Budget 2019 Reaffirms Canada’s Commitment to Remove Subsidies to Oil & Gas, Yet Offers New Handouts to the Sector
As IPCC clock counts down, propping up fossils increasingly risky and irresponsible, say environmental groups
Ottawa, Ontario, March 19, 2019 - This year marks the tenth anniversary of Canada’s G20 commitment to phase out fossil fuel subsidies. Yet, despite moderate progress in the 2017 budget, Canada remains the largest provider of fiscal support to oil and gas production in the G7 relative to the size of its economy.
Other governments are moving away from the financial and climate risks associated with oil and gas. Earlier this month, for example, Norway’s parliament recommended a partial divestment of oil and gas stocks from its Government Pension Fund Global, the world largest sovereign wealth fund, in favour of diversification.
In contrast, the Government of Canada has doubled down on fossil fuels by introducing billions of dollars in new subsidies in the past year. Budget 2019 allocates a further $100 million over four years to the Strategic Innovation Fund, aiming to help the oil and gas industry reduce emissions. However, the type of funding in the past has failed to deliver concrete and significant GHG reductions from the sector, as the carbon intensity of oil and gas production in Canada has not decreased. In addition, members of the Stop Funding Fossils initiative in Canada note that none of this funding should be allocated to support new oil and gas exploration and development.
The federal government reaffirmed its commitments to phase out fossil fuel subsidies under the G7 and G20 today, and announced that it will put in place an expert committee to review its fossil fuel subsidies and make this reporting public.
Canada has an opportunity to support the clean energy transition and prepare workers and communities for that shift, as is being proposed for workers and communities in the transition away from coal power generation.
Statements from members of the Stop Funding Fossils coalition in Canada in response to the federal budget:
“Earlier this month, Prime Minister Trudeau wrote that ‘[t]here is no issue more important to our future than climate change.’ If he truly believes that, he needs to keep Canada’s promise - originally made a decade ago - and end fossil fuel subsidies,” said Catherine Abreu, Executive Director, Climate Action Network Canada.
“We welcome today’s commitment to better reporting and transparency of Canada’s remaining fossil fuel subsidies. Canadians have a right to know. However, any subsidies to encourage additional oil and gas exploration and production in Canada and abroad are incompatible with our climate commitments under the Paris Agreement. ” said Annie Bérubé, Director of Government Relations, Équiterre.
“Subsidising the very industries responsible for carbon pollution undermines the government’s efforts to put a price on carbon. If Prime Minister Trudeau is serious about climate action, his government must end subsidies to the fossil fuel industry, yet instead the government is increasing its handouts to the oil and gas industry in the 2019 budget,” said Alex Doukas of Oil Change International.
To demonstrate climate leadership, members of the Stop Funding Fossils coalition in Canada have called on Finance Minister Bill Morneau to:
- Commit to publishing a roadmap to phase-out all remaining federal subsidies to fossil fuels;
- Commit to the public release of the fossil fuel subsidies peer review exercise with the Government of Argentina;
- Commit to selling the Trans Mountain pipeline system by the end of 2019. Budget 2019 should provide full transparency and public disclosure of the pipeline purchase and the costs and risks associated with the Trans Mountain Expansion (TMX).
Notes to Editors:
1 ) The Stop Funding Fossils initiative in Canada is comprised of Environmental Defence, Climate Action Network / Reseau Action Climat Canada, Équiterre, and Oil Change International.
2 ) The federal government has provided the following subsidies since the last budget:
- $275 million in infrastructure and marine protection support and $1 billion in tariff exemptions for the LNG Canada project;
- Accelerated Investment Incentive in the Fall Economic Statement that allows oil and gas companies to immediately write off the full costs of new machinery and equipment;
- The announcement of $1.65 billion in new supports for the oil and gas sector on December 18th, 2018, including:
- $1 billion in financial support for oil and gas exporters from Export Development Canada;
- $500 million over three years in “Energy Diversification” commercial financing from the Business Development Bank of Canada to help small oil and gas companies;
- A new $50 million investment in the oil and gas sector through Natural Resources Canada’s Clean Growth Program;
- $100 million through Innovation, Science and Economic Development Canada’s Strategic Innovation Fund in energy and economic diversification-related projects.
- Purchased the existing Transmountain Pipeline and the expansion project, acknowledging that it had to be a public sector undertaking since it would be uneconomic for the private sector to pursue.
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For more information and interview requests:
Camille Gagné-Raynauld, Équiterre
(514) 605-2000 | firstname.lastname@example.org
Alex Doukas, Oil Change International
(202) 817-0357 | email@example.com