Advocates are urging Ottawa to fully and rapidly phase out all financial support for fossil fuel development—at home and abroad, abated and unabated—to correct Canada’s abysmal record of being the worst climate performer of all G7 nations since the landmark Paris Agreement was adopted in 2015.
Attributing this poor track record to the “policy incoherence” of investments like the Trans Mountain pipeline expansion, eco-justice watchdog Above Ground writes in a recent op-ed for The Hill Times that this financing fits within “a long-standing pattern of hefty federal support to oil and gas companies.”
“At last count, this support, which Ottawa does not consider a subsidy, totalled an average of C$13.6 billion each year from 2018 to 2020,” note authors Karen Hamilton and Shawn Katz, citing an October, 2021 report by Oil Change International.
Add to that direct subsidies worth $3.28 billion estimated [pdf] by Environmental Defence for 2020 alone, and the total outstrips everyone else in the G20, including China.
The Trudeau government committed late last year to “developing a plan” to eliminate direct support for “unabated” fossil development overseas by the end of 2022. But “the commitment leaves intact the massive sums that the government provides to the industry in Canada, which in recent years has included billions in loans to projects such as the Trans Mountain and Coastal GasLink pipelines.”
And much fuzziness remains, writes Above Ground, on how Ottawa will choose to define “abated,” a term that is often used to describe projects with carbon capture that still allow for far larger emissions after the oil extracted in Canada reaches its end destination..
“Hundreds of Canadian climate experts warn that carbon capture is neither economically sound nor proven at scale,” writes Above Ground. The op ed cites a recent letter to Finance Minister Chrystia Freeland in which signatories wrote that the technology rather “prolongs our dependence” on fossil fuels “at a time when preventing catastrophic climate change requires winding down fossil fuel use.” Above Ground adds that carbon capture does nothing to address downstream emissions that constitute 80% of oil and gas emissions.
With Freeland, Natural Resources Minister Jonathan Wilkinson, and Environment and Climate Change Minister Steven Guilbeault currently collaborating on a timeline to eliminate Canada’s domestic support for fossil producers, Above Ground urges that the promised plan be free of carbon capture loopholes.
Noting that Canada must leave 83% of its fossil reserves in the ground if the world is to have even a 50% chance of limiting warming to 1.5°C, Above Ground, calls on Ottawa to close the policy gaps that could allow Export Development Canada—the federal agency that delivers “non-subsidy” fossil finance—“to maintain or even increase its support for pipelines or refineries.”
But while Above Ground and others take aim at fossil subsidies, a new report by the Canada Climate Law Initiative (CCLI) warns that a phaseout may create new legal risks for both government and business.
Stakeholders like oil and gas workers, and Indigenous and other communities affected by extraction must be engaged during the process to ensure a just transition, writes Canadian Lawyer, summarizing the report.
Businesses and governments will face litigation risks, the article states, as is already occurring in Australia, Europe, and elsewhere. And NGOs, civil society, and Indigenous groups will start suing companies to challenge subsidies, said CCLI scholar and University of British Columbia Ph.D. student Temitope Onifade.
The report offers several recommendations for subsidy reform: Governments must adopt the Auditor General of Canada’s broad definition of a subsidy, produce detailed subsidy inventories, report annually on risk management efforts, and review and amend legislation and policies involving fossil fuel subsidies.
Onifade also calls on lawmakers to “shift their subsidies from fossil fuels to alternative and sustainable energy resources with a view to climate justice.”