Ending fossil fuel subsidies was one of the first climate campaigns I worked on. In 2009, it was one of the few places within energy and climate policy that there seemed to be space with the Canadian government to move. After all, the oil industry was making billions in profits and certainly didn’t need the support of Canadian taxpayers to stand on its own.
In 2009, the Canadian government promised, along with the rest of the G20, to phase out unnecessary and inefficient fossil fuel subsidies. At the time, the federal subsidies in Canada were estimated at $1.4 billion each year. With a government trying to balance a budget, it seemed like a no-brainer to put an end to handouts to the wealthy oil industry.
But five years later, very little has changed.
The Pembina Institute just put out a new report on fossil fuel subsidies in Canada. The report’s conclusion? Taxpayer-funded subsidies are still on the rise for the fossil fuel sector. The government collects only $1.3 billion per year in federal corporate income tax from the oil and gas sector, and in fact it is entirely possible that overall subsidies handed back to the industry amount to more than that.
Canadian taxpayers are handing over our tax dollars to some of the richest companies in the world. Contrary to what we have been told, fossil fuels don’t keep our social services afloat – they are neither an economic driver nor a major source of tax income. Rather, they account for a sliver of our national economy, and the government is giving them handouts and tax breaks.
While some subsidies are being phased out, others, like the Capital Development Expense and the Capital Exploration Expense, are still costing Canadian taxpayers $711 million per year. And other subsidies have been renewed in recent budgets.
Add to that the fact that without oil and gas regulations or a price on carbon, the oil and gas sector is also using our atmosphere as a free dumping ground.
According to the report, the federal government is giving up between $4 and $18 billion per year that could be collected with a modest price on carbon. If we were smart, we would not be paying polluters to pollute, instead they would be paying for their pollution.
The climate is changing because of our dangerous addiction to fossil fuels, and the costs of climate change impacts in Canada are already soaring. The 2013 floods in Calgary cost the Canadian economy upwards of $6 billion, and the prairie flooding this spring is expected to cost at least $1 billion. A price on carbon could help pay for these damages, but instead we continue to subsidize the oil companies’ activities, which are damaging our land, air, water and shared climate.
Meanwhile, the exciting, new, modern, and low-carbon economy is at our finger tips. And while the oil industry benefitted from federal subsidies decades ago when it legitimately needed support to get up and running, clean energy is not getting the same support from the government today.
Instead of building mines and pipelines, we should be using those same skills and workers to build modern and clean energy; we should be moving and selling clean electricity rather than high carbon oil; we should be tapping into Canada’s vast potential as a low-carbon innovation hub, not pouring millions into greenwashing the tar sands. We don’t need to choose between a healthy environment and a healthy economy. We can have both.
It’s time for a change. And it can start by ending handouts to the very source of the problem. Canada can and must do better.
You can help. Take action here.