There is one simple truth when it comes to oil and gas subsidies in Canada: no one knows exactly how much money these companies are receiving from governments.
There’s a lack of clear data, for one, but also the nature of tax breaks and incentives, as well as discounted loans and other benefits, make it impossible to affix a firm number on the total.
That said, the estimates from researchers, energy experts and environmental organizations in Canada and beyond are all in the billions — as high as $30 billion and as low as $3 billion, depending on the year. And that’s only adding up subsidies from the federal government. Provinces, particularly Alberta, also dish out cash and savings through any number of programs, grants, incentives, tax breaks and royalty rebates.
There is also disagreement on what exactly constitutes a subsidy and what should be done about them. Do grants to spur emissions reductions for things like carbon capture and storage count as subsidies? Does below-market-rate financing count, even if the money is paid back? What about programs that help fossil fuel companies, but also players in other sectors? What if the federal government paid for, and operates, a (very expensive) pipeline? Should we count the costs of pollution from fossil fuels, for which companies don’t pay — but arguably the rest of us do?
The figures swing wildly depending on how a subsidy is defined, but what is clear is that billions continue to be funnelled towards eye-wateringly profitable companies in Canada — Canadian Natural Resources raked in approximately $7.4 billion in 2024, while Suncor, one of the largest oilsands producers, reported net income of $1.7 billion in the first three months of 2025 alone.
Let’s dive into the murky waters.
The federal government committed to phasing out so-called “inefficient” fossil fuel subsidies in 2009. But 16 years later, the government has yet to identify any such subsidies. Photo: Amber Bracken / The Narwhal
Okay, but, like, but what is a subsidy?
Yeeeaah, good question.
The simplest answer is that it is any financial benefit directed at an industry from a government.
The World Trade Organization considers there to be a subsidy if there’s direct money paid, or if there’s “any kind of income or price support where a benefit is thereby conferred,” which sounds just jargony enough to mean something.
The International Energy Association is a bit more direct, saying a subsidy consists of “any government action that lowers the cost of energy production, raises the revenues of energy producers or lowers the price paid by consumers.”
There are plenty of other breakdowns, but perhaps the International Institute for Sustainable Development has the clearest definition: “A subsidy is a financial benefit that the government gives, usually to a specific business, group or industry.”
All of these definitions would cover carbon capture and storage tax credits aimed at oil and gas, or that pricey Trans Mountain pipeline.
If that’s too clear, however, consider the federal government has been on the hunt to eliminate “inefficient” fossil fuel subsidies, following an agreement hammered out by the G20 a mere 16 years ago.
That means subsidies which fall within the generally accepted framework of a financial benefit, but not those that support government directives and policies. The benefit also has to target the oil and gas sector specifically, thereby excluding any measures that might be accessible to others, even if oil and gas is a beneficiary.
Are you confused? It seems like the feds are too, given that they’ve so far failed to find any inefficient subsidies in the past decade and a half.
Clear as a tailings pond.
What kind of money are we talking about?
Again, this will depend on the source.
Environmental Defence, an advocacy organization which tracks subsidies each year, places the figure at $29.6 billion in 2024, the vast majority of which — $21 billion — is tied to ownership of the Trans Mountain pipeline (more on that later).
The organization says a David Suzuki Foundation study found the amount of money given to the oil and gas sector in 2024 would be more than enough to build all the transmission infrastructure required to link all of the province’s electricity grids, which would to help reduce emissions by, for example, giving Alberta access to more hydro power, while also sharing its vast solar and wind power wealth with neighbours.
According to the Fossil Fuel Subsidy Tracker, a collaboration between the Organization for Economic Co-operation and Development and the International Institute for Sustainable Development, Canadian subsidies were $3.41 billion in 2023, the latest year of tracking.
Tom Gunton, a professor in the School of Resource and Energy Management at Simon Fraser University, said despite the vast differences in numbers, all of the figures are credible “based on their assumptions.”
He points to the International Monetary Fund as an example of how to measure different elements to arrive at a total. That organization calculated Canada’s direct subsidies to oil and gas at $2 billion in 2023, but also calculated the costs associated with oil and gas impacts at $36 billion, for a total subsidy calculation of $38 billion.
That means governments give $2 billion directly to companies, but the costs of carbon emissions, air pollution, land degradation and more, are far higher. Since, arguably, people in Canada pay the price of those impacts, the International Monetary Fund has decided that not making industry pay to stop or mitigate them counts as a subsidy.
Federal financing of oil and gas projects might be considered a subsidy to the sector, if the government offers an interest rate that is lower than what private lenders offer. But one policy expert said those interest rates often aren’t disclosed to the public. Photo: Amber Bracken / The Narwhal
In addition to the question of methodology, there’s also the tricky issue of trying to guess how much benefit the industry receives from public financing and tax benefits.
“If there is a tax reduction of some sort that results in the fossil fuel sector paying lower taxes than other sectors of the economy, that is clearly a subsidy,” Gunton said.
