Environmental Restoration Incentive Act

An Act to amend the Income Tax Act (oil and gas wells)

This bill was last introduced in the 43rd Parliament, 2nd Session, which ended in August 2021.

This bill was previously introduced in the 43rd Parliament, 1st Session.


Shannon Stubbs  Conservative

Introduced as a private member’s bill. (These don’t often become law.)


Defeated, as of March 10, 2021
(This bill did not become law.)


This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Income Tax Act to establish a tax credit for the closure of oil and gas wells. It also sets out a requirement for the Minister of Finance to make an assessment respecting the implementation of possible tax incentives for the closure of oil and gas wells.


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.


March 10, 2021 Failed 2nd reading of Bill C-221, An Act to amend the Income Tax Act (oil and gas wells)

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:15 p.m.
See context

Winnipeg North Manitoba


Kevin Lamoureux LiberalParliamentary Secretary to the President of the Queen’s Privy Council for Canada and to the Leader of the Government in the House of Commons

Mr. Speaker, it is a pleasure for me to talk about an industry that is so critically important to our country, in particular to give a western prairie perspective on it.

The essence of Bill C-221 is to provide a non-refundable tax credit at a rate of about 13%. There are a great deal of concerns, but it is a bill that I cannot support personally, and I will go into a bit of detail in regard to that.

Suffice it to say that what is taking place in Alberta and Saskatchewan and, to a lesser extent, in Manitoba and British Columbia with the whole issue of natural resources, in particular our oil and gas wells, is of great concern. I think the government has been moving forward in a very responsible fashion, and I would like to highlight a few of things, but first, I will make reference.

The other day there was a question by the opposition about what is taking place in Alberta. Often we get the Conservatives talking about our not moving fast enough on the whole issue of western development. I really appreciated the concise answer by the Minister of Natural Resources at week ago in response to a question posed to him on February 19.

He addressed the chamber by saying:

...let me speak to impending projects in this country. There are 32 oil sands projects in Alberta that are approved and ready to go. They are just waiting for the provincial government's approval or investment from the private sector, but they are ready to go. This is in addition to our support for TMX, NGTL and Line 3. We approved them and are building them. In the case of TMX, we bought it. We are creating thousands of jobs for oil and gas workers because we are proud of them and we are proud of this industry as it continues to lower emissions.

We have recognized, as the minister said, the importance of the industry that we, when we talk about the industry, need to factor in the environment too. When we look at the industry here in Canada, I think it fares quite well, when we compare it with the same type of industry around the world. I believe Canada has played a leadership role, and I attribute that to the workers, the entrepreneurs and some of those businesses out west that are really leading the world in ensuring that we can minimize emissions. It has been referenced previously inside and outside the House that in many ways this is an industry that is going to be achieving net-zero emissions, which is really good to hear.

The bill focuses on wells and what we do when wells are no longer active, and the Conservatives are proposing this tax credit. I do not know to what degree they have really thought it out. For example, it would seem to apply to every company under a set price; I think it is about 100,000 barrels, in terms of the daily average. Outside of that one criterion, it seems that, as long as someone meets that requirement, they would be able to apply. It would not focus federal support on only the companies that need it; it is more a case that we would give the tax credit, no matter whether they needed the support or not.

I believe that the government has approached this issue in a very progressive fashion. In fact, our COVID-19 supports has included nearly $1.7 billion, that is, more than $1.5 billion, in support for those orphan well closures in Alberta, Saskatchewan and British Columbia.

All of us are concerned about workers in the energy sector. There have been some very difficult times, we recognize that, but unlike the impression many Conservatives try to give, sometimes things are beyond one's control. The pandemic is something we could not have prevented. No country could have done that, as this is a worldwide issue.

When former prime minister Harper was leaving office, we started to see a depreciation in world prices. It started before he left office and has continued. When we think of it, oil and gas producers are coping with two crises that have had a very serious impact in the energy sector and the workers in that sector.

I believe the proper thing for the government to do was to look at ways we could assist, and one of those ways was to look at cleaning up those tens of thousands of inactive and abandoned wells. It is not a small amount of money. We are going into hundreds of millions of dollars. As I said, it would be over $1.5 billion.

There are two crises situations, the global pandemic and the aftershocks of the global price war, and now we have companies trying to react and make changes to their operations that are so badly needed. We will come out okay at the end of the day, because we recognized how important it is to be there for the industry.

A number we often hear is that one out of every three workers in the areas of mining, oil and gas were able to stay in their jobs because of the Canada emergency wage subsidy program. We often hear criticisms about the program and how company X received the program or company Y received the program. However, when I look at the literally millions of jobs that have been saved as a direct result of that program, I believe it was well worth the federal dollars to make the program what it is.

The energy sector is a very good example of how a sector within our communities was able to capitalize on a program that will enable the industry as a whole to rebound that much better going forward. Because of the supports provided, we were able to keep people in the workforce.

When we talk about the capping of wells, a big part is the issue of the climate and our climate record. This government has taken many, over 40, different emission-reducing measures over the years. In fact, we are on track to cut pollution by more than any other Canadian government in its history.

I like to think investments in things like public transit, energy efficiency and having a price on pollution all matter. Investing in Canadians and offering support where we can is what I believe this government has done well over the last 12 months, but even more than that, over the last four years.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:25 p.m.
See context


Monique Pauzé Bloc Repentigny, QC

Mr. Speaker, introducing a bill is always an important moment in the life of a legislator, and so is the time when that bill is debated.

I therefore commend the member for Lakeland, and I want to explain to her why the Bloc Québécois will not be supporting her bill. In environmental policy, there is a basic principle known as the polluter pays principle.

