(May 12, 2011) Re: “Greening Harper,” Lawrence Solomon, May 7
I wish to bring some factual clarity to Lawrence Solomon’s opinions regarding the Export Development Corp.
First, Mr. Solomon advances the idea that EDC makes bad loans to Third World governments for environmentally risky projects. EDC does no such thing. EDC operates on a commercial basis, with no annual appropriations from the government. Categorically, without exception, EDC never writes off corporate loans at the taxpayers’ expense. Not once. EDC manages its corporate loan portfolio by issuing bonds in the global bond market, not with any funds from the government, and if it does write off a loan, it does so from its own corporate ledger.
EDC most assuredly does not support environmentally risky projects. EDC is the only export credit agency in the world that has a legal requirement to review the environmental impacts of any transaction it considers, and the only one with a large, dedicated team to undertake that review. EDC is a signatory to all of the relevant international standards, including those of the International Finance Corp., World Bank and the OECD.
Mr. Solomon alleges that EDC is a patronage agency. EDC’s last two CEOs have been promoted from within EDC’s senior executive ranks, both of whom with peerless qualifications.
Finally, Mr. Solomon contradicts himself by stating that EDC both strengthens the private sector and muscles the private sector out of the export business. EDC’s role is to grow Canada’s exports, not support the private-sector banks. However, nearly 80% of EDC transactions are in partnership with one or more financial institutions. EDC is a partner of Canada’s banks in their export business, not a competitor.
Rosemarie Boyle, vice-president, strategic planning and corporate communications, Export Development Corp.
Lawrence Solomon responds Ms. Boyle emphasizes that EDC doesn’t write off corporate loans. I didn’t say it did. EDC writes off loans, at taxpayer expense, to Third World governments. EDC’s Consolidated Financial Statements, in a section entitled “Debt Relief,” says: “During the year, we received in total $49-million [from the federal government] pursuant to debt-relief arrangements for Ivory Coast and Congo,” states the 2009 annual report. This handout is commonplace.
My bank sources say EDC’s level of impaired loans, at 3.4%, is high by commercial bank standards. Moreover, the majority of EDC’s portfolio is not investment grade.
Unlike commercial institutions, EDC is directed by the government to patronize favoured corporations. Historically, Quebec firms have been disproportionate recipients of EDC largesse. That’s what I meant by “patronage.”
As for environmental risk, surely China’s Three Gorges Dam, which was responsible for the displacement of 1.4 million people along the Yangtze River, the flooding of 13 cities, and the diminution of China’s most spectacular natural attraction, would be considered environmentally risky. Or the Omai gold mine disaster in Guyana, which unleashed 3.2 billion litres of cyanide and heavy metal-laced effluent into the Omai River, devastating the country’s fishing industry. Or financing Canadian investors involved in a scheme in Chile to build the world’s longest transmission corridor, adversely affecting 14 national parks and protected reserves, in support of five dams being built on rivers in the Patagonian rain forest.
EDC has legal requirements to conduct environmental analyses. But a report conducted by Canada’s Parliamentary Research Branch said that EDC’s “board appears to have complete, unlimited freedom to make any decision, i.e., to define terms as it chooses, or to exempt any project it chooses. As well, the complete absence of limits on the decision-making power would suggest that the board directives would be virtually immune from judicial review.”
Contrary to Mr. Solomon’s assertions, the environmental advantages of renewable fuels are well established. For example, the federal renewable fuels standard that mandates the inclusion of minimum amounts of ethanol and biodiesel in our fuel supply will lower greenhouse gas emissions by roughly 4.2 billion megatonnes per year. That’s the equivalent of removing nearly one million cars from the nations highways annually.
In addition, a recent study by ChemInfo Services showed that ethanol reduces GHGs at a rate of 62% compared with traditional fossil fuels, while biodiesel surpasses even that mark with a remarkable 99% benefit.
Questions with respect to the use of fresh water are also welcomed by the industry. Few, if any, producers actually make use of irrigation and instead are able to rely entirely on rainfall. Ethanol producers also take great care in ensuring that two-thirds of the water used in production is recycled, often being reused right in the facility.
Finally, according to reports from the International Energy Agency, corn-based ethanol generates 2.34 units of energy for every single unit of energy consumed. Mr. Solomon also fails to highlight the thousands of jobs created and billions of dollars in economic growth the biofuels industry has and continues to generate.
Gordon Quaiattini, president, Canadian Renewable Fuels Association, Ottawa
Readers of the Post should be aware that Atomic Energy of Canada Ltd. consists of two parts. One is the CANDU reactor division, based in Mississauga, Ont., and the other is the R&D and waste management division, based in Chalk River, Ont. It is the former that is for sale and, for all but a few years out of the last 20, it has turned a profit while receiving little or no federal support. Its profits have gone back to the federal treasury or to support money-losing operations elsewhere in the company, such as isotope production.
So selling this part of AECL while keeping the remainder will not help Canadian taxpayers in the long term.
Michael Ivanco, vice-president, Society of Professional Engineers and Associates. Mississauga, Ont.