Climate Action Network Canada welcomes today’s major step towards ending fossil fuel subsidies, calls for acceleration of next steps

Unceded Algonquin Anishinaabe Territories [OTTAWA], 24 July 2023:

After more than fourteen years of campaigning from civil society to end the flow of taxpayer dollars to the industry fuelling the climate crisis, today’s announcement from Environment and Climate Change Minister Steven Guilbeault on eliminating inefficient fossil fuel subsidies delivers on a longstanding promise from the federal government, strengthened by the Supply and Confidence Agreement with the NDP.

Long criticized on the international stage for being one of the world’s top financiers of fossil fuels, Canada is now the first G20 country to implement an assessment framework to identify, evaluate, and phase out inefficient fossil fuel subsidies. The key threshold for efficiency is alignment with limiting global temperature rise to 1.5°C and not hindering the transition to renewables – although these conditions need to be explicitly included in the framework. The timing of this announcement, right before the G20 Environment Ministerial, sends an important signal to other large emitters on the need to move swiftly on eliminating fossil fuel subsidies.

The policy announced today does not apply to public financing – e.g. loans, guarantees and equity – and with billions of domestic public financing given to the TransMountain and Coastal GasLink pipelines, this is a crucial next step. The announcement promises an implementation plan by fall 2024 to phase out public financing of the fossil fuel sector, but with the country on fire, a plan that sets deadlines further down the road is not enough. Canada must unveil a plan this year to end all domestic public finance for oil and gas by the end of 2024, and redirect those funds to support a clean energy transition that does not cause harm to communities or ecosystems.

For too long, Canada has ignored the devastating impacts of fossil fuels. As the presence of protestors advocating against the tar sands at today’s announcement demonstrates, Canadians are tired of government support for an industry that is making vast profits at the cost of our climate and health. The new framework sets a strong precedent – but its implementation will be critical. Every department and Crown corporation must cooperate to apply the policy with stringency, and follow the vision of channelling investments towards building a climate-safe future for all.

Key points:

• The framework still allows for continued public support to dangerous distractions that prop up the fossil fuel sector, such Carbon Capture and Storage (CCS) and fossil-based hydrogen, continuing to skew the business case in favor of these ineffective and uneconomic technologies. The policy must be strengthened to eliminate these loopholes.

• Any projects to be considered in line with Article 6 – the Paris Agreement’s emissions-trading mechanism – must not undermine Canada’s climate ambition, especially as the gas lobby has sought to utilize this mechanism to falsely pretend that Canadian gas exports are a climate solution.

• While the framework includes exceptions for remote communities, the policy should be explicit about avoiding higher energy costs for equity-deserving communities who are already dealing with energy poverty.

• Moving forward, the government must ensure transparency around implementation of the policy and publish an inventory of the measures affected by this framework, and a rationale for any exemptions, as well as making it clear where the responsibility for monitoring and accountability lies.

Quotes: 

Caroline Brouillette, Executive Director, Climate Action Network – Réseau action climat Canada:

“The science is clear: if we are to limit the most catastrophic impacts of climate change, we need to not only phase in investments in climate solutions, but also phase out public investment in the fossil fuels causing the climate crisis. Right now, people across Canada are suffering from heat waves, wildfires, and a rising cost of living driven by fossil fuels, as oil and gas executives pocket record profits. Building on Budget 2023’s investments, the new framework announced today finally enables the federal government to accelerate the energy transition – which we need for our economy and our climate – rather than slow it down. As ever, the real test will be the framework’s implementation across departments, and its application to all forms of government financial support, including urgent next steps on public financing.”

Julia Levin, Associate Director, National Climate, Environmental Defence Canada:

“Environmental Defence welcomes the Government of Canada’s new policy to eliminate fossil fuel subsidies. Despite problematic loopholes, the new rules will close the door on any government spending that fails to align with the 1.5C temperature threshold. This rules out any spending on new oil, gas or coal projects. However, missing from today’s announcement are the tens of billions in public financing provided by Export Development Canada. The Government of Canada must quickly take the final step and end all fossil financing – without any loopholes for fossil gas, fossil hydrogen or CCS – without delay. It’s time to turn off the financial taps to Canada’s most polluting industry.”

Claire O’Manique, Public Finance Analyst at Oil Change International:

“Any step to stop funding fossils is welcome and urgently needed. But Canada cannot claim to be the first G20 country to phase out inefficient fossil fuel subsidies without also ending support for domestic public finance, CCS, and fossil hydrogen. It is disappointing to only mention drafting a plan to end public domestic fossil fuel finance by the end of 2024, rather than taking concrete steps now to end domestic public finance for fossil fuels.This will leave over CAD 13 billion a year in government support flowing to climate-wrecking oil and gas projects for the foreseeable future. It is not too late to close these gaps. Canada must demonstrate global leadership by committing to end its domestic fossil fuel finance by 2024 at the latest.”

