265 academics to Trudeau: No bail out for oil and gas in response to COVID-19

RE: Economic Recovery Planning in response to COVID-19

Dear Prime Minister,

We, the undersigned are reaching out to you today in full acknowledgement of the tremendous challenges you are currently facing to navigate our country through the COVID-19 pandemic. As such, we do not request your attention lightly. We are, however, gravely concerned about the potential for regrettable decisions to be made in such times of urgency. In particular, we would like to raise concerns regarding news that the Globe and Mail reported on March 19 that the federal government is preparing a $15-billion “bailout package” for oil and gas companies. Given that your government’s announcement seems imminent, we worked hard to prepare this letter collaboratively, in only two days, and in 24 hours we have gathered 265 signatures from Canadian academics at 33 universities, as well as 12 associations.

There is no question that Canada faces an immediate health crisis that is compounding an economic crisis, and urgent action is called for. However, decisions made by the federal government at this crucial moment will shape the future of Canada, and must reflect the interests of all Canadians, and a vision for rebuilding sustainable economies in recognition of the confluence of global shifts currently unfolding. Given that the proposed bailout package has been negotiated secretly with the United Conservative Party (UCP) government of Alberta and the Canadian Association of Petroleum Producers (CAPP), Canadians have a right to be concerned that its contents may represent only a narrow set of perspectives and interests.

As Canadian researchers in multiple fields related to the climate crisis and the economy, we urge the government to channel public revenues both to the immediate health crisis, and toward economic planning that will provide long-term benefits for Canadian workers and families, our ecosystems and the climate. We also urge governments at all levels to avoid sacrificing democratic principles in the name of expediency, by including a broad range of civil society representatives in decision-making about how these large investments in our future will be made. It is not acceptable to give privileged access to big business associations while excluding representatives from trade unions, universities, municipalities, Indigenous communities and non-profit organizations that work on behalf of the public interest.

The UCP government and the Business Council of Alberta have proposed that the federal government buy shares in “distressed” oil and gas companies. In addition, oil and gas corporations have asked for further reductions in their income and property taxes, interest-free bank loans at a time when many financial institutions have significantly reduced financing of fossil fuel extraction, and the freezing of the federal carbon tax rate.

However, public investment in oil and gas at this time is a highly speculative proposition, and particularly unwise given the urgent need for strategic investments in economic recovery. Canadians are already saddled with an enormous environmental debt — both for the remediation of thousands of orphaned oil and gas wells and for the eventual “clean-up” of the oilsands mines and tailings ponds — estimated by the Alberta Energy Regulator to be as high as $260 billion, roughly equivalent to all of the royalty revenue paid by the industry to Alberta from 1970 to 2017.

Premier Kenney argues that Canada “cannot afford to lose the single largest subsector of the Canadian economy.” We question whether Canada can afford to continue to support it. To presume that this industry can be protected with subsidies from the broader circumstances threatening the oil and gas sector globally is folly. As the current price war makes clear, Canada has no control over global oil prices, and growing demand for climate-friendly energy sources further threatens the viability of high cost, carbon-intensive oilsands production.

Canada’s subsidies to oil and gas companies reached $3.3 billion in 2015 alone, contravening our commitments to climate change mitigation. Instead of purchasing equity in oil and gas, Canadian governments should pursue the retraining of fossil fuel workers, and public ownership of Canada’s renewable energy sector, where government coordination and large scale investment are needed in the short term and where investments will be repaid. Funding is also urgently needed to support energy and water conservation, public transportation, regenerative agriculture and other areas of mitigation and adaptation to global warming.

The health crisis unleashed by COVID-19 has highlighted in vivid terms the need for social services and public investment and economies that support the health, wellbeing and futures of all Canadians, and the sustainability of all our communities. De-unionization and privatization of long-term care and health facilities, and the move toward the ‘gig’ economy for social services, have left us highly vulnerable. In addressing the urgent need for job creation, research shows that investments in both social services and sustainable energy produce far more jobs than comparable investments in the capital-intensive oil and gas sector.

In addition to supporting immediate financial relief due to the COVID-19 pandemic, we call for federal leadership to support an economic recovery plan that encompasses a green transition, not stop-gap measures, with income security for workers and a strong public sector. To ensure that the interests of all Canadians are served, such planning must be transparent, with the inclusion of representatives from all sectors of society, including unions and Indigenous communities. We have no more time to lose; we must stop investing in the past and start investing in the future.

Lead authors:

Laurie Adkin, Professor, Department of Political Science, University of Alberta, ladkin@ualberta.ca, tel. 780 492 0958

Debra Davidson, Professor, Department of Resource Economics and Environmental Sociology, University of Alberta, debra.davidson@ualberta.ca, tel. 780-492-4598

Contributors:

Marjorie Cohen, economist, Simon Fraser University, mcohen@sfu.ca

Anna Zalik, political economist, York University, azalik@yorku.ca

Kathleen Lahey, law professor, Queen’s University, kal2@queensu.ca

Regan Boychuk, policy analyst, Reclaim Alberta, reganboychuk@gmail.com

Emily Eaton, geographer, University of Regina, emily.eaton@uregina.ca

Emma Jackson, sociologist and researcher, 350 Canada ejackson@ualberta.ca

Trevor Harrison, sociologist, University of Lethbridge, trevor.harrison@uleth.ca

Mark Hudson, political economist, University of Manitoba, mark.hudson@umanitoba.ca

Éric Pineault, economist, Université du Québec à Montréal, pineault.eric@uqam.ca

Cc: Ministers William Morneau (Finance), Chrystia Freeland (Inter-governmental Affairs), Jonathan Wilkinson (Environment and Climate Change), Catherine McKenna (Infrastructure)

[Photo: Alberta oilsands. Photograph by Kris Krug. https://kriskrug.co/]