When the Québec subsidizes pollution

Photo Piere-Paul Biron

Germain Belzile

Wednesday, 16 August 2017 11:21

UPDATE
Wednesday, 16 August 2017 11:33

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Cement McInnis, a new cement plant to be established in Port-Daniel-Gascons, in Gaspésie, began this summer to produce cement. Announced in January 2014 by the government of Marois, this company, with cost overruns of 40 % in the building made the headlines, has received more than $ 600 million in grants, loans and equity participation ($350 million from Investissement Québec and 265 million $ from the Caisse de dépôt et placement du Québec).

Much ink has been used to criticize these subsidies. Among other things, commentators have pointed out that there had already been four cement plants in Quebec, including some operating at 65 % capacity, and that Maine wants to prevent the new cement from bidding on its contracts in the public sector, thereby reducing its anticipated profitability.

A cement plant, it emits a lot of greenhouse gas (GHG) emissions. According to the ministry of the Environment, the Port-Daniel will issue 1.75 million tonnes (Mt) of GHG when it will produce, on an annual basis, 2.2 Mt of cement. Therefore, the Québec government, through its regulations, and the financial support of its public corporations, encourages GHG emissions.

At the same time, the government is spending large sums to reduce GHG emissions through its programme of subsidies for the purchase or lease of electric vehicles (EV) batteries. It has even set itself very ambitious targets : 13 464 EV actually on the road in December last year, to 100 000 in 2020 and 1 million by 2030.

As we have shown in a study published in June 2017, a 100% electric car that replaces a standard car gasoline helps to reduce by an average of 3 t per year of GHG emissions, so that even if Quebec achieved its goal of 1 million electric cars on roads by 2030, the effect on the total emissions of Québec will be negligible (Quebec emits more than 80 Mt of GHGS). If one takes into account that part of these cars will also be plug-in hybrids, the gain becomes even more marginal.

A calculation simple, we can see that the cement factory in Port Daniel will emit as much GHG per year than 583 333 100% electric vehicles could save. In other words, the plant is highly subsidized will neutralize the effect on the GHG emissions of almost 600 000 cars an all-electric, they are also highly subsidized. And the approximately $ 615 million $ in grants “cimentières” will cancel the effects of more than $ 5 billion in grants ” électrifères “. Net effect on GHG = 0. Net effect on public finances : less than $5.6 billion.

Subsidize a thing and its opposite

The government of Québec subsidizes both the production and the reduction of GHG emissions. How can we understand such behavior? The economic theory of public choice advance a simple explanation : the politicians are, because of the electoral dynamic, forced to propose and implement policies that relate to voting, rather than those who are logical and consistent with their announced goals. Thus, the prospect of winning (or retaining) the constituency of Bonaventure, where is located the Cement McInnis, leads politicians to propose exactly the reverse of what they offer to the wealthy inhabitants of the districts urban of Quebec, who are more likely to buy electric cars.

But this does not stop me from making a constructive proposal : we cut all the subsidies, as much of the cement as those for the purchase of electric vehicles. It saves tons of money. And it would not be more wrong in regards to greenhouse gas emissions.