We Canadians have the dubious honour of being a world leader in financing fossil fuels and the worst offender of all G20 nations. Just prior to the COP26 summit, a new report – Past Last Call: G20 public finance institutions are still bankrolling fossil fuels – exposed Canada as a huge laggard if one measures climate leadership in terms of where a government invests its public dollars. In other words, is our government putting its money where its mouth is. The answer is an ear-splitting NO.
Canada: A World Leader for Fossil Fuel Finance
There is so much going in the wrong direction for Canada’s energy strategy. The Past Last Call report shows that Canada provided the most public finance for fossil fuels—USD $11 billion per year—between 2018 and 2020. The total for the G20 was $63 billion per year.
And compared to subsidies for fossil fuels, renewable energy gets less government support in Canada than in any other G20 nation. As a whole, G20 fossil fuel finance was 2.5 times that of renewables, but in Canada, support for fossil fuels is 14.5 times more than for renewable energy.
“Per capita, we’re often the worst…But to be the absolute worst, with a much smaller economy and much smaller population, is even more shameful. — Julia Levin, Environmental Defence
Key findings of the report
- International public finance for fossil fuels remains large. The 2018-2020 average of $63 billion per year has dropped from the 2012 to 2017 averages of $91 billion per year. In the absence of policies to end fossil fuel finance, this drop in 2018-2020 is not guaranteed to be permanent and is far from the complete and immediate end to public support for oil, gas, and coal that is urgently needed.
- 51% of international public finance for fossil fuels flowed to gas projects. This $32 billion a year is larger than what any other energy type received from 2018 to 2020, and greater than all renewable energy finance combined.
- International public finance for renewable energy has largely stagnated since 2014. Trade and development finance for renewable energy has fluctuated between $20 billion and $27 billion per year since 2014 instead of growing exponentially as is needed to support a globally just energy transition.
- ECAs were the worst public finance actors providing 11 times as much support for fossil fuels than clean energy with $40 billion per year for fossils and just $3.5 billion for clean energy. Export Development Canada is an an export credit agency (ECA). Source: OCI media release.
Historic commitment at COP26
“Good news, but Canada must also end its support for fossil fuels at home, or else it will continue to exacerbate the climate crisis.” — Patrick Bonin, Greenpeace Canada
At COP26, Canada joined the US, UK and 21 other countries and institutions to end direct international public fossil fuel finance for unabated coal, oil and gas and prioritize clean energy finance by the end of 2022. That COP commitment seems to be holding. In a recent article, the Globe and Mail reported that “a global movement to permanently separate the oil and gas industry from the public purse appears to be gaining momentum, with an overarching objective of repurposing funds to promote renewable energy.”
The devil is always in the details
Key words like “inefficient fossil fuel subsidies” and “phase out and rationalize”—found in the fine print of a 2009 G20 commitment—have provided a lot of wiggle room. Canada has yet to declare any fossil fuel subsidy as “inefficient” even following a 2019 discussion paper which “identified 36 measures that might be considered subsidies” according to the Globe and Mail.
In the more recent Glasgow commitment to “end new direct public support for the international unabated fossil fuel sector by the end of 2022,” the word “unabated” is “a sneaky loophole” Julia Levin told the Globe. “It leaves a window open for governments to say, ‘Hey, we’re going to support this oil and gas refinery because there’s a promise of one day attaching carbon capture technology.’”
During the recent election campaign, the Liberals promised “to accelerate our G20 commitment to eliminate fossil fuel subsidies from 2025 to 2023.” The Prime Minister’s Mandate Letter to Minister of Environment and Climate Change Steven Guilbeault reinforces that promise.
“Work with the Deputy Prime Minister and Minister of Finance, and with the support of the Minister of Natural Resources, to accelerate our G20 commitment to eliminate fossil fuel subsidies from 2025 to 2023, and develop a plan to phase out public financing of the fossil fuel sector, including by federal Crown corporations.”
The main driver of the climate crisis is the burning of fossil fuels. The world needs to rapidly scale up the transition away from fossils and support a massive increase in renewables funding in order to get back on the 1.5°C pathway. Technologies such as CCUS (Carbon Capture, Usage and Storage) and SMRs, (Small Nuclear Reactors) which are both enthusiastically supported by Canada’s government, cannot offset the emissions arising from the climate-wrecking expansion of oil and gas production. Quite the opposite, they represent a deadly and risky facilitator of the status quo.
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