This text is taken from the Courrier de la Planète of July 26, 2022. To subscribe, click here.
The federal crown corporation Export Development Canada (EDC) shows no intention of eliminating the fossil fuel sector from its portfolio pending the government’s plan promised in the last election.
EDC recorded no less than $1.366 billion in aid to the oil and gas sector in the first quarter of 2022. At this rate, it could exceed the volume of “aid” provided to this sector in 2021.
The duty identified a total of 47 new projects supported by these public funds since the beginning of the year, in the form of commercial loans, equity investments and insurance.
The Liberal Party of Canada, however, promised during the last election campaign “a plan to phase out public funding of the fossil fuel sector, including crown corporations”.
The Trudeau government has not yet dictated this instruction to EDC, confirms a government official that The duty agreed not to name so she could speak more freely. According to her, a “framework” must first be prepared by the Minister of the Environment, Steven Guilbeault. This same source explains that EDC will not be able to reduce its volume of business in oil and gas to zero, since part of it consists of loans whose contracts cannot be terminated.
In the meantime, the public company has set its own reduction targets, such as becoming carbon neutral by 2050 and reducing its “financing portfolio” linked to upstream oil and gas exploitation by 15%. by 2030. The wording does not constitute a commitment to reduce the amounts paid to oil and gas companies, but rather to choose among these companies those which reduce their extraction activities.
Unease around the term “subsidy”
In any event, Export Development Canada maintains that all these amounts do not constitute subsidies since they are distributed according to a “commercial approach”. The company prefers to use the term “support”.
In fact, an entire federal parliamentary committee this spring tried to find out whether EDC’s billions in oil can actually count as subsidies, a debate that divides experts. A report is still awaited.
Jason MacLean, an assistant professor at the University of New Brunswick’s Faculty of Law and the University of Saskatchewan’s School of Environment and Sustainability, believes that EDC is making an effort to shop for a narrow definition of word “subsidy” so that its volume of business in oil and gas can escape it. Every dollar invested in this industry, he says, is incompatible with Canada’s GHG reduction targets.
“Reducing all public funding and other support of all kinds will make it more difficult for the fossil fuel industry to access capital for extraction. »
Justin Leroux, full professor in the Department of Applied Economics at HEC Montreal, nuance: if a loan made by EDC is comparable to market conditions, it is better to speak of “support”, and not of “subsidy”.
“Does Canada honor its commitments because it gives support, not a subsidy? Afterwards, we are more in the interpretation of the rule, let’s say. This is where we have a big problem moving forward. »
clear signal
Minister Steven Guilbeault himself, during the 2021 election campaign and before he was appointed Minister of the Environment and Climate Change, wanted to clarify what his party’s promise consisted of. “The signal we are sending is very clear: the Canadian state will no longer support oil and gas production from 2023. Whether through direct or indirect mechanisms, tax shelters… because it is obviously incompatible with the achievement of the objectives we have set ourselves. »
The duty revealed last year that more aid to the oil industry had been provided by EDC under the Trudeau government, on average, than under the Harper government. Mr. Guilbeault then pointed out that the sums provided by EDC to the fossil industry had been declining since 2018.
In a statement sent in English, the office of the Minister responsible for EDC in the Trudeau government, Mary Ng, said that ” [son] government is committed to fighting climate change and phasing out fossil fuel financing.”
Minister Guilbeault’s office added that it is currently working to “accelerate” its commitment to eliminate fossil fuel subsidies from 2025 to 2023 and “develop a plan to phase out public funding of the fossil fuel sector, including through federal Crown corporations”.
EDC says it spent $4.8 billion on Canada’s cleantech sector in 2021, and promises to tie executive compensation to emissions reduction results as early as 2023.