Fossil fuel subsidies will likely feature prominently in climate policy debates when Parliament resumes later this month, with a particular focus on how Ottawa will fulfill its recent pledge to end fuel subsidies. fossils by 2023, two years earlier than originally planned.
The government’s commitment to phase out public funding of fossil fuels also deserves public attention. This support, which the government does not consider a subsidy, has led to Canada being named on the world stage as one of the biggest proponents of fossil fuels. At last count, that support totaled $13.6 billion per year on average, based on figures from 2018 to 2020.
At the United Nations climate conference in November, Canada joined more than 30 countries in pledging to end some of this funding — “direct” support for fossil fuels “without release” abroad — by the end of 2022. capture will depend on how Ottawa eventually defines key terms, such as “mitigated,” which is often used to describe emissions capture and storage projects. It also remains to define the “limited” circumstances in which exceptions can be made.
But wherever he gets on those definitions, it’s clear that the pledge will only cover a small portion of the total: around $1 billion, according to a preliminary government estimate. It leaves out the billions of additional dollars in federal support that are provided to oil and gas companies in Canada. Ottawa has acknowledged that this support must also be removed, but has not committed to a deadline.
Natural Resources Minister Jonathan Wilkinson said in November that a timetable for full phase-out would be announced “in the coming months”. As the government works on this timeline, three facts should be kept in mind.
First, supporting the growth of the oil and gas industry is fundamentally at odds with the goal of limiting global warming to 1.5°C – a level beyond which deadly climate impacts will become far greater, affecting hundreds millions more people. Experts say staying within that limit would require no new oil and gas deposits to be developed and the vast majority of oil sands reserves to remain untapped. Global oil production is expected to fall to around half of its current level. Industry’s treacherous climate impacts would not be mitigated even if it were to capture and store all the emissions released in its production process, as these are more than offset by the larger volume released when its product – oil – is ultimately burned.
Second, Canada supports this industry with more public funding than any other G20 country. Only Japan, South Korea and China come close to providing so much support to fossil fuel companies. Most of Canada’s fossil finance comes from Export Development Canada (EDC), which provides loans, insurance and other forms of support to businesses in Canada and abroad. EDC has recently provided billions in loans for controversial projects such as the Trans Mountain and Coastal GasLink pipelines.
Third, EDC has no intention of ending its support for fossil fuels. It has pledged to cut some of its support for oil and gas exploration and production. But it remains free to maintain or even increase its support for other types of fossil fuel development – new pipelines or refineries, for example, which can play a vital role in enabling the expansion of oil production and gas.
We simply have to face the reality that we have to phase out the oil and gas industry. Credible climate leadership would require at the very least cutting off the flow of public money that helps it thrive.
Ottawa should commit to ending all public financial support for fossil fuel development of any kind, in Canada or abroad, and doing it the right way. To do less would be out of step with the urgency of the climate crisis.