According to this principle, to which the Bloc Québécois subscribes, it is up to businesses to assume the costs of environmental damage related to their operations. The provisions of the member for Lakeland's Bill C-221 fail to respect that basic principle. The very principle of granting a tax credit in an attempt to force companies to assume their responsibilities would mean funding an industry that is harmful to the environment rather than funding the energy transition. We agree with the hon. member that it is not up to Alberta taxpayers to pay the full cost of shutting down orphaned wells, but nor is it up to Quebec, the provinces and territories. This is the perfect opportunity to recognize the merit of the polluter pays principle and to implement it as rigorously as possible. Until the shift to clean energy is completed so that Canada can move away from fossil fuels, which we hope happens as quickly as possible, governments will have to strengthen their environmental policies and come up with effective ways to hold resource companies accountable.

Two years ago, the Supreme Court upheld the polluter pays principle in the Redwater Energy case by overturning a ruling from Alberta's highest court holding that repaying the creditor bank of the bankrupt company should take precedence over cleaning up abandoned sites. The Supreme Court disagreed and said that the priority is the cleanup, that decontaminating the environment takes precedence over repaying creditors when an oil company goes bankrupt. It even specified that the creditors and fiduciaries claiming to have priority were in fact people who benefited from the company's economic activity and who were, as a result, bound by the same regulatory obligations as the bankrupt company.

Between 2016 and 2019, in only three years, there were 28 bankruptcies involving 10,000 sites in Alberta for a total value of $335 million. Over the same period, the Orphan Well Association's inventory grew by 300%. This NGO, also known as OWA, claims to be independent, funded primarily by the industry and under the regulatory authority of the Alberta Energy Regulator. Is that really the case? Let us continue. Its mandate is to close wells, plants and pipelines who are no longer under the responsibility of financially solvent owners in order to protect the public and the environment and to eliminate the potential threat posed by these unfunded liabilities.

If the industry properly funded the OWA to really repair the environmental damage caused by failed companies, would we still be talking about even more taxpayer dollars being funnelled to the fossil fuels industry? The federal funding that the member for Winnipeg North spoke of earlier, the $1.7 billion announced last spring to clean up and close orphaned wells, is taxpayer money. Albertans also fund, through loans, the restoration of hundreds of wells—more taxpayer dollars. What about guaranteed federal loans with public money from all across the country? Even more taxpayer dollars.

The tax credit proposed in Bill C-221 will not prevent the inevitable decline of the fossil fuel sector, especially not for the qualifying corporations the bill identifies. The explosion in the number of sites that the OWA is now responsible for clearly illustrates this reality. It is in the economic interest of the western provinces to diversify. Even the Organization of the Petroleum Exporting Countries, or OPEC, says that demand for oil will plateau and will not grow much in the next 25 years, while renewable energy is already growing and will continue to grow even faster over the same period. In this context, we must approach the problem of bankruptcies head-on and make sure that governments reform and tighten their criteria for how companies finance the end of their facilities' life.

Forcing society at large to pay for the environmental costs of an industry that not only degrades the surrounding environment, but puts communities at risk and compromises our climate future, is neither fair nor legitimate.

For public funds spent on closing wells to be considered an investment, such expenditures would need to be made in the wider context of a comprehensive energy transition plan. If such a plan were implemented, making an investment to restore the environment around the wells would be considered a measure to ensure a fair transition. It would have the dual benefit of protecting the environment and supporting energy sector workers during the necessary transition.

However, as a stand-alone bill, Bill C-221 is a tax incentive to support the development of business models and an industry that are making no attempt to mitigate the impact of the environmental degradation for which it is responsible. Any financial support provided to manage the environmental risks that continuously result from the fossil fuel industry must be attached to restrictive environmental regulations, as well as other preventive measures, in order to avoid endlessly exacerbating the situation and the problem.

There is one good program called area-based closures, where well operators work together to minimize the cost of restoring sites. It is a good program and a step in the right direction, but participation is voluntary.

We need to do more to protect the environment and our health and to address the climate emergency. One thing is for sure: Well operators must take note of the Supreme Court decision I mentioned earlier. Provincial governments, for their part, must create regulatory tools tied to taxation laws to enforce the Supreme Court decision.

In the Supreme Court Redwater case, the appellant, the Alberta Energy Regulator, estimated the province's oil and gas liability at $30 billion or more. These massive costs, which are a relatively conservative estimate, are over and above the ever-increasing costs of greenhouse gas emissions, the impact on human health and the destruction of natural environments in the province.

A multi-level governmental review of the fossil fuel regulatory environment, which would empower governments to hold those benefiting from the resource responsible, is decades overdue. The orphan well problem, which is not addressed in Bill C-221, is real, it is current, and it is definitely connected to that.

In conclusion, the Orphan Well Association, or OWA, has had expanded powers since the spring of 2020, powers that were granted in the middle of a pandemic under two amendments adopted to its enabling legislation by the Government of Alberta. According to published information, these powers affect three areas: the role that the OWA plays in promoting the closure of sites; the role it plays in ensuring that oil and gas sites are not abandoned prematurely; and increased financial control to manage sites that may eventually be abandoned, as well as those under its control.

These wells are being kept in good working order, but why? To what end? Essentially, the OWA can now buy up sites before they are abandoned, which helps the company. Then it will clean up the defective sites, which did not used to happen, meaning the industry is relieved of its responsibility yet again. That is the direction that the Alberta government would like to move in with the OWA, which now works in service of the companies.

The Bloc Québécois has already indicated that it is prepared to stand with workers and families in western Canada, but efforts need to be made to break the Canadian economy's dependence on fossil fuels. We have proposed concrete measures in favour of a recovery plan, but we are still waiting for the government's green recovery strategy.

Without a comprehensive strategy, Bill C-221 is just a glorified subsidy for the fossil fuel industry. The Bloc Québécois's position is clear: We are against any subsidy for that sector. The pandemic must not be used as an excuse to make the public pay the high price of environmental damage.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:35 p.m.
See context


Tom Kmiec Conservative Calgary Shepard, AB

Madam Speaker, I am pleased to join the debate on this very important issue, which my colleague for Lakeland has proposed.

