Budget 2022 reveals Canada’s inadequate response to global crises and fossil fuel dependence

For immediate release.

Unceded Algonquin Anishinaabe Territories [OTTAWA], 7 April 2022:

Today’s federal budget presented by Finance Minister Chrystia Freeland exposes Canada’s inadequate and incremental response to current global crises, and reveals that the federal government continues to prioritize risky techno-fixes over investing in a Just Transition and the real emissions cuts that are the only sure way to stave off climate catastrophe.

The budget includes a welcome commitment to increase Official Development Assistance by more than $1 billion over 5 years, including an additional $732 million for the Access to COVID-19 Tools Accelerator. However, this is pocket change in the face of the devastating climate-induced losses and damages the world faces. People and communities everywhere are expressing mounting energy and food security concerns, and the recent Intergovernmental Panel on Climate Change reports have amplified the need for ​​transformative and decisive climate action. Climate-induced disasters in Canada and around the world have made it clear: it is far less costly to shift our economy away from fossil fuels and adapt to climate impacts than it is to pay the price for climate disasters. The price for British Columbia to recover and rebuild after last year’s flooding alone has been estimated at $9 billion, with potentially billions more in indirect costs, and the incalculable tragic human costs. Without rapid, systemic change, extreme weather events will continue to increase in frequency and severity.

Canada must transform its economy and align its financial sector with a 1.5°C-compatible future. Implementing mandatory climate-related financial disclosures will help policymakers and investors understand the risks of climate change, but more is needed to reduce the risk the financial sector is causing to the economy through its entanglement in fossil fuels. The absence of details around the Canada Growth Fund is concerning.

It is disappointing that Canada continues to delay its commitment to end its support to the oil and gas industry. Rather than following through on its commitment to phase out fossil fuel subsidies, the government is simply displacing them. While the government is cancelling flow-through shares for oil, gas, and coal activities, it is creating a $2.6 billion investment tax credit for Carbon Capture, Utilization, and Storage (CCUS) at a time when oil and gas companies are reaping windfall profits from skyrocketing prices.

New investments in housing, childcare, pharmacare and dental care are welcome, but the budget does not address the needs of the 1 in 5 Canadians living in energy poverty. As people struggle to afford food, rent, and other basic needs, more than 80 organizations across Canada have called for a windfall oil and gas profits tax, with the revenue to be redirected to those who most need it. Instead, the government of Canada continues to subsidize the oil and gas industry. Between 2018-2020, on average G20 countries provided 2.5 times more support for fossil fuels than renewables. Canada provided 14.5 times more support for fossil fuels than renewables. Climate Action Network Canada has been advocating for at least 2% of the Canadian GDP – approximately $40 billion – to be allocated to real climate solutions at home.

The NDP-supported Liberal government has chosen to increase military spending by $8 billion, but failed to recognize that the absence of decisive action in response to the climate crisis is the greatest threat to people’s health and security. This budget does not include the substantial scale-up of adaptation funding that people and communities need to prepare for climate impacts.

Notably, while the budget refers to the need for sustainable jobs, it contains no dedicated funding and appropriate resources for a Just Transition. This is particularly disappointing given that delivering the long-delayed Just Transition legislation was listed as a priority in the recent Liberal-NDP confidence and supply agreement. The $2 billion Futures Fund for Alberta, Saskatchewan, and Newfoundland and Labrador is not accounted for in this budget, while amounts need to be greatly increased to fund the transition.

Today’s budget is the latest in a recent slew of inadequate and dangerous climate decisions. The Emissions Reduction Plan released last week, which projects a 56% increase in oil sands emissions this decade, and yesterday’s decision to approve the Bay du Nord project, which could produce 1 billion barrels of oil over its lifetime, show that the federal government still has not grasped that fossil fuel production is incompatible with climate leadership.

Quotes:

Eddy Pérez, International Climate Diplomacy Manager, Climate Action Network – Réseau action climat Canada:

“This budget is a failed attempt to respond to the urgency of the moment. The climate and energy security crises require a vision and a transition plan that prioritize the needs of people and communities everywhere. Today, Minister Freeland has announced that Canada still intends to keep the fossil fuel industry in the driver’s seat by giving them expensive tax credits instead of using those funds to invest in a safe, sustainable future.”

