Historic climate investments undermined by massive new fossil fuel subsidies
OTTAWA | TRADITIONAL, UNCEDED TERRITORY OF THE ALGONQUIN ANISHNAABEG PEOPLE – Today’s federal budget misses a major opportunity to fulfil the government’s campaign promise to phase out public financing for fossil fuels. Instead, a new investment tax credit for carbon capture and storage will put $2.6 billion into the pockets of oil and gas companies over the next five years alone.
“Today’s budget includes positive investments in climate action, but there’s an inherent contradiction in offering a giant tax credit to the very companies fuelling the climate crisis,” David Suzuki Foundation climate director Sabaa Khan said. “The government pledged in its election platform to develop a plan to phase out public financing for the fossil fuel sector, including Crown corporations, but has yet to deliver. How many more wake-up calls do the world’s scientists need to give us before we stop, pivot and make the necessary investments to truly position Canada as a leader in the imminent and inevitable clean energy economy?”
Fossil fuel companies will be able to claim the inefficient investment tax credit for carbon capture, utilization and storage technologies starting this year. Companies — already raking in windfall profits due to the high price of oil — will be able to write off 50 per cent of the costs of eligible projects. By 2026, this CCUS subsidy will cost taxpayers $1.5 billion annually.
“There’s no reason taxpayers should foot the bill for fossil fuel companies’ belated efforts to clean up their act when they are awash in excess profits,” Foundation senior climate policy adviser Tom Green said. “Contrary to what the oil and gas lobby would have us believe, carbon capture is a ‘wild card’ technology that the IPCC’s recent report found is expensive and will deliver little climate benefit. The technologies are largely unproven, will take too much time to scale up and shift focus and public investments from proven technologies that can quickly reduce emissions, such as renewables.”
Fortunately, the budget also includes major investments in climate action and environmental protection, including:
- Close to $900 million for clean electricity, notably support for interprovincial electricity transmission and renewable energy expansion (although unfortunately, some money will be siphoned off to subsidize small modular nuclear reactors).
- $350 million for greener buildings and homes and an additional $458.5 million to the $4.4 million announced in the 2021 budget for greener affordable housing.
- Nearly $1 billion to expand electric vehicle charging infrastructure.
- $1.7 billion over five years to extend Transport Canada’s consumer incentive program to make zero-emission vehicles more affordable.
- $547.5 million over four years to launch a new purchase incentive program for medium- and heavy-duty ZEVs.
- Increased funding for fisheries officers and equipment to monitor and enforce ocean protections.
- Additional funding for protection and restoration of grasslands and peatlands critical to biodiversity and climate resilience.
- $183 million to reduce plastic waste and increase plastic circularity.
- $50 million to protect B.C.’s old-growth forests.
“It’s encouraging to see ongoing support for restoring nature for its own values and to help fight the climate crisis,” Foundation nature director Jay Ritchlin said. “Every budget needs to be a climate, nature and reconciliation budget.”
The David Suzuki Foundation is a long-time member of the Green Budget Coalition, and advocated for the adoption of GBC’s Recommendations for Budget 2022.
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