A federal Member of Parliament is calling for a windfall profits tax on fossil fuel companies, just as an independent analysis predicts Canadian oil extraction hitting an all-time high over the next two years with the expected start-up of the Trans Mountain pipeline expansion.
MP Mike Morrice (GPC-Kitchener Centre) introduced a motion September 14, calling on the House of Commons to extend the Canada Recovery Dividend to include “excess” fossil fuel profits, the Toronto Star reported last week. The dividend was originally introduced in 2022 as a one-time, 15% tax on banks and life insurance companies, to be paid out over a five-year span.
“If the tax was applied to fossil fuel producers, Morrice says the resulting revenue could be used to address the climate crisis and improve affordability for Canadians, namely through investments in public transit, retrofitting buildings, and greening the electricity grid,” the Star writes. “The Office of the Parliamentary Budget Officer estimates that extending the Canada Recovery Dividend to the oil and gas sector and big-box stores would generate C$4.4 billion.”
The Star says Morrice’s motion has some support from Liberals, New Democrats, and Bloc Québécois MPs in the House, and from former federal environment and climate minister Catherine McKenna. “When you see these historic record profits, and in particular, a galling lack of investments in clean (energy) while it is a fossil fuel-caused crisis, we’ve got a problem,” McKenna said.
Environment Minister Steven Guilbeault and Finance Minister Chrystia Freeland were non-committal when the Star asked them about the proposal. “We are already taking many concrete steps to put windfall profits to good use, but we can always go further and faster on our efforts to fight climate change,” Guilbeault said.
Freeland’s office referred to the government’s efforts on food prices, affordable child care, and higher taxes on the wealthy, though “Morrice and other parliamentarians view fossil fuel companies as a more significant target” than major grocers, the Star says.
Trans Mountain to Boost Oil Extraction
On the same day the Star reported on Morrice’s motion, The Canadian Press covered an analysis by Deloitte Canada that showed extra capacity on the Trans Mountain line boosting Canadian oil extraction by about 375,000 barrels a day over the next two years.
That represents an 8% increase from the previous production high set in November 2022, and a nearly 9% increase from the 4.18 million barrels per day (bpd) of oil that Canada produced in June of this year—the most recent month for which statistics are available through the Canadian Centre for Energy Information, CP writes.
“The increase in volume is notable: it’s greater than the total amount added to Canada’s production levels over the past five years combined,” the report said.
The troubled, vastly over-budget Trans Mountain pipeline is Canada’s only pipeline system transporting oil from Alberta to the West Coast, CP writes. Its expansion, which is currently under way, will boost the pipeline’s capacity to from 300,000 to 890,000 barrels per day.
Much of this additional volume will go to markets outside the United States, allowing Canadian producers to reduce their dependence on U.S. refinery operations. This, in turn, is expected to narrow the price discount Canadian oil sands producers must typically accept for their lower-quality, carbon-intensive product compared with higher-quality U.S. sweet crude.
According to the Deloitte report, the vast majority of the expected increase in Canadian oil production in the coming years will come from the oil sands, where companies are working to speed up development at lower cost.
The Trans Mountain pipeline expansion is expected to be completed in early 2024, after a long history of project delays, massive cost overruns, and opposition from Indigenous and other communities along its route. Over the weekend, a Secwepemc knowledge keeper said the latest change in the pipeline route would threaten a sacred site [pdf]—Pipsell, or Jacko Lake, near Kamloops, BC—amounting to a continuation of cultural genocide, CP reported over the weekend.
Main sections of this report were first published by The Canadian Press on October 4, 2023.