Good afternoon, Mr. Chairperson and members of the committee. Thank you for having me here today.
I am vice-president of oil sands, fiscal and economic policy with the Canadian Association of Petroleum Producers. We represent the upstream oil and gas industry.
COVID-19 significantly impacted our sector. Reduced energy demand led oil and gas companies to reduce capital spending by $10.8 billion, or 31%, last year. Oil and gas job losses are estimated at approximately 135,000 in 2020.
Three specific federal programs provided support to industry in 2020. First is the Canada emergency wage subsidy. StatsCan estimates the program paid out a total of $69 billion to date for all industries. We estimate that our industry received $694 million, or 1%, from the program in total. Our members accessed the program during the first six months, from March to August, and largely stopped accessing it after that.
This program was critical to the upstream industry at a time of crisis, was likely responsible for the preservation of thousands of jobs and was well designed so that when the crisis had passed from an acute perspective, it would no longer provide support to our sector.
Second is the orphaned and inactive oil and gas wells program, which provided $1.72 billion in federal funding to the western provinces. This program has been critical in terms of its ability to provide upstream oil and gas and service companies with additional revenue during the crisis, which preserved jobs while supporting investment in closure and reclamation obligations.
To date, the multi-year program is approximately 50% allocated and has leveraged roughly $600 million in industry funds. It is estimated that the program has created approximately 2,000 jobs across three western provinces.
Third, Export Development Canada and Business Development Canada provided liquidity to companies through the BCAP programs.
Through its direct lend program, EDC joined bank syndicates for reserve-based borrowing companies on an equal basis. Limitations included prohibitions on dividends, debt repayment, share buybacks and executive compensation increases. Companies were also required to report climate disclosures consistent with the guidance of the TCFD.
EDC also provided bonding support for companies to free up cash flow under its existing programs. The BDC provided short-term subordinate loans to companies with fixed repayment terms to assist with access to credit.
All in, the BCAP programs provided $1 billion in liquidity support to between 10 to 15 companies, based on market-aligned lending terms. These programs proved to be critical for companies that found themselves in acute distress due to sudden and significant liquidity constraints arising from the pandemic.
CAPP and its members are appreciative of the federal government for its support of industry during this challenging time.
With the worst of the pandemic likely behind us, now is the time to think about measures to advance the economic recovery. In our 2021 forecast, we anticipated that a 14% increase in upstream investment would occur. This year's forecast represents the stabilizing of industry investment and the beginning of a longer-term recovery.
With global oil and gas demand expected to increase under IEA forecasts, combined with an increased focus on GHG emissions reduction, government can work with industry to position Canada as the supplier of choice and lead a strong economic recovery for Canadians.
The federal government has adopted an approach to drive objectives through strategic and targeted subsidies for all industries, aiming to decrease GHG footprints and improve environmental performance through national interest in industrial policy. Key measures in the 2021 federal budget that could be instrumental relate to clean-tech investment and sustainable finance.
Regarding clean tech, the proposed investment tax credit for carbon capture, utilization and storage is a welcome commitment. The design of this credit will need to reflect the economic realities of implementing CCUS on a commercial scale, particularly when it comes to achieving the government's stated goal of reducing emissions by at least 15 megatonnes of CO2 annually, up from four megatonnes currently.
The government indicated that consultation would be forthcoming, and we look forward to the opportunity to contribute.
Second, the incremental $5 billion added to the net zero accelerator fund has the potential to stimulate material investment in other GHG-reducing technologies, such as methane, facility efficiency and electrification. We believe there is potential for material emissions reduction, depending on the availability and design of the program.
On the issue of sustainable finance, the government committed to increase climate-related disclosures and to publish a green bond framework, issuing its first green bond worth $5 billion. The issue is a top priority for CAPP, particularly in the areas of emissions reduction, indigenous engagement, diversity, air, land and water use and process and personal safety. CAPP is supportive of Canada creating its own sustainable finance green bond framework that accommodates oil and natural gas in the economy.
We also support a global sustainability reporting standard that is universally recognized and builds on existing frameworks, such as what the IFRS has proposed sustainability standards for.
Finally, we encourage the government to prioritize the need for better comparability of international ESG data. Significant independently verified data exists in Canada but does not in many other jurisdictions. As a result, our industry is perceived to have poorer performance than our peers, largely due to the incompleteness of their data.
Thank you for the opportunity to present today. I look forward to the discussion.