Patrick Bonin, Climate and Energy Campaigner, Greenpeace Canada:

“What a bad week for the climate. This budget is just another act of the tragically bad play the Trudeau government is trying to put on as a climate leader; it’s hard to believe Trudeau and company believe in it themselves. Three days after the release of the sobering IPCC report — which warns we have no room for new fossil fuel infrastructure — offering billions in tax credit subsidies to oil and gas companies for carbon capture, utilization and storage projects is simply shameful.

“Unfortunately, this is par for the course for Trudeau. With the purchase of the Trans Mountain pipeline the day after declaring a national climate emergency, and now the approval of Bay du Nord two days after the IPCC report was released, this government is once again failing to match rhetoric with tangible, ambitious action.

“Instead of offering new subsidies to the fossil fuel industry — while claiming it wants to get rid of them — the government should be investing massively in the transition to help affected communities and workers make the transition to local, healthy and sustainable economies.”

Dr. Joe Vipond, President, Canadian Association of Physicians for the Environment:

“CAPE was pleased to see the focus on both climate change and strong public health care in the budget, but it was disappointing that a clear link was not made about the serious health impacts of climate change. We are concerned that the new tax credit for carbon capture, utilization, and storage will effectively be a subsidy for the fossil fuel industry, at a time when we should be eliminating such subsidies as soon as possible. The measures we were looking for on the transition to a well-being economy were woefully inadequate or missing entirely.”

Sabaa Khan, David Suzuki Foundation climate director:

“Today’s budget includes positive investments in climate action, but there’s an inherent contradiction in offering a giant tax credit to the very companies fuelling the climate crisis. The government pledged in its election platform to develop a plan to phase out public financing for the fossil fuel sector, including Crown corporations, but has yet to deliver. How many more wake-up calls do the world’s scientists need to give us before we stop, pivot and make the necessary investments to truly position Canada as a leader in the imminent and inevitable clean energy economy?”

Michael Polanyi, Policy and Campaign Manager, Nature Canada:

“The new investment of over $1.5B in nature-based climate solutions in Canada’s 2022 Budget is welcome, but it is sadly overshadowed by a new $2.6B subsidy for unproven carbon capture technologies, and Canada’s recent decisions that allow the expansion of fossil fuel production. Nature can neither survive, nor protect us, without a just transition towards a carbon-neutral, nature-positive and equitable world.”

Andrew Gage, Staff Lawyer and co-author of Net Zero or Net Reckless, West Coast Environmental Law:

“Budget 2022 treats Direct Air Capture and other technologies that suck carbon dioxide out of the air like a silver bullet that we should throw taxpayer dollars at so that the oil and gas industry can keep expanding. Canada needs to recognize the risks and limitations of these technologies and ensure that they actually help solve the climate crisis without creating new environmental and social problems.”

Marc-André Viau, Government relations director, Équiterre:

“While we acknowledge the intentions of the emissions reduction plan (ERP), the cuts to fossil fuel subsidies are in comparison simply microscopic. We would have expected Minister Freeland to take her environmental responsibilities more seriously, but this budget does not reflect that.”

Cathy Orlando, Director of Programs at Citizens’ Climate International and W7 (Women) Advisor to the 2022 G7:

“The care economy is absent from this budget. The care-economy is a no-carbon sector of our economy and it is growing but there is a worker shortage. Care economy workers take care of our children, elders and ailing family members. It is a female-dominated profession that is underpaid and undervalued. No wonder there is a shortage of workers. By redirecting financial flows away from fossil fuels subsidies and towards the care economy, Canada could begin to close the pervasive gender pay gap, and address the shortage of workers in the care economy.”

Lyn Adamson, Co-Chair, ClimateFast:

“We are appalled at the upside down priorities reflected in this budget. You would never know that we are in a Code Red climate emergency.  The UN Secretary General and the International Energy Agency are calling on us to stop any new fossil fuel development.

“We cannot expand oil and gas production and expect to reduce emissions. It’s radically wrong to keep pushing oil industry false solutions ahead of the needed transition. These subsidies  will not help us slash emissions by 2030 which is what we need to do. We need the government to set a clear direction to a sustainable future. We need to use our public money for a just transition, not handouts to oil and gas.”

Lorraine Green, GASP Grand(m)others Act to Save the Planet Co-chair:

“With yesterday’s approval of the Bay Du Nord project, things only got worse for the planet and our grandchildren’s futures. Today’s budget was a missed opportunity for Canada to align with its climate goals. Instead, the government once again has given fossil fuel lobbyists the green light to produce more oil and gas using our tax dollars. Is Canada not listening to UN Secretary General Antonio Guterres when he says, “DELAY IS DEATH”?”

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