As new research warns of severe climate impacts in Canada, environmental groups demand swift and concrete action

Ottawa, Tuesday, April 2, 2019 – This morning, the Commissioner of the Environment and Sustainable Development (CESD), Julie Gelfand, tabled her report on fossil fuel subsidies in Parliament. The scathing report details a poorly defined process, a lack of essential or reliable information and a lack of progress in making the necessary decisions to meet Canada’s G20 commitment to eliminate inefficient fossil fuel subsidies.

The report raises strong concerns that the Government of Canada is not fully committed to transparency and delivery on its commitment to phase out fossil fuel subsidies by 2025, according to the StopFundingFossils coalition of environmental organizations, which includes Équiterre, Climate Action Network Canada, Environmental Defence, Oil Change International and IISD.

This follows the day after a government study, Canada’s Changing Climate Report, demonstrated that Canada is warming at twice the global rate, and will likely face severe impacts if steps to reduce greenhouse gas emissions are not taken swiftly.

“Canada’s Changing Climate Report paints a clear picture of the future awaiting us if we don’t act now. Instead of tackling the phase-out of fossil fuels with the necessary urgency, the commissioner’s report reveals that the government is continuing to stall. Even worse, they are using definitions and assessments which justify the continuation of irresponsible handouts to the oil and gas industry” said Julia Levin, Climate and Energy Program Manager, Environmental Defence.

Incomplete assessments and unclear definitions plague review processes

The commissioner’s report looked at whether the Department of Finance Canada and Environment and Climate Change Canada have provided the necessary information and advice in order to ensure that the government can meet its G20 commitments.

In both cases, the Commissioner found a poorly defined decision-making process that has made it impossible for Canada to take concrete steps to meet its commitment.  Furthermore, the commissioner criticized both departments for failing to clearly define what an inefficient subsidy is and “failing to consider the economic, social or environmental sustainability of subsidizing the fossil fuel sector.”

The commissioner found that Finance Canada’s “assessments to identify inefficient tax subsidies for fossil fuels were incomplete, and that advice it provided to the Minister was not based on all relevant and reliable information” and did not consider all relevant evidence.

In a response by Finance Canada, they claim that Canada has now phased out most tax preferences for fossil fuel production. The environmental groups dispute this claim, noting that Canada continues to give huge tax breaks to oil and gas companies.

Environment Canada lacks rigor, ignores enormous subsidies

Similarly, the audit found “Environment and Climate Change Canada’s work to identify inefficient non-tax subsidies for fossil fuels was incomplete and not rigorous,” in part due to the use of unclear definitions and the failure compile a complete inventory of potential fossil fuel subsidies. Of the 36 potential non-tax subsidies identified by the department, it determined that 4 were subsidies for the fossil fuel sector, and that none were inefficient.

However, the commissioner notes that department failed to clearly define “inefficient” to guide its determinations. Likewise, the department failed to include in measures and programs related to the purchase of the Trans Mountain Pipeline by the government.

Last Friday, Minister Catherine McKenna announced public consultations on the elimination of fossil fuel subsidies, which also revealed the department’s conclusion that none of the programs reviewed qualify as inefficient subsidies which need to be phased out.

“By finding that none of the programs under review qualify as “inefficient” subsidies, the preliminary analysis essentially lets the government off the hook for billions of dollars in support for the fossil fuel industry,” said Julia Levin.

Analysis Excludes Billions in Export Development Canada Support

Furthermore, the evaluation of government programs and crown corporations does not consider Export Development Canada (EDC), the country’s export credit agency, a fossil fuel subsidy provider. In fact, Export Development Canada provides, on average, over $10 billion in government-backed support for oil and gas companies every year.

“It is absolutely inconceivable that financing provided by Export Development Canada to the oil and gas sector would not be considered a government fossil fuel subsidy. EDC contributes 12 times more financial support to the oil and gas sector than it does to clean technologies,” stated Annie Bérubé, Équiterre’s Director of Government Relations in Ottawa.

The CESD report is a follow up on a previous attempt by the Auditor General of Canada, in May 2017, to examine this file. At that time, the Auditor General, forced to suspend his audit, publicly criticized Finance Canada for obstruction and lack of access to critical data—an unprecedented situation.

For more information:

Report: Public Cash for Oil and Gas: Mapping federal fiscal support for fossil fuels, published in September 2018

Report: Risking it all: How Export Development Canada’s (EDC) Support for Fossil Fuels Drives Climate Change, published in November 2018

Expectations for Budget 2019 with regards to fossil fuel subsidies:

–      That the government commit to publishing a roadmap to phase out all remaining federal subsidies to fossil fuel production.

–      That the government commit to the public release of the fossil fuel subsidies peer review exercise with the Government of Argentina.

–      That the government commit to selling the Trans Mountain pipeline system by the end of 2019.

About CLIMATE ACTION NETWORK (CAN-Rac) (climateactionnetwork.ca): Canada’s primary network of organizations working on climate change and energy issues, CAN-Rac is a coalition of more than 100 organizations operating from coast to coast to coast. Our membership brings environmental groups together with trade unions, First Nations, social justice, development, health and youth organizations, faith groups and local, grassroots initiatives.

About ENVIRONMENTAL DEFENCE (www.environmentaldefence.ca): Environmental Defence is a leading Canadian advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.

About ÉQUITERRE (equiterre.org): In 2018, Équiterre is the largest and most influential environmental organization in Quebec, with over 180,000 supporters, 22,000 membres, 200 volunteers and 40 employees. Équiterre offers concrete solutions to accelerate the transition towards a society in which individuals, organizations and governments make ecological choices that are both healthy and equitable. By 2030, Équiterre, in partnership with local communities, will have contributed to the development of public policies as well as civic and business practices that lead to a low-carbon economy and an environment free of toxic substances.

About INTERNATIONAL INSTITUTE FOR SUSTAINABLE DEVELOPMENT (iisd.org): The International Institute for Sustainable Development (IISD) is an independent think tank championing sustainable solutions to 21st century problems. Our mission is to promote human development and environmental sustainability. Through research, analysis and knowledge sharing, we identify and champion sustainable solutions that make a difference.

About OIL CHANGE INTERNATIONAL (priceofoil.org): Oil Change International is a research, communication, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy.


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For more information or to arrange an interview:

Camille Gagné-Raynauld, Media Relations, Équiterre, cgraynauld@equiterre.org

Barbara Hayes, Communications Manager, Environmental Defence