Back in February 2007, the B.C. government created a $25-million Innovative Clean Energy (ICE) Fund to support what it considered to be green energy projects. Ironically, these so-called green projects are funded with a tax on energy that in B.C. is already 95 percent green. Why we pay a tax on green energy to fund green energy is a question only the brain-trust in Victoria can answer. But clearly, this fund is only one of countless examples of a new breed of ‘green’ corporate welfare. 

The government said the ICE Fund would be extended beyond one year if the program was successful. Success, in this case, refers to the program's popularity -- and popular it was. The government got 60 applications grubbing for nearly $140-million in handouts -- more than five times the amount of available funding. So, according to this rather self-serving definition of success, the program was extended and given another $25-million September 2008. This program, like many other corporate welfare schemes, creates a very strong incentive to spend time and energy applying for funding. Resources are limited, so what is spent applying for funding is likely taken away from more productive activities – like actually building green energy projects. 

Meanwhile, in July 2008, the government announced the 15 lucky winners in the first ICE welfare lottery. Given this program's definition of success, it should come as no surprise that some of the winners are very good at applying for – and getting – other shades of green corporate welfare. 

One of those companies, Nexterra, provides an interesting example. According to the B.C. government news release, Nexterra received $1.5-million from the ICE fund to help build a $9-million energy plant in New Westminster. What's not on the B.C. government news release, however, is that Nexterra also received $300,000 from Natural Resources Canada (NRCan) and $345,000 from the National Research Council of Canada (NRC-IRAP) for the same project. But there's more. Nexterra got $2.7-million from another arm of the federal government, Sustainable Development Technology Canada (SDTC), in February 2007 for a similar project. 

According to NRCan, Nexterra has received more than $4-million from NRCan alone for the development of this technology. 

NRCan, NRC-IRAP and STDC are federal government groups whose main purpose seems to be handing out our tax dollars to boost the bottom lines of savvy, small–and-medium-sized companies. This means companies too busy working to apply for subsidies are actually helping fund their competitors. 

It comes as no surprise that Nexterra was also given government funding for the same type of technology in the past. Dockside Green, the so-called sustainable housing development in Victoria got $85,000 from the B.C. government. The Green Municipal Fund committed $350,000 to this project. In fact, all three of Nexterra's projects in Canada have benefited from green corporate welfare. 

Ultimately, the B.C. government’s ICE Fund should be scrapped. Corporate welfare programs hand out precious tax dollars to activities that probably would have developed anyway, while drawing money out of our pockets and businesses' coffers that would have otherwise been put to more useful purposes. In fact, corporate welfare can actually slow technological development when companies divert resources into getting grants instead of research, development or production. 

Governments have proven again and again that they are a poor replacement for the market when they try to pick winners, but are an easy mark for those seeking quick cash.

By: Maureen Bader
Posted: January 14, 2009
Topic: British Columbia

Contact the regional director Jordan Bateman for further information.

Type: Commentary

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