Government Announces Relief for Oil & Gas and Cultural Sectors

The federal government announced its first sector-specific measures as part of its COVID-19 response, including targeted support for the oil and gas sector that is aligned with the Trudeau government’s key priorities:

• Up to $1.72 billion to clean up orphan and inactive oil and gas wells in Alberta, BC, Saskatchewan, with measures expected to maintain 5,200 jobs in Alberta alone
• Up to $750 million emission reduction fund, to help companies invest in technologies to help reduce methane emissions, including $75 million dedicated to offshore industry in Newfoundland
• Working with BDC and EDC to strengthen access to credit support for small and medium energy companies through the Business Credit Availability Program

While the Prime Minister recognized that the oil and gas sector was hit by the dual challenge of the pandemic and a global price war, he also argued that the environmental crisis could not be neglected because of the health care crisis.

Rather than delay or pause incoming methane regulations, as had been requested by industry, the government decided to leverage its financial support for the sector in order to accelerate and ensure that work to reduce emissions can continue, while keeping people at work.

The measures are expected to maintain roughly 10,000 jobs in total, while complementing key federal supports to Canadian workers: the Canadian Emergency Wage Subsidy and the Canadian Emergency Response Benefit.

Access to credit for mid-sized firms rounds out measures to the oil and gas sector, ensuring liquidity for companies to stay afloat and support employees. When questioned on whether the government would consider taking on equity in the oil and gas industry, Trudeau stated that this was not in the interest of the government or industry.

Alberta’s Response

In the days leading up to this announcement, Alberta Premier Jason Kenney had telegraphed that he was seeking support from the federal government for the orphan well package. There has been a great deal of talk in Ottawa circles about the divide within the Liberal Cabinet and Caucus on wider support for the oil and gas industry.  Deputy Prime Minister Chrystia Freeland has been a key interlocutor for Kenney at the federal level since last October’s election.

In response to the federal relief package, Kenney thanked the federal government “for taking this important first step to support the folks who work in our energy sector,” but noted “more support is needed to deal with the crisis in Canada’s energy sector…”

This announcement demonstrates the federal government’s approach to the oil and gas sector and sends two critical signals about sectors that are both directly and indirectly impacted by COVID-19:

• Core elements of the federal Liberal environment platform remain a key lens through which sectoral relief efforts will be measured
• While a broad and inclusive “Team Canada” approach has dominated the health portion of the pandemic response, a political lens is being applied to initial sectoral relief.

The Trudeau Liberals, re-elected with a minority in October, committed to achieving net-zero emissions by 2050, arguing this goal was necessary for both environmental protection and economic growth.  With allies in the House of Commons who share this point of view, the Liberals believe they can apply this lens to relief measures for the energy sector and, in the near future, may apply this logic to regulatory changes as well.

Other Financial Supports Announced Today

In addition to the energy package, the federal government announced additional support for small business, complementing the expanded Canada Emergency Business Accounts, and addressing gaps for innovators and start-ups:

• $675 million to Canada’s Regional Development Agencies to support smaller businesses unable to access existing support measures
• $287 million to support rural business and communities, providing access to capital through the Community Futures Network
• $250 million the Industrial Research Assistance Program to support innovators and early stage development firms unable to access current support measures. Firms can register with the National Research Canada starting today and applications will open early next week
• $20.1 million to Futurepreneur Canada to support young entrepreneurs
• $500 million to establish a COVID-19 Emergency Support Fund for cultural, heritage and sports organizations, administered by Canadian Heritage and supported by partners like the Canada Council for the Arts, to support people who are not eligible for existing assistance programs
• 125 members of the Canadian Armed Forces with medical training will be heading to Quebec to support long-term care facilities. The federal government will continue to consider ways to help Quebec, including through the Red Cross and with specialized federal volunteers.

Parliament Resumes Monday

The House of Commons remains scheduled to resume in-person sittings on Monday. Negotiations between the Liberals and other Opposition parties continue around the form and substance of those sittings. Of note, Conservative Leader Andrew Scheer continues to press for more in-person sittings of the House, stating that the need for direct accountability of government to Parliament has only increased during this pandemic.  As he noted, “now more than ever, Parliament is an essential service.”