Unpacking oil subsidies in Canada

  • Sep 17, 2021
  • Boe Report

Recently, Jagmeet Singh, NDP leader vowed he would end subsidies given to oil and gas companies if the NDP wins the upcoming federal election, directing that money to renewable energy.

Via Investopedia, a subsidy is a benefit given to an individual, business, or institution, normally from government. It brings to question, do Canadian oil and gas companies receive subsidies from their government, and how much? In April, a report released by Environmental Defence stated the government provided or announced roughly $18 billion to the oil and gas sector in 2020.

The figures in that report have been challenged, per a spokesperson for the minister of natural resources. Therein lies the crux of following this paper trail, and determining where money is coming and going.

Ben Brunnen, Vice President, Oil Sands and Fiscal and Economic Policy published an article on whether Canada’s oil and natural gas industry is subsidized. Brunnen states that “Canada’s oil and natural gas industry is not subsidized. A subsidy generally means a company or sector is given an unfair advantage.”

Brunnen also adds that the sector heavily invests in innovation and is diligently working on environmental performances and processes, such as the Canadian Oil Sands Innovation Alliance (COSIA). Since 2012, COSIA has invested a total of $1.8 billion. These investments are crucial for not only the sector, but Canada, its climate, workers, and its economy.

Subsidies are abound throughout across the country, from ag to business to pharmaceutical to wage subsidies. They are designed to help and support at times when said help is needed. It’s been estimated Canada spends $29 billion a year on business subsidies.

Unearthing complete and transparent subsidy information is hard, and makes the task of finding out which sector(s) receive the most financial help from government tricky. Via the approved Canada Emergency Wage Subsidy (CEWS) claims by period and industry sector in Canada, the oil and gas sector is nowhere near the highest. And during this ongoing pandemic, the federal government has worked to aid and help all sectors, not just oil and gas.

The fact of the matter is that truth and transparency for all financial help from federal and provincial governments is required.

For a detailed dive into oil and gas taxation and how it all works, KPMG published this useful guide where they outline how the industry is affected by taxes, what they pay, etc.

One has to wonder what would happen if Mr. Singh were prime minister and having to conduct business with oil and gas companies. To be a fly on that hypothetical wall. Would he feel compelled to invest in oil and gas? The oil and gas sector and Canada have to work together moving forward, just as they have in the past.29dk2902l

The Liberal federal government bought a billion-dollar pipeline, and chances are high any political party in power would have done the same thing in that position. Governments are in place to work with sectors and industries to help all parties flourish. It’s no secret that the government invests in the industry as the country is so reliant on both the revenues and jobs the sector contributes.

Governments work with sectors and industries to keep them flourishing and contributing to the economic wellbeing of a country, and that work is reciprocated by sectors and industries.

With the world facing climate change threats more frequently, yet the demand for oil and gas products and services increasing, a blend and balance need to be found. Until the day renewable energy is completely reliable, oil and natural gas has a place to play in this world.