in a province that has an economy 70 per cent based on oil — and that has already seen 40,000 layoffs in the energy industry this year.

All of the enviro grousing of late has reminded me of Rebecca Solnit’s stellar piece in The Guardian a few years back, written to her dismal allies on the U.S. left.

“If I gave you a pony, you would not only be furious that not everyone has a pony, but you would pick on the pony for not being radical enough until it wept big, sad, hot pony tears,” Solnit wrote. “Can you imagine how far the civil rights movement would have gotten, had it been run entirely by complainers for whom nothing was ever good enough? To hell with integrating the Montgomery public transit system when the problem was so much larger!”

Environmentalists are fighting the richest industry in the world — an industry that has spent millions of dollars to confuse the public about climate change science. They are finally starting to see some victories. The climate change plan enacted in Alberta was unimaginable a year ago. It has the “100 per cent” support of Athabasca Chipewyan First Nation Chief Allan Adam.

If we want any policy to stick — not to be struck down like former Alberta Premier Ed Stelmach’s royalty review — it needs to have broad support. Part of the job of the environmental movement should be to help build that support.

To quote Solnit again: “Being different (from the radical right) means celebrating what you have in common with potential allies, not punishing them for often-minor differences. It means developing a more complex understanding of the matters under consideration than the cartoonish black and white that both left and the right tend to fall back on.”

The fact industry and environmental leaders met informally over the past year, found some common ground and ended up standing on stage together to announce a major step forward on Alberta climate policy is a great thing. (And saying that does not mean I don’t acknowledge that while great, it’s not sufficient for Alberta to do its fair share to keep the planet from warming more than two degrees.)

As Tzeporah Berman, adjunct professor in the faculty of environmental studies at York University, wrote recently: “To say a policy is great does not mean there is not more work to be done.”

Without further ado, may the pipeline battles continue.

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The release of a University of Victoria study calling for updates to Canadian charitable law created quite a stir last week.

The study, prepared for DeSmog Canada, was covered by the Toronto Star, Vancouver Sun, Victoria Times Colonist, Canadian Press, Macleans, The Tyee, Yahoo! News and CFAX.

The report called for the Canada Revenue Agency (CRA) to clarify rules around “political activities” — defined as any activity that seeks to change, oppose or retain laws or policies — and to provide a more generous limit on allowable policy advocacy in line with other common law jurisdictions such as Australia and New Zealand. It also called for the creation of a politically independent charities commission to remove the potential for political interference in audits.

The findings were raised in the House of Commons by Victoria NDP MP Murray Rankin, who stated the report “analyzes the alarming lack of clarity in the rules governing political activities for charities.”

Tim Gray, executive director of Environmental Defence, said the recommendations put “what’s going on in Canada in the context of what’s going on in other common law and western countries … It gives a sense of how far Canada is behind on these things.”

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Environmental Defence was one of 18 Canadian charities that called on the country’s politicians to enhance the ability for charities to engage in public policy debates earlier this month.

“The lack of a level playing field between business and citizens around public policy is particularly evident in the debate around climate and tar sands,” Gray told DeSmog Canada. “There’s massive spending going on by the oil sector to influence public policy and every dollar they spend on lobbyists in Ottawa or on television ads, they deduct from their gross income and therefore reduce the income tax that they pay to build roads and run hospitals.”[view:in_this_series=block_1]

Citizens who donate money to a charity only receive a 17 per cent tax benefit and charities are limited to spending 10 per cent of their resources on policy advocacy work, described as “political activity” by the CRA.

Fifity-two charities have been audited for their “political activities” under a $13.4 million audit program launched by the federal government in the 2012 budget.

“It’s already unfair and the rhetoric that’s out there right now is to say that that level of unfairness should be enhanced,” Gray said. “It would be a huge move to favouring involvement by corporations in public policy at the expense of citizens.”

Gray also said citizens are confused by the current talk around “political activities,” which many assume to mean “partisan activities,” which charities are banned from taking part in.

Bill Schaper, director of public policy and community engagement for Imagine Canada — which advocates for the charitable sector — said his group has been hearing more and more about re-thinking how we define charity over the last couple of years.

“It’s something that’s been percolating,” Schaper told DeSmog Canada.

