Statement from Julia Levin, Associate Director, National Climate

Ottawa | Traditional, unceded territory of the Algonquin Anishinaabeg People – Environmental Defence welcomes the Government of Canada’s new Inefficient Fossil Fuel Subsidies Assessment Framework and Guidelines, which delivers on a longstanding commitment to end inefficient fossil fuel subsidies. If applied with integrity, these new rules for government spending will effectively shut the door on the creation of new handouts of public money to  the companies most responsible for the climate disasters being experienced today – and free up billions for climate solutions. 

As countries around the world grapple with eliminating their own fossil fuel subsidies, Canada has set a strong global precedent. Fossil fuels are causing the climate crisis and any spending which leads to expansion of the oil and gas sector, or locks in current levels of fossil fuel production, will make it harder to avoid catastrophic climate change. 

Furthermore, fossil fuel subsidies divert public spending away from investments in climate solutions – including renewable energy, electrification and energy efficiency – which would set Canada up to thrive as the world moves beyond oil and gas.

The new rules, which apply across government departments – contain problematic loopholes for fossil gas as well as dangerous distractions – including carbon capture and storage (CCS) –  which only serve to prolong our dependence on fossil fuels without delivering meaningful emissions reductions. The inclusion of these loopholes demonstrates the ongoing influence of Canada’s most polluting sector on government decision making in developing climate policy. 

Fortunately, to justify new fossil fuel subsidies, federal departments must prove that any new spending doesn’t hinder the transition to renewable energy and aligns with a pathway consistent with limiting global heating to 1.5°C. This would rule out any spending on new oil, gas or coal projects.

These new rules have a glaring omission: they won’t apply to public financing funded through Export Development Canada and other crown corporations. This is alarming given that Canada is one of the largest providers of fossil fuel financing in the G20. The government made a commitment to eliminate this outsized support back in 2021 and we welcome today’s announcement of a timeline for that promise. In order to have eliminated all public financing for fossil fuels by Fall 2024, the government must release a plan by the end of this year. With mounting climate disasters, there is no room for delay. 

Missing from today’s announcement were any details on how these new rules will be implemented, monitored and enforced. This must be done in a rigorous way, with full public transparency. We look forward to the Government of Canada quickly addressing these matters to ensure the new rules have teeth.

Across Canada, people are struggling and dying from the impacts of climate disasters as well as a cost of living crisis sparked by our dependence on fossil fuels. Government spending – in all its forms – must move us towards a truly renewable energy system – one that will deliver lower bills, cleaner air and more energy security.

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. There is no justification for continuing to transfer public money to the very companies and executives whose search for profit has fueled the climate crisis. It’s time to turn off the financial taps to Canada’s most polluting industry.

More Information:

• In May, over 100 organizations across Canada and around the world sent a letter to the federal government demanding a robust policy in line with Canada’s climate commitments.
• This policy does not address the support being provided by crown corporations, especially Export Development Canada, for domestic oil and gas companies. Canada ranks among the worst in the G20 for providing fossil fuels public financing. By comparison, Canada’s support for clean energy is relatively meager. From 2019 to 2021, Canada supported an annual average of CAD 11.1 billion in public finance to fossil fuels. This was more than 11 times its support to clean energy ($1 billion), compared to the G20 average of 4:1 fossil finance to clean energy. Despite a government commitment to eliminate this public finance back in 2021, no progress has been made. Today’s announcement was a missed opportunity to show Canadians the plan to tackle this enormous source of fossil financing. In 2022, the federal government gave more than $20 billion in subsidies and financial support to fossil fuel companies. Of this, $19.8 billion was financing provided through Export Development Canada.
• These new rules build off the Guidelines for Canada’s International Support for the Clean Energy Transition, a policy passed in December 2022 ending public finance being provided by the government, including crown corporations, for international oil and gas projects.
• The Government of Canada has recently introduced new subsidies and public financing for CCS and fossil hydrogen, including the CCUS investment tax credit which was introduced against the recommendations from over 400 of Canada’s leading academics and energy transition experts and the hydrogen investment tax credit which similarly ignored recommendations from over 100 scientists and academics, as well as 55 civil society organisations. CCS relies on the flawed premise that we can continue burning fuels indefinitely by capturing some of the carbon emissions from polluting facilities before they escape into the atmosphere. However, CCS does not address downstream emissions (emissions created when fossil fuels are burned, for transportation or heating) which constitutes 80-90 per cent of the emissions from oil and gas. Despite decades of research and investment, CCS is neither economically sound nor proven at scale, with a terrible track record and limited potential to deliver significant, cost-effective emissions reductions.

ABOUT ENVIRONMENTAL DEFENCE (environmentaldefence.ca): Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.

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For more information or to request an interview, please contact:

Alex Ross, Environmental Defence, media@environmentaldefence.ca