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The new year opened with a significant step forward for Canadian climate policy as the Glasgow Statement takes effect. Canada signed onto the policy, which promises to end international public support for the oil and gas industry, with an accompanying pledge to tackle the much higher domestic support for the industry by mid-2023.
This is a much-needed step in the right direction and brings us closer to our climate goals. However, let’s consider the backdrop. The fact is, Canada falls at the bottom of the G20 when it comes to public financing of fossil fuels in relation to GDP. Companies received $18.4 billion in federal spending in 2022 alone, while in the same year, the industry raked in all-time-high profits of $152 billion. The biggest oil and gas companies and their industry associations have been hard at work lobbying at every level of government for all manner of subsidies and industry-friendly policies.
But even beyond the monetary benefit the companies gain from their high level of access to government is the power and influence they exert in ways that profoundly alter the pace and course of the energy transition in Canada and abroad.
A few degrees off course
In Arundhati Roy’s now-famous pandemic essay, “The Pandemic is a portal,” she argues what we now all know — that there is no return to “normal.” There is a rupture, a portal, between the old world and the new, and we can’t shove everything through that opening. Climate policy is about choosing clear priorities — what will come with us and define the future. And here, in the turbid centre of the portal, where layered crises of climate change, economic strain and a pandemic meet, there is no room for ambiguity. The polycrisis forces us to pick a side.
And it seems like the government is making its choice clear. If you connect the dots between lobbying and government spending, we see that in 2020, oil and gas companies received a spike in government subsidies. That correlated with the Canadian Association of Petroleum Producers, the industry's biggest lobbying group, reporting a record number of communications with the federal government. Unchecked, this carefully tended relationship between the industry and the government will continue to funnel money to fossil fuel companies, locking us into a set of priorities that are not in line with a climate-safe future.
Most recently, lobbying and public funding are justified as an investment in carbon capture, utilization and storage (CCUS), which is essentially a way for the oil and gas industry to reduce its greenhouse gas emissions at the production stage while skirting the need to tackle the much more significant questions of fossil fuel expansion, production and managed decline. The issue of CCUS is controversial at best, criticized by climate experts and advocates around the world as a false solution that protects industry profits while pulling the rug out from under real clean energy solutions. Canada’s 2022 federal budget will invest $2.6 billion over five years in CCUS. What is the opportunity cost of that investment?
Government subsidies for CCUS act as a loophole in the promise to end public finance for fossil fuels, allowing the industry to wax enthusiastic about climate action while making no plans to wind down extraction. As evidence, listen to the oilsands companies make much ado of their participation in the Pathways Alliance, an industry initiative that aims to use carbon capture to achieve net zero by 2050, but hasn’t yet outlined a clear way to get there. Subsidizing CCUS extends the life of oil and gas while acting as an emissions reduction strategy on paper. The fossil fuel industry’s successful advocacy for public investment in this strategy precludes other, bolder investments in an energy transition. It sets the ship a few degrees off course, a distance that will grow with each passing year.
Devil’s in the details
If lobbying is power, then regulation is the metering of that power in service of the public interest. Real regulation of an industry involves a certain imagination for what an alternate economy could look like, along with a correlating investment in the alternate vision. But with public support for fossil fuels in Canada outstripping support for renewables by more than a factor of 11 between 2019 and 2021 alone, we are dragging our feet toward the energy transition.
When regulation does happen — in many cases because social movements manage to push the window of possibility open — oil and gas lobbyists are never far behind, relying on the relationships they have carefully built with the government to ensure that the devil is indeed in the details.
Even the Glasgow Statement policy — signed by Canada after intense domestic and international pressure and multiple electoral promises — contains grey areas that could be of concern. On the international side, there is an exception for fossil fuel projects that are of importance to “national security,” without identifying what these projects are. Similarly, the promise to end “inefficient” fossil fuel subsidies by the end of 2023 lacks a clear definition of what falls under that umbrella. And of course, the fact that the statement only covers “unabated” fossil fuels, meaning that any project connected to a CCUS facility is still eligible for taxpayer funding, is telling of the industry’s influence.
Oil and gas companies know the power of grey areas, and their long-standing relationships with the bureaucrats writing the policy help to circumvent the full power of regulation, allowing the companies to, in name, support high-level progressive policies while fighting their details and implementation behind the scenes.