But he also noted that there are risks associated with opening up charitable law for major changes. National Post columnist Andrew Coyne, for instance, has argued that we should get rid of charitable status altogether.

“As much as the grey zones are causing issues right now, sometimes grey zones are better than too much clarity because you might not like the clarity you get,” Schaper said.  

He noted that the charitable sector can do a better job of educating itself in terms of what constitutes “political activity” and said there would need to be much more discussion before Imagine Canada would push for specific changes to the law.

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A report released today by the University of Victoria’s Environmental Law Centre calls for sweeping reform of Canadian charitable law in line with other jurisdictions such as the U.S., Australia, New Zealand and England.

Current rules around “political activity” — defined by the Canada Revenue Agency (CRA) as any activity that seeks to change, oppose or retain laws or policies — are confusing and create an “intolerable state of uncertainty,” the report says.

“This has created a confused and anxious charitable sector and detracts from them carrying out their important work,” Calvin Sandborn, legal director of the Environmental Law Centre, said.

The report — prepared for DeSmog Canada — comes as 52 charities are being targeted in a $13.4 million audit program launched by the federal government in 2012 to determine whether any are violating a rule that limits spending on political activities to 10 per cent of resources. Those charities include Environmental Defence, the David Suzuki Foundation, Canada Without Poverty, Ecology Action Centre and Equiterre.

Australia and New Zealand, also common law jurisdictions, have modernized their laws in recent years to allow charities to conduct more policy advocacy in carrying out their missions.

The report, Tax Audits of Environmental Groups: The Pressing Need for Law Reform, calls for Canada to establish clearer rules about what constitutes “political activity” and provide a more generous limit on allowable “political activity.”

Canada’s Charities Law Urgently Needs Update: New @ELC_UVic report http://t.co/EUj828Va94 #UpdateCharitiesLaw #cdnpoli

— DeSmog Canada (@DeSmogCanada) March 25, 2015

“U.S. charity regulation is superior to current Canadian law because it is less vague and more respectful of the value that charities bring to public policy debates,” the report states.

Many European countries place no limit at all on a charity’s political activities.

Earlier this month, 18 Canadian charities called on the country’s politicians to enhance the ability for charities to engage in public policy debates.

“Our society has evolved and our legislation hasn’t,” said Eric Hebert Daly, executive director of the Canadian Parks and Wilderness Society, a group that signed on to the letter.

The new University of Victoria report calls on Canada to modernize the definition of what qualifies as charitable to rectify instances such as the CRA’s ruling that Oxfam can not have a charitable goal of “prevention of poverty.”

“In modern society the law should recognize that a poverty-relief organization can often relieve poverty more effectively by lobbying for affordable housing laws than by operating a soup kitchen,” the report says.

In October 2014, the Broadbent Institute released a report, which raised questions about whether the recent audits have been targeted at charities critical of the Harper government. The report said several right-leaning charities are reporting zero “political” activity while engaging in work that appears to meet the CRA’s definition.

There is a direct structural chain of command from the Minister of National Revenue to the charities directorate (which audits charities), the University of Victoria report notes before calling for the removal of any potential for political interference by establishing a politically independent Charities Commission like the one in England and Wales.

“Regardless of whether the audits are targeted or not, an obvious way to address this issue would be to reform the law to eliminate the potential for political control over CRA audits,” the report reads.  “This has been done in other jurisdictions.”

“The perception that audits may be targeted at charities critical of government policies creates a chilling effect,” the report says — adding that with such vague rules, charities can end up spending an “inordinate amount of energy and resources protecting themselves from an audit.”

The report also notes the contrasting treatment of business and charities under the Income Tax Act:

Since businesses can deduct advertising expenses from their income, they can lobby the public through advertising without any imposed statutory restrictions. A recent example has been the omnipresence of the multimillion-dollar [Enbridge] Northern Gateway radio, television, internet and newspaper ad campaign favouring the project. All of these advertisements would presumably be tax deductible and therefore subsidized by general taxpayers.

In contrast to companies’ tax-deductible political advertising campaigns, charities must carefully ensure that all activities of a political nature are kept within the 10 per cent limit. This contrasting treatment of business and charities under the Income Tax Act has the effect of encouraging businesses to take political action in support of commercial and private interests — while hindering the counterbalancing efforts of charities working to protect public interests.

