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End ‘Hefty’ Fossil Subsidies at Home and Abroad, Op-Ed Urges Ottawa

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.”

3 Comments (Open | Close)

3 Comments To "End ‘Hefty’ Fossil Subsidies at Home and Abroad, Op-Ed Urges Ottawa"

#1 Comment By Xavier Onasiss On March 11, 2022 @ 6:00 PM

Your article is a bit out of date. The Ukraine war has cut out all support for your point of view even in so called green Germany. Even Stephan Gibeualt not with you.

#2 Comment By Mitchell Beer On March 11, 2022 @ 8:01 PM

Thanks, Xavier. I’m not so sure about that. Maybe because the concerns about fossil subsidies and fossil dependency are based on evidence, not point of view.

If you’re referring to the massive spin we’re hearing from the fossil industry’s attempt to turn an overwhelming geopolitical and humanitarian crisis into their next big profit opportunity…sure, we’re being inundated with those messages, too. But what we’re seeing from Europe, including Germany, is a commitment to cut demand for Russian gas 65% by the end of this year and phase out all Russian fossil fuels “well before” 2030. After that, they’re recognizing decarbonization as the only way to free themselves from the next round of fossil dependency.

In North America, I’m not hearing anyone explain how a pipeline and new Atlantic LNG infrastructure that would take 10 years to build would have any impact on a war and induced energy crisis happening right now. Or how anyone proposes to prevent those large, new investments from becoming stranded assets against the plummeting costs and faster, more effective delivery available from energy efficiency, renewable energy, and energy storage.

But maybe you’ve been basing your point of view on a different set of facts? (And maybe that alternate universe is also a place where Steven Guilbeault spells both his first and last names differently? Ya know, ya never know…)

#3 Comment By Xavier Onasiss On March 14, 2022 @ 2:36 PM

It was poor planning. The pipelines and LNG plants should have been built 10 years ago. Mostly the developing world will be punished by this as they can’t afford higher energy prices and alternative. But most first world people don’t care about them. Just wishing something doesn’t make it so. Sorry about the misspelling. I don’t think Tesla makes tanks yet. Wind and Solar do have their place but currently issue is lack of storage (rare earth batteries bad for the environment especially the mines) and intermittency. You can’t simply vote or protest for what you want and get it. There are consequences and you can’t get things without toil, without sweat and without tears. Voters are not socially responsible and have unlimited authority. Notice China’s approach to climate change. If they vote for the impossible, the disastrous possible happens instead. In the end responsibility will get forced on all of us.