I have listened to the debate so far, and as an Albertan, I am disappointed to hear that other members will not be supporting a piece of legislation that is good for the environment. I have heard people say that it is good for oil and gas companies, but this is about the environment. The member for Lakeland has proposed a means for the private sector to contribute additional funds to remediate oil and gas wells that are basically at the end of their useful life.

I do not know how many members have done this, but I have walked along a well line that was successfully remediated and got its environmental certificate from the Government of Alberta. As far my eyes could see, I could no longer see where the drill pad had been. It was restored to a state of nature, where animals and everybody else could walk and use it on an everyday basis.

This is the result of an inevitable shift from conventional oil and gas to unconventional oil and gas production, which is mostly the bitumen oil sands, SAGD operations and in situ operations. What we sometimes see, ridiculously presented as what happens in the northeast corner of Alberta by, say, the National Geographic, is the open-pit mining, which is the way of the past. Those are very old mines that will be decommissioned in 10 to 20 years.

However, members can look at the legislative costing note provided by the Parliamentary Budget Officer for Bill C-221. It is flow-through shares, and this is the solution for decommissioning costs. Yes, there are a lot of oil sites, as the previous member mentioned. The Orphan Well Association is a repository for a company that goes bankrupt or into receivership and returns its energy leases to the people of Alberta when it can no longer operate. There was a fund set up in order to pay for these things.

I hear a member chirping away and disagreeing with me, but it is a solution for private-sector dollars to be put towards an environmental goal. It is not offsetting all of a company's costs. We are talking about wells that produce the equivalent of 100,000 or fewer barrels per day. I think this is what we want. We want the private sector to be more involved in remediating environmental costs associated with production.

In my riding, where Imperial Oil has its headquarters, a lot of oil and gas workers are unemployed, and this would put them back to work. There is a very slight time window that these flow-through shares would work for, which is basically between 2019 and 2026. We are talking about a very small group of wells that would be eligible for this. Companies could use this to offset some of the costs associated with it, but it is for the environment.

The bill before us has an excellent goal behind it. Why would we not support it? It would get people back to work with jobs. It would improve the environment, our landscapes and ecosystems. It offers an opportunity for us to do something that we are going to have to do anyway, which is fix up these well sites, which are all over Alberta, usually on people's properties. They will need to be remediated either way. Again, this is not for companies. It is for the environment.

To me, the downside is that it would cost $264 million by 2026, according to the PBO's cost estimate. However, it would get people who have great technical skills back to work and back out in the field. An excellent way of putting people back into the field is remediating these oil and gas wells.

The industry is the best in the world when it comes to this type of environmental work. There are wildlife biologists, people whose expertise is in rough fescue, which naturally grows in the foothills of Alberta. They are ready to go and do the work required for well remediation sites.

It was only a few years ago when some of the major Suncor sites were being remediated. What used to be an open-pit mine was completely remediated. We now have bison roaming again. It is a natural environment. One would not be able to tell what had been there, if it was not for the giant sign at the front of the site saying it used to be an open-pit mine. We have these large-scale industrial sites all over Canada.

I have known the member for Lakeland for a very long time, even pre-politics. We were in different provincial political parties. I am sure she would admit, and she would probably laugh at this, that we were probably each in the wrong political party. We likely would have identified as being in another one, should we have discussed it then.

However, she has been working at this for a long time. This type of proposal, had it been in place a decade or two ago, would have been able to support the sector and jobs in Alberta. We would not have to just wait for the Orphan Well Association to help remediate the sites for companies who can dig deep into foreign sources of capital to pay for remediation.

This would have been available for the smaller oil and gas companies in Alberta. It would have been available for the private sector. We say we have an ESG goal, say in a hedge fund or an equity fund, and we want to meet those. We have environmental and social goals that our fund investors want to meet. There is an opportunity right there. It would put tens of thousands of people back to work improving our environment and our landscapes. What could be better than that? We are using the Income Tax Act to do it, to offset some of the cost, not all of the cost, of this proposal.

I just do not see a downside to passing such a piece of legislation when the goal behind it is not subsidizing oil and gas companies but improving our environment. I just do not understand why other members of this House who had been in there originally will not support a piece of legislation like this. When we thought about this originally, it was just a total win on both sides. We would achieve a private sector goal, which is obviously to make a profit; and we would achieve an environmental goal, which is the remediation and improvement of our environment and the restoration of it to the condition it was in before industrial work was done on the property.

There is a Yiddish proverb that says, “he that cannot pay, let him pray.” Madam Speaker, I know you enjoy the Yiddish proverbs as much as I do. However, that is the case here.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:45 p.m.
See context


Tom Kmiec Conservative Calgary Shepard, AB

Madam Speaker, I hear the same member chirping away again. I am sure it is a different condition out there in Hamilton and the regions that he comes from, but in my neck of the woods, in the southeast part of Calgary, I have a lot of oil and gas workers who have been out of work for years now.

Their severance pay has run out, they have no more space in a home equity line of credit, they are at the limit of what they can afford and the outlook is grim. For many of them, their kids, spouses, friends and former co-workers have moved to the United States or Algeria or South America to seek work, because there is a booming industry worldwide for oil and gas development. That might be hard to believe, but it is still going on. One of my neighbours is an LNG specialist, and he spent time working in Venezuela.

I have a lot of family members who moved out west specifically for work opportunities. Lots of those have dried up, and in connected industries the same thing is happening. We know in Alberta that oil and gas is not going to bounce back to the same as it was before. We have been through this before. Albertans are extremely resilient. This is not the first bust that we have experienced, frankly, and there will be other booms and other busts in the future. We have adapted, every single time, by changing our legislation, changing our regulations and looking after the environment. That is what we do best. That is what this piece of legislation proposes to do.

Through this, I see an opportunity to harness the power of the private sector to invest in things that it cares about. I see these hedge funds and equity funds out there, all over North America, looking toward investing in projects that have environmental and social goals behind them. ESG is the way of the future. Many of them are looking at things like carbon net-zero investments that they would like to make.

My riding is home to one of the most efficient gas turbine electricity-producing power stations in North America, with something like a 98% to 99% efficiency, producing half of the city of Calgary's electrical power. It is hyperefficient. There are barely any people working in that facility, and it has now added on a carbon capture and carbon utilization system as well.

Projects like this are how we are going to get to our environmental goals. Changes like this to the Income Tax Act would help the private sector achieve the environmental goals that we all share in this House. Climate change is real. We have to address it. This is a way to get there because, as I said, “he that cannot pay, let him pray”.

We are done praying. There is an opportunity here to make sure that the private sector pays for these types of costs.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:45 p.m.
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Kristina Michaud Bloc Avignon—La Mitis—Matane—Matapédia, QC

Madam Speaker, I am pleased to have the opportunity to speak to Bill C-221, which seeks to amend the Income Tax Act and establish a tax incentive for the closure of oil and gas wells.

I want to acknowledge the work of the member for Lakeland, with whom I am fortunate to serve on the Standing Committee on Public Safety and National Security.

I can say in no uncertain terms that, unfortunately, the Bloc Québécois does not support this bill for one very simple reason that my colleague from Repentigny already pointed out: Bill C-221 is inconsistent with the polluter-pay principle.

What is the polluter-pay principle? It is a basic environmental policy principle supported by all those who believe that the environment is a priority. The Bloc Québécois therefore wholeheartedly supports it. This principle stipulates that companies need to assume the costs of any environmental damage they do.

It is simple. If a party causes environmental damage, then it must pay to fix it. If it cannot be fixed, then the party pays to compensate for the irreparable harm it has done to nature. It is not up to the government or taxpayers to absorb those costs. That would be unfair and illogical. That would mean collectively agreeing to pay to fix the environmental damage caused by oil and gas companies, while receiving no collective benefit from the profits.

That is the problem the Bloc Québécois has with Bill C-221. If this bill were to pass, oil and gas companies would be given a tax credit for assuming their responsibilities. In other words, if we say yes to Bill C-221, we are saying yes to more funding for an industry that we know is harmful to the environment, rather than increasing funding for the energy transition. That reasoning does not hold water in 2021.

Obviously, it is not as if the oil and gas industry was the poor cousin in Canada. As a matter of fact, in April 2020, less than a year ago, the federal government provided $1.7 billion in financial assistance to clean-up and decommission orphan wells in Alberta, Saskatchewan and British Columbia.

It does not stop there. Alberta already funds hundreds of well reclamation projects within its jurisdiction. That province offers loans to oil and gas companies, and the payment of interests is secured by none other than the federal government.

They will say that this support is needed in a pandemic and that workers in western Canada need support. We agree with helping workers and companies in times of crisis, but taxpayers already absorb much of the environmental costs from the oil and gas industry.

Moreover, it seems to me that the pandemic has become an excuse for a lot of things, much too many things. The present environmental crisis cannot be swept under the rug under the pretense that a public health crisis is raging. That kind of rhetoric no longer holds water in 2021 either.

The scientific evidence is too compelling on the cause and effect relationship between the destruction of the environment in the past decades and the pandemic we are living through. We cannot afford to legislate only to potentially hold oil and gas producers accountable. We must enshrine in law the requirement to start the energy transition, and yet, Bill C-221 would have the opposite effect.

Do we believe that oil and gas companies would change their ways if the government compensated them for their environmental mistakes? I think I know the answer: not a chance. Using taxpayer money to pay the environmental costs of an industry that damages the environment, puts communities at risk and compromises our climate future is completely irresponsible.

The member for Lakeland, who introduced this bill, says that it is not up to Alberta's taxpayers to assume 100% of the cost of decommissioning orphan wells. She is quite right, but I am sure she would agree with me that it is not up to Quebec taxpayers to pay for it either.

The Bloc Québécois recognizes the urgent need to deal with orphan wells, and we are prepared to support pragmatic solutions to this problem. However, these solutions must meet certain conditions. They must respect the polluter pays principle, they must contribute to an overall effort to make the energy transition, they must come with regulations and, last of all, they must help Canada meet its greenhouse gas reduction targets.

The Bloc Québécois is willing to discuss amendments to Bill C-221 in order for it to meet the conditions I mentioned. In this debate about orphan wells, it is important to have a broader conversation and to be aware of the importance of tackling climate change without further delay. More and more people are insisting that we, the elected members, address this issue.

A 2017 study by the C.D. Howe Institute showed that of some 450,000 listed oil and gas wells in Alberta, about 155,000 were no longer active but had not been completely cleaned up. In the spring of 2020, the Pembina Institute estimated that there were 164,000 abandoned wells in the province. The institute reported that these wells carried risks and expenditures that had not been borne by the owners, even though the owners benefited from the wells when they were active. The same study showed that for Albertans, the potential costs of cleaning up these abandoned wells could be as high as $8 billion, and that was in 2017. Of course, today, the costs would be even higher.

In fact, official estimates by the Alberta Energy Regulator, the only regulatory body for the energy sector in the province, value oil and gas liabilities at over $30 billion. However, internal documents estimate the total cleanup costs of Alberta's oil and gas sector, including the oil sands, at $260 billion. Should Albertans pay the price for the oil and gas sector's environmental carelessness? Should all Quebeckers and Canadians foot the bill? The answer is obvious.

We know that the economic downturn Alberta has faced for 10 years pushed many oil companies to bankruptcy. The province was left with thousands of wells left unattended by companies that did not bother to clean up their mess. That is a huge environmental problem, but it is also a public health and safety issue. These abandoned wells can contaminate the water and the soil, release greenhouse gases and put nearby houses at risk of exploding. It is a growing problem that companies keep sweeping into taxpayers' backyards. So much for being good corporate citizens.

