Sylvie Willis
Canada has not outlawed fossil fuels, but it has taken steps to reduce its support for them. In 2009, Canada committed to phasing out inefficient fossil fuel subsidies as part of the G20. In 2021, they moved up their deadline to complete this to 2023. Additionally, Canada has committed to ending subsidies and public financing for fossil fuels at home and abroad. However, there are still loopholes in existing policies that allow for financing for infrastructure that locks in fossil fuel use. In 2022, Canada also signed the Statement on International Public Support for the Clean Energy Transition, ending new support for the international unabated fossil fuel energy sector by the end of that year. While Canada has not outlawed fossil fuels, it is taking steps to reduce its reliance on them and increase its investment in clean energy and renewables.
| Characteristics | Values |
|---|---|
| Outlawing fossil fuels | Canada has not completely outlawed fossil fuels but has committed to ending subsidies and public financing for fossil fuels at home and abroad. |
| Current policies | Canada's policies on international public finance and fossil fuel subsidies have some strengths, but they also include loopholes that could be detrimental. |
| Progress | Canada's progress has been slow, with few efforts to reform subsidies at the provincial level. The federal government has made some moves, but the country is not yet on track to meet its Glasgow commitment to end international financing by the end of 2022. |
| Inefficient subsidies | Canada has committed to phasing out inefficient fossil fuel subsidies by 2023, in line with its G20 commitment. An Assessment Framework and Guidelines have been released to support this goal. |
| Public financing | Canada has provided significant financing for the oil and gas sector through Export Development Canada. The government has committed to ending this financing and is taking steps to transition to clean energy and renewables. |
| Fossil Fuel Advertising Act | Canada has proposed the Fossil Fuel Advertising Act to prohibit the promotion of fossil fuels, excluding certain types of fuel and specific situations, such as indicating the availability of fossil fuels and their prices at the point of sale. |
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What You'll Learn
Fossil fuel subsidies
Canada has made commitments at the federal level to phase out "inefficient" fossil fuel subsidies. As part of its G20 commitment, Canada is conducting a peer review with Argentina to evaluate these subsidies. Additionally, Canada has implemented guidelines, jointly developed by the Minister of the Environment and Climate Change and the Minister of Finance, to avoid creating new measures that would be considered inefficient fossil fuel subsidies and to ensure that existing support for the fossil fuel sector aligns with specific inefficiency criteria.
However, progress towards ending fossil fuel subsidies in Canada has been slow. Canada ranked last among 11 OECD countries on progress in ending support for fossil fuels. The country has continued to introduce new subsidies, including in response to the COVID-19 pandemic. Additionally, Canada is a significant international financer of fossil fuels, providing substantial financial support to the oil and gas sector through Export Development Canada.
To accelerate the transition away from fossil fuels, Canada needs to address loopholes in its policies. This includes ending support for natural gas and expensive, unproven technologies like CCUS (carbon capture, utilization, and storage), which only serve to prolong the use of fossil fuels. By redirecting financial support from fossil fuels to renewable energy sources, Canada can align its actions with its commitments under the Paris Agreement and promote a low-carbon economy.
While Canada has taken some steps towards ending fossil fuel subsidies, faster and more comprehensive action is needed to meet its climate goals and ensure a sustainable future for the country.
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Canada's G20 commitment
Canada has made several commitments as a member of the Group of 20 (G20) to phase out fossil fuel subsidies. In 2009, Canada, along with other G20 countries, recognised that inefficient fossil fuel subsidies undermine efforts to address climate change, encourage wasteful consumption, reduce energy security, and hinder investment in clean energy sources. Since then, Canada has repeatedly pledged to phase out these subsidies, including at the 2016 G20 summit in Hangzhou, China, and moved up its deadline to complete this phase-out to 2023.
