Just last year, Canada’s Liberal Party campaigned on a promise to start winding down subsidies to fossil fuel producers. Now that they’ve been elected on that platform, Justin Trudeau’s government faces its first real test on fossil fuel subsidies in the 2016 budget that will be released next week. You can call on the government to keep their promise here and join more than 2,000 people who’ve already signed our petition.
Each year, the Government of Canada hands out an average of $1.8 billion (CAD) in subsidies to oil, gas, and coal companies. The subsidies in the federal budget aren’t the only forms of public support that benefit Canada’s fossil fuel industry: government-owned Export Development Canada provides between $2.7 billion and $5.7 billion (CAD) in government-backed finance to oil and gas projects each year, largely to projects overseas.
That means billions of taxpayer dollars per year are being used to fuel the climate crisis and undermine clean energy development. And while Canada first committed to ending fossil fuel subsidies in 2009 as part of a commitment by all G20 governments, little progress has been made. In 2016, it’s way past time for these handouts to end.
We have said it many times before, and it is worth repeating: bailouts and subsidies for big oil, coal, and gas are a bad idea. Here are just a few of the reasons why:
- The current economic situation in Alberta underscores Canada’s urgent need to diversify its economy. Doubling down on a boom-and-bust industry seems profoundly unwise, yet that’s just what fossil fuel subsidies do;
- Given the urgency of the climate crisis, governments must shift public support away from fossil fuels and toward clean energy as quickly as possible, instead of propping up the industries causing the problem;
- Oil and gas companies justify their obscene profits during periods of high prices by saying that they need a rainy day fund to help them weather the down cycles – yet when the down cycle arrives, they ask for handouts anyway.
On the plus side, Canada has an opportunity to be a real leader in this space: late last year, China and the US signaled interest in finally setting a concrete deadline to phase out fossil fuel subsidies at this year’s G20 summit. By using its first budget to set an ambitious 2020 timetable to end these handouts, the Trudeau government would show genuine international leadership, and push other G20 leaders to agree to an ambitious deadline this year.
It’s important for the Trudeau government to use this budget to show that it’s serious about its subsidies promise. While Canada’s government signed the Fossil Fuel Subsidy Reform Communique in Paris, which deserves a pat on the back, some other recent developments are cause for concern. Late last month, Export Development Canada, an institution wholly owned by the government of Canada, decided to plough $750 million CAD into Canada’s oil and gas sector. This new commitment marks the first major fossil fuel support package announced by Export Development Canada since the Trudeau government took the reins in Canada late last year, and it comes at a time when other, smart investors are running in the opposite direction.
As if that weren’t enough, industry is clamouring for even more subsidies. Earlier this week, an industry group asked for a $500 million federal handout to clean up the mess that oil companies have left behind, despite the fact that the companies who’ve caused the messes are sitting on near-record piles of cash. Cleaning up these messes is indeed a good way to put people to work, but why, exactly, does the industry need taxpayer money to do so?
Given the Trudeau government’s commitment to start phasing out subsidies to fossil fuel producers, Canadians should expect – and demand – action on this front. It’s important to look to Canada’s upcoming budget on March 22 as a first sign of just how serious the Trudeau government is about keeping these promises.
(Hat tip to Above Ground for maintaining data on EDC’s fossil fuel finance)