Pumpjacks draw oil out of the ground near Olds, Alta., Thursday, July 16, 2020. A new report suggests the economic impact of the pandemic led to a massive increase in federal aid to Canada’s oil patch. THE CANADIAN PRESS/Jeff McIntosh

Pumpjacks draw oil out of the ground near Olds, Alta., Thursday, July 16, 2020. A new report suggests the economic impact of the pandemic led to a massive increase in federal aid to Canada’s oil patch. THE CANADIAN PRESS/Jeff McIntosh

Pandemic increased direct aid to fossil fuel producers, new study shows

The report raises further questions about how to define fossil fuel subsidies

A new report suggests the economic impact of the pandemic led to a massive increase in federal aid to Canada’s oil patch.

But the annual inventory of fossil fuel subsidies published by the International Institute for Sustainable Development also highlights that almost all of the direct aid was paid out in two programs to protect jobs and cut greenhouse gas emissions.

It raises further questions about how to define fossil fuel subsidies, an issue Canada has not solved despite promising to eliminate “inefficient” ones for more than a decade now.

“The problematic aspect is how do we make sure they’re not supporting for future fossil fuel production,” said Vanessa Corkal, a policy analyst at the IISD and author of the report.

Her report notes that it makes no sense for Canada to both provide direct funding to help fossil fuel producers and charge a price on the pollution fossil fuels create, likening it to “trying to bail water out of a leaky boat.”

Canada first promised to eliminate the subsidies as part of a G20 commitment in 2009, and Prime Minister Justin Trudeau more recently set a target date of 2025 to do it.

But a peer-review of fossil fuel subsidies being done with Argentina is still not done, and a full list of what subsidies even exist has yet to materialize. That peer review began in June 2018 and was expected to be done by June 2020 at the latest.

Corkal said it’s impossible to phase out anything until there’s a full picture of what exists.

Finance Canada has not yet provided an update on the status of that review.

The IISD report shows Canada spent at least $1.9 billion in direct aid to the traditional energy sector last year, up from $600 million in 2019.

More than three-quarters of that — $1.5 billion — was to help companies restore abandoned oil wells in Alberta, Saskatchewan and British Columbia.

Abandoned wells are a significant source of methane emissions. Canada’s most recent emissions inventory suggests in 2018 270,000 tonnes of greenhouse gas emissions came from them. However several studies suggest there are more abandoned wells than we think, and they emit more methane than we count.

Another $320 million was aid to Newfoundland and Labrador’s offshore oil industry, which was hit hard last year by the pandemic and the oil price collapse in the spring.

Corkal said initially the oil recovery fund for the province was pitched in a way that would require it to show an environmental impact, but it’s not clear that’s happening. Most of that funding has yet to be committed.

Corkal said loans aren’t included in the subsidies total because it’s not clear how much they will ultimately cost taxpayers, so federal loan programs offered to oil companies last spring to help them weather the pandemic downturn aren’t included in the totals. Nor is a $750-million package to help companies cut their methane emissions to meet new federal standards, because a lot of that funding is supposed to repayable.

Environment groups welcomed the orphaned oil well program last spring, believing it to be a better way to help the sector than subsidizing oil production. But Corkal said taxpayers shouldn’t be on the hook for cleaning up orphaned wells permanently.

“Even if a subsidy has clear emissions reductions benefits, it’s ultimately still reducing the cost of business for fossil fuel producers,” she said.

Defining how a subsidy is “inefficient” lies at the heart of the promise to eliminate them in Canada. Environment Canada once listed four subsidies from its department and yet determined all were efficient, either by aiding small remote communities with the cost of fuel, or having a positive environmental impact.

President Joe Biden made eliminating fossil fuel subsidies in the United States an immediate priority. On his first full day in office he directed all federal agencies to identify any direct federal spending on fossil fuels, and to eliminate any such spending from the budget next year.

Mia Rabson, The Canadian Press

Like us on Facebook and follow us on Twitter.

Want to support local journalism? Make a donation here.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Fire crews battle a large wildfire north of Highway 1 east of the Yale Road West exit on Thursday, April 15, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Firefighters battle wildfire in Chilliwack near Hwy 1

Helicopter dropping water on large wildfire in Chilliwack near Yale Road West exit, north of highway

web
Fire breaks out inside Mission Walmart

Customers, staff evacuated as firefighters investigate

Japanese Canadian citizens being transferred into waiting trucks outside Hope Station House. NNMCC L2021-2-1-004. Photographs courtesy of the Nikkei National Museum and Cultural Centre
Fight continues for historic Hope Station House

Ombudsman report and stop work order come alongside district’s move to remove heritage status

Lift equipment is driven away from a fire in an adjacent unit on Industrial Way in Chilliwack on Wednesday, April 14, 2021. (Paul Henderson/ Chilliwack Progress)
Chilliwack firefighters deal with heavy smoke, extreme heat in challenging industrial fire

Crews successful in containing fire to 1 unit in industrial building, adjacent units suffer smoke damage

A woman wears a protective face covering to help prevent the spread of COVID-19 as she walks past the emergency entrance of Vancouver General Hospital in Vancouver, B.C., Friday, April 9, 2021. COVID-19 cases have been on a steady increase in the province of British Columbia over the past week. THE CANADIAN PRESS/Jonathan Hayward
Top doctor warns B.C.’s daily cases could reach 3,000 as COVID hospitalizations surge

There are more than 400 people in hospital, with 125 of them in ICU

The father of Aaliyah Rosa planted a tree and laid a plaque in her memory in 2018. (Langley Advance Times files)
Final witness will extend Langley child murder trial into May or June

Lengthy trial began last autumn with COVID and other factors forcing it to take longer than expected

The corner of 96th Avenue and Glover Road in Fort Langley now has traffic signals, and new “touchless” signal activation buttons. (Matthew Claxton/Langley Advance Times)
Busy Fort Langley intersection gets ‘touchless’ crosswalk signals

The new traffic light started operation in April

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A crossing guard stops traffic as students wearing face masks to curb the spread of COVID-19 arrive at Ecole Woodward Hill Elementary School, in Surrey, B.C., on Tuesday, February 23, 2021. A number of schools in the Fraser Health region, including Woodward Hill, have reported cases of the B.1.7.7 COVID-19 variant first detected in the U.K. THE CANADIAN PRESS/Darryl Dyck
COVID-infected students in Lower Mainland schools transmitting to 1 to 2 others: data

Eight to 13 per cent of COVID cases among students in the Lower Mainland were acquired in schools, B.C. says

Dr. Bonnie Henry – in a B.C. health order that went into effect April 12 – granted WorkSafe inspectors the power to enforce workplace closures with COVID-19 spread. THE CANADIAN PRESS/Jonathan Hayward
24 workplace closures being enforced in Fraser Health under new COVID-19 order

WorkSafe inspectors the power to enforce closures if COVID-19 has spread to 3 or more employees

Maple Ridge Fire and Rescue were conducting training operations at Gold Creek Falls when a firefighter broke their leg. (Eileen Robinson photo - Special to The News)
Firefighter suffers broken leg during swift water rescue practice in Golden Ears park

A training exercise at Maple Ridge waterfall on Wedesday results in mishap

Norm Scott, president of Royal Canadian Legion Branch # 91, is disappointed the Legion does not qualify for COVID financial assistance from the provincial government. (Black Press Media file photo)
B.C.’s pandemic aid package passing Legion branches by

Federal non-profit status stymies provincial assistance eligibility

Most Read