Canada’s $3.3bn fossil fuel subsidies undermine climate action: Report

Activists call on the Canadian government to eliminate subsidies to fossil fuel companies during a 2012 PowerShift protest in Ottawa. (Photo: OBERT MADONDO/The Canadian Progressive)

Activists call on the Canadian government to eliminate subsidies to fossil fuel companies during a 2012 PowerShift protest in Ottawa. (Photo: OBERT MADONDO/The Canadian Progressive)

By Obert Madondo |  | Published Nov 15, 2016, by The Canadian Progressive

Canada’s $3.3 billion in federal and provincial subsidies to oil and gas producers undermine climate action, says a new study by four prominent Canadian environmental groups. According to the study, Canadian taxpayers pay fossil fuel companies $19 for each ton of carbon dioxide they unleash into the atmosphere.

The study, jointly released by Environmental Defence, Oil Change International, Équiterre, and Climate Action Network Canada, urges the Canadian government to eliminate of all federal subsidies to fossil fuel companies by 2020. Unless the subsidies are eliminated, Canada will pay more to the oil and gas industry than the country collects through carbon pricing between now and 2020.

“This system is like taxing consumers when they buy cigarettes while giving massive tax breaks to tobacco companies that encourage them to produce more cigarettes. It doesn’t make sense,” said Alex Doukas of Oil Change International.

While Prime Minister Justin Trudeau has barely criticized U.S. President-elect Donald Trump´s climate change denialism, he has vowed to “show leadership that quite frankly the entire world is looking for.” Trudeau recently pledged to introduce a pan-Canada price on carbon dioxide emission in 2018.

“Unless Canada phases out massive subsidies to oil and gas companies, Trudeau’s carbon price will do little to encourage polluters to cut carbon emissions,” said Dale Marshall of Environmental Defence. “The three billion dollars in annual subsidies could be put to much better use by investing in climate action, healthcare, or other initiatives.”

RELATED: G20 ignores global public’s call to eliminate fossil fuel subsidies

Canadian taxpayer funds keep flowing to climate pollutors despite government pledges for strong action against climate change. In 2009, Canada and other G20 countries pledged to eliminate subsidies to fossil fuel companies. Earlier this year, G7 leaders committed to eliminate the handouts by 2025. But G20 energy ministers meeting in Beijing in July failed to make a commitment to eliminate fossil fuel subsidies.

Environmentalists also argue that government subsidies to climate polluters may scuttle the key goals of the 2015 Paris Agreement, which came into force on November 4. Signatories to the agreement pledged to limit global warming to 1.5 or 2 C above pre-industrial levels by 2050. Numerous experts have argued that, to meet that goal, 80 per cent of fossil fuels must stay in the ground.

On Monday, over 400 civil society groups from more than 60 countries delivered a letter urging world leaders attending the ongoing COP22 climate conference in Marrakesh, Morocco, to “put an immediate halt to new fossil fuel development and pursue a just transition to renewable energy with a managed decline of the fossil fuel industry.”

According to the letter: “To live up to the goals set forth by the Paris Agreement and to safeguard our climate for this and future generations, fossil fuel production must enter a managed decline immediately, and renewable energy must be advanced to swiftly take its place in the context of a just transition.”

In his mandate letter to Finance Minister Bill Morneau, Trudeau urged the minister to “Work with the Minister of Environment and Climate Change in creating a new Low Carbon Economy Trust to help fund projects that materially reduce carbon emissions under the new pan-Canadian framework.”

According to Annie Bérubé, Director of Government Relations at Équiterre, “Morneau must announce a predictable phase-out of all remaining preferential tax treatment to the oil and gas sector starting in Budget 2017.”

[Edited]

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Obert Madondo is an Ottawa-based progressive blogger, and the founder and editor of The Canadian Progressive. Follow him on Twitter: @Obiemad

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Obert Madondo

Publisher and editor
Obert Madondo is an Ottawa-based independent journalist and progressive political blogger. He's the publisher and editor of The Canadian Progressive.