Canada Fossil Fuel Subsidies Hit $30 Billion Amid Pipeline Push, Study Reveals
Original article by Taylor Noakes republished from DeSmog.
Amid trade war talk of expanding Canadian energy infrastructure, a new report reveals that direct Canadian subsidies to the fossil fuel and petrochemical sectors reached nearly $30 billion in 2024.
For comparison’s sake, Canada spent between $38 billion and $39 billion on defense in 2024.
“Oil and gas companies – emboldened by their influence over President Trump – are exploiting the current economic uncertainty to call on governments to double down on fossil fuels,” Julia Levin, associate director of national climate with nonprofit group Environmental Defence, which put out the report, said in a statement.
Levin notes that oil and gas companies have been vocal in their demand that politicians work to expand pipelines and related projects, and seek new export markets for Canadian fossil fuels. Meanwhile, Canadian taxpayers, who fund the companies’ subsidies, face the expensive consequences of climate change and related disasters.
In recent weeks, the chief executives of Canada’s major oil and gas companies — including Suncor, Cenovus, Enbridge, and Imperial — signed an open letter to the leaders of four of Canada’s major political parties. In it, they demand federal party leaders to eliminate regulations, emissions caps, tanker bans on the West Coast, and carbon levees on major emitters.
The open letter was endorsed by prominent Canadian conservatives, including Conservative Party leader Pierre Poilievre. Alberta Premier Danielle Smith recently repeated many of the same industry talking points in defending her taxpayer-funded trip to attend a controversial PragerU fundraiser where she shared a stage with far-right influencer Ben Shapiro.
Last month, Liberal leader Mark Carney indicated his interest in building new east-west pipelines, ostensibly to reduce dependence on foreign imports and develop new trade opportunities.
“This push ignores the fact that fossil fuels come at a high price — not just at the pump, but through rising costs of groceries, worsening health outcomes, damage to property and huge government handouts,” said Levin in the statement.
“It also ignores the rapid energy transition towards renewable energy that is happening globally.”
Among Environmental Defence’s principal findings is that the Canadian government spent $29.6 billion on the fossil fuel sector in 2024, which is nearly $6 billion more than what it would cost to build interprovincial grid connection infrastructure. Recent research from the International Institute for Sustainable Development suggests that a national electrical grid could lower electricity costs nationwide, create hundreds of thousands of new clean tech jobs, stabilize electricity costs, improve Canadians’ health, and provide Canada with the energy security currently threatened by the Trump trade war.
Canada’s direct subsidies includes approximately $21 billion in financing for the Trans Mountain Pipeline, $7.5 billion from Export Development Canada (which included money for LNG and carbon capture, and financing for Canadian companies and companies and governments seeking to buy Canadian products), and another $700 million for LNG infrastructure.
Big Oil regularly promotes LNG and carbon capture as potential solutions for the climate crisis, though these arguments have been thoroughly debunked. LNG advocates in Canada often characterize it as a “bridge fuel” that could be used to help developing nations transition away from coal. Recent research indicates that the world’s two largest coal users — India and China — are in fact transitioning directly to renewable energy systems like solar and wind.
Moreover, LNG is a deadly fossil fuel that also happens to be resource intensive to produce, and often results in large volumes of methane emissions. Methane is estimated to be 80 times more potent a greenhouse gas than carbon dioxide. As for carbon capture, recent research from the Institute for Energy Economics and Financial Analysis poured cold water on Canada’s premier industry-driven carbon capture project — Pathways Alliance — determining that it is not financially viable and is unlikely to provide any environmental benefit. This determination is consistent with expert analyses of other carbon capture projects, both in Canada and globally.
Canada Has Given Away $74.6 Billion in Subsidies
Environmental Defence estimates Canada spent $2.4 billion on carbon capture projects in 2024, more than in previous years.
The group’s report also determined that federal subsidies to the oil and gas sector over the last five years amounted to $74.6 billion. Their analysis of what constitutes federal fossil fuel funding includes direct grants, tax breaks, loans, and loan guarantees from the government of Canada and some federal agencies (such as Export Development Canada).
Despite oil industry claims that fossil fuel companies are investing in climate solutions (claims that have led the federal government to introduce anti-greenwashing legislation), Environmental Defence found that none of Canada’s four largest industry companies reported investments in climate initiatives or emissions reductions as part of their capital spending.
The report has also reveals that pollution created by oil and gas companies reached an estimated $53 billion in 2024. This includes increased health costs, property damage from extreme weather events, as well as decreased agricultural productivity, a consequence of changing weather patterns.
“The calls for a new oil pipeline pose real risks to Canadian taxpayers,” said Levin in an email to DeSmog, noting not only that global demand for oil is set to peak in the next four years and then significantly decline, but that oil demand is already showing signs of plateauing in major energy markets like China.
“No company is willing to bet its own money on what is guaranteed to quickly become a massive stranded asset,” said Levin. “Instead, oil and gas companies want taxpayers to pay the price for new fossil fuel infrastructure as their wealthy shareholders reap the rewards.”
Levin is particularly critical of the under reported fact that federal subsidies to the fossil fuel sector have deepened Canada’s economic vulnerability.
“The Canadian public is already on the hook for the new Trans Mountain Pipeline — to the tune of somewhere around $30 to $40 billion and rising. And the project has done nothing to reduce our dependence on the United States, with nearly half its oil still flowing south of the border,” she said.
Original article by Taylor Noakes republished from DeSmog.