A lawyer from Ecojustice, a Vancouver-based group of lawyers who specialize in environmental law, said that the best way for the province to address the problem of abandoned oil wells is to require companies to make a security deposit before drilling. That would be a more forward-looking solution than Bill C-221. We need to fix the mistakes of the past first.

The issue of orphan wells needs to be addressed, but there need to be strict conditions to warrant having the public cover the cost. Any financial assistance associated with environmental risks, such as the decommissioning of orphan wells, must be done in conjunction with changes to the environmental regulations. Preventive measures must also be taken to stop perpetually aggravating this problem.

We simply cannot vote in favour of a bill that sustains an industry that is causing environmental degradation. Alberta and the other oil- and gas-producing provinces have the power to make regulations that would require the industry to take care of its wells. The pandemic must not be used as an excuse for deregulating the environmental protection sector. There are ways to prevent more orphan wells from popping up in Alberta. There are ways to avoid making the public pay astronomical bills.

Environmental trusts exist precisely to allow producers to share the risk among themselves in case one of them goes bankrupt. Oil and gas companies should be required to maintain enough assets to cover the costs of dismantling and cleaning up their facilities. In the event of bankruptcy, the law should require companies to fulfill their environmental responsibilities before having to pay off their creditors. To avoid bankruptcies, governments should modify their criteria to require companies to finance the end of life of their wells upfront. In short, laws and taxes should be used to prevent problems, not to fix them after the fact.

In conclusion, investing public money to fix the problem of orphan wells would only be justifiable if it were part of a comprehensive, ambitious plan for an energy transition. If such a plan existed, the investment necessary for closing down these wells would have the dual impact of protecting the environment and supporting energy sector workers and their families during the transition.

The Bloc Québécois has proposed a green recovery plan, with concrete solutions for a successful energy transition. In its plan, the Bloc suggests, among other things, that the unused funds from the Trans Mountain expansion project be redirected toward renewable energy projects to create jobs, a large part of which could be earmarked for Alberta to support its green transition.

However, we are still waiting for the Liberal government's comprehensive strategy for a green recovery. Without stricter environmental regulations, measures like the tax credit proposed in Bill C-221 amount to little more than a new kind of subsidy for the fossil fuel industry.

The economic recovery policy should include powerful incentives to encourage companies to move away from fossil fuels and invest in clean and renewable technologies. The Bloc Québécois cannot support a bill that would make taxpayers bear the staggering costs of Canada's dependence on oil. The Bloc Québécois is prepared to stand in solidarity with the taxpayers, workers and families of western Canada on condition that laws and regulations are put in place to end the Canadian economy's dependence on fossil fuels from the previous century.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 5:55 p.m.
See context


Shannon Stubbs Conservative Lakeland, AB

Madam Speaker, I am grateful for the debate on my PMB, Bill C-221, the environmental restoration incentive act, which is one part of what must be a multipronged approach to a current and future risk that needs resolution.

There is rarely a single perfect public policy remedy to a complex real-world challenge. Exponentially increasing orphaned and abandoned wells are mainly a result of major bankruptcies and a widespread economic collapse, caused in part by Canada's own anti-energy federal government and the 2019 Redwater decision that prevents struggling small oil and gas developers from getting private financing when nearing bankruptcy with outstanding remediation liabilities. The federal government can take real action while provinces do their part.

My bill exclusively focuses on the most financially challenged small and medium-sized oil and gas businesses and fairly proposes to include this tool that is currently available to other sectors, such as exploration development in mining, fabrication of metals and other technologies such as wind turbines, geothermal energy and fuel cells. Before 2017, flow-through shares could be used by oil and gas producers for drilling and exploration too. It makes sense to extend it to the smallest, most at-risk energy businesses in Canada, which cannot secure private sector financing due to their precarious economic positions and liabilities, specifically to encourage the remediation and reclamation efforts that they were doing under normal financial circumstances.

It is a no-brainer. Why should flow-through share provisions be limited to the extraction and production fees of resource development and not be available as an environmental remediation tool? South Okanagan—West Kootenay's NDP MP said he accepts the use of flow-through shares for mining extraction. I wonder why we cannot all agree that they should be used to stimulate private sector financing for restoration as well.

What is very odd is that the MPs who like flow-through shares for production but not remediation also offered support for a colleague's intended bill for qualifying environmental trusts. I supported it also, but the fact is that it would have immediately helped only the largest producers with the advantage of cash on hand. My Bill C-221 helps the smallest businesses on the edge of bankruptcy, businesses that cannot get financing and cannot or will not access the federal government's predatory payday style LEEFF loans or the BDC's co-lending and mid-market programs.

Some colleagues say my bill is a subsidy. I have explained extensively why it is not and I will not revisit that question, but I must emphasize that my intent is to protect taxpayers in the long run and limit public liability. My bill is a discount for Canadian taxpayers.

Canada’s oil and gas sector contributed $493 billion in revenues to governments in Canada between 2000 and 2018. That is $26 billion per year. The PBO says my bill will cost $264 million in total, ending in 2026. It could potentially cost taxpayers everywhere $70 billion for all 130,000 active and inactive wells in Canada today.

Davenport’s Liberal MP talked about the need to support measures that help companies avoid bankruptcy and support our environmental targets. Bill C-221 does exactly those things, but deliberately limits the use of public funds by enabling the lion’s share of financing, specifically for remediation and reclamation, to come from the private sector.

Bloc MPs urged the polluter pay principle. Yes, the Conservatives enshrined it in law, but the fact is that voting against my bill goes against that principle, ignores the realities of small and medium-sized oil and gas businesses and workers on the edge of total devastation, and leaves either a lack of remediation or only taxpayers liable.

My bill is real action, not just rhetoric, on the polluter pay principle to help the most vulnerable energy businesses—

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 6 p.m.
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Mark Gerretsen Liberal Kingston and the Islands, ON

Madam Speaker, I think we heard the member say that her Internet connection is unstable.

