Updated: Jun 9, 2021
Everything you ever wanted to know about subsidies to Canada's fossil fuels sector but never will
It seemed like a simple inquiry. Canadian taxpayers subsidize the fossil fuels sector and I was curious to know 3 things: How much are these subsidies? Which companies receive them? Why are we subsidizing them? Here is my story.
On February 10, 2020 I wrote to the Minister of Natural Resources asking about subsidies to the fossil fuels sector. I’d read the sector was receiving $3.3 billion dollars a year in subsidies from Canadian taxpayers[i] and asked if that is true.
I said I would like to know the government’s rationale for giving subsidies in billions of tax dollars to corporations and if he would share the criteria his department uses for awarding subsidies. And, I asked if he would provide a list of the corporations receiving subsidies and their amounts.
In 2009, the Government of Canada committed to phasing out subsidies to the fossil fuels industry by 2020. I pointed out that it did not appear the Liberal government was on track to meet that commitment and asked if there is a revised target for phasing out subsidies to the sector.
On February 25, 2020 I received a response from the Minister stating he asked department officials to reply directly to me on the matter.
Then, silence. Recognizing we had entered into a pandemic, I waited.
On July 15, 2020, I wrote to the Minister reminding him of my February letter. Recognizing we are in difficult times, I pointed out that I was not asking for original research. As a former manager with the federal public service, I expect there is a list of subsidies to the sector. I asked if he could send me the list.
Not hearing anything, I wrote to the Minister again on December 17, 2020. That prompted a telephone call from the Minister’s office on December 31, stating that a response had been prepared. It was sent to me on January 21, 2021, just shy of a full year from my original letter. Was it worth the wait? No!
The (three page) response, from an Assistant Deputy Minister adjusts the language from subsidies to “inefficient fossil fuel subsidies”. These (IFFS) “encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threats of climate change”. “Canada has committed to phase out or rationalize inefficient fossil fuel subsidies by 2025.” He further states that “All tax expenditures have been reviewed and eight tax expenditures have been phased out or rationalized.” It is not clear how much that reduces overall subsidies to the fossil fuels sector in Canada.
• Do taxpayer subsidies to the sector amount to $3.3 B per year? No answer.
• What is the rationale for subsidies to the fossils fuel sector? No answer.
• What criteria does the government use for subsidies to the sector? No answer.
CNN recently reported, “Canada’s crude oil production is expected to keep increasing until 2039. Canada's proven oil reserves stand at roughly168 billion barrels, according to government data. If all of that is extracted and burned, it would add an estimated 72 gigatons of CO2 into the atmosphere. That's almost a third of the world's remaining carbon budget. The Canadian government has not responded to repeated requests for comment.” [ii]
Why is this of such concern? Canadian tax dollars are being used to subsidize profit-making companies that produce climate pollution. That will continue for years to come. But Canada’s Minister of Natural Resources is not going to tell you how much those subsidies are, who receives them or why. Canadian taxpayers deserve better!
About the author
James Riordan was Executive Director, Legislative and Regulatory Affairs, Environment Canada when he retired from a career with the federal public service. During his career, James also worked in managerial positions with the department of Energy, Mines and Resources, now Natural Resources Canada.
[i] Environmental Defence Canada. The Elephant in the Room: Canada’s Fossil Fuels Subsidies, (2016). [ii] Kottasová, Ivana. Norway, the UK and Canada are not climate champions. They are climate hypocrites. CNN (February 17, 2021).
Copies of correspondence: