Environment Committee on March 29th, 2022

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair.

I'd like to continue on that line of questioning with Mr. Brunnen and Ms. Joseph.

When we're looking at innovation in this sector, carbon capture and storage being one of the largely Canadian innovations that's coming forward, that's also impacting the concrete industry. Some high emissions are coming out of industries that are not oil and gas related. Could you comment on the funding going into new technology? It's a non-efficient subsidy when it's not going into innovation. Could you comment on how this could not be looked at as an inefficient subsidy?

[Ben Brunnen]

Absolutely.

There are absolutely no production subsidies for oil and gas whatsoever. In terms of inefficient fossil fuel subsidies, the framing is to what extent the supports are effective at achieving or delivering government policy objectives. That's the opening frame. It's the frame that both ECCC and federal finance have looked at.

In conclusion, they've identified that the clean-tech investment supports such as CCUS and discussions such as the net-zero accelerator are efficient in the sense that they are working towards achieving investment in technologies that will reduce emissions.

The other piece to keep in mind when we look at the definition and approach to subsidies is to what extent these tools or levers are available across the entire economy and are not specific to oil and gas. That is the case with CCUS, and that is the case with any of the clean-tech funding the federal government is undertaking—

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you. That's the key point I was looking for. I have to interrupt because of time, but you've hit on my key point: It's not just oil and gas. Thank you for that testimony.

Dr. Kim, I'd like to shift over to you in terms of what we're doing internationally through our G20 commitments. Could you comment on the definition of “non-efficient subsidies” and the work that is going on globally in that area and where Canada is committed to that work through the G20? How are we working with Argentina on providing a global definition of “non-efficient subsidies”?

Could you comment on where we're are in terms of that work that's going on internationally?

[Dr. Joy Aeree Kim]

Thank you very much for the question.

I do understand that there has been a difference of opinion among countries, at least within the G20, about the definition of “inefficient subsidies”. If you look at the latest review done by Italy, for instance, where there actually have been a lot of recommendations to share, Italy defined any subsidy that goes to fossil fuels as inefficient.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

Wrestling with the definition is something we've been hearing a lot about so far this morning, and we're just getting started. There is context internationally that there isn't a broad consensus. Italy has one definition, but I think we'd also see that the World Trade Organization has a different definition of “inefficient subsidy”.

[Dr. Joy Aeree Kim]

Let me just clarify that, because you were actually questioning about the G20, and I just mentioned the difference of opinion within the G20 context. However, as UNEP, which is custodian of the SDG indicator, which is supposed to, as a mandate that actually was agreed upon by the head of all countries, remove inefficient fossil fuel subsidies, and, as an indicator, to measure and report on fossil fuel subsidies, we as a custodian agency developed the definitions, the scope and how to measure—basically the methodology of that—together with the OECD. It was an internationally agreed upon definition and methodology that was actually recommended to all of the member countries to follow and, based on the methodology, to measure and to report.

I would say that there is, indeed, an internationally agreed upon methodology that also includes a definition of what constitutes a fossil fuel and what constitutes a subsidy. There are more details in our report about the reasoning behind why we actually proposed to use this definition and so on. I cannot go into detail at the moment, but I would just emphasize there is, indeed, an internationally agreed upon methodology, which was adopted by the UN Inter-agency and Expert Group on SDGs.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

You mentioned SDG 12.C.1 and the measurement. When was that report adopted? Could you send that report to our committee clerk, so that we can include that in our study?

[Dr. Joy Aeree Kim]

Yes, of course.

It was adopted in 2019. There is an inter-agency export group under the UN statistical division, which basically represents all countries by regional representative. They provide the guidance on how the SDG will be measured, which will be reported in the UN Secretary General's report on SDGs.

[Lloyd Longfield, Liberal, Guelph, ON]

That's something Canada and Argentina is working on. Do I have that right?

[Dr. Joy Aeree Kim]

They are aware of that. I think the G20 track is a bit unique, if you like, in that they have a peer review process that actually started before the last [Technical Difficulty—Editor] was adopted.

The methodology report is available. I shared the link, but, unfortunately, it is only available in English. I'll be happy to share the link again.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you so much.

We'll move on now to Madame Pauzé.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, Mr. Chair.

I'd like to thank all the witnesses for freeing up their time to attend this meeting.

My first question is for Ms. Brownen Tucker.

You filed a report last year. It shows that, on average, the G20 countries as a whole have provided 2.5 times more support for fossil fuels than for renewable energy. In Canada, it's been 14.5 times more support for fossil fuels than for renewables.

The International Energy Agency has estimated that Canada's public budget for research and development funding was US$1.1 billion in 2020 alone.

