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.
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.