The following is a transcript of Heather Exner-Pirot’s testimony before the Canadian House of Commons Standing Committee on Environment and Sustainable Development. She discusses the issue of fossil fuel subsidies.
This recording occurred on March 31, 2022. Please check against delivery.
By Heather Exner-Pirot, March 31, 2022
Thank you, Chair and Committee members, for the opportunity to speak to you. I am talking today from the territory of the Tsuut’ina Nation, outside of Calgary.
For my opening remarks, I want to focus on three issues that I believe have been missing from the public debate on eliminating inefficient fossil fuel subsidies.
There has been lots of discussion in defining a subsidy. But we also need to define what we mean by fossil fuels.
At their essence fossil fuels are hydrocarbons. And they are an incredibly accessible and versatile molecule with many uses that are critical to our modern way of life and high standard of living, such as textiles, rubber, digital devices, packaging, detergents, plastics, carbon fibre, medical equipment and fertilizer. They are essential in the production of solar panels, wind turbine blades, batteries, thermal insulation for buildings, and electric vehicle parts.
Demand for petrochemicals is booming, and the International Energy Agency expects it to account for over a third of the growth in oil demand to 2030. Invest Alberta, a crown corporation, believes there is potential for Alberta’s petrochemical industry alone to be worth $30 billion/year by 2030.
In addition to petrochemicals, ammonia and blue hydrogen are derived from natural gas, a fossil fuel. A consensus is emerging that ammonia and hydrogen will play a key role in the energy transition, by producing only water as an emission through fuel cells.
When used with carbon capture, blue hydrogen produces very few emissions and is an excellent low carbon energy solution. It can be produced more cheaply in Alberta than in any other jurisdiction in the world, which is important because it needs to be cost competitive to compete with oil and gas and to trigger the demand that will help the hydrogen industry achieve a critical mass of infrastructure.
It is imperative that any efforts that Parliament develops to target fossil fuel subsidies focuses on activities that burn fossil fuels, rather than conflating it with the production and use of hydrocarbons in general.
That relates to the second point. If the intent of the commitment to eliminate fossil fuel subsidies is to reduce greenhouse gas emissions (GHGs), then public support for research and projects aimed at reducing GHGs should obviously not be excluded, even if that support goes to oil and gas companies. I note the opposition to the Carbon Capture Utilisation and Storage (CCUS) investment tax credit because it would “constitute a substantial new fossil fuel subsidy.”
Helping the highest emitting sector in the country to reduce their emissions faster seems highly aligned, not in contradiction, of Canada’s COP26 and G20 climate commitments. Punishing the oil and gas sector is not more important than reducing GHGs. We need to be fighting a climate war, not a culture war.
Finally, I would like to highlight that despite recent COP26 commitments, the current energy crisis has spurred governments from all over the world, including in Canada, to provide subsidies and tax credits to gasoline prices, heating bills and energy costs: measures that fall perfectly into definitions of inefficient fossil fuel subsidies, because they incentivize greater consumption.
But they have been implemented because affordable energy is fundamental to our collective well-being and development. Almost every human development indicator is positively correlated to energy use per capita, from child mortality, to literacy, to gender equality.
And if it’s bad in Canada, it is of course far, far worse in developing nations around the world.
So it is not so easy to paint fossil fuel subsidies with a negative brush. There needs to be some nuance applied. In many cases they are implemented to ensure the most vulnerable in our societies have some access to energy. It is a human right. And I believe the committee should be mindful of the role of the Government of Canada in ensuring every Canadian has access to reliable and affordable energy. GHG emissions cannot be the only lens by which our government evaluates policies.
I know Mr. Buffalo spoke before me so I will not repeat his points. But I would offer to the Committee that I study Indigenous peoples’ involvement in the oil and gas industry, and their barriers to access to capital, and would be pleased to answer questions on this topic as well.
Heather Exner-Pirot is a Senior Policy Analyst at the Macdonald-Laurier Institute.