RNNR Committee Report

DISSENTING REPORT: Study on the Emissions Reduction Fund – Onshore Program Mario Simard, MP for Jonquière (Bloc Québécois)

The oil and gas sector is responsible for roughly 26% of Canada’s GHG emissions, making it the largest emitting economic sector in 2019. Since 2005, this sector’s emissions have increased by 137%, due mainly to significant growth in fossil fuel production. It is worth noting that in Canada’s 2021 greenhouse gas inventory, the federal government acknowledged that it had underestimated methane emissions in the oil and gas sector, primarily from leaks, which is supported by independent scientific studies.¹

In light of this, it was legitimate to expect that the Emissions Reduction Fund – Onshore Program, developed by Natural Resources Canada as part of Canada’s COVID-19 Economic Response Plan, would be designed to cut methane emissions. However, in his November 2021 audit, the Commissioner of the Environment and Sustainable Development (CESD) concluded that the department had failed to meet this target, allowing the recipient oil and gas companies to increase fossil fuel production.

Just as the accounting of greenhouse gases was flawed according to the CESD, there has been no calculation done of how many oil and gas sector jobs have been saved. Furthermore, the program was developed when oil prices plunged at the start of the COVID-19 pandemic. However, by 2021 the price per barrel and production recovered, reaching record highs, and assistance to the industry was no longer warranted. According to the CESD, Dr. Pierre-Olivier Pineau, the International Institute for Sustainable Development, the David Suzuki Foundation and Environmental Defence Canada, the department should make changes to the Emissions Reduction Fund and even cancel the third intake period.

We therefore recommend

• 1.      That the Committee call on the government to use the internationally recognized ISO-14064 standard for developing programs to reduce GHG emissions, as recommended by the Office of the Auditor General.
• 2.      That the Committee call on Natural Resources Canada to end the Emission Reduction Fund (ERF) onshore program since it was developed to cushion the impact of the COVID-19 crisis in early 2021 when a barrel of oil was trading at $64, and that since then, the price of oil has soared by 100%, to $128 per barrel today. Since the rationale for the support program has evaporated, the ERF has become a form of direct subsidy to oil and gas companies.

¹ For example, see Katlyn MacKay et al., “Methane emissions from upstream oil and gas production in Canada are underestimated,” Scientific Reports, Vol. 11, 2021; and the papers cited in John Liggio et al., “Measured Canadian oil sands CO2 emissions are higher than estimates made using internationally recommended methods,” Nature Communications, Vol. 10, 2019.