The report provides the example of cigarette companies fighting smoking laws to defend profits while cancer societies advocated smoking laws for the public good (to prevent cancer). The “political activities” of the cigarette companies would have been tax deductible, whereas the charities advocating tougher smoking laws would have had to follow the ten per cent rule.

“This impairment of charities’ pursuit of the public interest has been magnified by the recent spate of audits and their repercussions on the charitable sector,” the report says.

Policy advocacy by Canadian charities has resulted in measures addressing acid rain, regulations on smoking, laws against drunk driving and regulations on toxic chemicals.

Canadian charities and non-profit organizations account for more than eight per cent of Canada’s GDP. As of the end of 2013, there were more than 86,000 registered charities in Canada.

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Eighteen Canadian charities have written a letter to the country’s political parties asking them for platform commitments to enhance the ability for charities to engage in public policy debates.

The charities argue in their letter that “without years of organizing effort by Canadian charities, Canada would not have dealt with issues such as addressing acid rain, promoting safe driving, reducing smoking and banning toxic chemicals.”

The chief concern lies around the current regulation of so-called “political activities” — defined by the Canada Revenue Agency as any activity that seeks to change, oppose or retain laws or policies. Charities are currently limited to spending ten per cent of their resources on these “political activities.”

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Groups that signed onto the letter include Oxfam Canada, the Canadian Parks and Wilderness Society, Amnesty International Canada, David Suzuki Foundation and Equiterre.

“Our society has evolved and our legislation hasn’t,” Eric Hebert Daly, executive director of the Canadian Parks and Wilderness Society, told DeSmog Canada.

Charities have changed from being primarily service providers — doing things like running soup kitchens and helping the disabled — to contributing direct knowledge of social issues to public policy debates, Hebert Daly argued.

“It seems ridiculous to not let the experts be the ones to speak out on issues that they’re experts in,” he said. “If you’re a corporation, you can write off 100 per cent of your spending on political activity and have no restrictions whatsoever, but if you’re a charity you can only write off 10 per cent. There’s a real discrepancy there that doesn’t seem to make sense.”

Right now, the letter the charities sent to federal politicians would qualify as “political activity” and would need to be accounted for under the ten per cent rule.

“When they hear political activity, most people think ‘supporting a political party’ but there’s a huge gap between creating public policy and supporting a political party,” Hebert Daly said.

Charities are banned from taking part in “partisan activity” (supporting or opposing a candidate or political party).

Several of the charities that signed onto the letter have been audited since 2012, when the federal government dedicated $13.4 million to the Canada Revenue Agency to audit the political activities of charities.

The groups argue in their letter that the current regulations are confusing:

“A confusing regulatory environment leaves many would-be advocates unclear how proactively charities can advocate for policy change. The existing interpretation of the Income Tax Act appears to be open to widely divergent interpretations of what constitutes charitable activity … The result is a chill where charities feel that their efforts are being discouraged, subjected to rhetorical attacks or harsh or arbitrary review.”

Hebert Daly says all political parties should be interested in reforming the law so there is no question about arbitrary application of the rules or silencing of dissent.

“The fact that the interpretation itself can change at any moment is part of the problem,” he said. “It would simply take a bureaucrat three seconds to change their mind at CRA and we’d be way above the 10 per cent.”

The groups are asking for an open consultation process involving a broad range of charities and the public to help develop new regulations for the sector.

“The debate on this has really just started,” Hebert Daly said. “I think you need to have an open and honest conversation in the public view about what makes sense in terms of modernizing the Income Tax Act.”

Photo: Dave King via Flickr

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Good public policy improves the lives of Canadians, and contributions from civil society groups can significantly improve the public policy that governments make. Despite the benefits of working well together — to both sides, and to Canadians overall — relationships between the sector and governments are not without challenges.

Note: the term "civil society groups" includes both nonprofits, which have no limits on their political activities, and charities, which have well-defined limits on their “political activities,” as described below.

In the last three years, many within the charitable sector have become concerned about Canada Revenue Agency audits focused on political activities, but few realize that controversy over the regulation of charities dates back decades in our country.

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The current controversy revolves around 52 charites being audited in a $13.4 million program launched by the federal government in 2012 to determine whether any are violating a rule that limits spending on political activities to 10 per cent of resources. Some of those charities, including Environmental Defence, the David Suzuki Foundation, Canada Without Poverty, Ecology Action Centre and Equiterre, have gone public with the fact they are undergoing audits.

