This report evaluates a potential fossil fuel subsidy provided to the Canadian oil industry through the Government of Canada's expansion and continued operation of the Trans Mountain Pipeline (TMP) using the government's new fossil fuel subsidies assessment framework as the basis for analysis.
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- Pages
- 42
- Published in
- Canada
- Rights
- IISD, 2024
Table of Contents
- 1.0 Introduction 8
- 2.0 Government of Canada Fossil Fuel Subsidy Policy 9
- 3.0 Trans Mountain Pipeline Overview 12
- 4.0 Trans Mountain Pipeline Subsidies 14
- 4.1 Calculating the Subsidy Provided to TMP 14
- 4.2 Rate Base Cost-of-Service Analysis 15
- 4.3 Discounted Cash Flow Analysis 17
- 4.4 Impact of Sale of TMP on the Subsidy 20
- 4.5 Subsidy Estimate Summary 21
- 5.0 TMP Subsidy Assessment 22
- 6.0 Other Considerations in Evaluating Subsidies 24
- 7.0 Policy Options 26
- 8.0 Conclusion 28
- References 29
- Appendix A. Discounted Cash Flow Analysis of TMP 34
- Figure 1. Steps used to identify whether a measure is a fossil fuel subsidy in Canada 11
- Figure 2. Trans Mountain ownership structure 13
- Figure A1. Western Canadian oil exports and pipeline capacity 36
- Table ES1. Estimates of Trans Mountain Subsidy 5
- Table 1. TMP capital costs and base fixed toll estimates 17
- Table 2. Net present value estimates based on PBO model 19
- Table 3. NPV estimates of TMP 20
- Table 4. Subsidy estimate by method 21
- Table 5. Step 1: Assessment of fossil fuel subsidy 22
- Table 6. Step 2: Assessment of fossil fuel subsidy as inefficient 23
- Table 7. Cost-benefit analysis of the TMP 25
- Table A1. Tolls for alternative Canadian pipelines to selected markets 36
- Table A2. Summary of TMP scenarios 38
- Table A3. TMP cash flow assumptions Scenario 1 (CAD million) 39
- Table A4. NPV estimates for scenarios 39
- Table A5. Government loss on sale of TMP 41
