The government of Canada provided fossil fuel and petrochemical companies at least $18.6 billion in subsidies last year, a new report has found.
Some of the biggest projects tracked in the report, released by Environmental Defence Fund Wednesday, included $8 billion in loan guarantees for the Trans Mountain pipeline expansion and $7.3 billion in financing passed through Export Development Canada, a Crown corporation that helps Canadian companies invest overseas.
Another $1.3 billion went to carbon capture and storage projects, while $1.8 billion was handed to companies in the form of tax breaks, the report found.
The report comes ahead of a looming deadline the Liberal government set for itself to phase-out inefficient fossil fuel subsidies. In July 2023, Minister of Environment and Climate Change Steven Guilbeault said Ottawa would announce a plan to phase-out the public financing of the fossil fuel sector by the fall of 2024.
The ministry has yet to answer Glacier Media’s questions surrounding the subsidies cited in the report.
Julia Levin, Environmental Defence’s associate director of national climate and the lead researcher on the report, said a lack of transparency on fossil fuel subsidies meant her team was forced to analyze press releases and programs they knew gave out subsidies.
“There are dozens of Crown corporations many of which might be providing public financing for fossil fuels,” Levin said. “But there's a number of Crown corporations where I have no information.”
“It’s impossible to create an exhaustive inventory… It’s our best estimate.”
$65 billion in oil and gas subsidies over four years
The $18.6 billion in fossil fuel subsidies provided in 2023 are down slightly from the $20.2 billion provided by Ottawa the previous year, according to Environmental Defence, which has been tracking subsidies for six years.
Last year’s subsidies raise the total over the past four years to at least $65 billion, 10 times what the federal government invested in climate change adaptation since 2015 and enough to fund all of Canada's major solar and wind energy projects between 2019 and 2021 — twelve times over, claimed Environmental Defence.
The report also claimed that more fossil fuel companies are turning to investments in petrochemical projects — such as fossil fuel-based plastics — to “preserve their business and profits.”
In addition to direct subsidies, the report included a calculation of the social costs of greenhouse gas emissions from Canada’s oil and gas sector in 2023, estimated to be roughly 200 megatonnes. Using a government tool to calculate the dollar value of carbon pollution, the report found fossil fuel yearly emissions cost society $52 billion in 2023.
“I think Canadians should be angry,” said Levin. “The government has had the commitment to end fossil fuel subsidies since 2009. And yet we’re in a situation where they're continuing to give nearly $20 billion a year.
“It is important that there's some accountability over a commitment that has not yet been fulfilled.”
Call for windfall tax on above-average oil and gas profits
Beyond ending fossil fuel subsidies, the report calls for a tax on windfall profits on above-average profits in the oil and gas sector.
In February 2024, the House of Commons’s finance committee recommended a windfall tax on companies that have made oversized profits by taking advantage of crises. The committee pointed to profits made by grocery chains and oil and gas companies following the COVID-19 pandemic and Russia’s full-scale invasion of Ukraine.
Since then, a poll carried out by Leger found 62 per cent of Canadians would back such a tax.
Subsidies to fossil fuel companies are set to increase in 2024, according to the Environmental Defence report. It pointed to two Parliamentary Budget Office analyses that estimated the new carbon capture investment tax credit and hydrogen investment tax credit will together provide more than $11 billion to industry by 2028.
“It’s the government's responsibility to make sure it’s using our taxpayer dollars to improve our lives. So that means both addressing the climate crisis, but it also means investing in things that make our lives better,” said Levin.
“It means more money in our pocket books because those renewable are cheaper than fossil fuels.”