For the benefit of the member, I know a lot of work goes into a private member's bill, and she does have the right to respond. I believe if you seek it, you will find unanimous consent to allow her to restate the last 30 or 45 seconds. We did not hear that, and I think she has a right to be heard.

Environmental Restoration Incentive ActPrivate Members' Business

February 25th, 2021 / 6 p.m.
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Shannon Stubbs Conservative Lakeland, AB

Madam Speaker, I am sorry. I am out in rural Alberta. I promise I am wrapping up, but I want to thank all members for helping me do this.

The Liberal member for Davenport talked about the need to support measures that help companies avoid bankruptcy and support our environmental targets. Bill C-221 does exactly those things, but deliberately limits the use of public funds by enabling the lion’s share of financing to go specifically for remediation and reclamation by the private sector.

The Bloc members urged the polluter pay principle, which, yes, the Conservatives enshrined in law, but the fact is that voting against my bill would run against that principle, ignore the realities of small and medium-sized oil and gas businesses and workers on the edge of total devastation, and leave either a lack of remediation or only taxpayers liable.

My bill is real action, not just rhetoric, on the polluter pay principle to help the most vulnerable energy businesses; not big oil and not major multinationals, but literally the little guys. The NDP MP said that Canadian taxpayers should not foot the bill and I agree. However, inaction, doing nothing, defeating this bill, would help guarantee they would.

Frankly, the objections have been mostly ideological and geographical, with no real alternative proposals. This is a challenge across Canada in most provinces. In Alberta alone, most wells are on private land. Financially forced abandonments are magnets for rural crime, but there are tens of thousands of wells on government land, on Crown grazing leases, and thousands on indigenous reserve lands too. What happens to all of them when companies go bankrupt?

Since 2015, Canada’s energy sector has lost $200 billion and 200,000 jobs while orphan and abandoned wells have increased 300%. That is not a coincidence, but a consequence. That was before 37% of oil and gas companies had to make permanent layoffs to stay alive at the start of last year. There is little light at the end of the tunnel.

I passionately support Canada’s oil and gas workers. The sector is the most environmentally and socially responsible in the world. It is crucial to the whole country’s economy and future. Bill C-221 can help continue its unmatched stewardship, clean-tech investment and innovation exceeding standards, while protecting farmers, municipalities, land owners, indigenous communities, the environment, taxpayers, and creating badly needed jobs. I hope MPs in all parties will actually walk their talk and support this bill.

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:05 a.m.
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Shannon Stubbs Conservative Lakeland, AB

moved that Bill C-221, An Act to amend the Income Tax Act (oil and gas wells), be read the second time and referred to a committee.

Mr. Speaker, I am really pleased to speak about my private members bill, Bill C-221, the environmental restoration incentive act, which I introduced on February 25, earlier this year.

Although the world has changed in many ways over the past nine months, the Canadian oil and gas sector continues to face a state of uncertainty. The families whose livelihoods depend on the sector still face what many say is an unprecedented struggle, with major anxiety about their futures and complete financial despair. Entire communities are at risk because of the steady decline of oil and gas activity and historic levels of bankruptcies and investment losses in Canadian oil and gas, and that damage has rippled across the country.

Since 2015, more than 200,000 jobs have been lost in the Canadian energy sector. It has devastated families and entire communities. There are many social consequences. A recent study from the University of Calgary’s school of public policy said that for every 1% increase in unemployment, 16 Albertans will die by suicide.

Never has a Canadian industry faced such a severe triple threat: global oversupply and demand drops, a collapse of global prices and a lack of market access. Even before COVID-19, a combination of economic policy and legislative and regulatory factors in Canada led to a historic and major collapse in investment, small businesses and jobs, while energy sectors in the United States and across the country were thriving. COVID-19 only exasperated what energy workers in my backyard of Lakeland would characterize as “carnage”, a dire situation shared by energy workers across Canada from B.C. to Ontario to Come By Chance in Newfoundland and Labrador.

Canadian oil and gas producers are world leaders in environmental remediation and reclamation, but one consequence of this perfect storm of challenges is that the record numbers of business bankruptcies have caused the number of orphan wells to increase by over 300% since 2015. It is an urgent economic and environmental challenge for rural municipal governments, for landowners, on Crown land and in indigenous communities.

Mark Dorin’s family farm in Didsbury, Alberta, is at risk. He said that the value of the land is at stake and is rendered literally worthless. Michelle Levasseur, economic development officer for the Town of Calmar says that it is a financial burden that is “not fiscally responsible…to ask our current residents to fund”.

Normally, orphaned wells become the responsibility of the provincial orphan well associations and funds. In strong economic conditions, they are remediated on schedule through levies on all the other active producers, but these orphan well funds are being overwhelmed, putting taxpayers at risk of eventually having to bear 100% of the cost for decommissioning, closure, remediation and reclamation. Between 2015 and 2018 in Alberta alone, the number of orphan wells skyrocketed from 768 to over 3,400. Today there are a total of 97,000 inactive wells in Alberta. The Alberta Orphan Well Association has an inventory of 2,983 orphan wells for abandonment and 3,284 sites for reclamation.

In B.C., there are over 300 orphan wells that need to be decommissioned. Half of those wells are on protected farmlands and there are over 7,000 more inactive wells. B.C.'s auditor general estimates that it could cost up to $3 billion to reclaim all the orphan wells and facilities in B.C. By percentage, B.C. actually has the largest increase of orphan wells since 2015, at 600%. Saskatchewan has more than 600 orphan wells and 30,000 inactive wells. The province’s auditor general estimates that it would cost $4 billion to decommission all of their existing wells. In Ontario, there are almost 900 inactive wells that could become orphaned if more companies go bankrupt, mostly throughout the southwestern part of the province.

Overall, there are more than 130,000 inactive, orphaned and abandoned wells in Canada. It is estimated that it could cost between $30 billion and $70 billion to fully decommission all current active and inactive oil and gas wells in Canada. That is why it is so crucial for the federal government to lead and to continue to take action on this national environmental and fiscal challenge. There is no doubt that it is complex and it requires a multipronged effort from provincial and federal governments and, importantly, from the private sector.

