Two years after the auditor general concluded that the Trudeau government had failed to identify its subsidies for the oil and gas industry, Environment Minister Catherine McKenna says federal officials are still working on it.

In a letter sent to Karen Hamilton, a program officer at Ottawa-based corporate accountability organization Above Ground, McKenna suggests this identification process is ongoing, 20 months after the auditor general reported that the minister's department “did not yet know” the extent of the subsidies.

“Please be assured that the government is working to identify and review non-tax measures that support fossil fuel production and use,” McKenna wrote on Feb. 11. A copy of the letter was obtained by National Observer.

Canada committed in 2016 to axing “inefficient” fossil fuel subsidies by 2025. Phasing them out is one priority in McKenna’s mandate letter. It is also a key objective for a global renewables agency that Canada joined last month. The former Harper government had also joined other G20 countries in a commitment to phase out inefficient fossil fuel subsidies following a summit in Pittsburgh in 2009.

The auditor general considers “non-tax” subsidies to be things like government grants or research funding, loans or loan guarantees that governments offer at favourable rates, and actions by government to intervene in markets, for example to sell off resources at below-market rates or to depress prices.

The minister’s letter meant it was unclear what had happened since the auditor general’s report, Hamilton said in an interview. “Just to get dates or more information, it’s like pulling teeth — we don’t really understand why it’s so complicated,” she said. “We don’t know where they’re at in their process.”

She said without receiving a firm date, she was skeptical the government would reveal anything until after the federal election scheduled for this fall.

Fossil fuel subsidies are widely viewed as roadblocks in the path to a country’s low-carbon economy. Economists say they distort the marketplace in favour of oil, gas and coal businesses and against clean technology, hampering efforts to get these businesses off the ground.

The International Institute for Sustainable Development, for example, has calculated that over a five-year period Canada spends several billion dollars in direct subsidies and publicly funded loans on these subsidies, an amount of money “of the same order” as losses that Canadian low-carbon firms experience.

In the letter to Hamilton, the minister laid out a number of steps the government had taken “toward fulfilling” its commitment. This included the 2016 budget’s announcement that accelerated capital cost allowance for facilities that liquefy natural gas will expire in 2024, and the government’s move to restrict what types of expenses incurred by oil and gas companies can get tax deductions.

Canada has also proposed hundreds of millions of dollars for new clean technology initiatives as well as new tax incentives for businesses investing in wind turbines and solar panels.

But the auditor general warned in 2017 that without a clear understanding of fossil fuel subsidies and a plan with timelines, departments won’t be able to ensure they’ll be able to meet the 2025 target.

The government launched a peer review process with Argentina in June 2018 that promised to “ensure both countries are on track to phase out inefficient fossil fuel subsidies.” McKenna as well as Finance Minister Bill Morneau are expected to carry out the peer review on behalf of Canada.

Environment and Climate Change Canada said last year that “public reporting” on the subsidies issue will occur once the two reviews — one on non-tax measures in the department, and the other with Argentina — have been finalized.

Since then, government officials have stayed relatively quiet about any progress on either review. McKenna’s office was contacted for this story but did not respond to questions before publication.

National Observer asked the Embassy of Argentina in Ottawa a series of questions about the peer review beginning Dec. 18, 2018 and following up several times. Cecilia Ines Silberberg, first secretary and consul at the embassy, said Jan. 16 that she had “not received yet formal answers” to these questions.

In September at a G7 conference in Halifax, McKenna appeared unwilling to discuss whether the group had held any talks on the issue. A few months later in December, McKenna said the government was not considering speeding up the phase-out target to align with a call to action by 415 investors, with $32 trillion in assets-under-management called the Global Investor Statement to Governments on Climate Change. “Our commitment is 2025,” she said in response.

In January, Canada joined the International Renewable Energy Agency, whose director has previously told National Observer that the government should be asking itself whether using taxpayer dollars to subsidize fossil fuel infrastructure is a “wise investment given the fact that this may end up as a stranded asset.”

Morneau spearheaded the government’s decision to spend billions of public dollars buying the Trans Mountain oil pipeline and expansion project. He has gone on to defend the price the government paid against an estimate by the Parliamentary Budget Office that it was at the higher end of the pipeline's true value.

Hamilton said she believed if the Argentina peer review was being taken into account, the earliest that something on subsidies could be published would be for the G20 in Japan this June. But that timeframe was unlikely, she added, given how long it has taken other G20 countries to undergo their own reviews.

Germany and Mexico, for example, underwent their own peer review process. Germany identified US $17.6 billion in measures that favour fossil fuels in 2016, while Mexico identified US$2.6 billion. The Mexican review did not include subsidies to consumption of fossil-fuel-based electricity and natural gas.

Would buying the TransMountain pipeline be counted as a non-tax subsidy? Seems like it should. There's 4.5 billion dollars right there, that should instead have gone to renewables.

The tragedy is going to intensify when Canadians reflexively, thoughtlessly, sanctimoniously elect a Scheer led Conservative government believing that would be some kind of change for the better.

I hope with all my heart that one day in the future there will be an intelligent dominant species on planet Earth.

