Good morning, Madam Chair and members of the committee.
Thank you for the opportunity to speak with you today. My name is Renaud Gignac. I'm a lawyer and economist at Investors for Paris Compliance, an organization that monitors the climate commitments of big companies.
I'm here to propose two budget measures: first, a tax on the windfall profits of oil and gas companies, and second, an act on climate damages recovery.
Before I go into detail on these measures, I submit to you that the Canadian economy is currently suffering from a major inequity. On the one hand, taxpayers have already begun subsidizing the astronomical and rising costs associated with climate change. Average home insurance premiums, which reflect the increase in damages, have increased by 45% in the past six years, with increases of up to 300% in regions such as northern Calgary. At the same time, insurers have increased deductible amounts and are restricting coverage for certain risks.
Households are also paying more in taxes, including to fund the disaster financial assistance arrangements program, whose costs are rising year after year.
Going forward, the Federation of Canadian Municipalities has established a need to invest $5.3 billion per year, starting now, to upgrade our sewers, roads and dikes. Those findings are shared by the Union des municipalités du Québec.
On the other hand, Canada's oil and gas sector has raked in net profits of $1.5 billion per week since the Strait of Hormuz closed in February: that is, three times more than before the crisis.
These two parallel trends—rising costs for everyone, on the one hand, and record profits for the industry, on the other—highlight how deeply unfair the current situation is.
What can we do?
First, economists have estimated that a tax on the windfall profits of oil and gas companies could raise between $9 billion and $46 billion this year, while still leaving the industry entirely reasonable profits: between $44 billion and $81 billion. Other countries, such as the United Kingdom, have successfully implemented such a contribution.
However, a windfall profits tax is temporary, by definition, since it only applies when oil prices are high. However, the damages caused by climate change will still be there, and it will continue to get worse over the coming decades.
That's why we're proposing a second mechanism, a climate damages recovery act, which targets historical emissions and builds on the architecture of recent tobacco compensation agreements, in which large manufacturers have been held responsible for public health costs to the tune of $33 billion.
Vermont passed its Climate Superfund Act in 2024, and it was followed shortly thereafter by a similar act in New York. New York's legislation requires the major emitters of greenhouse gas, or GHG, to pay $75 billion over 25 years—that is, $3 billion a year—to adapt municipal infrastructure.
How does that work? Companies are billed a proportionate fraction of the adaptation costs, which is calculated based on their share of global historical emissions over a reference period, for example, from 2000 to 2025.
We estimate that a Canadian climate superfund could generate between $3 billion and $6 billion per year over the next 25 years. These funds could serve to compensate victims of climate damage, stabilize the home insurance system and fund the adaptation of our communities.
These two measures could help correct the inequity that's making low- and middle-income households not only pay more for their energy bills, but also pay out of pocket for the costs of climate damages.
It's time to align our budget rules with basic principles of fairness. Let us put the costs on those responsible for them, that is, mainly, the companies that are raking in windfall profits and that have generated the GHG emissions, not the households that are suffering the consequences.
Thank you.