On February 6, 2014, CBC reporter Evan Solomon published a story and aired a segment on the television program Power and Politics about these audits. The news story raised the question of whether environmental charities critical of the government are being unfairly targeted for their “political activities” as defined by Canada Revenue Agency.

In October 2014, the Broadbent Institute further interrogated that question by releasing a report called Stephen Harper’s CRA: Selective audits, “political” activity, and right-leaning charities.

The Broadbent report examined publicly available CRA tax filings of 10 “right-wing” charities and cross-referenced these with their publicly available work. In each case, the charities had reported they had conducted no political activity between 2011 and 2013.

The Broadbent Institute’s report, which includes the Fraser Institute, the Atlantic Institute for Market Studies and Focus on the Family, provides examples of activity for each of the charities that the report’s authors argue meet the CRA’s definition of “political activity.” It’s unknown whether any of these charities are currently under audit.

Flashback to 1978: Trudeau Government Accused of “Muzzling Charities”

Controversy around charities undertaking “political activities” is anything but new. Thirty-six years ago, in February of 1978, the Trudeau government issued Information Circular 78-3. It warned charities that any political objects or activities would be understood as contravening the Income Tax Act, and could result in the revocation of an organization’s charitable status. The document took a broad view on what constituted political activities, and clarified that none of a charity’s resources could be devoted to them.

Charities, the federal opposition parties and the press reacted strongly to Information Circular 78-3, arguing it contravened the right of free speech, unduly constrained charities in their pursuit of improving society and ran against the democratic values of Canadians. 

An editorial in the Toronto Star from April 18, 1978, captures the tone of the response, calling it “outrageous” for the Trudeau government to “muzzle charities” with guidelines that “take the narrow view that while charities can directly aid the needy, for example, they can’t advocate changes in public policy that might benefit the needy [because] this is considered political activity.”

The Trudeau government defended its actions by claiming the information circular wasn’t a shift in policy, but rather only a reflection of the imperfect case law according to which purposes and activities of charities must be interpreted. Under ongoing pressure, the Trudeau government eventually suspended the circular. 

In 1987, the Mulroney government released Information Circular 87-1, which advanced the now familiar approach of allowing charities to undertake ancillary and incidental political activities that are not partisan and limited to expenditures of 10 per cent of a charity’s resources. The 1987 policy statement also required that charities report on both exempt and political activities in their annual information returns.

The mid-1990s to early 2000s saw an unprecedented amount of activity oriented to improving the relationship between the federal government and the charitable sector. It culminated in June of 2000, when the Chrétien government announced the Voluntary Sector Initiative, a five-year joint initiative between the sector and the government set up to improve their working relationship. Among the many outcomes of the initiative was a Code of Good Practice on Policy Dialogue (2002), which makes explicit why and how the federal government and the sector should work together on public policy.

In 2003, based in large measure on the work described above, and after open consultation with the sector, the Charities Directorate of Canada Revenue Agency updated its guidance on political activities with the release of CPS-022, which is still in effect today. It is substantially the same as Information Circular 87-1, but is more explicit and makes greater use of examples than previous guidance.

A close reading of the guidance reveals that Canada Revenue Agency permits more latitude in terms of political activities than many in the sector appear to believe (see: 10 Ways Charities Have Improved Canadians' Daily Lives). It would seem that at least some of the purported “advocacy chill” often cited in the sector flows from charities themselves not fully understanding the range of activities permitted by the regulator.

While some of the “chill” may be caused by charities’ own lack of understanding of the law, there’s no doubt part of it can also be attributed to the perception of a crackdown on the environmental sector.

While a robust regulator that conducts regular audits is an essential element of a well-functioning charitable sector, being audited is a stressful, time-consuming exercise that distracts from a charity fulfilling its mission. And when you have a government that has openly accused Canadian environmental groups of  “money laundering,” it’s little wonder environmental charities are feeling a little on edge at the moment. Only time will tell how the current audits will go down in the history books.

Obviously, the challenges presented by imperfect case law and an arcane regulatory regime around charities persist today. The Charities Directorate has recently launched a series of tools to help charities understand the rules. And the Pemsel Case Foundation was recently founded with a mission to foster better knowledge and understanding of charity law and regulation by the Canadian public and voluntary sector organizations.

