Canada's Emissions Reduction Fund, Onshore Program for oil and gas: audit by the Commissioner of the Environment and Sustainable Development
Short record: the main facts, with sources. A full case file has not been prepared.
- The record does not name which of my species, waters, soils or forests were harmed.
In November 2021 Canada's Commissioner of the Environment and Sustainable Development reported that Natural Resources Canada had not designed the Onshore Program of the Emissions Reduction Fund to ensure credible and sustainable emission reductions, and that its expected reductions were an overestimate and not reliable. For 27 of 40 funded projects, companies had indicated that the new infrastructure would accommodate production increases.
The Commissioner reported that the department's expectation of 3.7 Mt CO2 eq of emission reductions per year as of 2023 "was an overestimate and was not reliable"; 40 projects with a total value of C$71.5 million had been funded.
Status As of October 2026: the CESD's Report 4 of November 2021 is the audit finding on record; no measurement of emission reductions from the funded projects is in the sources reviewed.
What happened
In Report 4 of its 2021 reports, tabled on 25 November 2021, the Commissioner of the Environment and Sustainable Development (CESD) audited the Onshore Program of the Emissions Reduction Fund, for which Natural Resources Canada is responsible. The report states that the government launched the program in November 2020 as part of Canada's COVID-19 Economic Response Plan and saw it as a way to help the energy sector deal with lower oil prices during the pandemic. The program offered up to $675 million to onshore (land-based) oil and gas companies to maintain employment, attract investments, increase global competitiveness and accelerate their deployment of equipment to reduce greenhouse gas emissions, with a particular focus on methane. The report states that the funding took the form of interest-free loans, which constitute a subsidy, and that companies had 5 years to repay.
The CESD found that Natural Resources Canada "did not follow key greenhouse gas accounting principles or a standard" when preparing its estimates of expected emission reductions, and that its expectation that the program could achieve 3.7 Mt CO2 eq of reductions per year as of 2023 "was an overestimate and was not reliable". The report states that the 3.7 Mt estimate was a best-case scenario that assumed the whole $675 million would be disbursed to almost all of the 610 eligible companies. In April 2021 the department announced that it had funded 40 projects from 15 companies, with a total value of $71.5 million, expected to reduce emissions by 3.1 Mt CO2 eq in the first year following implementation; the CESD found this expectation was also an overestimate.
For 27 of the 40 projects, the CESD found that the companies had indicated in their submissions that the new infrastructure would accommodate current and future production increases; the companies excluded from their estimates the emissions that would result. The CESD also found that the department did not fully assess value for money: it did not assess the minimum loan each company would need and awarded the maximum amount requested. It stated that a subsidy for oil and gas companies that does not secure a benefit such as emission reductions "could be an inefficient fossil fuel subsidy". Natural Resources Canada responded "Agreed" or "Partially agreed" to the report's recommendations.
- 2020November: the government launched the Onshore Program of the Emissions Reduction Fund as part of Canada's COVID-19 Economic Response Plan.
- 2021April: Natural Resources Canada announced that it had funded 40 projects from 15 companies, with a total value of $71.5 million.
- 202120 August: completion date of the audit. 25 November: the CESD tabled Report 4 in Parliament.
What was said
“was an overestimate and was not reliable”
“it could be an inefficient fossil fuel subsidy”
How it looked
Shown
- Natural Resources Canada announced in April 2021 that it had funded 40 projects from 15 companies, with a total value of $71.5 million, expected to reduce emissions of greenhouse gases by 3.1 Mt CO2 eq in the first year following their implementation.Natural Resources Canada · Office of the Auditor General of Canada
Recorded
- The CESD concluded that Natural Resources Canada did not design the Onshore Program to ensure credible and sustainable reductions of greenhouse gas emissions in the oil and gas sector or value for the money spent.
- The CESD found that for 27 of the 40 projects funded in the first intake period, the companies had indicated that the new infrastructure would accommodate current and future production increases, and that the companies' estimates excluded the resulting emissions.
- The CESD found that the department awarded the maximum amount requested and determined only the non-repayable portion of each loan, on the basis of cost per tonne of reduction.
In nature's name
Money moved in nature's name
| What | Kind | Amount | Period |
|---|---|---|---|
| Onshore Program of the Emissions Reduction Fund: funding offered to onshore oil and gas companies Natural Resources Canada Office of the Auditor General of Canada | Budget | 675m CAD | 2020-21 and 2021-22 (years in which funding was to be disbursed) |
| Total value of the 40 projects funded in the first intake period Natural Resources Canada Office of the Auditor General of Canada | Pledged | 72m CAD | 2021 |
What was measured
The audit finding on record concerns expected emission reductions, which the Commissioner reported as an overestimate and not reliable; it is not a measurement of emissions actually avoided. No independent measurement of emission reductions from the funded projects is on record in the sources reviewed.
Findings on record
- Official audit Commissioner of the Environment and Sustainable Development (Canada) (2021-11-25) · Report 4—Emissions Reduction Fund—Natural Resources Canada: “was an overestimate and was not reliable” Office of the Auditor General of Canada
Who gained
Reached nature or the ground
Gained elsewhere
Responses on record
- government-of-canada (2021-11-25): Natural Resources Canada responded "Agreed" or "Partially agreed" to each recommendation of Report 4, as recorded in the report's recommendations and responses table. · Office of the Auditor General of Canada
In court and with insurers
Lawsuits and rulings
Insurers
What nature saw
Nature's report opens this page. Below: further outcomes measured on the ground.
What we don't know
Nature
- Not measured Harm to nature: The record holds no measurement of harm to nature.
Did the harm stop?
Not stated in the sources reviewed.
Who paid?
The Government of Canada, through Natural Resources Canada, offered the funding as interest-free loans to onshore oil and gas companies, according to the Commissioner's report.
Sources
Government and regulators
- Report 4—Emissions Reduction Fund—Natural Resources Canada (2021 Reports 3 to 7 of the Commissioner of the Environment and Sustainable Development to the Parliament of Canada)Office of the Auditor General of Canada · 2021-11-25
- Report 4—Emissions Reduction Fund—Natural Resources Canada (full report, PDF)Office of the Auditor General of Canada · 2021-11-25
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