Pipelines or Progress: Government support for oil and gas pipelines in Canada
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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.
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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.
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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.
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