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

North Cowichan councillor Kate Marsh. (File photo)
North Cowichan postpones decision on cell tower placement

But cell tower policy may be developed soon

B.C. provincial health officer Dr. Bonnie Henry speaks at a press conference Monday, April 18. (B.C. Government image)
New COVID-19 cases tick down on the central Island

New cases held to single digits three days in a row

CVRD offices on Ingram Street will remain closed for another 14 weeks after flooding last month. (File photo)
CVRD headquarters closed for another three and a half months

Building significantly damaged during water leak

Victoria police are asking for help locating high-risk missing man Derek Whittaker, last seen in Victoria April 12. (Courtesy of VicPD)
MISSING: Police searching for Derek Whittaker, last seen in Victoria

Whittaker believed to be driving 1994 red Volkswagen Golf

The IIO is investigating after a police dog bit a man during a traffic stop near Ladysmith on April 17, 2021. (Black Press Media stock photo)
IIO investigating after police dog bites man near Ladysmith

RCMP dog bit man during traffic stop on Friday, April 17

In this image from NASA, NASA’s experimental Mars helicopter Ingenuity lands on the surface of Mars Monday, April 19, 2021. The little 4-pound helicopter rose from the dusty red surface into the thin Martian air Monday, achieving the first powered, controlled flight on another planet. (NASA via AP)
VIDEO: NASA’s Mars helicopter takes flight, 1st for another planet

The $85 million helicopter demo was considered high risk, yet high reward

(Photo by Mojpe/Pixabay)
Canadian kids extracting record amounts from Tooth Fairy

Our neighbours in the U.S. receive slightly less from Tooth Fairy visits

Families of two of three workers killed in a train derailment near Field, B.C., in 2019 have filed lawsuits accusing Canadian Pacific of gross negligence. The derailment sent 99 grain cars and two locomotives off the tracks. THE CANADIAN PRESS/Jeff McIntosh
Families of workers killed in Field train derailment allege negligence in lawsuit

Lawsuits allege the workers weren’t provided a safe work environment

(New Westminster Police)
4 youth arrested after 30-person brawl in New Westminster leaves 1 seriously injured

Police are looking for witnesses who saw the incident take place

South Surrey’s Paul Cottrell, who works with the DFO, tows a grey whale out of Semiahmoo Bay Sunday. (Contributed photo)
Dead whale floating near White Rock towed to shore for necropsy

Animal has been dead since at least April 15

Wickaninnish (Clifford Atleo) plays the drum while singing the Nuu-chah-nulth song on the court steps in Vancouver In a picture from April 2018. Photo credit, Melody Charlie.
Five western Vancouver Island First Nations celebrate legal fishing victory

Court ruling confirms Nuu-chah-nulth fishing rights in case dating back to 2003

Sunday’s storm rocked one of the ferries crossing Kootenay Lake. Photo: Dirk Jonker
VIDEO: Storm makes for wild ferry ride across Kootenay Lake

The video was captured by ferry employee Dirk Jonker

Dr. Bonnie Henry gives her daily media briefing regarding Covid-19 for the province of British Columbia in Victoria, B.C, Monday, December 7, 2020. THE CANADIAN PRESS/Jonathan Hayward
Toddler marks youngest British Columbian to die related to COVID-19

Child one of eight people to die from virus this weekend

Most Read