A tilted playing field
It seems inevitable that fossil fuel lobbyists, with their abundant exposure and access to decision-makers, are able to exert outsized influence on oil and gas policy and funding decisions.
In a way, the regulations — or lack thereof — around corporate lobbying of the government invites this uneven dynamic. There is a lack of transparency and clarity in public records, which makes the direct links between lobbying and public support difficult to draw. This leads to numbers that are often underestimated. The whole playing field, from the Lobbying Act itself to the types of activities covered to the rules governing disclosure to the sheer amount of support in various forms is tilted towards the companies. The rules are rife with gaps — they are a rickety partial dam against a flood of power and influence from the industry, exercised relentlessly each day.
The cost of delay
All of this has the inevitable effect of slowing down the energy transition that is this century’s most pressing priority.
And time is everything in the justice equation of climate change. If we want an equitable pathway out of this crisis, we must measure the cost of delay in lives. The price of inaction is already unacceptably high; the “loss and damage” struggle that reached a head at the last United Nations climate conference is a reflection of how we have moved past the point of “preventing” climate change, and are now fully in the stage of compensating death and attempting to minimize the inevitable death to come.
This may seem like an acceptable price to pay for CAPP and the lobbyists who seek to extend the life of the oil and gas industry while staving off a transition to a low-carbon future. But Canadians should know the true cost of taxpayer support for the oil and gas industry extends far beyond the dollar amounts. We must all choose a side.
Comments
We have done so, and will be pulling support from any organizations that still think we can push this problem down the road to our grandchildren. People are dying now.......and the fact that Canadians continue to subsidize the industry making hot house earth a real possibility....while that industry rakes in increasing profits....is a Crime against a Livable Future.
We're going to stand with the land defenders.....win or lose. It turns out that native Canadians have a culture far more life affirming than anything we colonizers could imagine. For us, its all about us, not the seven generations. For us, we can't afford to wind down fossil fuel production, we must ramp it up.........and use public dollars, that should go to health care and quality education for all our children.........to subsidize the continued Climate instability and extreme weather disasters.
We can't even tell the oil industry to build their remediation schemes themselves....they can't afford to do that, knowing as they likely do, that Carbon Capture's real aim is to capture tax dollars and beguile the public into another generation of Rising Emissions: Brought to you by the Alberta Advantage.
We simply can't afford it. Our grandchildren will curse us if we don't demand a livable future: NOW
My real hope for transition is on the demand side, frankly. The fossil fuel companies have been able to hang tough on production and subsidies for production and rules surrounding that. But they haven't been able to stop the growth of electric alternatives to fossil fuel use, or even had all that much luck blocking government mandates for their adoption. Those have been growing exponentially.
Up to now, that hasn't obviously reduced fossil fuel use because the economy also grows exponentially, and the alternatives (electric cars, heat pumps etc) started small. But the economy's exponent is a lot smaller, and we're getting to the point now where the curve on growth in electrified alternatives starts to swamp economic growth and produce actual demand reduction. When demand starts seriously reducing, prices for fossil fuels will fall.
And then the most crucial thing: As prices fall and it becomes clear that isn't a cyclical thing, the political power of fossil fuel producers will start to seriously decline. And THEN, it will become politically possible to do the right thing on a range of issues.
This process is how things have worked so far. However, in the interests of the drastically diminishing time frame that we now find ourselves in, it is ABSOLUTELY IMPERATIVE that EVERYONE ramp this process up to take place - YESTERDAY!!!
The challenge Canada faces is that the vast majority of Canada's oil is exported to the USA. As you have correctly mentioned before Canada is America's bitch, so as long as US demand exists, Canada's extraction continues... The current federal government in the US is making big efforts to wind down demand, however who knows which way the political pendulum will swing south of the border in a couple of years.
I suggest it's a bit more complex than mere demand. If memory serves, about 78% of the members of CAPP are majority foreign-owned oil companies, with the majority again being American.
CAPP will never publish stats -- let lone admit -- that many of the American owned companies loved it when the world price dropped in 2014, mainly because their Canadian subsidiaries were tapped into extracting raw bitumen and shipping it to their own US refineries at rock bottom prices, even with the higher cost to extract the oil from an unconventional source. Many were already fully decked out with heavy oil refining capability in the US. In essence, they shipped cheaper raw feedstock from their own Canadian companies sans markups, then refined it into higher value gasoline and diesel in the US, taking advantage of the huge price differential between raw and refined products.
