BREAKING: EDC Backing Will Add to Canada’s Fossil Industry Bailout, Watchdog Groups Warn
Routing public financing through an “opaque Crown corporation with minimal government oversight” is not the way to be accountable for the way pandemic recovery funds are spent—or for the proportion of that money going to fossil fuel bailouts, three leading advocacy groups argue in a backgrounder published this morning.
The release by Oil Change International, Environmental Defence, and Above Ground focuses on the role Export Development Canada has been given in funneling federal dollars to fossil fuel companies—in addition to the C$16 billion documented last week by the global Energy Policy Tracker, Oil Change Research Analyst Bronwen Tucker told The Mix.
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The backgrounder details the “new programs which have the strong potential to add to EDC’s already high oil and gas finance, but which have largely not kicked in yet,” she wrote. “They will be added into the Energy Policy Tracker as possible in the coming weeks and months.”
“EDC is not the sole vehicle through which the government is offering bailout money to oil and gas firms,” the backgrounder states. “EDC’s role is significant, however, and bears scrutiny given the agency’s track record of providing vast sums of support to oil and gas with minimal disclosure.”
The agency’s original mandate was limited to supporting Canadian companies’ ventures abroad. But Parliament extended that role to domestic business activities during the 2008 economic crash, the backgrounder states, and while the extension was meant to be temporary, it was never reversed.
The three organizations cite the criticisms EDC has received for poor transparency, past critiques of Parliament’s lax scrutiny of the agency, and the risks taxpayers would run if EDC backed a losing project and couldn’t make good on its financial obligations. In particular, they focus in on the Canada Account, the funding mechanism administered by EDC but directed by the federal trade and finance ministers that Ottawa used to buy the Trans Mountain pipeline and finance its expansion.
“As part of its COVID-19 response, the government greatly increased limits to the Canada Account’s liability,” they write. “In doing so, it granted itself leeway to issue billions more in risky loans via EDC to companies that may not be able to repay.”
If those companies fail to repay, the backgrounder warns, “any loss incurred is directly borne by Canadian taxpayers.”
Before the pandemic, the groups say, EDC was directing an average of $13.8 billion per year to fossil companies, provided 12 times as much funding to oil and gas as it did to a poorly-defined cleantech category from 2012 to 2017, and devoted about 30% of its fossil support to domestic operations, much of it in the carbon-intensive tar sands/oil sands. “EDC provides make-or-break support for some fossil fuel businesses and large oil and gas projects,” the backgrounder states. And its “support to oil and gas includes support for projects that have been criticized for violating human rights, including the right of affected communities to free, prior, and informed consent. For instance, in April EDC approved a loan of up to $500 million for the Coastal GasLink Pipeline in British Columbia, a project opposed by hereditary leaders from all five clans of the Wet’suwet’en Nation.”
The agency only released its first climate policy last year, the groups add, and it makes no commitment to phase out support for oil and gas. The plan “commits EDC to integrate climate-related risks into its risk assessment processes, but does not give any sense of what weight they will be given in EDC’s decision-making.”
The backgrounder closes with a set of recommendations to align COVID-19 recovery funds with an “urgently-needed transition away from fossil fuels.” It warns that EDC’s “ongoing backing for the expansion of fossil fuels is incompatible with Canada’s Paris Agreement commitments and out of step with the international finance community’s shift towards decarbonization.” And its lack of transparency means the Canadian public “will never know the full costs, economic and environmental, of new EDC supports for the oil and gas sector.”