At a time when Canadians are worried about paying their bills, thousands of public service jobs are being cut, and climate disasters are becoming more common and more devastating, our federal government continues to provide billions in public funds to bankroll oil and gas companies. That’s not just a climate problem. It’s an economic one. 

Despite repeated commitments to phase out fossil fuel subsidies, Canada continues to offer billions of dollars in financial support to the fossil fuel industry. Recent federal budgets have even expanded investment tax credits for carbon capture and other oil and gas infrastructure. There is a cost to these decisions that is paid by Canadians. 

The Opportunity Cost

Every dollar spent subsidizing fossil fuels is a dollar not invested in building the economy that Canadians actually need. 

Globally, clean energy investment is accelerating. The International Energy Agency (IEA) reports that investment in renewables, grids, storage and electric vehicles now exceeds fossil fuel investment worldwide. Countries are competing for leadership in clean manufacturing and electrification because that’s where the world is headed. 

In Canada, public dollars are needed to accelerate renewable energy deployment, modernize electricity grids, electrify transportation, and expand public transit. Government funds could help advance high-speed rail in the Quebec-Windsor corridor, support building retrofits that lower energy bills, or strengthen domestic supply chains for clean technologies. 

These are the real  nation-building investments. They reduce household costs, create durable jobs and position Canada for long-term competitiveness. 

Earlier this year at the World Economic Forum, Prime Minister Mark Carney said to other world leaders that “nostalgia isn’t a strategy”. Yet, in Canada, he continues to live in the past by propping up fossil fuel projects. 

Public Dollars are a Limited Resource

The impacts of subsidizing the fossil fuel industry are particularly stark given the socio-economic pressures that Canadians are facing currently. Hospitals across the country are overcrowded and understaffed. Affordable housing shortages persist. Municipalities face growing infrastructure deficits, compounded by the rising costs of climate change. 

Public resources are finite. Choosing to direct billions of dollars towards profitable fossil fuel companies makes no sense and limits what governments in Canada can do elsewhere, whether that’s strengthening healthcare, expanding affordable housing or building resilient communities. 

Risk and Public Exposure

Subsidizing fossil fuel infrastructure also exposes Canadians to long-term financial risks that oil and gas companies are themselves unwilling to take on. The Trans Mountain Expansion (TMX) was purchased by the federal government in 2018 when the private sector was going to jump ship. The initial cost to complete the project was $5.4 billion, which then ballooned to over $34 billion. 

In a world where major economies are accelerating towards clean energy, fossil fuel infrastructure risks becoming stranded assets. When governments step in as owners or financiers, the risk of stranded assets shifts from companies to the public. 

The Social Cost of Carbon

There is also a broader economic cost that rarely appears in debates around fossil fuel subsidies. The social cost of carbon, which by 2030 is expected to rise to $294 per tonne of CO2 emitted, is the cost paid by Canadians for the pollution pumped out by wealthy polluters. The social cost of carbon is driven by many things, including health impacts, agricultural losses and climate disasters. 

In recent years, Canada has seen historic wildfire seasons, leading to massive evacuations and economic losses. Floods in B.C. and Atlantic Canada have required extensive public recovery spending. Meanwhile, insured losses from all severe weather events have risen sharply over the last decade. Subsidizing fossil fuels only adds more fuel to these fires. 

It’s Time to Prioritize Canadians

Canada has the capacity to invest in industries that lower emissions, strengthen resilience and reduce long-term costs for households. Redirecting public support towards real solutions such as renewables, electrification, public transit and climate adaptation would better align public spending with economic reality. 

If nostalgia isn’t a strategy, as the Prime Minister said in Davos, then it’s time to look to the future and move past fossil fuels. It’s time for Canada to prioritize Canadians over outdated polluting industries.