The Canadian government publicly says that it is committed to cutting its carbon emissions and support for the fossil fuel industry. However, it has done the opposite. Throughout the COVID-19 pandemic, Canada’s oil and gas sector received CAD $18 billion in subsidies and financial support from taxpayers.1
Also, Canada’s government provides more support for oil and gas companies, mostly based in Alberta, than any other G7 nation. Furthermore, it is the least transparent about these subsidies.2 So, why do fossil fuel companies receive so much support and what are the energy alternatives to oil companies in Alberta?
Why do oil companies in Alberta receive so much federal funding?
Canada’s huge oil and gas industry is largely concentrated in the province of Alberta. The five major fossil fuel companies operating in the region make billions in profit.3 Yet, they continue to receive large public subsidies.4
Supporters of the Canadian oil and gas industry say that it accounted for around CAD $132 billion (nearly seven per cent) of the economy in 2018. Also, it directly and indirectly supports about 530,000 jobs across the country.5
The size and strength of Alberta’s oil and gas industry are indisputable. So, why does it require so much support from taxpayers? Canadian federal and provincial governments are estimated to provide CAD $4.8 billion per year in subsidies to the fossil fuel industry each year.6 One prominent way that these companies receive federal funding is by getting taxpayers to pay for the cleanup of old oil and gas wells. In 2020, Canada’s prime minister, Justin Trudeau, promised to spend CAD $1.7 billion to clean up inactive wells.7
Fossil fuel companies have also lobbied the Canadian government to pay for investment in clean energy technology. For example, Suncor Energy wants the federal government to help pay for a CAD $1.4 billion project to replace boilers fired by petroleum coke with natural gas.8 “Fossil fuel subsidies undermine carbon pricing, work against the achievement of Canada’s climate targets, encourage more fossil fuel exploration and production, and allocate scarce public resources away from other priorities like health care, education and renewable energy”, according to a recent report.9
What are the energy alternatives to oil in Alberta?
Rather than subsidising Alberta’s oil and gas industry, many agree that it would be better to invest in clean energy technology, such as wind and solar power. There are 50 per cent more jobs in clean energy in Canada than oil and gas and mining combined, a recent report found. Furthermore, the number of jobs in these industries is growing rapidly. Jobs are being created in clean energy at a higher rate than the rest of the Canadian economy.10
Wind power is also a cost-effective energy alternative to oil companies in Alberta. Wind power has grown exponentially in Canada since 2008, from 2,349 megawatts to 13,413 megawatts installed capacity in 2019.11 In fact, wind energy is so cost-effective that in Alberta, it is cheaper than oil or natural gas. The Canadian Wind Energy Association says that by 2030, renewable energy will supply 30 per cent of Alberta’s energy needs.12
- Cox, S. (2021). Canada’s oil and gas sector received $18 billion in subsidies, public financing during pandemic: report. [online] The Narwhal. Available at: https://thenarwhal.ca/canada-oil-gas-pandemic-subsidies-report/ [Accessed 8 Jun. 2021].
- Cox, S. (2018). Canada leads G7 in oil and gas subsidies: new report. [online] The Narwhal. Available at: https://thenarwhal.ca/canada-leads-g7-in-oil-and-gas-subsidies-new-report/ [Accessed 8 Jun. 2021].
- Riley, S. (2019.). How Alberta’s biggest oil companies are still raking in billions. [online] The Narwhal. Available at: https://thenarwhal.ca/how-albertas-biggest-oil-companies-are-still-raking-in-billions/ [Accessed 8 Jun. 2021].
- Cox, 2021. (2021). Canada’s oil and gas sector received $18 billion in subsidies, public financing during pandemic: report. [online] The Narwhal. Available at: https://thenarwhal.ca/canada-oil-gas-pandemic-subsidies-report/.
- Canada Action. (n.d.). Crude Oil in Canada. [online] Available at: https://www.canadaaction.ca/oil.
- International Institute for Sustainable Development. (2020). Unpacking Canada’s Fossil Fuel Subsidies. [online] Available at: https://www.iisd.org/articles/unpacking-canadas-fossil-fuel-subsidies-faq.
- Riley, S. (2020). 11 things you need to know as Trudeau announces $1.7 billion to clean up “festering” orphan and inactive wells. [online] The Narwhal. Available at: https://thenarwhal.ca/11-things-trudeau-1-7-billion-clean-up-festering-orphan-inactive-wells/.
- Lewis, J. and Nickel, R. (2020). Canada’s oil patch seeks government green aid to produce cleaner crude. Reuters. [online] 15 Oct. Available at: https://www.reuters.com/article/us-global-oil-canada-environment-focus-idUSKBN26Z2NL [Accessed 8 Jun. 2021].
- Cox, S. (2018). Canada leads G7 in oil and gas subsidies: new report. [online] The Narwhal. Available at: https://thenarwhal.ca/canada-leads-g7-in-oil-and-gas-subsidies-new-report/.
- Environmental Defence. (2019). Cleaner, cheaper and growing: renewables are ready. Canadian policy isn’t. [online] Available at: https://environmentaldefence.ca/2019/06/06/cleaner-cheaper-growing-renewables-ready-canadian-policy-isnt/.
- Canadian Wind Energy Association. (2019). Installed Capacity – Canadian Wind Energy Association. [online] Available at: https://canwea.ca/wind-energy/installed-capacity/.
- Wilson, E. (2017). Made-in-Alberta procurement process harnessed competitive market forces getting the best deal for consumers – Canadian Wind Energy Association. [online] canwea.ca. Available at: https://canwea.ca/blog/2017/12/13/made-alberta-procurement-process-harnessed-competitive-market-forces-getting-best-deal-consumers/ [Accessed 8 Jun. 2021].