Just think how much less carbon there'll be when we don't have Trudeau in the sky every week. My nickname for him? Captain Carbon of the skies. He talks the talk and that's where it ends.

Federal Env Minister Catherine McKenna has redefined "transition away from fossil fuels". The Liberal shift begins by going in the wrong direction: doubling down on fossil fuels, with new pipelines and LNG facilities. Curtailment is kicked down the road to future generations. First we dig the hole deeper, then we climb out. Maybe.

McKenna: "The reality is this is a transition that is going to take decades."
"We are in a transition. So transitions don't happen overnight."

To avert greater disaster, the IPCC gives us until 2030 to halve GHG emissions and 2050 to eliminate them. We ignore the best available science at our peril.
We need to start planning for the decline of fossil fuels, not expansion. When you're in a hole, stop digging.

Our "progressive" politicians are engaging in a new insidious and far more dangerous form of climate change denial. Notley and Trudeau acknowledge the science, but ignore its implications.

McKenna, Trudeau, and Notley are betting that the world will fail to take real climate action in time. They are betting on climate disaster.

Yes indeed. And what's even worse than that is that they've convinced a significant percentage of the population that this is what real action actually looks like.

If the scientists are saying we've got 12 years then we've probably got 8 or 9 - based on how conservative their estimates have been for a long time now. To be talking about a process that's going to take decades is the absolute height of idiocy. I'd rather be lied to than treated like an idiot.

I live on the east coast of Vancouver Island. We're under over a foot of snow and more is falling. The historical record says we get less than that in any given month. We've had that in the past 5 days and there's no end in sight yet.

The new normal is unpredictable, volatile and a lot of the country's infrastructure is going to become problematic in the coming years.

If we don't have a government that can tell us the truth, act on the truth, plan for what we're going to face in the short term and what our children and grandchildren are going to face long term...

I continue to hope a few billionaires get together and cooperate in building a museum/gallery of sorts to demonstrate to any future visitors to Earth or perhaps some future intelligent species of Gaian arachnids that homo sapiens weren't all foolish, shallow, self destructive narcissists.

Except that the vast majority of billionaires got there because of (and, like Steve Jobs, often encouraging) consumerist behaviour (read "foolish, shallow narcissistic") of the population. "Nobody ever went broke underestimating the intelligence of the American public." - HL Menken

Thank you for your insights.

Except for the obvious exceptions like George Soros, Warren Buffet, Bill Gates and quite probably a few others who are now giving it away.

Well, Catherine McKenna, perhaps instead of taking months/years to figure out and document all the many fiscal mechanisms that have been created to benefit the Industry which is willingly destroying the future of our young people, you could just pressure your boss to STOP any and all financial benefits to this criminal sector and transfer those monies to a just transition. That shouldn’t take much time! Maybe you should just resign (out of frustration?) at not being able to do your job. I have no doubt that you might well have been pressured by the PMO too? You’re intelligent, a woman and have been silenced in public before by your boss. Some of you have to speak out. The buck stops somewhere in the Federal Liberal Government, why not your desk?

We have a federal election this year. Let's remember Liberal procrastination when we discuss the election with friends and neighbours.

Except that the main alternative party most will consider will only work to accelerate the problem further, and to hide their inaction with more propaganda. Right now Scheer is busy whooping it up for Canadian oil and gas, as though climate change won't affect us somehow.

There ought to be a test before you hold yourself up for public election, including a requirement for a reasonable minimum level of comprehension of science and of the concepts of levels of evidence, and ideally a morality test as well. One of our biggest problems may be that the majority of elected officials, if they have a professional degree, have earned it in law, instead of in science. This doesn't seem to be serving anybody well.

Hard to imagine that between two smart ministers, Environment and Finance that the figures for subsidies for fossil fuels are not readily available. There must be a real good approximation. How does the government plan or create a budget?

This following is verbatim from the Liberal Party 2015 election platform: Promises made, promises not kept!
Continue to phase out fossil fuel subsidies:
We will fulfill Canada’s G20 commitment to phase out subsidies for the fossil fuel industry. In 2014, the Pembina Institute estimated that more than $1 billion in fossil fuel subsidies still existed in our current tax framework. We will direct the Department of Finance to conduct a detailed analysis of fossil fuel subsidies. A target of $250 mil- lion in reduced fossil fuel subsidies is our starting point, and a first step will be to allow for the use of the Canadian Exploration Expenses tax deduction only in cases of unsuccessful exploration.

... and this too:
We have two fiscal anchors that guide our overall fiscal framework. In 2019/20, we will:
• Reduce the federal debt-to-GDP ratio to 27 percent
• Balance the budget.

I agree that the alternative party – the Conservatives – would do even a worse job on environmental issues than the Liberals, and the NDP has no hope of winning the election. It is very easy to criticize vacillating politicians, but I think the main problem is that politicians can NOT be real leaders and make changes faster than the public can handle. If they do, they will be punished, as the NDP in Alberta probably will be this spring. The majority of Canadians are NOT interested in changing their lifestyles to address climate change – witness the truck convoy which is happily polluting the environment in order to lobby for the oil and gas industry….