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

An Interior Health nurse administers Pfizer-BioNTech COVID-19 vaccines to seniors and care aids in Kelowna on Tuesday, March 16, 2021. (Phil McLachlan/Kelowna Capital News)
105 new COVID-19 cases in Interior Health

Just over 8,000 new vaccine doses administered in the region for a total of 158,000 to date

Last year’s flood season stretched from April through early July, as this picture of flooding at Cache Creek park on July 4, 2020 shows. With area snowpacks at slightly above normal, temperatures and rainfall will play a role in determining what this year’s flood season looks like. (Photo credit: Tom Moe)
Snowpacks in area slightly higher than normal as freshet starts

Temperatures and rainfall are critical flood risk factors in coming weeks

The Clinton Annual Ball went ahead in 2020, albeit in a different format and with far fewer guests than usual. (Photo credit: Clinton Annual Ball committee)
Clinton Annual Ball postponed again in 2021, but still carries on

Thanks to some creativity, ball is still the longest continually-held event of its kind in Canada

The 2020 financial statements for Cache Creek show that the village needs to look at either increasing revenues or cutting services in order to maintain a balanced budget. (Photo credit: <em>Journal</em> files)
Cache Creek council advised to increase revenues or cut services

Presentation also shows that continued use of Landfill Legacy Fund for operations is unsustainable

A group of outdoor enthusiasts and heritage buffs learning more about the history of the iconic 1926 Alexandra Bridge during a pre-COVID-19 tour. (Photo credit: Hope Mountain Centre for Outdoor Learning)
A group of outdoor enthusiasts and heritage buffs learning more about the history of the iconic 1926 Alexandra Bridge during a pre-COVID-19 tour. (Photo credit: Hope Mountain Centre for Outdoor Learning)
Major grant will help refurbish historic Alexandra Bridge near Spuzzum

The 1926 bridge, which last saw vehicle traffic in 1964, is major attraction on Fraser Canyon drive

Demonstrators at the legislature on April 14 called on the province to decriminalize drug possession and provide widespread access to regulated safe supply across B.C. (Jake Romphf/News Staff)
Rally calls for decriminalization, safe supply on 5th anniversary of overdose emergency declaration

From 2016 to the end of February, 7,072 British Columbians died due to overdose

(Government of Canada)
Liberal MP caught stark naked during House of Commons video conference

William Amos, in Quebec, appeared on the screens of his fellow members of Parliament completely naked

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Feb. 1, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps to 1,168 Wednesday, nearly 400 in hospital

Now 120 coronavirus patients in intensive care, six more deaths

Moss covered branches are seen in the Avatar Old Growth Forest near Port Renfrew on Vancouver Island, B.C. Thursday, Sept. 29, 2011. THE CANADIAN PRESS/Jonathan Hayward
B.C. blockades aimed at protecting old-growth forests reveal First Nation split

Two Pacheedaht chiefs say they’re ‘concerned about the increasing polarization over forestry activities’ in the territory

Richmond RCMP Chief Superintendent Will Ng said, in March, the force received a stand-out number of seven reports of incidents that appeared to have “racial undertones.” (Phil McLachlan/Capital News)
‘Racially motivated’ incidents on the rise in B.C’s 4th largest city: police

Three incidents in Richmond are currently being invested as hate crimes, says RCMP Chief Superintendent Will Ng

Commercial trucks head south towards the Pacific Highway border crossing Wednesday (April 14, 2021). The union representing Canadian border officers wants its members to be included on the frontline priority list for the COVID-19 vaccine. (Aaron Hinks photo)
CBSA officers’ union calls for vaccine priority in B.C.

Border officers at ports including, YVR and land crossings should ‘not be left behind’

A still from the video taken of a violent arrest on May 30, 2020 in downtown Kelowna. (File)
Kelowna Mountie charged with assault for caught-on-camera violent arrest

Const. Siggy Pietrzak was filmed punching a suspected impaired driver at least 10 times during an arrest

A screenshot from a Nuu-chah-nulth healing song and performance created in collaboration between Hjalmer Wenstob and Timmy Masso. (Screenshot from YouTube)
VIDEO: Tla-o-qui-aht First Nation brothers produce COVID-19 healing song

Hjalmer Wenstob and Timmy Masso share dance and inspiration.

Most Read