A number of funders, including Max Bell Foundation, have taken an active interest in supporting charities who do public policy advocacy. I would hope these initiatives and others like them will help warm Canadian charities to the idea of doing public policy advocacy — because the potential rewards for all of us are enormous.

This article originally appeared in The Philanthropist.

Photo: Obert Madondo via Flickr

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A new report from the Broadbent Institute raises fresh questions about whether Canada Revenue Agency (CRA) audits are being used as a politicized tool to pressure critics of the federal government. 

The report, Stephen Harper’s CRA: Selective audits, “political” activity, and right-leaning charities, says several right-leaning charities are reporting zero “political” activity while engaging in work that appears to meet the CRA’s definition.

“We know charities that have been critical of policies of the Harper government are being audited by the Canada Revenue Agency. With mounting evidence suggesting bias in auditing decisions, we need to find out what’s going on here,” said Rick Smith, executive director of Broadbent Institute, a non-partisan organization founded by former NDP Leader Ed Broadbent.

Fifty-two charities are being targeted in a $13.4 million audit program launched by the federal government in 2012 to determine whether any are violating a rule that limits spending on political activities to 10 per cent of resources. Those charities include Environmental Defence, the David Suzuki Foundation, Canada Without Poverty, Ecology Action Centre and Equiterre.

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The Broadbent report examined publicly available CRA tax filings of 10 charities and cross-referenced these with their publicly available work. In each case, the charities had reported that they had conducted no political activity between 2011 and 2013.

The Broadbent Institute’s review, which includes the Fraser Institute, the Atlantic Institute for Market Studies and Focus on the Family, provides examples of activity for each of the charities that appear to meet the CRA’s definition of “political.”

For example, on Oct. 22, 2012, the Fraser Institute released a report calling for the B.C. government to lift its moratorium on offshore oil and gas exploration, which appears to fall under the CRA’s guideline on what constitutes political activity, which states an activity is political if “the intention of the activity is to incite, or organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.”

The report raises fresh questions about the CRA’s selection process for determining which charities are targeted for political-activity audits.

Other groups scrutinized in the Broadbent report are: Macdonald-Laurier Institute, C.D. Howe Institute, the Montreal Economic Institute, Canadian Constitution Foundation, Energy Probe Research Foundation, Frontier Centre for Public Policy and Institute for Canadian Values.

It’s unknown whether any of these groups are currently under audit.

The Broadbent Institute is calling for the establishment of an independent inquiry to examine CRA processes to ensure transparency and fairness in its decision-making criteria around political-activity audits and interpretations of “political” activity, and to ensure such processes are not subject to political pressures or interference. 

“Political activity is a critical part of many charities’ work. Progressive or conservative, blunting the ability of civil society to advocate and to engage in debate and, occasionally, dissent should concern us all,” Smith said.

Photo: Obert Madondo via Flickr

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Quebec will gain “minimal economic benefits” from west-to-east oil pipeline projects such as TransCanada’s Energy East and Enbridge’s Line 9 according to a new report released this month. Both projects would transport western Canadian oil and oilsands (also called tar sands) bitumen to refineries and ports in Quebec, but would only make a combined 0.50 per cent contribution to economic activity and 0.30 per cent to jobs in the province.

“Quebec will bear almost all of the risks and costs associated with spills and other environmental impacts, without any offsetting economic gains,” Brigid Rowan, senior economist with the consulting firm The Goodman Group Ltd., and co-author of the report says.

Oilsands producers, pipeline companies, and the owners of the two refineries in Quebec have the most to gain from Line 9 and Energy East concludes the report by The Goodman Group Ltd. in collaboration with Greenpeace and Equiterre. The fifty-five-page report also refutes claims by pipeline proponents that supplying Quebec with cheaper western Canadian bitumen will make things cheaper at the gas pump for Quebecers.

“Refineries will not provide discounts for Quebec markets when they can also sell their refined products to profitable markets outside Quebec,” the report states.

“Consumers who think that oil companies will give them a break at the gas pump have another thing coming,” Pierre-Olivier Pineau, an energy specialist at HEC Montreal Business School warns.

