‘A Major Turning Point’: Trudeau Unveils $1.7 Billion for Abandoned Wells, Resists Fossils’ Bailout Demands

Prime Minister Justin Trudeau has unveiled C$1.7 billion in new funding to clean up abandoned oil and gas wells and another $750 million to combat methane leakage, part of a $4-billion package for sectors affected by the coronavirus crash, while rejecting fossil industry calls to suspend climate action and regulations during the pandemic.

The statement earned praise across most of the Canadian climate community, with one veteran campaigner calling it a “major turning point for oil and gas politics in Canada”. Organizations expressed support for the orphan well spending, while pledging a watchful eye on the government’s promise of financial support through Business Development Canada (BDC) and Export Development Canada (EDC).

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“Just because we’re in one crisis right now doesn’t mean we can forget about the other one—the climate crisis that we are also facing as a world and as a country,” Trudeau told media Friday. That was after Environmental Defence released and Global News reported on a leaked copy of a 13-page memo from the Canadian Association of Petroleum Producers to Natural Resources Minister Seamus O’Regan and seven other federal Cabinet ministers. It listed more than 30 regulatory measures the fossil industry wanted to see suspended or delayed.

While he rejected CAPPs attempt at a massive backtrack, Trudeau “told reporters that plunging oil prices and the economic impact of combating COVID-19 have devastated the oil and gas sector and left too many energy workers without an income,” the Globe and Mail reports.

“To help these workers, our government will invest $1.7 billion to clean up orphaned and inactive wells in Alberta, Saskatchewan, and B.C.,” Trudeau said. 

“Cleaning them up will bring people back to work and help many landowners who had these wells on their property for years, but haven’t be able to get them taken care of and the land restored,” he added. “Our goal is to create immediate jobs in these provinces, while helping companies avoid bankruptcy and supporting our environmental targets.”

The PM said the $750-million methane fund would include $75 million for offshore oil and gas operations in Newfoundland and Labrador. All told, he said the announcement would create 5,200 jobs in Alberta and 10,000 across the country.

“The $2.4 billion falls far short of the $20 to $30 billion demanded by Alberta, including additional liquidity for hard-hit energy companies,” the Globe notes. “The government announced new loan measures on Friday but declined to put a price tag on the program or provide further details.” Trudeau did say mid-sized companies would have access to credit through BDC and EDC, and promised additional “liquidity measures” to follow.

“What we talked about today is middle-sized firms, mid-tier firms, in the energy sector,” said Finance Minister Bill Morneau. “We’re going to go broader on mid-sized firms in the coming days, and then we will need to provide credit for the largest of firms to make sure they can bridge the gap as well.”

Separately, Reuters reported Thursday that Canadian banks are beginning to relax their lending standards for hard-hit fossils.

Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe welcomed Trudeau’s announcement, with Kenney calling it a lifeline for blue collar workers in western Canada’s oilfield services sector.

“That can’t go to things like bonuses or dividends, or anything except actually doing the work,” he told media Friday. “This will allow for a surge of well reclamation and completion work, all across the province, we hope starting immediately.”

Climate and energy campaigners were nearly unanimous in declaring a win.

“Today, Prime Minister Trudeau made clear that Canada’s bailout package will prioritize addressing the climate crisis and building the cleaner, safer economy we need,” said Stand.earth International Program Director Tzeporah Berman. “This is the kind of leadership the world needs. This bailout announcement is a major turning point for oil and gas politics in Canada.”

Pembina Institute National Policy Director Josha MacNab applauded federal and provincial governments for addressing a global crisis “in a way that will put Canada on a more solid footing for a healthier, more resilient future,” with “priority given to job creation while staying the course on environmental and climate action.”

MacNab called the announcement “a win for Canadian workers, Canada’s economy, and our shared environment and climate,” adding that “it’s essential that as we address one global crisis, we don’t exacerbate another. While these investments seem to be pointing us in the right direction, we’re looking at the details to ensure the outcomes will put oil and gas workers back to work while advancing our efforts to reduce climate pollution.”

“We congratulate the government for remaining firm in regulating methane emissions from the oil and gas industry,” said Julia Levin, climate and energy program manager at Toronto-based Environmental Defence. But “reducing methane is very cheap, and the government should not be giving loans worth almost $700 million for companies to comply with existing regulations.” So “any federal support must be tied to achieving methane reductions that go beyond what the regulations will deliver.”

Levin also expressed concern about fossil funding through Export Development Canada, noting that legislative amendments last month “have made it easier for the government to use EDC to funnel more support towards domestic oil and gas operations—without public scrutiny.”

“Since Trudeau first floated the possibility of an oil and gas bailout, people from coast to coast to coast have made it clear the government should bail out workers, communities, and the climate—not oil and gas executives,” added Oil Change International research analyst Bronwen Tucker. “That today’s announcement does not include most of the industry’s wish list is credit to this unignorable public outcry.”

Meanwhile, Infrastructure Minister Catherine McKenna said her department is preparing a list of local projects to receive billions of dollars in budgeted but as-yet-unspent infrastructure funds to help stimulate the economy once the pandemic has passed. “The term ‘shovel ready’ is back in use as Ottawa seeks out smaller projects—such as recreation centre repairs—that can be approved quickly and create immediate jobs,” the Globe and Mail writes. In an interview with Globe, McKenna said “she’s been reading up on former U.S. President Franklin Roosevelt’s New Deal, which included major infrastructure spending as part of the U.S. response to the Great Depression in the 1930s,” the paper adds.

“She is also reaching out to people who played key roles in responding to the 2008-09 economic crisis, including former Bank of Canada governor Mark Carney, former Conservative minister John Baird, and former parliamentary budget officer Kevin Page.”

And that kind of investment might find public support in Alberta, where Calgary-based pollster Janet Brown is picking up “an increasing desire amongst Albertans to diversify Alberta’s oil and gas-dependent economy over the past couple of years,” CBC reports.

“Albertans don’t necessarily want to abandon the oil and gas industry, but that doesn’t mean they don’t want to see the economy transition away from the oil and gas industry,” Brown said. “It’s about…keeping the industries that we rely on strong, and diversifying so that in the future we’re not so reliant on any single industry.”