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Viewpoint: Fossil fuel subsidies cost Canadians a lot more money than the carbon tax

The federal carbon tax increase is now in effect, and will raise gas prices by in most Canadian provinces.

The hike prompted complaints from and a , culminating in a in the Liberal government.

Yet this ongoing debate overlooks a far costlier carbon tax: fossil fuel subsidies.

Fossil fuel subsidies cost us big bucks

Every year, federal and provincial governments use taxpayer dollars to provide financial support or tax breaks to fossil fuel companies.

These subsidies cost Canadian taxpayers at least , or roughly $214 per taxpayer every year. And unlike the federal , Canadians don't get a rebate on this tax.

Fossil fuel subsidies are a big problem across Canada. The federal government has spent on the Trans Mountain oil pipeline and on a liquefied natural gas facility. The Canadian oil and natural gas sector also benefits from under the Income Tax Act.

British Columbia, Alberta, and Saskatchewan give more than in royalty reductions and tax exemptions to the fossil fuel industry every year. Ontario gives in tax breaks to aviation and agricultural fuels. Manitoba, Québec and the Atlantic provinces give similar tax exemptions to .

Big costs to taxpayers

A billion here, a few billion there—all these subsidies add up to a big cost to Canadian taxpayers. While oil and gas companies boast about , Canadian taxpayers are footing the bill.

These explicit fossil fuel subsidies are .

They don't include the health-care costs of air pollution, which is responsible for . They also don't include the future costs of cleaning , unpaid and other costs abandoned by fossil fuel companies.

Multi-level problems

Fossil fuel subsidies are a problem at . They frustrate climate change mitigation efforts because they increase the profitability of fossil fuels.

This creates a perverse incentive that .

They also create artificially lower prices for fossil fuels, which is why libertarians and free market conservatives have opposed these so-called fossil fuel welfare payments.

Fossil fuel subsidies also impose an opportunity cost. The taxpayer money used for fossil fuel subsidies could go to more valuable projects, such as building more homes, just as the federal government .

Just the federal portion of the subsidies over the last four years could have . The money could also .

For these reasons, there is a mounting consensus that and elsewhere should be eliminated.

Ending fossil fuel subsidies

There have been various attempts to . In 2009, Prime Minister Stephen Harper and other G20 leaders pledged to .

At the 2022 United Nations climate change conference, all UN member states committed to "accelerating efforts towards the phase-down of … ."

In the past few years, United States President Joe Biden has sought to .

Last June, the House of Commons studied . Following the report, Environment Minister Steven Guilbeault .

Despite these calls for reform, many and continue to cost us billions. Indeed, to support oil and gas extraction than Australia, Germany, Japan, Mexico and the United States.

Eliminating fossil fuel subsidies may not be a to solve climate change, but can make a big difference in . It just makes dollars and sense.