CANADA LEADS G20 IN PER CAPITA PUBLIC FINANCING TO OIL AND GAS

Max Goessler/Pixabay

Canada has lavished at least C$13.8 billion per year in public financing on oil and gas projects since signing on to the Paris climate agreement, making it the fossil industry’s highest per capita source of public finance in the G20, and their second-largest overall benefactor after China, according to a blistering new report issued today by Oil Change International and Friends of the Earth U.S.

The funding is a large chunk of at least US$77 billion per year the G20 handed over to fossil projects between 2013 and 2018, OCI reports. The Canadian subsidies have been routed through Export Development Canada (EDC), the federal Crown corporation that has taken a lead in dispensing corporate relief during the COVID-19 pandemic.

“As Canada prepares historic levels of public finance in response to COVID-19, much of which will flow through the EDC, the new report demonstrates that its public finance has to date been dramatically misaligned with what is needed to avoid the worst of climate change,” Oil Change says in a release.

“As the health and livelihoods of millions are at risk from the still unfolding COVID-19 crisis, it’s critical the federal government gets recovery spending right,” said report co-author Bronwen Tucker, OCI’s Edmonton-based research analyst.

“Right now, much of our stimulus money is flowing through Export Development Canada, and that’s alarming when it has such a deep bias towards oil and gas,” she added. “An institution that’s backed risky projects like the Coastal GasLink pipeline and the Trans Mountain Expansion pipeline despite Indigenous rights violations and the climate crisis is not fit to finance a just recovery—at least not without serious reform.”

“Canada cannot claim to be a climate leader while it allows a Crown corporation to hand out over C$10 billion a year to oil and gas projects, while largely ignoring the clean energy sector,” agreed Julia Levin, climate and energy program manager at Environmental Defence Canada. “Paired with Export Development Canada’s notorious lack of transparency and the recent legislative changes that increased its financing limits, we are very concerned that the agency will risk public money—without public scrutiny—on loans to oil and gas companies that were facing insolvency long before COVID-19 appeared.”

“For years we’ve been calling on Ottawa to end Export Development Canada’s support for fossil fuels, and our calls have been met with silence,” added Above Ground Program Officer Karen Hamilton. “With Canada’s per capita public financing of fossil fuels now the highest in the world, will the government finally acknowledge the need to align its public finance policies with its climate commitments?”

The report concludes that public finance for fossil fuels was essentially unchanged in the first three years after the Paris deal was finalized, landing at US$77 billion per year from 2016 to 2018 compared to $76.6 billion from 2013 to 2015. That finding was “alarming at a time when avoiding the worst of climate change means no new finance should flow to oil, gas, or coal,” Oil Change writes. The research also put EDC’s performance in context: “Export credit agencies (ECAs) were the worst public finance actors, providing nearly 14 times as much support for fossil fuels than clean energy, with US$40.1 billion a year for fossils and just $2.9 billion for clean,” the release states.

And “most of this finance flowed to wealthier countries. Eight of the top 15 recipients were high- or upper-middle-income countries by World Bank classifications. Six were lower-middle income, and only one low-income.”

The report calls on G20 countries and multilateral development banks to:

      • Support a global, just pandemic recovery to zero-carbon societies, “instead of further locking in fossil fuel production and use”;
      • Put an end to public finance for all oil, gas, and coal projects;
      • Rapidly scale up investment in “clean energy, energy efficiency, just transition plans, and universal energy access”;
      • Ensure timely, transparent reporting on all energy finance initiatives.

“At this point in the climate emergency, continued investment in fossil fuels creates risks across society,” OCI and Friends of the Earth state. “Private and public investors alike will face stranded assets as decarbonization efforts scale up (transition and legal risk), or overinvestment will result in severe climate impacts from excess carbon dioxide emissions that will bring about shocks to the entire economy (physical risk).

But with governments around the world “preparing public spending packages of a magnitude they previously deemed unthinkable,” the two organizations add, “the fossil fuel sector has been quick to opportunistically respond to this with requests for massive bailouts, new subsidies, regulatory rollbacks, and the postponement of climate measures.”

The report cites Canada as a country where “public outcry likely helped lessen the magnitude of fossil fuel bailouts initially proposed”. However, “early support in response to COVID-19 included a US$5.3-billion investment and loan guarantee in Keystone XL pipeline from the Government of Alberta, US$1.9 billion in aid for abandoned well clean-up and methane leaks without fixing the regulatory gaps that allow polluters to shirk these responsibilities, a multi-billion-dollar credit facility for small and medium oil and gas producers through Export Development Canada (EDC), and other public finance programs oil and gas producers are eligible for through EDC and the Canadian Development Investment Corporation.”

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