Another layer of complication is loans and backing for oil and gas projects. Oil Change International estimated public financing in Canada amounted to US$8 billion between 2019 and 2021.
Nichole Dusyk, the senior policy advisor and lead on Canadian energy at the International Institute for Sustainable Development, said this public financing comes at rates lower than what a private lender would offer.
“We often don’t know what that rate is,” she said. “That’s often confidential. It’s not disclosed to the public, so we can’t quantify what that subsidy is.”
If we could, the difference between the market rate and what the government is offering would be a subsidy. I mean, if the government decided to ensure you got a lower mortgage rate, would you be richer?
Factoring in the provinces, the totals could increase by billions. In Alberta, that could include royalty rebates, incentives for carbon capture and storage, paying rent to landowners who have been stiffed by fossil fuel companies, billions in unfunded cleanup costs and more.
One central issue, according to both Gunton and Dusyk, is a lack of detailed and accessible public data.
“You need a comprehensive database to know what the subsidies are, and that’s task number one,” Gunton said. “And then task number two is to look at the subsidies and make sure that you have a plan for phasing them all out.”
Recent actions by the federal government suggest phasing subsidies out is … a ways off.
Nice pipeline you got there, what did you pay for it?
Remember that pledge in 2009 to phase out “inefficient” subsidies? That’s another area without a lot of clarity.
“If the subsidy is reducing greenhouse gas emissions, then they say that’s not necessarily inefficient, or if the subsidy supports Indigenous engagement in the oil and gas sector, that’s not necessarily an inefficient subsidy,” Gunton said. “So they’ve muddied the waters a bit by adding some of these additional criteria to define ‘inefficient’. ”
As discussed, there haven’t been any phaseouts. What’s also unclear is if any subsidies have been avoided or turned down since making the pledge.
“They did clearly lay out a definition that they are working with, and that definition has a number of exemptions, but what we don’t have is any transparency on how that framework is being implemented,” Dusyk said.
One thing we do know is that since the pledge was made, the federal government spent an awful lot of money twinning the Trans Mountain pipeline from Alberta to the west coast. Approximately $34 billion, if we’re being specific about it.
But is it a subsidy?
Environmental Defence thinks so. It calculated the total subsidy for the pipeline at approximately $21 billion in 2024, almost all of which came as a loan to the company.
“Any sort of financial contribution, whether it’s in the form of loans, any sort of investment tax credits that actively support fossil fuel projects or oil and gas companies, we refer to them as fossil fuel subsidies because they are contributing to the expansion of fossil fuel projects,” Aly Hyder Ali, the oil and gas program manager at Environmental Defence, told The Narwhal.
The federal government spent about $34 billion to twin the Trans Mountain pipeline, seen here under construction in 2023 near Hope, B.C. But experts disagree on how much of that figure should be considered an oil and gas subsidy. Photo: Jesse Winter / The Narwhal
Gunton, who authored a report for the International Institute for Sustainable Development last year examining subsidies for the Trans Mountain pipeline, came to a different, albeit still pricey, conclusion.
He doesn’t consider the full cost of the pipeline a subsidy because the oil and gas sector is paying some tolls for using the pipeline, meaning the government receives revenue from its operation.
But since those tolls are likely kept low, his analysis concludes the subsidy for that one project is anywhere from $8.7 billion to $18.8 billion.
“Determining what the private sector would charge compared to what the government is charging — there’s always a range of estimates that you would probably generate, because nobody knows exactly what those amounts are,” he said.
Phasing out versus ‘build baby build’
The issue of government subsidization for fossil fuels is taking on more urgency as Ottawa continues its push to “build, baby, build” in the face of the ongoing trade war and boiling national tensions.
The Build Canada Act (one part of Bill C-5, which became law in June) will fast-track projects in the national interest, with hints that it will focus heavily on oil and gas infrastructure.
Ali said there are projects that should be fast-tracked to help Canada prosper, but focusing on oil and gas is both environmentally and financially irresponsible.
“There’s billions and billions of dollars of investments that are projected to take place over the next 50 years or so that are going to turn into stranded assets,” he said, referring to projected decreases in demand for fossil fuels. “Billions that could be invested in clean renewable energy to better benefit Canadians.”
The push for building projects quickly only increases the need for more transparency from all levels of government on where public dollars are being spent, he said.
Dusyk said the billions being spent on supporting fossil fuels could be better spent on decarbonizing other sectors, or helping individual Canadians decarbonize their homes and transportation. It’s money that could reduce costs and make life more affordable for Canadians. Instead, it’s being funnelled to do things like “decarbonize” fossil fuels — an unproven, complicated proposition that doesn’t account for the emissions made when those fuels are used, whether in Canada or foreign markets.
“It is going to support expansion of oil and gas and that is going to make it more costly to ultimately transition our economy,” she said. “But it also makes it slower and contributes to climate change along the way.”
