Pipelines or Progress: Government support for oil and gas pipelines in Canada
Canadian governments provided CAD 23 billion to oil and gas pipelines in the last 3 years. The economic benefits to Canadians are as uncertain as these projects' futures.
Governments have begun to heed calls for a green recovery in Canada. Yet public financial support for pipelines can increase carbon emissions for decades, undermining Canada's positive actions.
Rather than risking public money supporting pipelines, Canadian governments should diversify the economy, support workers and communities, and shift funds to growing clean energy industries.
We examined support by provincial and federal governments in Canada to three major pipeline projects, none of which has been completed to date. We found at least eight different types of financial support measures provided for Trans Mountain, two for Keystone XL, and two for Coastal GasLink. Cumulatively, Canadian governments have provided over CAD 23 billion in government support since 2018. Of this, over CAD 11 billion is in loans, and at least CAD 10 billion is loan guarantees or liabilities. Over CAD 10 billion in government support to pipelines was provided after the COVID-19 pandemic hit.
Government support for pipelines has been made at least partly on the assumption that the projects will provide economic benefits to Canadians, even as the oil and gas sector faces challenges due to shifting investments and as the International Energy Agency has illustrated that new government investments in fossil fuel production are incompatible with a net-zero economy. Yet project finance is increasingly being provided by the government, even at a time of increased international calls for phasing out public finance for fossil fuels. Government support to pipelines places public money at financial risk for current and future generations. Support for oil and gas export infrastructure, such as pipelines, undermines Canada’s commitments under the G7 and G20 to phase out inefficient fossil fuel subsidies.
You might also be interested in
At long last, Canada restricts oil and gas subsidies (except for all the loopholes)
Environment and Climate Minister Steven Guilbeault has unveiled detailed plans to phase out "inefficient" oil and gas subsidies, based on guidelines released yesterday morning that take effect immediately and are meant to fulfill a 14-year-old pledge by G20 countries.
Canada to Cut Oil & Gas Subsidies
The Canadian federal government has implemented a framework to revoke subsidies for fossil fuels that are deemed inefficient. However, the framework lacks details on the specific subsidies to be eliminated and does not provide a dollar amount for the cuts. Canada, as the fourth-largest oil producer in the world, is the first country to comply with a 2009 pledge made by the Group of Twenty (G20) nations. The government plans to exempt oil and gas projects that have plans to reduce emissions and utilize carbon capture and storage (CCS) technology. Federal Environment Minister Steven Guilbeault stated that the objective is for federal support to be directed only towards projects that decarbonize the sector and result in significant greenhouse gas emissions reductions.
Canada Bans Some Fossil Fuel Subsidies, Meeting Decade-Old G-20 Pledge
Canada revealed new rules to ban some fossil fuel subsidies, targeting those that unfairly advantage oil and gas, solely support sector activities or endorse consumption of fuels that worsen climate change.
Canada releases framework to phase out inefficient fossil fuel subsidies
Canada on Monday released a framework for eliminating inefficient fossil fuel subsidies, making it the first G20 country to deliver on a 2009 commitment to rationalise and phase out government support for the sector.