This year, the Alberta government announced an additional $100 million loan to the provincial orphan well fund to remediate 1,000 wells. In April, the federal government announced $1 billion for Alberta, $400 million for Saskatchewan and $120 million for B.C. for abandoned and orphaned wells.

I supported that one-time funding as a first step, but I think the government must adopt a permanent fiscal incentive to enable the private sector to raise funds dedicated solely to reclamation and remediation. Such an initiative recognizes the financial and economic reality that Canadian oil and gas producers face, while it emphasizes the primary role of the private sector to fulfill the environmental duties inherent in their responsible development of oil and gas resources in Canada.

What Bill C-221 proposes is a non-refundable tax credit that could eventually enable a flow-through share provision to encourage small and medium-sized producers to take action on the pressing challenge of suspended and inactive wells, and immediately create service jobs in communities and regions that need them most. I hope Canadians will note that my bill applies only to small and medium-sized producers that are struggling the most, which are responsible for about one-quarter of total Canadian oil production. These producers have, on average, one well for every 10 wells of the large multinational operators, which will not qualify for this tax credit. In 2017 and 2018, more than two-thirds of those small and medium-sized companies lost money, so it is urgent.

The first part of Bill C-221 creates a non-refundable tax credit that will help small and medium-sized oil and gas producers right away. The second part makes the case for this credit to qualify for the flow-through share provisions of the Income Tax Act, which is the government's part to do, so that when a producer wants to raise money from private investors, the producer can attach the value of this tax credit to a share of the company, which is sold to an investor.

The investor buys the share and the tax credit, and in this way the value of the tax credit flows through to the shareholder. What this means is that the tax credit the producer gives up becomes the profit margin for the investor who purchases these shares. That is a big incentive for outside private investors to contribute funds and capital to companies specifically for the purpose of decommissioning wells, even when the company's share price is not expected to increase.

Another reason this federal leadership is necessary is the 2019 Redwater Supreme Court decision, which was the right ruling but at a very challenging time. It says that when an oil and gas company goes bankrupt, the assets from that company have to go toward paying for the company’s environmental liabilities first, such as oil and gas wells, before lenders and investors are paid back. One consequence, of course, is that the ruling dried up private sector sources of investment, compounding all the other challenges that are harming small and medium-sized producers in Canada. Oil and gas producers are cutting spending and capital investment plans aggressively just to try to survive.

I want to stress that, from my perspective, the growing number of suspended and inactive wells awaiting decommissioning is not evasion nor neglect by small and medium-sized oil and gas producers in Canada. It is in fact a stark reality of their precarious economic positions. It is a consequence of all of the damaging policies that have undermined competitiveness and tanked Canadian oil and gas investment. Therefore, it is the duty of the federal government to help figure this out. Smaller producers simply do not have the money left in their businesses, and if the status quo continues, they simply cannot raise the money needed to proactively address their inactive wells in the current conditions.

In 2009, the previous Conservative government committed to ending inefficient and wrong-headed subsidies to oil and gas. Despite the rhetoric from others, the current Liberals removed any remaining, as well as some benchmark industry tax treatment from oil and gas, but not other industries. I support those measures.

The previous Conservative government advanced the polluter-pay principle in Canadian law. Bill C-221 reinforces the standard of polluter pay and protects taxpayers from the potential burden of billions of public dollars needed for remediation and reclamation. The federal government’s finance department confirms that this proposal is not a subsidy. The department defines a subsidy as “federal tax expenditures that provide preferential tax treatment that specifically supports the production or consumption of fossil fuels.”

The International Energy Agency does not consider this measure to be a subsidy either. Its definition of a subsidy is “any government action that lowers the cost of energy production, raises the revenues of energy producers or lowers the price paid by energy consumers”.

It is not unprecedented. For example, in the mining sector, flow-through share financing contributes over 65% of the funds raised for mining exploration across Canada, a measure Conservatives have always supported and the Liberals recently extended. Provinces have called for action on the growing challenge of orphaned and abandoned wells, but the $1.7 billion from the federal government is, unfortunately, a drop in the bucket compared to the overall up to $70 billion liability in active and inactive wells in Canada right now.

Alberta is calling for flow-through shares in order to allow the private sector to accelerate oil and gas well reclamation. Premier Scott Moe of Saskatchewan has also made similar calls.

Premier Jason Kenney advocates it to get the oil field service sector back to work while reducing an environmental liability. Alberta finance minister Travis Toews supports the proposal. He says, “Bill C-221 builds on the work Alberta has undertaken,” and “Flow-through shares are a game-changer for helping producers raise money from the private sector to decommission oil and gas wells.”

The industry wants to do its part to continue being a world leader in environmental stewardship and innovation.

Mark Scholz, the president and CEO of the Canadian Association of Oilwell Drilling Contractors also supports the environmental restoration incentive act. He said, “Programs designed to incentivize private investment in well reclamation, for instance, would help provide consistent work over time, which is the foundation for building a steady labour force again in the oilfield services sector.”

The Canadian Association of Petroleum Producers says, “Tools to temporarily or more permanently find ways to encourage these companies to raise capital would be exceptionally welcome at this point in time. Things such as flow-through shares...to help assist with reclamation and remediation are...tools”.

The Lloydminster Oilfield Technical Society in Lakeland says that it believes Bill C-221, combined with changes to share structures within Canada, will represent another avenue for the oil and gas industry to repair the damage with which it has been inflicted, and that any positive environmental impact, in the form of asset retirement, will always be looked upon favourably by its group and by the industry. The ability to achieve multi-party support of this initiative is indicative of Canadian society’s aim to maintain our oil and gas industry as the world leader in responsible development.

In my view, the solution to this environmental and financial challenge must prioritize the private sector and should not be solely dependent on taxpayers through big government programs. As a federal MP, this is just one thing I can do to bring forward a solution now.