If we apply your support formula, that is, 2.5 times instead of 14.5 times, it would mean that, of that amount, only $7.6 million would go to renewable energy and what's left of the $1.1 billion would go to fossil fuels.

Given the objective to reduce emissions, don't we need to review the share of the budget going to renewables?

[Bronwen Tucker]

The report you're referring to was comparing the trade and development finance of G20 countries. Through Export Development Canada, the amount of public finance we're giving to oil and gas is 14 times higher than for renewables, so that public finance absolutely needs to be phased out on the fossil fuel side.

This is a commitment that Canada made at COP26, alongside 38 other countries and institutions; to phase out international public finance for fossil fuels by the end of this year.

On the renewable energy side, to differing ratios, this trend is seen across different government Crown corporations, as well as in our tax and non-tax subsidies. Basically, the finance for renewables should be scaled up.

[Monique Pauzé, Bloc, Repentigny, QC]

You mentioned Crown corporations. So let's talk about Export Development Canada. Most of the assistance provided is, of course, related to EDC's finance structure, also known as Canada Account. Can you comment on EDC's role in the “success” of this commitment by the government?

[Bronwen Tucker]

Yes, definitely. Export Development Canada is very anomalous compared with such agencies in any of our peer countries in the way that its export finance is structured. There's the Canada account, which acts, often, as a government slush fund: $3 billion of that $13.6 billion a year in finance for oil and gas over the last three years has been for the Trans Mountain pipeline. We also see from its corporate account there are both loans and insurance, and a variety of financial products basically that are going to oil and gas.

We basically see, time and time again, that Canada's own federal reviews have shown there's fairly poor transparency of EDC compared with other export credit agencies in other countries. The terms of this finance on the transaction level are often not known, but we know on the whole that these are often more preferential than what private institutions can give. Beyond that, because it's using the Government of Canada's triple-A credit rating and it is also ultimately backed by the government, this allows EDC to assume risks that private banks would deem unacceptably high and basically on the margin. It helps fossil fuel projects that wouldn't otherwise be able to go forward to go forward and attract more private financing.

It's projects like the Coastal GasLink pipeline. Moreover, Enbridge has received $300 million over the last few years. Its LNG projects. I'm happy to give other examples, but it's a good summary.

[Monique Pauzé, Bloc, Repentigny, QC]

Could you send us a page with a few examples, please? It doesn't have to be an 800-page report.

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Francis Scarpaleggia]

You have about 45 seconds left.

[Monique Pauzé, Bloc, Repentigny, QC]

Ms. May, do you have any questions to ask?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you, colleague.

How much time would I have, Mr. Chair?

[The Chair, Liberal, Francis Scarpaleggia]

You'd have about 40 seconds.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

I would like to ask the representative, Mr. Brunnen, from the Canadian Association of Petroleum Producers about this. When he says that his organization hasn't done anything to promote fossil fuels or fight against climate change, is he unaware of the efforts made in the media, particularly the signed agreement with the newspaper chain that includes the National Post, that that organization editorially supports and promotes fossil fuels and works against climate change information?

Are you unaware of that agreement? It was covered in The Globe and Mail a couple of years ago.

[Shannon Joseph]

We are unaware of that agreement.

[The Chair, Liberal, Francis Scarpaleggia]

Okay. Well, that takes us to six minutes.

We'll go now to Ms. Collins.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

First, to Oil Change International, Canada gives out more money to big oil than any other country in the G20. At COP26 Canada adopted the Glasgow Climate Pact to accelerate efforts to phase out fossil fuel subsidies. From your perspective, where does Canada stand with regard to our international peers on this commitment?

[Bronwen Tucker]

It's ranked last in the G20 based on, basically, 2018-20 finance. That is consistent across previous reports as well. EDC for a long time has given really outsized amounts to the oil and gas sector.

It's by far the largest financier of oil and gas that signed this agreement at COP26. We have seen the U.K, as well as the U.S., already put in policies to amend how they give their export finance to rule out almost all oil and gas. Basically, in looking at comments from EDC as well as from ministers and MPs as Canada looks to implement this agreement, I think there are definitely concerns. We've seen EDC itself state it's difficult to separate out what of its finance is international versus domestic.

In terms of the climate or economic impact, there's no trend along geographic lines. Our clear recommendation here, which is aligned with climate science, is that implementing this commitment means phasing out all federal public finance fully and without loopholes for CCS, gas or blue hydrogen. Both the U.S. and the U.K. policies, as well as other public finance policies like that of the European Investment Bank, are really good templates that Canada is now well behind.