Critics want Trudeau to ditch the oil and gas fund

Green Party MPs and environmental groups say a financial aid program for onshore oil and gas companies should be scrapped after a scathing report from Canada’s climate watchdog was released on Thursday.

“This is an egregious example of a fossil fuel subsidy,” said Julia Levin, senior manager of climate and energy programs at the advocacy group Environmental Defense. “This must be a no-brainer for the government to get rid of this program.”

the Emission reduction fund provides up to $ 675 million in interest-free loans and grants to help land-based oil and gas companies attract investment, retain jobs, and reduce greenhouse gas emissions that cause climate change. But a report by Environment and Sustainable Development Commissioner Jerry DeMarco found that the program was not designed to retain jobs or reduce emissions, and that Natural Resources Canada vastly overestimated the emission reductions the program would achieve.

In the first round of funding, nearly a third of the program’s approved projects indicated that the money would lead to an increase in future oil or gas production, but those increases were not factored into their evaluations, according to the report.

The 48-page report presents ample evidence that the onshore emissions reduction fund was not really effective in reducing emissions, despite its name. In fact, it could be increasing them, DeMarco said.

The federal government is “committed to eliminating the fossil fuel subsidies that are incentivizing oil and gas exploration and production” by 2023, Natural Resources Minister Jonathan Wilkinson said. National Observer of Canada, But that excludes programs that “are good for the environment, like repairing orphan wells or programs focused on reducing emissions.”

Green MPs Elizabeth May and Mike Morrice want the program to be suspended, and May called it “part of a climate emergency acceleration plan” because it has locked Canada into increased oil and gas production at a time when the Phasing out fossil fuels has never been more. important.

What people are reading

In question period on Thursday, May asked Wilkinson, how the program could be fixed.

Wilkinson said the fund, created in response to the COVID-19 crisis, aimed to do two things: maintain jobs and “ensure continued action against methane pollution at a time of economic crisis.” In both respects, he argued, the program was successful.

However, the commissioner’s report found that Natural Resources Canada did not include job retention as an eligibility condition or an evaluation criterion for funding decisions. DeMarco couldn’t even say definitively whether reductions occurred as a result of the program because at least part of the program’s emissions reduction goal has already been accounted for in other federal policies.

Wilkinson went on to say that the oil and gas sector “has certainly improved in terms of the economic outlook” and the department has “begun a review of the future of this program and the remaining funding.”

Going forward, the most important thing is to ensure that no more funds are sent under the current framework, Morrice said.

To date, only $ 134 million has been disbursed from the $ 675 million fund, and he wants the rest to be reallocated to projects that actually achieve emissions reductions, such as building renovations, climate adaptation, and just transition-oriented initiatives. away from fossil fuels. .

However, as it stands, the recently audited emissions reduction fund is “another gift to the oil and gas industry at the expense of taxpayers,” says Levin.

“We shouldn’t need the commissioner to audit each and every spending schedule for the government to make the right decisions when it comes to using public dollars,” he said.

“The commissioner is not going to audit every one of the subsidy programs, so how are we going to get the government to design programs that don’t continue to fuel the climate crisis?”

In a statement to National Observer of Canada, Laurel Collins, an environmental critic for the NDP, said that “using erroneous estimates of greenhouse gas emissions to finance the oil and gas sector” puts both Canada’s emission reduction targets and the health of Canadians at risk. , and “Liberals are not showing the climate leadership that they have repeatedly told Canadians that they can wait.”

Both the NDP and the Green Party remain convinced that Canada’s current greenhouse gas emission reduction target of 40 to 45 percent below 2005 levels by 2030 is not enough. May hopes the target can be changed to 60 percent to reflect Canada’s fair share of global emissions before the UN climate conference next year.

Vanessa Corkal, a policy adviser at the International Institute for Sustainable Development, says there is a “very great risk” of undermining our climate goals if proper assessments are not conducted to detect things like the overestimations revealed by the commissioner’s report.

Regardless of the sector, he says that any government program that involves reducing emissions must be designed with strong accounting principles, conditions and strict funding criteria to ensure that job retention and emission reduction results are included in the design. and are measured correctly.

DeMarco repeatedly said that the program’s grants are “fossil fuel subsidies, no doubt,” and Corkal says the report illustrates the risks of subsidies that claim to have environmental goals but are actually highly inefficient.

She says the emissions reduction fund and other programs should be included in Canada and Argentina’s ongoing peer review of inefficient fossil fuel subsidies, which has yet to be made public.

Launched in June 2019, the peer review is part of the G20’s commitment to eliminate all inefficient fossil fuel subsidies. Similar peer reviews across other countries took between 12 and 24 months; The review of Canada and Argentina has been done for almost 30 years.

On November 26, Wilkinson was asked about when the peer review findings would be released. He said that “that process is ongoing” and could not provide a deadline, but acknowledged that it is something the government needs to update on.

For Morrice, now “is not the time to review and study. It is time for decisive action ”.

“How much more time do we need to study and review the continued investment of public funds in the same sector that is the main contributor to the climate crisis?”

The emissions reduction fund highlights how poorly Natural Resources Canada is designing federal programs, Levin says.

“There is a disconnect between what the ministers tell the public these programs set out to accomplish and then what the actual parameters of the program are,” he said.

An example of this is the $ 1.72 billion awarded to BC, Alberta and Saskatchewan to clean orphaned or inactive wells. The federal government framed it as an opportunity to reduce greenhouse gas emissions, create jobs, promote indigenous reconciliation and contribute to an inclusive economic recovery, but one report found that Alberta’s program “amounts to little more than a bailout for the oil and gas industry “.

Most of the jobs the program bragged about creating were likely only temporary or would have existed with or without the funds, and there was a widespread halt in well cleaning activities as companies waited for grants, according to the report.

Alberta’s failure reflects the commissioner’s findings on the emissions reduction fund; Both programs lack transparency and did not achieve what they said they would do.

“[The emissions reduction fund] was designed to pay oil and gas companies to comply with existing regulations, ”Levin said, adding that the money should be reinvested in independent monitoring of methane emissions and combined with more stringent federal regulations to enforce oil and gas companies to follow the program.

“These are companies that have benefited, they have made billions of dollars, this is the richest industry in the world,” Levin said. “Why aren’t we entrusting them to take care of the mess they are leaving behind?”

Natasha Bulowski / Local Journalism Initiative / Canada National Observer