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Ottawa is bailing out fossil fuel producers. Will Canadians be given a full accounting of the costs?

2020 is a pivotal year for wealthy nations to ramp up their climate action plans, spelling out how they’ll make the deep emissions cuts needed between now and 2030.

Instead, states are bolstering the very industries that must be phased out to avert disastrous climate breakdown, as high-carbon sectors push for government aid in response to the economic crisis.

Canada’s oil and gas lobby has asked for a bailout of up to $30 billion. Ottawa has committed several financial supports for the sector, with more on the way. On April 17 it announced a package that includes new loans and guarantees to mid-sized oil and gas firms, to be delivered by Export Development Canada (EDC) and the Business Development Bank of Canada (BDC), as well as funding for clean-up of spent wells and loans for emissions reductions. It also indicated further credit support for the largest oil and gas companies is still being planned.

The total value of this public aid is unknown. While officials have disclosed the price tag of the well clean-up and emissions reductions programs ($1.7 billion and $750 million, respectively), they’ve given no total figure for the EDC and BDC supports. When asked, Finance Minister Bill Morneau told reporters that “we are not putting a limitation” on the program, which will be “demand driven.” Nor has information been released about the value of forthcoming supports to large fossil fuel companies.

Oil and gas companies also stand to benefit from the aid that Ottawa has made available across sectors, such as the 75% wage subsidy program and the $65 billion Business Credit Availability Program (BCAP). The latter consists of loans and other supports being provided, once again, through Export Development Canada and the Business Development Bank of Canada. The oil and gas industry is identified as a priority sector for the BCAP.

As a broad base of Canadian academics and civil society advocates have argued, economic support measures should directly benefit workers, not companies, and they mustn’t delay the phaseout of an industry that’s fuelling the climate emergency, which already claims hundreds of thousands of lives each year.

Canada’s response to the climate crisis remains woefully inadequate. It’s on track to widely miss its emissions reduction target for 2030. The vast majority of Canada’s oil reserves must remain in the ground if we’re to limit global warming to 1.5°C. Yet Ottawa continues to pour billions of dollars of public money into expanding this industry, a policy that’s increasingly questioned even on economic grounds. The government’s aid package further entrenches this approach, and risks placing our emissions targets even further out of reach.

As Ontario’s former environment commissioner points out, details about the terms of the bailout are unclear. The government has not explained how it will inform Parliament which companies are benefiting from these supports, how they’re being used and how many jobs are retained as a result.

The use of Export Development Canada as a vehicle for much of the new aid to oil and gas companies is also cause for concern. Observers have long called attention to the lack of transparency in EDC’s operations, with a recent Globe and Mail exposé reporting a “pattern of secrecy” and “lax supervision” of the agency by the federal government. A government report prepared in advance of an upcoming legislative review confirmed EDC’s deficient disclosure practices.

It’s not too late for Ottawa to change course. It can shelve the planned bailout for large fossil fuel companies and place strict limits on the aid announced for mid-sized firms. Public resources would be better used to support workers as they transition to other sectors. Then it must put in place rigorous transparency and reporting measures to inform Parliament and Canadians of the full costs, economic and environmental, of any assistance it does provide to fossil fuel companies.

The emissions associated with every oil and gas project salvaged by this bailout must be accounted for and offset without delay. The world cannot wait for serious action to address the climate emergency. Too many lives hang in the balance.

May 2020 update

Ottawa expanded its offer of support to the oilpatch on May 11, announcing a new program to provide loans of $60 million or more to large firms in any sector other than finance. The government has not indicated there will be any cap on the amount a company may receive, nor the total amount to be disbursed through this program. How many billions of dollars in aid Ottawa will provide to fossil fuel producers remains, therefore, as unclear as ever.

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No bailout for oil and gas in response to COVID-19: a letter to Prime Minister Trudeau

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