VANCOUVER — The federal government continues to use hundreds of millions in taxpayer dollars to subsidize a fossil fuel industry by offering tax breaks, fiscal supports and direct grants to encourage the production of more oil, gas and coal, according to a new report from a coalition of environmental organizations.

And despite Ottawa’s commitment to reduce fossil fuel demand through climate action programs — with plans to roll out a carbon price in 2019 — the true cost of these subsidies are “hidden” from Canadians, the authors argue.

“This has more to do with the oil price crash and crafty industry tax accounting than significant action by Canada’s government,” said Patrick DeRochie, climate and energy program manager of Environmental Defence. “Combining carbon pricing and fossil fuel subsidies is like trying to bail water out of a leaky boat. If you don’t fix the leak, you are never going to fix the problem.”

The efforts to upkeep the fossil fuel industry can “lock in” environmentally harmful economic activities, he added.

The coalition of groups #StopFundingFossils includes International Institute for Sustainable Development, Environmental Defence, Climate Action Network, Équiterre and Oil Change International. The report, entitled Public Cash for Oil and Gas, found that $200 million of public funds was spent on fossil fuel subsidies.

But that number could be in the billions, DeRochie said, because many of the tax deductions claimed by oil and gas companies were “impossible” to quantify.

“Canada really needs to step up and disclose to Canadians how much public money is going to these companies and potential climate polluters,” he explained. “We would like to see that money repurposed … to start funding a just transition for workers and communities in the oil and gas sector at the forefront.”

And the estimates do not include figures regarding the recent purchase of the Trans Mountain pipeline — which the federal government bought for $4.5 billion dollars and most recent estimates put construction costs ranging from $7.4 billion to $9 billion dollars, the report noted.

Subsequently, subsidies will likely be “significantly higher,” the report added.

That’s because Texas oil company Kinder Morgan faces a direct financial benefit in the form of indemnification, financial assurances and the potential resale of the pipeline for below market value.

All of these options deliver a blow to public funds, DeRochie said, noting the same money can be better spent on transitioning workers and communities that will be most affected when Canada’s energy sector moves toward clean energy alternatives.

Meanwhile, policy-makers will meet at the G7 environment ministerial meeting in Halifax this week, the last major event for discussions this year. But Canada is the largest provider of government support for oil and gas production per unit of GDP in all G7 countries — which together pledged to end “inefficient fossil fuel subsidies” by 2025 at a meeting two years ago, according to a news release.

As part of the G7 and G20, Canada has committed every year since 2009 to work to “phase out” inefficient fossil fuel subsidies, according to the government website. StarMetro reached out to the federal government, but comment was not available before publication.

In their platform in 2015, the Liberals made a clear commitment to “phase out subsidies for the fossil fuel industry over the medium term.” Then last year, auditor general Michael Ferguson said he tried to test the promise but called out the government for refusing to provide the necessary documents.

In June, the feds took a step toward fulfilling the promise by agreeing to enter a peer review process with Argentina. This means each country would explain how much they spend on subsidies.

But this “phase-out” process must be accelerated, the report said.

“For Canada to move forward on its climate commitments, the government will undoubtedly be faced with a number of tough choices,” said Yanick Touchette, policy adviser at the International Institute for of Sustainable Development.

The oil and gas sector accounted for more than a quarter of Canadian emissions in 2016. Since 1990, the sector’s emissions have increased by 70 per cent. When considering oil sands production alone, the increase is 367 per cent during the same period, the report said.

Loading... Loading... Loading... Loading... Loading... Loading...

A 2017 Star investigation found that since 2010 more than $2.6 billion in public money has flowed to dozens of companies that had repeated or significant violations of environmental rules designed to keep the public safe. Those companies in total were fined about $15 million. Critics note that, in effect, taxpayers paid their fines and, in many cases, the companies continued to pollute.

DeRochie said the policies undermine renewable energy alternatives ability to compete for investors. But broad reform can remove distortion from the markets and stop the creation of projects reliant on government support to remain viable.

And, he noted, propping up a “sunset industry” is slowing down the transition to a clean energy future.

“Canada should be rapidly phasing out fossil fuel subsidies and planning for the managed decline of the oil and gas industry, but, instead, it’s buying a tar sands pipeline and financing its expansion,” says Adam Scott, senior adviser at Oil Change International.

“The federal government should stop wasting public money on a sunset industry and start investing in a clean energy future and a just transition for communities and workers.”

Read more:

As Trans Mountain sits in limbo, will more people divest from fossil fuels?

Canada has failed to charge Volkswagen three years after discovery of emission-cheating vehicles

Environment groups’ report criticizes Liberals on fossil fuels, parks management

Correction — Sept. 17, 2018: This article was edited from a previous version that misquoted Patrick DeRochie, climate and energy program manager of Environmental Defence, as stating the organization would like to see public money repurposed to fund a just transition from workers and communities in the oil and gas sector. In fact, DeRochie said the organization would like to see that money repurposed to start funding a just transition for workers and communities in the oil and gas sector.

With files from David Bruser and Jesse McLean

Read more about: