Fossil Fuels – At What Cost?

This report, prepared by EnviroEconomics Inc. for the International Institute for Sustainable Development's Global Subsidies Initiative, estimates the value and impact of government subsidies for upstream oil activities in Alberta, Saskatchewan, Newfoundland and Labrador, and at the Canadian federal level. Using a definition based on the WTO's Agreement on Subsidies and Countervailing Measures, the study identifies 63 subsidy programs totaling approximately $2.8 billion annually. The report analyzes the distribution of these subsidies, their financial impact on well-level production, and their broader macroeconomic and environmental effects through 2020.

• The study estimates that federal and provincial governments provide over $2.8 billion in annual subsidies to the oil sector in Alberta, Saskatchewan, and offshore Newfoundland and Labrador, covering jurisdictions that account for more than 97 per cent of Canada's oil production.
• A total of 63 subsidy programs were identified: 18 in Alberta, 19 in Saskatchewan, nine in Newfoundland and Labrador, and 17 at the federal level.
• Federal subsidies account for $1.38 billion, or 49 per cent of the total estimated subsidies. Alberta receives the largest share of total subsidies at 73 per cent, which exceeds its 67 per cent share of crude oil production.
• Development subsidies, intended to encourage the production of new oil resources, are the largest category, comprising 59 per cent of total subsidies, valued at $1.68 billion.
• The primary mechanisms for providing subsidies vary by jurisdiction: the federal government and Newfoundland and Labrador rely heavily on tax expenditures (83 per cent and 63 per cent respectively), while Saskatchewan primarily uses royalty relief or tax reductions (78 per cent). Alberta uses a mix, with royalty relief at 46 per cent and tax breaks at 25 per cent.
• On average across Canada, subsidies represent about 5.2 per cent of the average production value. This rate is highest in Alberta (5.7 per cent) and lowest in Newfoundland and Labrador (3.7 per cent).
• In Saskatchewan, subsidies for new oil wells average $139,000 per well or $143 per m3 produced, representing approximately 27 per cent of the estimated future value of production from those wells.
• Macroeconomic modelling suggests that removing the $2.8 billion in subsidies would lead to a national decrease in GHG emissions of about 2.1 per cent by 2020, with Alberta seeing a larger reduction of about 5 per cent in provincial emissions.
• The removal of subsidies is projected to improve government balances, with the federal government balance increasing by 1 per cent, Alberta by 5 per cent, and Saskatchewan by 4 per cent, as the savings from avoided subsidies outweigh losses in corporate taxes and royalties.
• Subsidies are projected to increase national oil production by approximately 5 per cent by 2020, with the highest impact in Alberta (6 per cent) and the lowest in Newfoundland and Labrador (0.3 per cent).
• Oil exports are significantly influenced by subsidies, with results indicating that the national oil trade surplus increases by about 14 per cent when subsidies are in place.
• Non-conventional production, particularly the oil sands, benefits disproportionately from subsidies, which are estimated to add 6 to 7 per cent more production and approximately 12 per cent more emissions to the sector.

APA

Sawyer, D., & Stiebert, S. (2010). Fossil Fuels – At What Cost? International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/ffs_awc_3canprovinces.pdf

Chicago

Sawyer, Dave, and Seton Stiebert. Fossil Fuels – At What Cost? International Institute for Sustainable Development, 2010. https://www.iisd.org/gsi/sites/default/files/ffs_awc_3canprovinces.pdf.

Wikipedia

{{cite report |last1=Sawyer |first1=Dave |last2=Stiebert |first2=Seton |title=Fossil Fuels – At What Cost? |publisher=International Institute for Sustainable Development |date=November 2010 |url=https://www.iisd.org/gsi/sites/default/files/ffs_awc_3canprovinces.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sawyer2010fossil, author = {Sawyer, Dave and Stiebert, Seton}, title = {{Fossil Fuels – At What Cost?}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = nov, url = {https://www.iisd.org/gsi/sites/default/files/ffs_awc_3canprovinces.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }