Because the emission of greenhouse gases hurts people around the world and in future generations, many people argue that anyone who emits them should be made to pay a fee for doing so. One way to do this is with a carbon tax, which is a specific example of a Pigovian tax applied when someone undertakes an activity that causes harm to others.
Rather than imposing such a fee on users of fossil fuels, Canada actually provides them with large subsidies. An assessment by the Climate Action Network found that oil and gas companies are receiving billions of dollars a year in subsidies, from various levels of government. This view conforms with that of the International Institute for Sustainable Development (IISD), which found that the Canadian oil and gas industry “received $2.84 billion in tax incentives from the different levels of government across Canada in 2008 through 63 different subsidy programs”. They estimate that $1.38 billion of this comes from the federal government. Alberta is the province that provides the most subsidy: $1.05 billion, followed by Saskatchewan at $327 million and Newfoundland and Labrador at $83 million.
The IISD estimates that emissions from the oil sands would be 12% lower without these subsidies. These subsidies continue despite a pledge made to the G20 that they be eliminated.
Another way governments subsidize oil and gas producers is by protecting them from legal liability in the event of accidents. This is what the Government of Alberta is planning to do, in relation to carbon capture and storage (CCS) projects. Such liability limits would be similar to those in the nuclear industry, where operators of nuclear power plants cannot be held financially responsible for the full cost of accidents they cause. Rather, taxpayers will be on the hook to pay for many of the cleanup costs.