Climate Change, Fossil Fuel Subsidies
The oil industry says it doesn't want subsidies. For once, we agree!
Patrick DeRochie
Tis the season for giving and gratitude, so what was the response from oil and gas executives and their political allies to yesterday's announcement of $1.65 billion in new financial support from the federal government?
"We don't want government handouts."
This is news to me, but for once we're in agreement with the oil lobbyists! Tell the federal government to stop give money to fossil fuel companies.
This week, the federal government announced $1.65 billion in new grants, loans and financial supports for oil and gas companies, a massive backslide on its longstanding commitment to eliminate fossil fuel subsidies. This caps off a year of irresponsible government handouts to support an industry whose growth is incompatible with Canada's climate targets.
Already in 2018, the federal government has showered the oil and gas sector with public money, including:
Billions in tax breaks, fiscal supports and direct grants that make Canada the largest provider of government support for oil and gas production per unit of GDP in the G7;
A new Accelerated Investment Incentive that allows oil and gas companies to immediately write off the full costs of new machinery and equipment;
$275 million in infrastructure support and $1 billion in tariff exemptions for a massive new export facility for fracked gas in British Columbia;
$4.5 billion to purchase the Trans Mountain pipeline and proposed expansion, which the private sector didn't want because it faces intractable legal and regulatory challenges and is already losing money.
Export Development Canada, the country's export credit agency, provided, on average, $10 billion in government-backed support for oil and gas companies every year between 2012 and 2017.
The massive support for oil and gas is particularly problematic considering Canadian oil companies are making record profits. In 2017, the aggregate gross profits of the Big Five oil sands producers were $46.6 billion. While Alberta workers, families and communities worry about their next pay check, the oil companies are raking in the cash.
You would think that oil executives and their political allies would be thankful for this Christmas windfall from the federal government. But instead they complain!
Tim McMillan, CEO of the Canadian Association of Petroleum Producers, Canada's primary oil industry lobby group, said the industry "didn't ask for money under federal government programs."
A financial analyst who covers major oil and gas companies for BMO Capital Markets said the new subsidies are "not really anything concrete in the short term" and "are unlikely to have a meaningful impact on job creation."
The CEO of Alberta oil and gas producer Whitecap Resources, Grant Fagerheim, said "this is absolutely not what is needed" and that "the energy sector is not looking for handouts, it's not looking for support in the form of loans." He also said his company won't use the additional federal support to make new investments or create new jobs.
The CEO of another oil and gas producer, Advantage Oil & Gas, said "We've got a revenue problem. We need to have more revenue coming in the door." So I guess his company doesn't want more subsidies either.
The Fraser Institute, a pro-oil think tank, complains that "Alberta's oil and gas sector has received little more than coal in its holiday stocking." Wow, I can think of a few people and industries that would be ecstatic to receive $1.65 billion in financial support from the feds!
The Calgary Chamber of Commerce says that the loans included in the federal announcement "do not provide the stability that the market needs."
Alberta Premier Rachel Notley is also unsatisfied. She says the oil and gas sector "doesn't want free money," hoping that the new subsidies are only "a start" and a "first step."
Alberta Opposition Leader Jason Kenney agrees that apparently oil and gas companies don't want taxpayer handouts. "None of them—none of them—are asking for handouts," he said.
Wow! It's not often that Environmental Defence agrees so wholeheartedly with oil and gas companies and politicians pushing pipelines. But in this case, we agree. They don't want the money. So let's not give it to them.
And while they are at it, the federal government needs to get to work to phase out the litany of tax breaks, direct grants and fiscal supports propping up the largest source of carbon pollution in the country.
So let's take this opportunity to get on board with the oil companies on this one: Tell the federal government to stop giving pubic money to fossil fuels!