“The extra profit margin from cheaper Canadian crude oil will most likely be pocketed by the refineries,” Pineau predicts.

Quebec’s coastal location gives both refiners and oilsands producers the opportunity to sell their product overseas if the price is right. DeSmog Canada reported last March as much as ninety per cent of the oil and bitumen TransCanada wants to ship through its proposed 4,600 kilometre Energy East pipeline will be exported out of Canada.

Petro-Chemical Industry Is A Small Share of Quebec’s Economy

Refining jobs in Quebec are well paying and mostly union jobs, but much like the oil industry itself the refining sector involves large sums of money and yet employs very few people.

Ultramar’s Quebec City refinery (owned by Texas-based Valero) and Suncor’s refinery in Montreal employ five hundred people each or less than 0.03 per cent of Quebec’s working population. The production of plastics and chemicals by the Montreal Petrochemical Complex employs 7, 500 or 0.40 per cent of the working population in the city.  

“If it is assumed that each of the jobs directly at Quebec refineries results in up to 11 other jobs elsewhere in the Quebec economy (i.e. for every direct job, there are 11 other jobs from contractors, suppliers and spin-offs), the total for the entire economy is still about 12,000 jobs (or less), equivalent to about 0.30 per cent (or less) of the provincial total. Likewise, even if it is assumed that the Quebec refineries result in a very wide range of spin-offs, the impact on overall economic activity (Quebec GDP) is around $1.5 billion (or less), equivalent to about 0.50 per cent (or less) of the provincial total,” the report states.

Pipeline Construction Will Create A Few Short-Term Jobs in Quebec

The report estimates the economic impact of the construction of Energy East and Line 9 on Quebec’s economy will be 0.20 per cent annually over a four-year period. Line 9 will require very little construction whereas Energy East will involve laying of 1,600 kilometres of pipeline from southeast Ontario to Saint John New Brunswick and the building of marine oil transport ports in Quebec and New Brunswick.

“Once the initial capital investment (i.e. construction phase) is completed and the pipelines are in service, ongoing operations would have minuscule labour requirements and impact (less than 0.04 per cent/year with the Suncor coker and less than 0.02 per cent/year without it) on overall economy activity,” the report concludes.

A Pipeline Rupture Would Cost Billions

If the economic benefits of west-to-east pipelines for Quebec are “insignificant” a pipeline rupture “could have a huge impact on the environment, waterways, human society and public safety.” The Goodmann Group, a consulting firm specializing in energy economics estimates a major pipeline rupture in an urban centre such as Montreal could cost between five to ten billion dollars to clean up and result in a major loss of economic activity.

“Typically spill risks are socialized with local inhabitants (human, wildlife and plants) bearing large costs: the area where the spill occurs is often never fully restored; waterways and drinking water can be polluted; humans can lose their homes and livelihood and/or be subject to a deterioration in their quality of life; and wildlife and plant life are killed. Tar sands heavy crude is particularly difficult to clean up,” the report states.

Pipeline companies in Canada do not carry liability insurance for pipeline spills anywhere close to five billion dollars. Canada’s largest pipeline operator – Enbridge – has $685 million for all its operations.

“Quebec citizens should be concerned,” the report warns.

Refining Bitumen Puts Quebec’s GHG Reduction Targets in Jeopardy

“In the current Canadian context Quebec can play a key role: if the province rejects the pipeline projects, then tar sands expansion will be constrained – allowing more time for the emergence of green alternatives. Moreover, Quebec has tremendous risk exposure from Energy East, as this pipeline will use Quebec as a conduit to export enormous quantities of dirty oil from the tar sands", says Patrick Bonin of Greenpeace Canada.

Quebec has proposed greenhouse gas (GHG) emissions reductions targets of a twenty-five per cent cut (1990 baseline) in the GHG emissions the province produces by 2020. These targets to reduce global warming emissions far surpass Canada’s own national emission reduction goals. Refining bitumen in Quebec, a heavy unconventional oil that produces up to forty per cent more GHG emissions to extract and refine than conventional oil, will put these provincial targets in jeopardy.  

“Not only would approval of the projects increase greenhouse emissions from refining more heavy crude in Quebec; but they have the potential to have a much greater incremental impact on Canada’s overall GHGs by enabling tar sands expansion,” the report concludes.

