Analysis: Fossil Lobby Keeps Pitching as Federal Green Recovery Discussions Get Complicated

The Canadian Association of Petroleum Producers (CAPP) showed a previously unsuspected sense of humour last week, pitching the federal government for another round of tax breaks that would “level the investment playing field” and help it attract financial support in its moment of greatest need.

CAPP’s call for a 100% tax deduction on its capital expenses comes less than two months after Environmental Defence Canada released and Global News reported on the organization’s 13-page letter to Natural Resources Minister Seamus O’Regan and seven other Cabinet ministers, demanding more than 30 different cuts to the climate, environmental, and safety regulations governing the industry. The “crass attempt to exploit a global pandemic,” one veteran climate advocate, said at the time, gave Canadians an unmistakable view of the fossil lobby’s “radical agenda” on everything from climate regulation to oil train safety, from species protection to the transparency of the federal lobbying process.

But the fossil lobby was apparently undeterred, now trying out the claim that a tax break isn’t a subsidy. “We hear from coast to coast—from the offshore of Newfoundland to the investments that we’d like to see in Western Canada—that it would be a key thing the government could do to level the playing field and to be consistent with other industries within Canada,” CAPP CEO Tim McMillan told the Globe.

McMillan “dismissed the notion that such support would equate to a subsidy for the industry, adding that similar programs are in place for manufacturing and other sectors,” the paper explains.

That would be news to the Organization for Economic Cooperation and Development (OECD) and the International Energy Agency (IEA), whose joint report last week documented US$3.7 billion in Canadian fossil subsidies last year. (At the Bank of Canada’s average exchange rate for 2019, that equates to C$4.9 billion.)

Which would put the industry about $4.9 billion away from the notion of a “level playing field” in commerce. And that isn’t all the fossils are asking for.

“The association also wants Ottawa to display a visible show of support for the industry in an effort to woo international investment here, and create a panel made up of senior industry representatives and government departments to work on a recovery strategy,” the Globe writes. “CAPP said the group should formulate goals for economic growth, job creation, Canada’s climate targets, clean technology export ambitions, and economic reconciliation.”

The fossil lobby’s latest wish list is at odds with much of the news and analysis coming out of Ottawa in the last several weeks, suggesting the federal government is serious about grounding its post-pandemic economic stimulus plan in a green recovery. But it comes on the heels of a news report last week that officials in Finance Canada, and elsewhere in the federal public service, are unconvinced that a green stimulus—or any stimulus at all—will be needed to drive the country’s recovery from the pandemic. 

And the fossil lobby isn’t the only source of a counter-narrative against a green recovery package. In a May 31 opinion piece for the Globe, economist Chris Ragan and author Andrew Potter called a green stimulus a “terrible idea” and urged Ottawa to just increase its carbon tax instead. The next day, Globe data journalist Matthew McClearn made his pitch that Ontario’s Green Energy Act was a “cautionary tale” for grounding COVID-19 relief in sustainable infrastructure funding.

It’s hardly a groundswell. But the appearance of three critical and largely under-substantiated critiques of the green recovery raised the question: Are we seeing the beginning of an organized attack on a recovery strategy that enjoys overwhelming support from Canadians, and is gaining momentum in other parts of the world?

The general consensus among Ottawa-watchers is that there’s still steady interest in a green recovery, but the details of implementation are still very much a work in progress.

“I haven’t seen a shift. They’re still committed to those ideas. The reality of implementation is a different story,” one Canadian climate advocate told The Mix. “There are some big questions being asked given how much money is going out the door for immediate COVID response, and how concerned folks are about the possibility of a second wave and what that would cost. That’s where I think the questions are arising about the actual availability of new funds.”

While the “conviction to trying to have a green recovery” is not wavering, she said, “there’s less confidence that there will be fresh new money available” for a recovery of any sort, given the “higher likelihood of the pandemic being less than linear and more of a cyclical story”. But with funds already allocated through mechanisms like the Canada Infrastructure bank, “it’s not like all hopes for a green recovery are dashed. It’s just that the actual money available for new things that haven’t already been budgeted is in question.”

The advocate also pointed to a stark difference in experience between Finance, where officials are still “totally immersed in crisis mode” and pandemic response, and Environment and Climate Change Canada, which has a bit more space to take a longer view. “I would put it more down to that, than there necessarily being an ideological disconnect,” she said. “I don’t think there’s anything nefarious or scary going on, but I also don’t think there’s unstoppable momentum for a green recovery that will just roll on its own without any prodding. It’s somewhere in between.”

The same dynamic is playing out in the federal Cabinet, she added.

“There are a number of folks at the Cabinet table who have both the inclination and the space to be thinking about a green and transformative recovery period,” she said. Others “are very preoccupied with the immediate needs of the moment and are more concerned with issues like national unity than they are with thinking through a green and transformative recovery. And then there are those in the middle.” For supporters of the transformative pathway, that means “thinking about how to give those Cabinet ministers who have the inclination and the space the tools to bring their colleagues around,” and to step into the avalanche of ideas and possibilities the climate community has been bringing forward.

Another veteran observer said senior officials are still in the “idea collection phase”, casting a wide net before tying down the details of a federal recovery strategy. Various ministers and departments are spending a lot of time getting ready for implementation, she added—but no one yet knows when that will be.

Across multiple meetings and conversations about green stimulus, no one in government has shut down the topic, indicating a general willingness to entertain bold ideas, the observer said. But it isn’t clear how or when the conversation will move beyond ideas—largely because the government is moving very carefully at a time when “Canadians are very far from out of the woods” with the pandemic.

That uncertainty, and the delayed action it has produced, open a window of opportunity for what the fossil lobby does best—wield influence, twist arms, and try its best to control the narrative. But the climate community is pushing back, and at least one organization is reporting a measure of success mobilizing Liberal backbenchers to support a green recovery—a strategy that worked well in the campaign against the controversial Teck tar sands/oil sands mine.

“We launched a day of action for a green and just recovery, because we believe that you can influence politicians to make the right decision,” Greenpeace Canada digital strategist Lydie Padilla wrote late last month. “More than 3,300 people visited our page on May 27, answering our call to tell key Liberal MPs to speak up publicly in favour of a green and just recovery.” And the effort produced a response from three backbenchers—Rachel Bendayan (Outremont), Joël Lightbound (Louis-Hébert), and Nathaniel Erskine-Smith (Beaches-East York).