Are fossil fuels getting too much government help?

Natural Resources Minister Jonathan Wilkinson said Friday that a pandemic relief program will be reviewed to help oil and gas companies reduce their methane emissions now that the industry is back on its feet.

But he said the government will not view aid programs that help the fossil fuel sector reduce its emissions as the “inefficient fossil fuel subsidies” that the government has promised to eliminate by the end of 2023.

The Onshore Emissions Reduction Fund is under unflattering spotlight this week after an audit found it was poorly designed and not good value for money.

Environment Commissioner Jerry DeMarco’s report released Thursday criticized the program for poor design, exaggerating the emissions cuts it could achieve and possibly double-counting the emissions that would have been cut without this fund. He also said that the program was helping some companies increase their production without taking into account the increased emissions that it would bring.

With only about a fifth of the program’s total $ 675 million already awarded, and the third round of applications won’t close until January, DeMarco said there is still time to correct the multiple ways this program is failing.

On Friday in Ottawa, Wilkinson said the program was conceived 20 months ago to help oil and gas companies stay afloat at a time when oil prices had plunged.

“What I would say, and I agree with the commissioner on this, is that we are not in the same situation now,” Wilkinson said.

“The economic crisis for the oil sector has passed and now is the time to analyze whether this program should continue in its current form.”

In the first weeks of the pandemic, oil prices in Canada suffered a double blow from falling demand when the world came to a halt and a production war between Russia and Saudi Arabia that caused an oil glut.

At certain times, Alberta’s oil reference price was below zero. But prices have rebounded and are now hovering somewhere above $ 50 a barrel.

@JonathanWNV says the aid program to cut #methane emissions will be reconsidered. #CDNpoli

Julia Levin, senior manager of climate and energy programs at Environmental Defense, said the crisis period for the industry was very short and that projects to reduce methane must work under new federal methane regulations that are in the midst of their implementation. .

“There is no evidence that public dollars were needed to help these so-called struggling companies bear expenses that they should be doing on their own,” he said.

DeMarco said it’s unclear how many of the projects would have been carried out without ERF funding, as companies were already required to do the work to comply with the new methane regulations. As such, he said it’s unclear how many additional emissions cuts this program has achieved.

However, Wilkinson said 4.6 million tons of emissions were already strictly avoided as a result of the program. Therefore, he said it does not qualify as the type of fossil fuel subsidy the government has promised to eliminate by the end of 2023.

However, DeMarco’s audit found that 27 of the first 40 projects funded also included in the application a claim that companies would increase their production as a result of the program, largely because the technology it was funding to reduce emissions meant that they could produce more oil and gas and still comply with the new methane regulations.

Wilkinson said the government only sees financial aid to fossil fuel companies as a problem that encourages “the exploration and production of fossil fuels.”

“However, let me be clear,” he added. “What (the fossil fuel subsidy) does not mean is the investments that the government can make together with energy sector partners to reduce emissions. So things like cap and carbon sequestration are not inefficient subsidies. to fossil fuels. “

This Canadian Press report was first published on November 26, 2021.

Reference-www.nationalobserver.com

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