Refineries in Quebec currently lack the necessary equipment to refine large quantities bitumen, although it appears Suncor may make the two billion dollar investment to retrofit its Montreal refinery for bitumen. Bitumen needs to be ‘cooked’ longer during the refining process and at higher temperatures than conventional oil to be turned into liquid fuels.

Enbridge’s Line 9 pipeline project from Sarnia to Montreal was approved by the National Energy Board – Canada’s federal energy regulator – last March but faces two legal challenges that are ongoing. TransCanada announced earlier this month the pipeline company will apply for its 1.1 million barrels a day Energy East pipeline from Alberta to Saint John New Brunswick in mid-August of this year.

Image Credit: David Suzuki Foundation, Economics of Transporting and Processing Tar Sands Crudes in Quebec report, Enbridge, TransCanada's Energy East: Export Pipeline, Not For Domestic Gain Report

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Last week’s approval of the Line 9 pipeline project by the National Energy Board (NEB) hinges on thirty conditions being met by the pipeline’s operator, Enbridge. The conditions are meant to enhance the safety of the project that involves shipping 300,000 barrels of crude oil and oilsands bitumen everyday from Sarnia to Montreal. Critics of the project say the requirements are not “meaningful conditions” and do not protect communities living along the 38-year old pipeline.

"By giving the green light without actually imposing conditions, the NEB is complacent towards the oilsands industry and demonstrates its inability to protect [our] health, public safety and our environment," Sidney Ribaux, executive director of Équiterre, says of Line 9’s approval in a statement from Montreal.

“The NEB may pretend to have put adequate safeguards in place but it has only safeguarded the profits of pipeline companies and externalized the risks associated with pipelines onto landowners as the Board always does,” says Dave Core, president of the Canadian Association of Energy Pipeline Landowners Associations (CAEPLA).

The conditions largely require Enbridge to provide the NEB – Canada’s independent energy regulator – with the most recent information about the Line 9 project. This includes information regarding the current state of the pipeline, revised emergency response plans and the pipeline company’s updated pipeline leak detection system manual.

Why this information was not required before the NEB decided the Line 9 project was in “the public’s interest” has baffled critics. The difficulties of participating in the eighteen-month decision-making process frustrated participants who were unable to review and comment on the most recent and relevant information about the project.

“The decision and its conditions do not reflect the concerns raised by the public about Line 9 and shipping tar sands bitumen through their communities,” Adam Scott, climate and energy program manager for Environmental Defence Canada told DeSmog.

Public’s Concerns Absent from Decision

Scott points to a hydrostatic test of Line 9 as the one condition the governments of Ontario and Quebec, environmental groups, and landowners asked for, but the Board chose not to impose:

“The Board elects to make no order at this time regarding hydrotesting of the pre-existing portions of Line 9,” reads page 49 of the NEB’s 140-page document on the Line 9 decision.

A hydrostatic test or hydrotest involves flushing a pipeline with high-pressure water to determine if it can safely operate at maximum pressure.

Line 9 has not operated at its maximum pressure in recent years. Evidence submitted to the NEB by an international pipeline safety expert indicated the best way to ensure the existing cracks on Line 9 do not turn into a rupture is to conduct a hydrotest.

Protests London, Ontario against Line 9's approval 

“Enbridge needs to conduct a hydrostatic test on Line 9. It is the gold standard for pipeline integrity and safety. Canada has a well-established history of hydrotesting its pipelines,” Richard Kuprewicz, pipeline safety expert told DeSmog Canada in an interview last October.

The Board did not disagree with the argument for a hydrotest, but appears to have sided with Enbridge’s view the test could have “detrimental effects” or damage the pipeline. The decision to order a hydrotest was punted to a later time and date. 

Safety Tests to be 'Revisited'

“The Board has imposed Condition 11…[and]… may revisit the issue of requiring hydrotesting prior to granting LTO (leave-to-operate),” concludes the Board.

Before ordering a hydrotest the Board wants to review Enbridge’s approach to hydrotesting (Condition 11) and the company’s updated engineering assessment of Line 9’s state (Condition 9). The assessment must include a reliability study of the inline pipeline inspection tool Enbridge uses to evaluate the threat of cracks and corrosion to the line.

The engineering assessment Enbridge submitted during the Line 9 hearings is primarily based on the pipeline's condition ten years ago.

