Feds Release Framework to Phase Out Fossil Fuel Subsidies

Feds Release Framework to Phase Out Fossil Fuel Subsidies
Canadian Minister of the Environment and Climate Change Steven Guilbeault speaks in Montreal, Quebec, on Dec. 19, 2022. (Andrej Ivanov/AFP via Getty Images)
Matthew Horwood

The federal government has released its framework to phase out fossil fuel subsidies, saying it will make Canada the first G20 country to follow through on a 2009 pledge to phase out government support for the sector.

“By eliminating inefficient fossil fuel subsidies, we are encouraging smart and efficient government investment decisions that can increase Canada’s competitiveness in a decarbonizing global economy, while avoiding the creation of stranded assets,” Environment Minister Steven Guilbeault said in a July 24 news release.

“Phasing out fossil fuel subsidies in Canada will ensure government programs and spending support an energy sector that is aligned with our ambitious climate goals.”

Back in 2009, G20 leaders pledged to “rationalize and phase out over the medium term inefficient fossil fuel subsidies.”

While the framework will apply to existing tax measures and 129 non-tax measures, ongoing multi-year subsidy agreements the federal government has already made will not be cancelled.

Even though an exact dollar figure of the subsidies impacted was not published, a government official speaking on background to The Canadian Press said government programs that could be affected by the guidelines control about $1 billion in public money.

Six categories of fossil fuel activities will be exempt from the framework: providing essential energy to a remote community or short-term support for an emergency response, enabling significant carbon emissions reductions, supporting clean energy, and supporting indigenous participation in fossil fuel activities or projects that have a credible plan to reach net zero by the year 2030.

Mr. Guilbeault said the new framework was a “fundamental shift” from how Canada has supported the fossil fuels industry for decades. “We’re eliminating subsidies to produce fossil fuels in Canada, whether it’s oil, gas or coal, unless those subsidies are aimed at decarbonizing the emissions of this sector,” he said.

The Canadian Press and Reuters contributed to this report.