With the Canadian government still tight-lipped at week’s end on the bailout package it’s crafting for the country’s pandemic-ravaged fossil sector, 56,000 online petitioners demanded the government invest in the oil and gas work force, not shareholders, while new analyses showed how the right investments could position the country for a stronger, greener recovery.
On Friday, Prime Minister Justin Trudeau said the government was looking for a way to help the sector, The Canadian Press reports. But “Trudeau’s promise came nine days after Finance Minister Bill Morneau said an aid package for the oil sector was ‘hours, potentially days’ away,” the news agency adds. “Morneau’s office would not say Friday how many hours Morneau actually meant.”
Noting that “doing it right is more complicated than doing it fast,” Greenpeace Canada Senior Energy Strategist Keith Stewart said the delay might be good news. “It would be a lot easier and faster to pump out a bailout of loans and aid to companies than it would be to find innovative ways to fund workers through a transition to greener pastures,” the news agency says, citing Stewart. “He is hopeful any direct aid to companies will be tied to their willingness to show business plans in line with Canada’s climate targets. Anything else should help workers who need to know they can pay their mortgages and put food on the table while they retrain for new jobs in clean energy or environmental remediation.”
That line of thought received a powerful virtual boost Friday when a group of youth climate strikers, environment organizations, and democracy groups held an online rally “calling on Canada’s federal government to prioritize relief for workers and impacted communities rather than oil and gas companies,” Stand.earth reports. The release lists three MPs—one each from the Liberal, New Democratic and Green parties—who logged on “to accept more than 56,000 petition signatures from Canadians opposed to a bailout of the oil and gas industry.”
“We need to support oil and gas workers—as we do all workers who are trying to survive this economic storm,” said Dogwood spokesperson Alexandra Woodsworth. “But Canadians will not accept a sweetheart deal for oil company execs and shareholders to protect Big Oil’s bottom line, and prop up a sunset industry. We need every single public dollar available to save lives, support communities, and rebuild a cleaner, more resilient future.”
“There seems to be a government push to rely on Big Oil and dirty fossil fuel oil and gas,” said Chief Kukpi7 Judy Wilson of the Union of B.C. Indian Chiefs. “Pipelines continue to come through our territory. Construction is ongoing, telling us where the investment really is.” And “we also don’t want man camps in our territories. There is already evidence that shows us that they lead to further violence against our women and our girls, and have devastating effects on our people, especially our most vulnerable.”
“We desperately need responses from our decision-makers that address the most vulnerable and address these inequalities,” said Stand.earth International Program Director Tzeporah Berman. “At this rare moment in history—as we design stimulus packages—we have an opportunity to direct funds and efforts to rebuild and restructure so that our systems, our infrastructure is more resilient, addresses the multiple crises that we face, and leaves no one behind.”
As the days ticked by and the pressure on Ottawa mounted, there was no shortage of specifics on how the sector stimulus money should be spent.
On Thursday, fossil executives were praising the federal government’s response so far and laying out the form they thought a bailout should take…as long as no one actually calls it a bailout.
“The oilpatch doesn’t want a handout or bailout from Ottawa,” CBC writes, citing Whitecap Resources CEO Grant Fagerheim. “Instead, industry leaders want the federal and provincial governments to look at ways to reduce expenses for the industry. such as providing funding for debt and lowering royalties.”
“Then you are not picking winners and losers,: Fagerheim explained. “You’re actually doing it overall for the energy space to help drive down their costs to make it more competitive with other places around the world.”
“At a time like this, the number one thing is liquidity. The first three things are liquidity,” added NuVista Energy CEO John Wright.
“The last thing you want to see is, for example, your bank line shrink at a time like this, even though you’re a strong company,” he added. “Where the government can step in is ensuring they are providing liquidity and encouragement to the banks such that we don’t get an undue compression of liquidity for strong companies.”
“We need to allow the companies to have enough cash so they don’t get so much debt on their balance sheets that the creditors won’t continue to support them,” said World Petroleum Council of Canada Chair Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy. “They need enough financial capacity that they can continue to pay all these operating costs, even if they’re losing money, and get through to the other side.”
On Thursday, as well, an analyst with RBC Capital Markets suggested “that an aid package could allow companies that shut in production to sell barrels of oil that they’re not producing to the federal government at a mutually agreed upon market price,” Bloomberg reports. “They will be free to actually produce that crude later on, when prices are better, and refund the government the revenue it paid them earlier, smoothing out the producers’ revenue and ‘leaving taxpayers whole’.”
“As a voluntary arrangement, Shut & Swap rests on market forces, and temporarily utilizes the balance sheet liquidity afforded by the Canadian government,” Greg Pardy wrote in a research note.
[Hey, what a plan! Next, Ottawa could pay 3M not to produce N95 masks for Canadian health care workers! Why not subsidize your neighbourhood Blockbuster store not to keep trying to compete with Netflix? What could possibly go wrong?—Ed.]
Thankfully, Ottawa had a menu of more sensible ideas to choose from. In Toronto, The Atmospheric Fund called for public funds to be spent for public benefit, “to spur job creation and benefit the whole economy, not executives and shareholders. We need those funds to clean up polluting industries and accelerate the low-carbon reality.”
TAF addressed the potential disconnect between fast economic stimulus and an effective green infrastructure program that could take months or years for planning and approvals. “While these [longer-term solutions] are under development, we can get a head start by focusing on the plentiful small and mid-size project opportunities like retrofits and distributed renewables, and taking advantage of existing funding programs that can be rapidly expanded,” wrote Bryan Purcell, the fund’s vice president of policy and programs.
“Fortunately, the federal government has a multitude of climate funding programs which could be boosted to get money into the economy quickly and productively, while reducing carbon,” Purcell added, citing the federal Zero Emissions Vehicle Infrastructure Program, Climate Action Incentive Fund, and Accelerated Investment Incentive for qualifying renewable energy projects. [Disclosure: The Energy Mix publisher Mitchell Beer has worked on past contracts with TAF.]
The Pembina Institute and the International Council on Clean Transportation echoed the call to use electric vehicle production to boost the economy, and Pembina published a separate set of principles to guide the economic stimulus package. It said federal funding should prioritize:
- Jobs that are resilient to future economic shocks and disruption;
- Investments in producers of low- and zero-carbon goods and services;
- Incentives for carbon reductions that go beyond current regulatory requirements;
- Backstopping Canada’s ability to meet its climate commitments where possible.
Meanwhile, transit agencies across Canada are requesting an immediate C$1 billion in emergency funding, plus another $400 million per month to cover lost revenue during the pandemic.
“Systems across the country are coping with an unprecedented ridership drop that’s caused by the COVID-19 pandemic,” Canadian Urban Transit Association President Marco D’Angelo told the Globe and Mail last week. “We’re asking the federal government to find a way to help systems access funds to make sure that essential transit can keep running.”