Two other conditions strongly recommended by critics of the project and the government of Ontario – a third party independent review of Enbridge’s data on Line 9 and the requirement of $1 billion in liability insurance in the event of a spill – were also absent from the Board’s conditions.

“There’s nothing of substance [in the conditions]. It’s pretty basic stuff that’s already required in legislation that already exists, like how you’re going to mitigate the damage you’re going to do to water crossings when you dig up a pipeline,” said Adam Scott of Environmental Defence in an interview with NOW Magazine.

Canadians Need To Determine Their Energy Future Outside of the NEB

“With these conditions, the Board is of the view that the IMP (integrity management plan) which Enbridge has implemented to date, and proposed steps going forward, sufficiently protect the facilities from cracking to enable safe operation of Line 9,” the NEB decision reads.

Although Line 9’s approval surprised no one, critics of the project held out hope for stronger conditions.

Dave Core, president of the Canadian Association of Energy Pipeline Landowners Associations (CAEPLA), has been dealing with pipelines, and the NEB for over twenty years and thinks Canadians need to rethink the regulator.

“Canadians need to realize the NEB is doing exactly what it was designed to do over sixty years ago – protect pipeline company shareholder profits and protect politicians from the public. The Board cannot be relied on to protect the public, the environment, or landowners’ rights,” says Core, who is originally a farmer from southwestern Ontario where Line 9 lies.

"We need to have a discussion about the future of the NEB and whether there even ought to be a future for the Board. It is only through ironclad contracts with the discipline of the courts and insurance that our safety, the environment and landowner stewardship responsibilities will be protected," Core told DeSmog Canada from Vancouver. 

The fate of Line 9 now depends on the NEB deciding whether Enbridge has met all imposed conditions on Line 9’s approval. Because Line 9 is an existing pipeline the project does not require approval from the federal government. 

Image Credit: Enbridge, Robert Cory

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The federal government has allocated more than $13 million for the Canada Revenue Agency’s (CRA) investigation of charitable organizations, which is planned to extend beyond 2017, according to documents obtained by DeSmog Canada through Access to Information legislation (PDF attached below).

Previous figures announced in the 2012 Bill C-38 Omnibus budget amounted to $8 million for the monitoring and investigation of Canada’s charitable organizations over two years.

According to the internal documents, the Minister of Finance approved $13.4 million in funding to institute new reporting requirements for charities engaged in political activities or receiving funding from foreign sources. The funds will also be used to ensure charitable organizations are “operating in compliance” with new rules. The document notes these new reporting and compliance initiatives will continue through the year 2016-17 and remain “ongoing.”

Screen shot of the Canada Revenue Agency document.

Screen shot of Budget 2012 plans as outlined on the Government of Canada’s budget website.

As the CBC recently reported, the CRA is auditing seven of Canada’s most prominent environmental charities, including the David Suzuki Foundation, Tides Canada, West Coast Environmental Law, the Pembina Foundation, Environmental Defence, Equiterre and the Ecology Action Centre.

Marcel Lauzière, president of Imagine Canada, told the CBC, “We’re concerned about what appears to be an increase in audits around political activity and in particular around environmental organizations.”

He added, “There’s a big chill out there with what charities can and cannot do.”

John Bennett of the Sierra Club said the rules the CRA is looking to enforce are unclear. “We don’t know what rules we’re playing by. The problem with this is that they gave the power to CRA to walk in and shut you down. And then if you want to complain, you can go to court afterwards.”

At least one environmental group, Environmental Defence, is currently appealing an audit report submitted by the CRA concerning the activities of the organization.

Ministerial correspondence documents, also released to DeSmog Canada, show the CRA and the Prime Minister’s Office received a significant amount of complaints regarding the investigation of charities, with letters likening the initiative to a “witch hunt,” “a wild goose chase,” a “crackdown…limiting free speech,” and an effort in “silencing those who can’t speak for themselves, and polariz[ing] the potential for public debate.”

Others claimed the monitoring of environmental charities would “negatively [affect] the dialogue required to determine the viability of resource development against environmental concerns,” and “was implemented to specifically target environmental groups opposed to the Gateway Pipeline development.”

To each complaint, the ministerial correspondence coordinator notes: “There is no expectation of reply from Minister Shea.”

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