Nature Canada

Report says it’s time to end subsidies to fossil fuel companies

An oil pipeline stretches across
the landscape

Last week the Climate Action Network released a report on the billions of dollars in tax breaks that the Government of Canada hands out to oil, coal and gas companies each year — and the problems this poses for attempts to address our changing climate and transition to a greener economy.

From the report, Fuelling the Problem:

By subsidizing fossil fuel producing companies the government is encouraging faster production and facilitating the rapid expansion of large fossil fuel projects such as the Alberta tar sands, Canada’s fastest growing source of greenhouse gas pollution.

Globally, artificially low costs of fossil fuels have been shown to encourage wasteful consumption, distort energy markets, and allow for increased greenhouse gas pollution, thereby fueling the climate crisis. Subsidizing oil extraction also makes investments in oil more attractive compared to lower carbon, lower risk alternatives, thereby increasing the lock‐in of economies into fossil fuels.

In a time of fiscal constraint, the federal government could generate hundreds of millions of dollars in extra revenue by ending unfair tax breaks to some of the richest companies in the world. Eliminating handouts to oil and gas corporations operating in Canada would also help the country take a step towards a cleaner energy economy.

So why no action? Using leaked government memos, the report outlines a months-long strategy to downplay its responsibility to phase out fossil fuel subsidies, something all G20 countries agreed to do in 2009. According to the report, the Green Budget Coalition (in which Nature Canada is a member) has identified over $900 million in tax breaks to the fossil fuels industry that could be eliminated in the March 2011 federal budget.

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