Canada’s Provinces Provided at Least CAD 2.5 Billion in Fossil Fuel Subsidies Last Year, Undermining Climate Action
New report finds fossil fuel subsidies in Alberta, British Columbia, Saskatchewan, and Newfoundland and Labrador rival those dispensed at the federal level
February 15, 2022, Ottawa—Provincial governments are still providing billions of dollars to prop up fossil fuels, concludes a new report from the International Institute for Sustainable Development (IISD) tallying subsidies in Canada’s four major oil and gas producing provinces.
While Canada’s federal government has pledged to phase-out its fossil fuel subsidies by 2023—which totaled at least CAD 1.9 billion in 2020—provincial governments have yet to make similar commitments. If left unaddressed, IISD experts say this will be a major roadblock to meeting the country’s net-zero target.
“Fossil fuels are the biggest cause of Canada’s climate pollution, and subsidies drive up oil and gas production and use,” says Vanessa Corkal of IISD, one of the authors of Blocking Ambition: Fossil fuel subsidies in Alberta, British Columbia, Saskatchewan, and Newfoundland & Labrador. “Provinces need to stop using these subsidies to delay the energy transition that’s already underway, and instead seize the benefits of proactively building a cleaner economy.”
According to the report, this means not creating any new fossil fuel subsidies, phasing out existing subsidies by 2023, and increasing the transparency of provincial subsidy data. Instead, in 2020 and 2021, provinces doubled down on fossil fuel subsidies as a pandemic recovery strategy despite the economic and climate risks.
Specifically, the report finds that Alberta provided a total of CAD 1.3 billion in fossil fuel subsidies last fiscal year. During this period, the Alberta government also disbursed $400 million from its Technology, Innovation and Emissions Reduction (TIER) Fund—a program meant to reduce industrial greenhouse gas emissions—to incentivize fossil fuel production, IISD experts say, including through subsidies for controversial carbon capture technology.
Meanwhile, British Columbia provided CAD 765 million in fossil fuel subsidies, largely for continued support of liquified natural gas that the report says risks undermining positive climate progress, such as efforts outlined in the CleanBC plan. Public surveys indicate that the majority of British Columbians are opposed to these subsidies, deeming the province's oil and gas royalty program—which is currently undergoing review—outdated and in need of reform.
In Saskatchewan, the report uncovered CAD 409 million in fossil fuel subsidies over this period, noting that the province introduced several new subsidies in recent years, including drilling incentives for producers.
Turning to the East Coast, the research shows that Newfoundland and Labrador’s government increased fossil fuel subsidies last fiscal year, reaching CAD 82.6 million. In addition, the report states that recent changes to the royalty structure for the Terra Nova oil field will cost Newfoundland taxpayers another CAD 300 million over the lifespan of the project.
“Canadians need governments at all levels to step up and work together to protect citizens from the increasingly dangerous impacts of a changing climate,” says Corkal. “Cooperation and action on fossil fuel subsidy reform is more important than ever.”
For media inquiries, please contact:
Charly Blais, Communications Officer, IISD Energy, [email protected]
About IISD
The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies. Our work inspires better decisions and sparks meaningful action to help people and the planet thrive. We shine a light on what can be achieved when governments, businesses, non-profits, and communities come together. IISD’s staff of more than 120 people, plus over 150 associates and consultants, come from across the globe and from many disciplines. With offices in Winnipeg, Geneva, Ottawa, and Toronto, our work affects lives in nearly 100 countries.
You might also be interested in
Canada is sitting on 12 'carbon bombs.' Here's where they are
Just under the surface of B.C. and Alberta, in a rock formation known as the Montney Play, lies enough potential greenhouse gases to blow past Canada's 2030 emissions targets 30 times over. It's one of 12 fossil fuel reserves researchers in the journal Energy Policy have identified in Canada — called "carbon bombs" — that would each release a billion tonnes or more of carbon into the atmosphere if their resources were extracted and burned. This would be catastrophic for the world's efforts to slow rising global temperatures, the authors argue.
Record oil profits 'enough to make you ball up your fists,' says N.L. minister
After handing oil companies more than $280 million in cash during the COVID-19 pandemic, Newfoundland and Labrador’s energy minister says it’s tough to watch those same companies rake in record-shattering profits.
LNG the wrong choice at the wrong time for B.C.
As 2023 begins, B.C. Premier David Eby and his new cabinet are setting priorities and determining which policies of the Horgan government to carry forward and which to cast aside. Liquefied natural gas exports touch on a host of critical issues that Eby and key ministers are considering.
Canada vows to stop funding overseas oil and gas projects, but billions in support still on the books
In November 2021, Prime Minister Justin Trudeau issued a warning about the dangers of climate change at the United Nations’ 26th climate change conference in Glasgow, Scotland.