This is the traditional 17th Century Canadian extractive economic model. First beaver pelts, then timber and fish, now fossil fuels. Would someone please educate our thick leaders on the stratospherically higher value of a knowledge and tech-based economy already?
The demand for oil was catalyzed by the smartest companies with a toehold in their neighbour to the north, not just by consumer demand, though those sexy SUV ads do have an effect on the masses. In terms of consumer demand, Canadians are a bit more thirsty for liquid petroleum and high emissions than Americans. But that's not saying a lot when other cold nations in, say, northern Europe produce only half the per capita emissions of Canada, the US and Australia.
In my view, the major carmaker's electric ambitions cannot be realized fast enough. Oil is directly dependent on the number of gas tanks present in the domestic economy. And carmakers are gearing up to make affordable models that will stomp combustion cars on operating costs every time. Money is more important to most Canadians than lowering their personal emissions profile. But please, expensive F150s and Range Rovers in every garage are just not necessary.
There is also the imperative for cities to fully address climate adaptation by promoting more compact walkable neighbourhoods and communities rich in electric transit options and greenbelts preserved for habitat and for local food production. This is where the feds can help a lot more. Paying a greater share for urban transit is a lot easier than taxing personal SUVs to death, which will surely produce an electoral backlash.
Appadurai: "Canada falls at the bottom of the G20 when it comes to public financing of fossil fuels in relation to GDP."
Canada is at the TOP of the G20 when it comes to public financing of fossil fuels. Though I guess you can call that the bottom.
"Canada leads G20 in financing fossil fuels, lags in renewables funding, report says" (CP, Oct 28, 2021)
Appadurai: "Canada signed onto the policy, which promises to end international public support for the oil and gas industry, with an accompanying pledge to tackle the much higher domestic support for the industry by mid-2023."
Pundits (including on The Observer) and politicians (Guilbeault) have falsely suggested that Canada will end fossil fuel subsidies in 2023 or shortly thereafter. Do not be deceived.
Canada is committed only to the phaseout of "inefficient" fossil fuel subsidies, narrowly defined as subsidies that encourage wasteful consumption, viz., the domestic sale of fossil fuels at below cost.
Since subsidies that lower production costs, increase producer profits, and make producers more competitive in global markets do not qualify as "inefficient" subsidies, Ottawa has no plans to halt "efficient" subsidies.
Ottawa will continue to funnel billions of public dollars to the massively profitable, largely foreign-owned O&G industry. Tens of billions into carbon capture, SMRs, and blue hydrogen. Plus clean-up assistance. Plus new export pipelines (TMX). Canada's idea is to "green" (i.e., greenwash) its fossil fuels at the upstream end, not get off them.
Appadurai: "Government subsidies for CCUS act as a loophole in the promise to end public finance for fossil fuels"
CCS subsidies also undermine carbon pricing, making it cheaper and more profitable to produce oil. Oilsands producers are already shielded from significant carbon pricing, paying mere pennies on the dollar.
Yes, corporations and governments know the power of ambiguity all too well, and are very meticulous about including it in all documents. "National security", "unabated", "inefficient" etc. provide enough loopholes for them to safely ignore any so-called commitment. I am no longer surprised, but still appalled, at the hypocrisy of our political and business leaders. Anjali, please run for office again. We need people like you to lead us into the future!
True that there's no going back to "normal" but that should probably be obscured, too scary for many.
However, what IS being obscured thanks to algorithms and widespread misinformation is the only fact that matters, that ONLY the political right wing denies the basic REALITY of climate change, selfishly nullifying its creeping terror because THEY can't handle it, thereby also burying that never-more-urgent need to "pick a side" that Anjali speaks of.
And a Nanos poll today inexplicably finds Cons at 35 to the Liberals' 28, and Jagmeet Singh attacks both parties to leverage more valid concessions for people, threatening the agreement between his party and the Liberals as leverage when all that actually matters when it comes to HELPING PEOPLE is that the NDP numbers combined with Liberals bury the conservatives. Let THEM scurry around for issues and headlines.....
Carbon capture and storage is also oxygen capture and storage. They are not talking about capturing carbon, but carbon-dioxide. If co2 is truly locked away forever so is the two thirds of it made up of oxygen atoms that we can never breath again.
If we instead just stop burning fossil carbon, plants would eventually use that co2 and release the oxygen back to us animals.