Assessment of Fossil Fuel Subsidies in Canada

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