Climate Change

Trillions of dollars in fossil fuel subsidies

In 2021, the International Monetary Fund published a review of fossil fuel subsidies and reported a total of C$7.6 trillion in 2020 or about 6.8 percent of global GDP and are expected to rise significantly by 2025.

“There would be enormous benefits from reform, so there’s an enormous amount at stake,” Ian Parry, an environmental policy expert and lead author of the report, told The Guardian. “Some countries are reluctant to raise energy prices because they think it will harm the poor. But holding down fossil fuel prices is a highly inefficient way to help the poor, because most of the benefits accrue to wealthier households. It would be better to target resources towards helping poor and vulnerable people directly.”

Yale School of the Environment

Part of the total reflects governments undercharging supply costs (rights and royalties), but most involve implicit subsidies, including undercharging for environmental costs. Eliminating gifts to fossil fuel producers would raise public revenues while reducing greenhouse gas emissions.

Like other resource sectors protecting profits, the fossil fuel industry spends large sums to discourage subsidy eliminations. In the U.S., the Congressional Committee on Oversight and Reform reported in 2021 that ExxonMobil, Chevron, Shell, BP, and the American Petroleum Institute (API) spent over $450 million lobbying the American federal government since 2011. Chair Carolyn B. Maloney said:

These oil companies pay lip service to climate reforms, but behind the scenes they spend far more time lobbying to preserve their lucrative tax breaks.  

Now multiply that lobbying extravagance to include every state and province in North America and all national and regional governments of other oil producing nations. Lobbying by oil and gas companies has an immense return for shareholders and bonus rich executives and it greases the wheels of politics.

Information published by the BC Government shows that subsidies in this province go far beyond direct payments and royalty reduction programs that have amounted to more than $10 billion in the past 15 years.

In addition to royalties, producers pay modest permit fees and rents for rights that were until recently acquired through competitive bidding. To win bids for lands thought to hold commercial quantities, producers and land agents bid bonus amounts. Years ago, bonuses brought in billions of dollars and volumes of natural gas produced were much lower than today.

Ending public tenders for crown petroleum and natural gas rights ends that stream of public revenue.

Source: BC Government and
Bank of Canada Inflation Calculator

BC NDP paused monthly tendering for rights in early 2019 and ended them in 2020, except for two minor sales in 2021. There has been no public bidding for rights in the past 14 months and no future sales are scheduled. In 2020, government published a lame excuse that disposition of oil and gas rights had been postponed due to COVID-19 related “travel restrictions affecting bid delivery.”

As we see in so many other areas involving public business in British Columbia, obfuscation and misinformation are tools used often by politicians and administrators. To taxpayers, foregone revenues are as much a direct business subsidy as cheques issued directly to affected corporations. However, while there is a clear record of cash disbursements, less attention is paid to other forms of corporate welfare.

The World Trade Organization includes foregone revenue in its scope of subsidies, but businesses and their political friends argue these are no subsidies. That’s a little like stumbling drunks reeking of alcohol declaring they have not been drinking.

6 replies »

  1. The O&G industry get huge tax breaks, meanwhile the tax payer/consumer has to pay a carbon tax so society can wean itself off of pollution. Norm; just wondering if anybody has crunched the numbers and figured out how much a litre of gasoline would really cost if there were no tax breaks/subsides to the O&G industry.


    • Cost inputs have little to do with the price of gasoline. From well to gas pump, the industry maximizes what it charges and the lack of competition allows them to gouge without much restraint.

      Drivers in BC and Washington might fuel up with gasoline refined from Alberta crude at Washington’s Cherry Point refinery. After removing tax differences, Canadian will pay a much higher price.

      Politicians in this region have occasionally warned refiners and retailers (nudge, nudge, wink, wink) to act fairly. In 2019, John Horgan Premier threatened to use the courts to compel companies to reduce prices. In 2022, when the price of a litre was 1/3 higher than in 2019, Horgan suggested people carpool and “think before” they drove. It was abject surrender preceded by political theatre.


  2. Meanwhile….. The Canadian taxpayer, and not the oil industry, is in the process of building another pipeline between Edmonton and Burnaby with, I’m sure, another branch line down to Washington State. Number crunchers have already figured that the pipe line will never ever pay for itself. Meanwhile…The great unwashed in Alberta believe that Trudeau and his merry band Liberals and NDPers are going out of their way to destroy the O&G industry. Maybe we should get that Flame Thrower on CKNW, Mike Smyth, on it and I’m sure he’ll figure it all out.


      • Or any of them for that matter. Smyth is all showman. Its all show and nothing with soul underneath or feeling of seriouness as iI would expect from real, journalism. When he partnered with Baldrey, that took the cake.. I heard him trying to be critical and talk back to Baldrey on Baldreys Beat so as to sound like he’s being a tough journalist, but I could tell right away it was all such fake bullshit like the rest of their qauckery they call journalism. I gave up listening to all of the Globals NW gobbily goop long ago. It’s all so fake superficial sounding. No depth. But here in blogs and sites like these where real journalistic strength and integrity thrives and lives is a blessing.


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