Canada spent over $15B on financial support for oil & gas industry this year: report
Canada’s federal government has committed more than $15 billion in public money to the oil and gas industry so far in 2022, according to a new report by Environmental Defence. The non-profit group says the subsidies fly in the face of promises to halt support for the emissions-intensive sector.
However, critics question the report’s accounting, and defend Ottawa’s backing of early-stage technologies aimed at cutting the industry’s impacts on the environment.
Last year, Canada joined 23 other nations at the UN’s COP26 climate conference in committing to end certain types of support for foreign oil and gas activity by the end of 2022. Natural Resources Minister Jonathan Wilkinson added at the time that Canada will also end public financing of domestic fossil fuel projects, a Liberal Party election promise.
According to the Environmental Defence report, Canada is the largest international fossil fuel financier to sign the COP26 pledge. The $15 billion figure so far in 2022 represents a decrease from last year’s report citing nearly $18 billion in subsidies.
“Canada continues to fuel climate disaster by providing billions to oil and gas companies,” Julia Levin, the group’s national climate program manager, stated in a news release on Friday. “Eliminating public financing for fossil fuels will free up billions of dollars to support climate solutions.”
Canada’s commitment at COP26 puts pressure on Export Development Canada (EDC), which provides financial backing to foreign oil and gas companies in order to promote Canadian business interests.
The Environmental Defence report says EDC accounts for the bulk of the federal government’s financial support for the fossil fuel industry, averaging $13 billion per year from 2018 to 2020. The Crown corporation’s sum includes its support for projects like the Trans Mountain Pipeline Expansion and the Coastal Gas Link pipeline.
An EDC spokesperson said that it does not consider its services a subsidy, adding the agency "provided $3.4 billion of business facilitated for the oil and gas sector" in the first half of 2022.
"In 2021, for the first time, EDC facilitated more business in the cleantech sector, including renewable power generation, than in the oil and gas sector," Zoe de Bellefeuille wrote in an email to Yahoo Finance Canada.
Kevin Krausert, a former oil field services executive who now runs a clean technology venture capital firm and startup accelerator, says the accounting in the the Environmental Defence report conflates tech that the oil and gas sector benefits from, with the actual sector itself.
He says investments included in this year’s $15 billion total include technologies key to achieving Canada’s climate goals, which could be used beyond the oil and gas sector.
“These are wise investments that the Government of Canada has made to help all sectors reach the herculean task of a net-zero 2050,” he said in a phone interview. "These are not investments, let alone subsidies, only for oil and gas."
Canadian Association of Petroleum Producers spokesperson Jay Averill notes the billions of dollars the upstream oil and gas sector adds to government coffers. Like Krausert, he also sees the industry as a key player in the transition to a cleaner economy.
“About 75 per cent of all clean technology investment in Canada comes from the natural gas and oil industry,” he said in an emailed statement.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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