Fossil fuel subsidies from Canadian provinces and territories exceed federal support for the industry, triggering fossil fuel production “that may not otherwise occur” and depriving provinces of “millions in uncollected royalty and tax revenue from fossil fuels,” concludes a new report.
“Based on available data, Canadian provinces and territories, including those listed in this report, collectively contribute more subsidies to the fossil fuel industry than the federal government,” states the report [pdf] by the International Institute for Sustainable Development (IISD). So “any federal plan to phase out subsidies is inherently incomplete without scaled-up action from provinces, as governments’ policies affect each other.”
The analysis finds that Alberta, followed by British Columbia, Saskatchewan, and Newfoundland and Labrador, lavished more than C$2.5 billion on the fossil industry in their 2020/21 fiscal year, and $1.5 billion for the first nine months of 2021/22. The totals for the last full fiscal year include:
• $1.32 billion from Alberta, after Jason Kenney’s United Conservative Party government “committed to fossil fuel production as a pandemic recovery strategy, increasing subsidies and dispensing the Technology, Innovation and Emissions Reduction (TIER) Fund in ways that incentivize fossil fuel production”;
• $765.3 million from B.C., with John Horgan’s NDP government undercutting its own CleanBC climate plan with its continuing support for liquefied natural gas (LNG) development;
• $409.3 million from Saskatchewan, including drilling incentives and other new subsidies that have just been introduced in recent years;
• $82.6 million from Newfoundland and Labrador, where “recent changes to the royalty structure for the Terra Nova oil field will cost taxpayers an additional $300 million over the lifespan of the project.”
Those numbers matter because “phasing out fossil fuel subsidies in Canada requires provinces to step up,” IISD writes. While Ottawa has committed to ending subsidies by 2023, “movement on the subsidy file cannot rely on federal commitments alone.”
The report places “quantifiable subsidies” from the federal government at $1.9 billion in 2020, not including public finance worth $14 billion.
IISD authors Janetta McKenzie, Estan Beedell, and Vanessa Corkal urge provincial governments to make their fossil subsidies more transparent and easy to track, set 2023 phaseout plans that align with the federal target, refrain from introducing new subsidies for fossil fuels or associated technologies like carbon capture and storage, and work with Ottawa to make a subsidy phaseout a reality.