Laura Cameron, Policy Advisor, IISD:

“This is a significant step forward and sets a strong example for Canada’s G20 peers. But gaps in the framework mean public money could continue to flow toward carbon capture and storage for oil and gas production at a time when the country must swiftly move to renewable energy. With these gaps closed, Canada can ensure public funds are advancing climate solutions.”

John Young, B.C. Energy Transition Strategist, David Suzuki Foundation:

“The new framework is supposed to ensure any government support for the sector will not delay the transition to renewables and are in compliance with the goals of the Paris Agreement to limit warming to 1.5 C. Implementing this commitment with integrity means there can be no further subsidies for new fossil fuel projects like the controversial LNG plants proposed in British Columbia. As our recent LNG report clearly indicated, LNG locks in emissions, locks up investment and locks out renewables.”

Marc-André Viau, director of government relations, Équiterre:

“The new guidelines on inefficient subsidies are an important first step to transition the oil and gas sector to clean and renewable energy. These kinds of government measures must help to propel the creation of new sustainable employment opportunities, particularly in communities where a great number of jobs are currently linked to fossil fuel development. Équiterre is concerned, however, about the exemptions granted in today’s announcement, particularly for the development of marginal technological solutions such as carbon capture and storage (CCUS) and hydrogen, which lock in future fossil fuel use. These are exit strategies on which the fossil fuel industry is banking heavily to maintain the status quo for their production. Taxpayers’ money should not be used to prop them up.”

Gretchen Fitzgerald, National Programs Director, Sierra Club Canada:

“Every dollar spent propping up fossil fuels robs us of safety – safety from wildfires and floods and the uncertainty that is a climate-changed world. Subsidies put money into the well padded pockets of oil and gas executives – who have already profited immensely from delaying action. Fossil subsidies waste money that should be spent on communities and renewable industries. Too many communities are paying the price of inaction in lives and damage while the solutions to climate change, such as wind, solar, energy efficiency and storage need more financial backing.”

Sven Biggs, Canadian Oil and Gas Program Director, Stand.earth:

“In a world on fire there is zero room for fossil fuel subsidies. So while today’s announcement from the Federal Government does contain some positive steps forward, it still fails to meet the urgency of the climate crisis. Most alarmingly it means taxpayers’ money will continue to be spent propping up the illusion that carbon capture and storage technology will allow the Canadian oil patch to continue to grow, while the forests of northern Alberta burn all around it.”

Melanie Snow, Legislative Affairs Specialist, Ecojustice: 

“Eliminating inefficient fossil fuel subsidies and focusing on clean energy is but one important  step toward what is really required, a complete and transformative move away from a fossil-fuel based economy. However, the continued subsidization of production processes — even where abated — is inconsistent with what is required in the face of climate emergency. Carbon capture, utilization, and storage is a false solution that does more to prolong the economic viability of fossil fuel production than anything else. The world is on fire, and we need political leaders to step up to the plate and do everything they can to deliver on the promise of a net-zero future.”

Keith Stewart, senior energy strategist with Greenpeace Canada:

“While we are pleased to see that some taxpayer support for oil and gas companies is being eliminated, we’d like to remind the federal government that there are no ‘efficient’ subsidies for fossil fuels in an era of both record-breaking climate disasters and oil industry profits, and especially not for unproven technologies like carbon capture. Given Canada’s record, the commitment to end public finance for the fossil fuel sector is significant and we will continue to push for rapid and ambitious action on this file. Under no condition should the federal government cave to the industry lobby for new subsidies, including those for fossil gas export projects under the guise of phony credits.”

Dr. Claudel Pétrin-Desrosiers, President, Association québécoise des médecins pour l’environnement (AQME):

“While we are experiencing an exceptionally intense year in terms of extreme climatic events (heat, forest fires, flooding following very heavy rainfall), we doctors are also answering more and more questions related to human health, which obviously suffers from these phenomena. It would be inconceivable today for the medical community to finance tobacco companies, but it’s also inconceivable for the government to invest in fossil fuels when we need, more than ever, to change course and transform our ways of doing things and living now. Today’s announcement is encouraging, but also insufficient, as we remain worried about the exceptions granted, which are likely to slow down the necessary pace while maintaining mirages and wait-and-see attitude around ineffective solutions.”

Dr. Melissa Lem, President, Canadian Association of Physicians for the Environment:

“As healthcare workers and communities across Canada reel from the health effects of wildfires, smoke and extreme flooding this summer, the announcement of this new framework and guidelines to phase out inefficient fossil fuel subsidies could not have come at a better time. However, loopholes that allow for ongoing expansion of fossil fuel infrastructure threaten their ability to achieve the task at hand. We must accelerate fossil fuel phaseout further and faster through policy and implementation to ensure our right to a safe, healthy and liveable future.”

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