It would not fix every issue overnight, but Bill C-221 is good for the environment, would help struggling small and medium-sized producers and would build an opportunity for immediate job creation for experienced, highly skilled workers in the oil and gas service sector now.

In order to make the greatest impact and to actually implement the flow-through shares part, I am asking all members to partner with me. This must be a collaborative effort with all members of Parliament to succeed.

During the last Parliament, I had the opportunity to bring forward Motion No. 167, which called for action to combat rural crime. I worked with all parties and secured support from hundreds of organizations and thousands of Canadians across the country. We accepted amendments and ultimately it passed the House of Commons with unanimous support.

My first goal is always to do what is in the best interests of the people I represent, for Alberta and for all Canadians. What ultimately matters most to me is doing the right thing and helping to advance meaningful initiatives for people, not politics and not partisanship.

Similarly, the current situation with orphan wells is escalating with many different impacts in western Canada, but I believe the objectives of Bill C-221 are important to all Canadians. The choice members of Parliament from all parties will have to make is whether the federal government creates a path for the private sector to address the surge in inactive and suspended wells to prevent adding to the number of orphaned wells, or leaves it to the Canadian taxpayers to foot the bill.

I want to close by saying Alberta has a long history, an unmatched history, of leadership on environmental stewardship and innovation in Canada. This is just another small but creative way to generate jobs, address environmental concerns and protect taxpayers in Alberta and across the country.

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:15 a.m.
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Richard Cannings NDP South Okanagan—West Kootenay, BC

Madam Speaker, I know my colleague from Lakeland is very concerned about the problem of orphaned wells. We are talking about inactive wells here today. I am particularly concerned about the flow-through share aspect. We use flow-through shares a lot in the mining industry to incentivize investment in exploration and development of mines at a very risky time in that development. We want our resources to be developed, but it is risky so we give investors that incentive.

Here we have an obligation companies have, which they have had since they started drilling the well. We know it is there, they know it is there and we should not have to incentivize them to put aside that money ahead of time so that taxpayers are not obliged to do it. I am just wondering why Canadian taxpayers should come in and foot the bill for companies that are just—

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:20 a.m.
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Shannon Stubbs Conservative Lakeland, AB

Madam Speaker, I enjoyed working with the member on the natural resources committee in the last term.

My perspective on this is “woulda, coulda, shoulda”. We need to address the situation we are in now. This challenge is complex. It is primarily the regulatory legislative responsibility of provinces. I did work in the department of energy for the Government of Alberta, and as I have said internally and publicly, I think there have been lots of missed opportunities in the past regarding regulatory and financial incentives, business development rules and determining the definitions and outcomes desired for reclamation and remediation.

In the reality we are in now, because of the drop in investment, there is an increase of hundreds of percentages of orphaned and abandoned wells. It is therefore our duty to partner with provinces to figure out how to solve this problem. Industry says flow-through share provisions are a tool that will—

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:20 a.m.
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Mario Simard Bloc Jonquière, QC

Madam Speaker, much of what my Conservative colleagues have been saying just does not add up. I remember a conversation I had with a Conservative colleague a while ago. He told me that what the Conservatives want when it comes to oil is not more federal money but less legislation. They want the government to get out of the way.

This morning, however, it seems very clear to me that my colleague's bill is not about making the government get out of the way. It is about tax credits. Once again, the Conservatives are asking for more financial support for the oil industry, which has probably received more financial support than any other industry in Canada.

In my opinion, this bill is at odds with the polluter pays principle. My colleague says the bill is compatible with that principle, but that is not even remotely the case.

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:20 a.m.
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Shannon Stubbs Conservative Lakeland, AB

Madam Speaker, the member must have missed the first part of my speech when I said that this is not a subsidy and is not about taxpayers' money being given to oil and gas companies. In fact, that is exactly what we are seeking to prevent. It is the Conservatives who are leading on this issue to ensure reclamation and remediation of all the outstanding oil and gas wells by enabling the private sector to use an incentive to raise funds from investors to meet these responsibilities. I would love to see any Ontario or Quebec MP stand up and say they do not support this measure for the mining sector, for example, or for other industries in Canada.

The government needs to get rid of its antienergy legislation, remove red tape, remove regulation and allow the Canadian oil and gas sector to thrive. However, because of consequences from global factors and its domestic decisions, this issue has been created. It is an enormous—

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:20 a.m.
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Winnipeg North Manitoba


Kevin Lamoureux LiberalParliamentary Secretary to the President of the Queen’s Privy Council for Canada and to the Leader of the Government in the House of Commons

Madam Speaker, it is interesting to look at the reality of the situation. We have a national government today that is investing hundreds of millions of dollars in orphaned wells in an attempt to work with our prairie provinces to actually make a difference for the environment and industry as a whole.

The member made a comparison: Ottawa has spent about a billion dollars in the the Province of Alberta and the Province of Alberta has spent about $100 million. Does the member not recognize or believe that Ottawa and Alberta need to work together to achieve good results?

Environmental Restoration Incentive ActPrivate Members' Business

November 16th, 2020 / 11:25 a.m.
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Shannon Stubbs Conservative Lakeland, AB

Madam Speaker, I do, which is exactly why I am bringing forward this legislation. I look forward to the member working with this Albertan to help get the private sector funding into the industry that is required for full remediation and reclamation of oil and gas wells in Canada, and to protect taxpayers.

However, the member is not correct. The federal government has not invested hundreds of millions of dollars in oil and gas well remediation and reclamation, aside from, if that is all he is talking about, the $1.7 billion that was split among three provinces.

The outstanding liability for all active and inactive oil and gas wells in Canada stands to potentially be between $30 billion and $70 billion. The reality is that oil and gas investment, because of the government's policies in this country, is plummeting, and companies can no longer get private sector investment to meet their environmental responsibilities while they develop the resource. It is the government's job to help fix that.