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‘We can’t continue to go from failure to failure’: Environment watchdog slams Liberals’ oil and gas sector program

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OTTAWA—Canada’s independent environment commissioner is slamming the Liberal government for designing a $675-million pandemic support program for the oil and gas sector that does not “ensure credible and sustainable” reductions in greenhouse gas emissions that cause climate change.

The so-called “Emissions Reduction Fund” for land-based oil and gas producers struggling during the COVID-19 pandemic also fails to ensure value for the interest-free loans earmarked to support these companies because there is no tracking of total emissions reductions from the program, according to federal Environment Commissioner Jerry DeMarco’s audit of the initiative.

“It was a hastily put-together program. But that’s still no excuse. Luckily, most of the funds are still available and they could improve the program before it’s too late,” he told reporters at a press conference on Thursday.

The audit is one of five reports DeMarco tabled in Parliament Thursday, as the Liberal minority government promises to dramatically reduce emissions over the next eight years through a strengthened suite of policies that include regulations for clean electricity, the promotion of zero-emission vehicles (ZEVs), and a legally-enforced cap on greenhouse gas from the heavy-polluting oil and gas sector.

The commissioner also charted Canada’s past three decades of failure to reduce national greenhouse gas emissions. National emissions increased 21 per cent from 1990 to 2019, the most recent year for which government data is available. And since 2015, when the Liberals took power, Canada’s emissions increased by more than one per cent — making it the “worst performing of all G7 nations” since the international Paris Agreement to fight climate change, DeMarco noted.

He said Canada has missed opportunities to do better, and cited examples of climate policy “incoherence,” including Ottawa’s decision to purchase the Trans Mountain pipeline and finance a $12.7-billion expansion of the oil pipeline. He said the government must implement effective policies to hit the current target of reducing emissions to at least 40 per cent below 2005 levels by 2030.

“We can’t continue to go from failure to failure,” said DeMarco, adding that “if past performance is the best indicator of future performance, the story is not good.

“We need to have more than just plans. We need to have results,” he said.

In a joint statement, Environment Minister Steven Guilbeault and Natural Resources Minister Jonathan Wilkinson said emissions projections when the Liberals took power projected even steeper increases, and that the commissioner’s reports highlight the “mammoth” task at hand.

They also expressed confidence the Liberal plan can hit Canada’s 2030 goal, citing government projections from earlier this year that said policies announced as of April — which didn’t include new measures like the ZEV mandate and oil and gas emissions cap — would get Canada to 36 per cent below 2005 levels by 2030.

The government’s own tallies of annual greenhouse gas emissions have found that increased emissions from the production and use of fossil fuels — through Canada’s oil and gas and transportation sectors — have prevented progress from reduced pollution in other sectors since 2015. The oil and gas sector was responsible for 26 per cent of Canada’s national emissions in 2019, while another 25 per cent came from transportation emissions.

These facts have bolstered calls from environmentalists and climate campaigners for the government to address rising emissions from fossil fuels — something the Liberal government acknowledges with promises to cap emissions from Canada’s oil and gas sector and create regulations to force car dealers to sell more ZEVs until 100 per cent of new passenger vehicle sales are for zero-emitting cars and trucks by 2035.

At the same time, the government says it will eliminate “inefficient” fossil fuel subsidies by 2023, and scrap public financing through Crown corporations to fossil fuel companies in Canada at some as-yet unspecified time.

Yet during the pandemic, when the oil and gas sector was hobbled by low prices and lockdowns, the Liberals crafted a support program to help companies in the industry. Launched in November 2020, the program offered up to $675 million in interest-free loans and gave recipient companies five years to pay them back. As DeMarco’s report on Thursday explains, the program was meant to help companies reduce emissions while maintaining jobs and global competitiveness.

But DeMarco found the program failed to ensure the money would lead to lower emissions. Natural Resources, the department that designed the program, did not apply “greenhouse gas accounting principles.” The department also failed to ensure any reductions would be on top of those that would have happened even if the program didn’t exist, the audit says.

DeMarco said he was also “surprised” and “disappointed” the department isn’t tracking how much total emissions would drop because of the program. Furthermore, 27 of 40 applications in the first tranche of the program indicated the money would also increase oil and gas production and did not include the resulting emissions from burning that extra fuel, DeMarco’s report said.

“It’s sort of the basics of performance management: you set objectives and you track your progress towards that,” DeMarco said.

He also questioned whether the program would represent an “inefficient” fossil fuel subsidy that the government has pledged to scrap, and concluded such programs “risk undermining Canada’s effort to fight climate change.”

“Fossil fuel subsidies run counter to the stated goal of the government, which is to transition to a low-carbon economy,” DeMarco said.

He said the department should have a “sober second look” at this program and said he’s “not optimistic” they will follow his advice to make changes to fix it.

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