Canada spent $18B on financial supports for the fossil fuel industry last year: report

A new report concludes that the federal government dropped at least $18 billion in subsidies on the fossil fuel industry last year — despite the federal Liberals' stated desire to move the country to a post-carbon economy.

'There's a real contradiction there' — Julia Levin of Environmental Defence

A pumpjack works at a wellhead on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. Higher oil prices in the wake of a U.S. air strike in Iraq that killed a top Iranian general are driving up share prices for Canadian energy companies and threatening higher fuel prices for consumers in Canada.
A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. (Jeff McIntosh/The Canadian Press)

A new report concludes that the federal government dropped close to $18 billion in subsidies and other forms of financial support on the fossil fuel industry last year — despite the federal Liberals' stated desire to move the country to a post-carbon economy.

"It's the opposite of the polluter-pays principle, and we're paying for polluters," said Julia Levin, climate and energy program manager with Environmental Defence, which produced the report. "And that's entirely at odds with where our allies are going and not responsible to the Canadian public."

In 2009, then-prime minister Stephen Harper and other G20 countries pledged to phase out "inefficient" fossil fuel subsidies. World leaders agreed this was necessary to address climate change and encourage investment in clean energy.

Since then, environmental groups have called for a complete accounting of the supports provided to the fossil fuel industry.

Levin said she and her team took a broad look at how public dollars helped fund the industry in 2020. Publicly available data showed money went to the oil and gas sector through programs like the pandemic wage subsidy, the RCMP and emissions reduction programs, she said.

"On the one hand, we have a government that's setting climate goals, making climate plans. But on the other hand, it's continuing to subsidize the sector that's most responsible for fuelling the climate crisis, " Levin said. "So there's a real contradiction there."

Ottawa challenges the findings

A spokesperson for the minister of natural resources challenged some of the report's figures. The minister's press secretary, Ian Cameron, said the Canada emergency wage subsidy — a pandemic policy measure meant to keep unemployment down — doesn't target a specific sector.

"It has helped workers across the country – including oil and gas workers – put food on the table, and we make no apologies for that," Cameron said in an email.

Another recent report estimated provinces and the federal government spent $1.9 billion on subsidies to the fossil fuel industry in 2020. Environmental Defence said it takes a broad view of what's considered a fossil fuel subsidy and accuses the government of adopting too narrow a perspective.

Is Ottawa tracking where the money is going?

The public has to rely on estimates from non-governmental groups because the federal government has yet to compile its own figures. 

The Office of the Auditor General of Canada found in 2019 that assessments of inefficient subsidies by the federal departments of Finance and Environment and Climate Change were incomplete or lacked rigour.

In 2019, Prime Minister Justin Trudeau wrote in his mandate letter to then-finance minister Bill Morneau that he was expected to finalize a report listing Canada's fossil fuel financial supports. That report remains a work in progress, according to what MPs on the natural resources parliamentary committee were told in March.

"It's been a slightly slower project than we had originally anticipated because, not surprisingly, COVID has prevented some of the advancement of our work," said Shawn Tupper, an associate deputy minister in the Department of Natural Resources.

"We are working with the Department of Finance in this regard to make sure we are able to advance this file as quickly as possible."

Which government agency is the most generous?

Thursday's report says that Export Development Canada (EDC) has given the most financial support to fossil fuel companies, accounting for $13.6 billion of the money they received. That sum includes supports for projects like the Trans Mountain Pipeline Expansion project and the Coastal Gas Link pipeline.

EDC said in an email it offers financial services like loans, equity and insurance to the oil and gas industry — not subsidies.

The Crown corporation said it has gradually reduced its support for the sector. EDC said it provided $8.1 billion to businesses in the oil and gas sector in 2020, down from $12.5 billion in 2018. 

Export Development Canada offices in downtown Ottawa.
Export Development Canada offices in downtown Ottawa on April 13, 2020. (David Thurton/ CBC News)

"We unequivocally understand the urgency in addressing climate change and are committed to doing our part," said Anil Handa, an EDC spokesperson, in an email. "We also understand the public's interest in the support we provide to Canada's oil and gas sector, which remains an important segment of our national economy and will need to play a role in the transition to a low carbon future."

EDC also said oil and gas companies are "important partners" in the clean tech sector and it increased its supports for this sector by 27 per cent in 2020 compared to the previous year. 

"We will continue to reduce our exposure to carbon-intensive sectors while growing our support of clean technology and other business aligned with the low-carbon transition," Handa said.

Oilpatch says study underestimates the sector's value

Oil and gas sector advocates said studies like Thursday's ignore how much money the sector provides through royalties, jobs and local sponsorships.

"They tend to tell a story that the federal government is giving a bunch of money to oil and gas for their profits," said Lynn Exner, CEO of the advocacy group Canada Action. "It misses the big piece, which is how much money is being generated for all the levels of governments."

The Canadian Association of Petroleum Producers said in a media statement the oil and gas sector is driving innovation and investment in Canada's clean-tech sector.

"We agree environmental progress is important and the upstream sector is the foundation of Canada's growing clean technology industry," said CAPP spokesperson Jay Averill.


David Thurton

Senior reporter, Parliamentary Correspondent

David Thurton is a senior reporter in CBC's Parliamentary Bureau. He covers daily politics in the nation’s capital and specializes in environment and energy policy. Born in Canada but raised in Trinidad and Tobago, he’s moved around more times than he can count. He’s worked for CBC in several provinces and territories, including Alberta and the Northwest Territories. He can be reached at david.thurton@cbc.ca

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