[Editor’s note, December 2018: Thanks for checking out our Best of 2018! If you’re a regular Environmental Defence reader, you’ve probably seen that there’s been billions in new fossil fuel subsidies announced since this blog was written. But while the numbers may have changed, these subsidies remain an irresponsible use of public money that should be better spent. Here’s our reaction to the $1.6 billion in financial supports announced just at the beginning of December.]
Last year, every Canadian household contributed $234* from their taxes to oil and gas companies. And that’s what will happen again if the government keeps stalling on its promise to phase out public subsidies to the fossil fuel industry.
Every year, federal and provincial governments pay billions in hand-outs to Canada’s oil, gas and coal companies, undermining climate action in Canada. Fossil fuel subsidies to producers total $3.3 billion annually, spurring these companies to explore for more oil and gas, and contradicting Canada’s efforts to cut carbon pollution. Bloomberg’s editorial board called fossil fuel subsidies “the world’s dumbest policy”—wasteful, expensive, environmentally destructive, and unnecessary.
Instead of the “polluter pays” principle, it’s a practice of “pay the polluter”. Fossil fuel subsidies in Canada are mainly tax expenditures. Most identified subsidies benefit oil and natural gas producers by providing tax breaks for exploration activities, field development, and extraction. In addition to theses deductions, more than a billion dollars in Crown Royalty Reductions in Alberta add to the $3.3 billion total. In 2016, EDC, a crown corporation, provided nearly $12 billion in public financing to fossil fuel companies.
The money given away to oil and gas companies is money that could be left in Canadians’ pockets or better spent on things that improve our collective well-being. $3.3 billion could pay for 44,000 hospital beds, or the education of 260,000 high school students, or install solar panels on 13,200 schools.
Canada has committed to eliminating fossil fuel subsidies, but is dragging its feet by waiting until 2025 to completely phase them out. In fact, the Auditor General said last year that not only does Canada not have a plan to get rid of subsidies, but the government won’t even release relevant information about the subsidies to the public.
Nobody likes filing taxes, including Canada’s largest oil and gas companies, which are stowing money away in offshore tax havens to avoid paying their fair share. A recent analysis shows that tar sands producers like Suncor and Canadian Natural Resources Ltd are using complex accounting schemes to avoid paying billions of dollars in taxes.
Canadians don’t have this option, and they would be outraged to know that so much public money is going to subsidies and tax breaks for the fossil polluters that are causing climate change.
Enough with the hand-outs to the oil and gas industry. Tell the federal government to get rid of these subsidies by 2020 at the latest.
* The 2016 census shows that there are over 14 million households in Canada. Divide the amount of fossil fuel subsidies by the number of households and it means that every household in Canada is contributing $234.51 in subsidies and tax breaks to oil and gas companies.