Thank you for the invitation to appear before the committee today. I would like to provide some context around the federal government's track record when it comes to providing oil and gas companies with subsidies, and the patterns that are exemplified by the emissions reduction fund.
The Government of Canada continues to provide huge amounts of subsidies and public supports to the fossil fuel companies despite a commitment to eliminate these subsidies. The emissions reduction fund was just one of many support programs created in 2020 to subsidize the oil and gas industry, part of $18 billion in subsidies and public financing promised to the sector that year alone. Over the past five years, governments in Canada have provided $100 billion to oil and gas companies.
We know that when it comes to the climate crisis we need an all-of-government approach. Fossil fuel subsidies undermine our ability to reach our climate commitments. That's why international leaders such as the head of the IEA and the UN Secretary General are urging countries to remove fossil fuel subsidies as a key step to tackling the climate crisis.
The ERF is just one of several new funding programs set up to provide fossil fuel subsidies under the guise of emissions reductions and job creation. Minister Wilkinson has claimed that these programs that are ostensibly about achieving environmental outcomes are not fossil fuel subsidies, but that simply isn't true, and it doesn't align with international definitions such as the World Trade Organization's.
Programs like the ERF lower the cost of production and doing business for oil and gas companies and result in increased profitability. They distort the market, even further benefiting fossils over solutions like renewables and the electrification of transport such as EVs. These programs socialize the costs of environmental cleanup by allowing oil and gas companies to reap enormous benefits from public resources. In fact, oil and gas profits are at an all-time high, estimated by the ARC Energy Research Institute to reach nearly $100 billion this year.
Not only do these programs pass environmental costs on to taxpayers, therefore violating the polluter-pays principles that are enshrined in Canadian laws, but none of these programs did what policy-makers claimed they wanted to achieve in terms of emissions reductions, environmental cleanup, or job creation or retention. In fact, the audit by the commissioner described the ERF as a fossil fuel subsidy and an inefficient use of taxpayer money. It revealed just how poorly designed this program was.
Though it is not practical to do an audit of every spending program, the trends illustrated by the commissioner are apparent in other government programs, such as the $1.7 billion that went to cleaning up oil and gas wells. Rather than leading to new remediation work, the end result was largely that profitable companies were able to pause their own spending and replace it with public funds. This pattern causes concerns about how even larger funding programs are being designed, such as the $8-billion net-zero accelerator.
As we know, the government has committed to eliminating fossil fuel subsidies by next year. This was in response to large amounts of public pressure. However, in order for the government's approach to be credible, it must use internationally recognized definitions. Failing to do so means breaking a promise made to Canadians.
The ERF exemplifies a second concerning pattern around the impact of industry lobbying. The best, most cost-effective way to tackle methane emissions is through regulations. This approach ensures that the public isn't cleaning up for industry and that every facility is undertaking emissions reduction activity.
We know that the oil and gas industry lobbied to have existing methane regulations delayed, weakened and made voluntary. The pattern here is of the oil and gas lobby weakening the regulatory approach in order to reduce their cost of doing business, and then convincing governments to take on some of those costs, in effect subsidizing regulatory compliance.
Canada needs to tackle its methane problem. Achieving reductions in methane emissions is critically important. It's actually inexpensive, and many measures are easy to implement. We must strengthen the current regulations aimed at reducing methane emissions by 2025 and ensure that the new regulations in the 2030 methane reductions are robust. However, there's no reason that the public should be bearing these costs instead of industry.
Furthermore, the best way to reduce methane emissions is to begin talking about the need to transition off oil and gas. We need to start actually planning for the transition away from fossil fuel production.
In closing, we know the scale of spending needed to tackle the climate crisis is significant. Given that governments don't have infinite spending capacity, we need to be strategic. Oil and gas companies have profited immensely for decades from public resources. Instead of continuing to subsidize the sector, the government must implement strong regulatory frameworks that ensure oil and gas companies are doing their fair share while investing in activities that put us on a climate-aligned pathway, including energy efficiency, renewable energy and electrification. Ongoing subsidies like the ERF divert spending from these climate solutions.
I will end there.