Canadian pipelines have received more than $23 billion in support from federal and provincial governments in the past three years, according to a new report from the International Institute for Sustainable Development.
The independent expert group processed the numbers in a report which analyzed the extent of government support for oil and gas pipelines.
The report discusses a broader definition of government support than just subsidies. Government support includes “any way that federal or provincial governments promote fossil fuel production in a way that involves public money,” says Corkal.
Subsidies, on the other hand, are legally defined by the World Trade Organization as a beneficial financial contribution from a government.
Author Vanessa Corkal, a Canada Energy Transitions policy adviser at the institute, says it’s impossible to calculate the exact amount of pipeline subsidies due to a lack of government transparency.
“We thought it was important to highlight the high level of support that the government of Canada and Alberta provided to this area,” says Corkal.
It’s important for Canadians to understand the financial risk governments have taken by investing in pipelines, which may never be completed or bear fruit, says Corkal.
But the report also came a week after British Columbia experienced a devastating heat wavewhich is probably related to climate change and therefore the fossil fuel industry, he says.
Canadians need to consider “whether or not these investments are putting us on the path to tackling climate change at the scale and pace we need. And the pace that we need really became clear last week,” she says.
Government support covers easy-to-calculate things like out-of-pocket spending, foregone revenue through tax breaks, and COVID-19-related support, as well as harder-to-calculate things like risk-taking, where a government promises to protect a project from political decisions, he says.
The report highlights eight financial support measures for the Trans Mountain Pipeline; two for the now-dead Keystone XL pipeline and one for the Coastal GasLink pipeline.
The support includes more than $11 billion in loans and $10 billion in loan guarantees or assumed liabilities, the report says. About half of that support was delivered after the COVID-19 pandemic hit.
According to the report, the federally owned Trans Mountain pipeline received at least $15.4 billion in support during the last three years.
Twinning the 1,150-kilometre pipeline to expand its capacity to 890,000 from 300,000 barrels of bitumen per day has been the center of a storm of controversy. The project was purchased by the federal government in May 2018 for $4.5 billion.
In the last three years, the project has obtained $11.3 billion in loans and credit support and $35.3 million to cover expenses and losses.
The Coastal GasLink pipeline obtained at least $500 million in federal support through loans and COVID-19 support, the report says.
If completed, the 670-kilometre pipeline would transport 2.1 billion cubic feet of natural gas per day from the Dawson Creek area of northeastern BC to Kitimat for processing at LNG Canada’s export facility.
Then there is the now-dead TC Energy Keystone XL pipeline, which received at least $7.5 billion.
The Alberta government gave the pipeline $6 billion in loans and COVID-19 support and invested $1.5 billion, the report says.
Reached for comment on the report, the federal department of finance released a statement saying Canada “is strongly committed to phasing out subsidies for inefficient fossil fuels and has already eliminated eight of the nine tax subsidies.” The ministry also said the federal government had no investment in the Keystone XL project and is not providing a direct subsidy to the Coastal GasLink pipeline.
Corkal says there is a huge lack of transparency around the support and funding of pipelines in Canada. For the report, the institute submitted 13 requests for access to information. It took the federal government two years to deliver 1,700 pages, but Corkal says “most of them were redacted in some way. And that’s not representative of the pages that weren’t delivered at all.”
The government can withhold any document it deems commercially sensitive, a term applied broadly to pipelines, says Corkal.
That’s part of why the public isn’t aware of the Trans Mountain pipeline’s terms of sale, he adds.
The institute requested the terms of sale and the original appraisal of the project to find out if the government overpaid for the project, but was denied.
“We know there were specific documents that we wanted to see that we actually received, but they didn’t have any information that we could use because they had been redacted to the point that there was nothing useful,” she says.
The report calls on all levels of government to be more transparent in their support for the oil and gas industry, especially in provinces where most fossil fuel subsidies are given, says Corkal.
The federal government has committed to reviewing its fossil fuel subsidies in 2009 and 2016, although Corkal says the review is “significantly” behind schedule.
The Finance Ministry says Canada’s review will be made public once the investigation has been peer-reviewed, but did not give a timeline for that process.
Supporting pipelines does more than increase the use of fossil fuels, it also undermines climate action, says Corkal.
When government money is tied up in a polluting industry, there is less money to invest in clean energy, he says.
Investing money in something as risky as a pipeline means you could lose everything if the project is never finished, like the now-dead Keystone XL pipeline, he says. And governments tend to double down on investments before accepting the loss and walking away.
Corkal says he hopes this report will help taxpayers understand the financial risk governments are taking and ask whether those funds could be better used to promote economic diversification, transition, and “real, good-quality jobs in a new low economy.” in carbon”.
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