What’s a subsidy? - The Orca

What’s a subsidy?


Jack Middleton: One recent report included funding for Indigenous inclusion and a national pandemic wage subsidy program as ‘subsidies’ for the natural gas and oil industry.

About once a month, another group comes forward with a report trying to prove that Canada’s natural gas and oil industry is heavily subsidized. They bundle in all sorts of government spending and call it a “subsidy.”

This month, it was Environmental Defense, releasing a report claiming government subsidized the natural gas and oil sector to the tune of $18 billion in 2020.

This eye-popping number caught the attention of national media outlets. Unfortunately, it looks like no one bothered to read past the headline. If they did, they’d realize most of the items included are tax measures designed to create jobs and opportunities, only available when companies spend significant amounts of money in a province.

These are not subsidies. True subsidies are designed to confer an advantage or benefit that other sectors do not have.

It’s worth breaking down the types of funding this group counted to get to $18 billion.

First off, funding for $6 million for Indigenous economic participation in oil and gas related infrastructure projects in Alberta and BC.

This is counterproductive. Governments should keep investing in economic reconciliation, as Indigenous communities in British Columbia increasingly want a seat at the table, not to be excluded. Some of this funding has already gone to groups like the First Nations Major Projects Coalition, Kitselas First Nation and their partner Tsay Keh Dene Nations to help jump start important projects that create jobs and long-term value.

The group also counts $300 Million for the Canadian Emergency Wage Subsidy (CEWS) into the figure. This program directly funded workers and kept many people employed through the worst part of the pandemic in industry. The federal government recently commented on this saying that CEWS is “a pandemic policy measure meant to keep unemployment down — doesn’t target a specific sector.”

Environmental Defense also included programs that support direct emissions reductions in the upstream in British Columbia and Alberta. The report claims that funds used for hydrogen or carbon capture are illegitimately spent. These are vital technologies and projects that reduce emissions in Canada.

Ironically, they are campaigning against emissions reductions, in favour of the status quo.

Reports like this aren’t looking for pragmatic solutions. They’re simply throwing everything at the wall and hoping the big number they come up with sticks.

In fact, the narrative that oil and natural gas production being heavily subsidized simply does not reflect reality – which has been recently confirmed by our own federal government.

According to a briefing note from Natural Resources Canada (NRCAN): “Given the nature of NRCAN’s direct spending (i.e. innovation and environmental performance), the department does not provide any inefficient fossil fuel subsidies that encourage wasteful production or consumption of fossil fuels.”

And in recently speaking with the National Observer, Federal Minister of Infrastructure and Communities Catherine McKenna said “we eliminated all of the fossil fuel subsidies at the federal level.”

Organizations like Environmental Defence have every right to advocate for their cause – ideally with the facts.

In a pandemic, I believe it’s unethical to suggest an industry cause further layoffs. And frankly, it’s confusing to argue against technologies that will reduce emissions.

Jack Middleton is an Advisor for Citizen Engagement and Outreach in B.C. with CAPP.