Trudeau Admits Trans Mountain is a Fossil Subsidy as Report Urges Clean Energy Shift

Canadian Prime Minister Justin Trudeau as much as admitted this week that the federal bailout of Kinder Morgan’s troubled Trans Mountain pipeline expansion amounts to a C$4.5-billion subsidy to the fossil fuel industry.

If the pipeline still belonged to a private company, “the project would be dead,” Trudeau told a live interview event with Maclean’s Magazine on Monday evening. While the PM intended his comment to justify the Trans Mountain bailout, it coincided with a major report this week that tracked the hundreds of millions of dollars per year in tax breaks, fiscal supports, and direct grants Canadians shell out to fossil companies each year—not including the Trans Mountain deal.

“The Prime Minister confirmed what we suspected already: that the risky Trans Mountain expansion project was dead if not for the Canadian government bailout,” Patrick DeRochie, climate and energy program manager at Toronto-based Environmental Defence, told The Mix in an email yesterday.

“Instead of extending billions in subsidies to prop up an economically shaky pipeline that violates Indigenous rights and will increase Canada’s carbon pollution, the federal and Alberta governments should focus on accelerating the shift to a clean energy economy that is already under way.”

Earlier in the week, in conjunction with the report release, DeRochie said the actual value of the country’s routine fossil subsidies could be in the billions of dollars per year, since many of the tax deductions available to oil and gas companies are impossible for outside researchers to quantify.

“Combining carbon pricing and fossil fuel subsidies is like trying to bail water out of a leaky boat,” he said. “If you don’t fix the leak, you’re never going to fix the problem.”

The report, Public Cash for Oil and Gas, was produced by the Winnipeg-based International Institute for Sustainable Development and Oil Change International. They released the results alongside Environmental Defence, Équiterre, and Climate Action Network-Canada.

“Canada is the largest provider of government support for oil and gas production per unit of GDP of all G7 countries,” IISD states in a release. “With the recent purchase of the Trans Mountain pipeline, it is likely that the quantifiable amounts of federal subsidies just became even larger.”

“Our findings illustrate the need to reform the tax system so that the impact of fossil fuel subsidies on climate change and the environment is taken into account, and that public funds are managed in ways that are most beneficial to Canadians,” added IISD lead author Yanick Touchette.

“Canada really needs to step up and disclose to Canadians how much public money is going to these companies and potential climate polluters,” DeRochie told the Star Vancouver. “We would like to see that money repurposed…to start funding a just transition for workers and communities in the oil and gas sector.”

While the value of federal fossil subsidies has declined in recent years, DeRochie said that’s been more a matter of circumstance than deliberate government policy. “Although $200 million for federal fossil fuel subsidies is lower than our study from three years ago, this has more to do with the oil price crash and crafty industry tax accounting than significant action by Canada’s government,” he said.

The Star Vancouver notes that greenhouse gas emissions from the Canadian oil and gas sector have increased 70% since 1990—367% from the tar sands/oil sands—and the sector accounted for one-quarter of the country’s emissions in 2016.

“Canada should be rapidly phasing out fossil fuel subsidies and planning for the managed decline of the oil and gas industry, but instead, it’s buying a tar sands pipeline and financing its expansion,” said Oil Change International Senior Advisor Adam Scott. “The federal government should stop wasting public money on a sunset industry and start investing in a clean energy future and a just transition for communities and workers.”