Canada’s Provinces Provided at Least CAD 2.5 Billion in Fossil Fuel Subsidies Last Year, Undermining Climate Action

February 15, 2022, Ottawa—Provincial governments are still providing billions of dollars to prop up fossil fuels, concludes a new report from the International Institute for Sustainable Development (IISD) tallying subsidies in Canada’s four major oil and gas producing provinces.

While Canada’s federal government has pledged to phase-out its fossil fuel subsidies by 2023—which totaled at least CAD 1.9 billion in 2020—provincial governments have yet to make similar commitments. If left unaddressed, IISD experts say this will be a major roadblock to meeting the country’s net-zero target. 

“Fossil fuels are the biggest cause of Canada’s climate pollution, and subsidies drive up oil and gas production and use,” says Vanessa Corkal of IISD, one of the authors of Blocking Ambition: Fossil fuel subsidies in Alberta, British Columbia, Saskatchewan, and Newfoundland & Labrador. “Provinces need to stop using these subsidies to delay the energy transition that’s already underway, and instead seize the benefits of proactively building a cleaner economy.”

According to the report, this means not creating any new fossil fuel subsidies, phasing out existing subsidies by 2023, and increasing the transparency of provincial subsidy data. Instead, in 2020 and 2021, provinces doubled down on fossil fuel subsidies as a pandemic recovery strategy despite the economic and climate risks. 

Specifically, the report finds that Alberta provided a total of CAD 1.3 billion in fossil fuel subsidies last fiscal year. During this period, the Alberta government also disbursed $400 million from its Technology, Innovation and Emissions Reduction (TIER) Fund—a program meant to reduce industrial greenhouse gas emissions—to incentivize fossil fuel production, IISD experts say, including through subsidies for controversial carbon capture technology.

Meanwhile, British Columbia provided CAD 765 million in fossil fuel subsidies, largely for continued support of liquified natural gas that the report says risks undermining positive climate progress, such as efforts outlined in the CleanBC plan. Public surveys indicate that the majority of British Columbians are opposed to these subsidies, deeming the province's oil and gas royalty program—which is currently undergoing review—outdated and in need of reform. 

In Saskatchewan, the report uncovered CAD 409 million in fossil fuel subsidies over this period, noting that the province introduced several new subsidies in recent years, including drilling incentives for producers.

Turning to the East Coast, the research shows that Newfoundland and Labrador’s government increased fossil fuel subsidies last fiscal year, reaching CAD 82.6 million. In addition, the report states that recent changes to the royalty structure for the Terra Nova oil field will cost Newfoundland taxpayers another CAD 300 million over the lifespan of the project.

“Canadians need governments at all levels to step up and work together to protect citizens from the increasingly dangerous impacts of a changing climate,” says Corkal. “Cooperation and action on fossil fuel subsidy reform is more important than ever.”

For media inquiries, please contact:

Charly Blais, Communications Officer, IISD Energy, cblais@iisd.org