Canada has taken some steps towards ending its support for fossil fuels, including committing to ending subsidies and public financing for the industry at home and abroad. However, progress has been slow, and Canada has faced criticism for a lack of transparency and accountability in its policies. For example, Canada has not yet published a list of tax and non-tax subsidies, which is critical to ensuring accountability. Additionally, Canada continues to commit billions of public dollars to fossil fuels through direct transfers, tax breaks, and public financing mechanisms such as loans, insurance, and bonds.
Canada's current policies also contain loopholes that could jeopardise their effectiveness. For instance, the international public finance policy allows support for natural gas-fired power in some circumstances, which is incompatible with the Paris Agreement targets. Additionally, Canada has been criticised for its lack of implementation details and enforcement of its policies.
To accelerate its progress, Canada has proposed an Assessment Framework with 129 non-tax Measures and Guidelines developed by the Minister of the Environment and Climate Change and the Minister of Finance. These tools aim to help Canada avoid creating new Measures that would be considered inefficient fossil fuel subsidies and ensure that any support for the fossil fuel sector aligns with the defined inefficiency criteria. However, the effectiveness of these tools remains to be seen, and Canada still has significant work to do to meet its G20 commitments.
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Domestic public finance for fossil fuels
Canada has committed to ending subsidies and public financing for fossil fuels at home and abroad. However, it has been slow to implement these changes, and there is a lack of transparency around how much the federal and provincial governments provide in fossil fuel subsidies. It is estimated that Canada provides at least CAD 4.8 billion per year in fossil fuel subsidies, including tax deductions, direct cash transfers, research and development support programs, and tax breaks.
Export Development Canada, the national export credit agency, has provided over CAD 88 billion to the oil and gas sector since 2016, including CAD 19 billion in 2022. This is in stark contrast to the CAD 147 million provided annually for domestic renewable energy. Canada's policy to end domestic public finance for fossil fuels should include loans, equity, grants, guarantees, and insurance, as these supports serve to de-risk projects and provide confidence in fossil fuel investments.
Canada's international public finance policy for fossil fuels has some strengths, including a strong definition aligned with the World Trade Organization's and a requirement for fossil fuel projects to prove a lack of renewable energy alternatives. However, loopholes in the policies exist, such as allowing support for the production of natural gas-fired power, which is incompatible with Paris Agreement targets.
To improve its domestic public finance policies for fossil fuels, Canada should:
- Close loopholes in existing policies to ensure the government does not enable financing for infrastructure that locks in fossil fuel use in the future.
- Ensure that investments in natural gas and expensive, unproven technologies such as CCUS (carbon capture, utilization, and storage) do not entrench carbon-intensive infrastructure.
- Adopt a strong definition of "inefficient" to ensure that subsidies are aligned with Canada's climate commitments and supportive of a low-carbon economy.
- Include specific requirements for transparency and reporting, as well as clear, central enforcement and accountability mechanisms.
- Redirect public finance toward climate solutions and renewable energy sources.
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Fossil fuel advertising
Canada has committed to ending public financing for fossil fuels, but progress has been slow. The country has not yet ended its support for fossil fuels, and there is still a lack of accountability and transparency in its policies. Despite this, Canada has taken some important steps towards ending its support for the industry, including phasing out "inefficient" fossil fuel subsidies.
The latest Intergovernmental Panel on Climate Change (IPCC) report stated that corporations have attempted to derail climate mitigation through targeted lobbying, doubt-inducing media strategies, and corporate advertising to deflect corporate responsibility. Fossil fuel companies use advertising to promote false solutions to the climate crisis, such as fossil gas, fossil hydrogen, bioenergy, and carbon capture and storage (CCS). They also emphasise climate-friendly products in their advertisements, misrepresenting their actual level of investment in renewable or green technologies. For example, BP's renewable energy advertisement was successfully challenged by ClientEarth, as 96% of the company's spend was on oil and gas.
A ban on fossil fuel advertising is not without precedent. A similar ban on tobacco advertising and sponsorship was enforced in the EU, and this could be a model for addressing fossil fuel advertisements. The tobacco industry responded by transitioning its advertising to print media, but cigarette usage still declined.
Fossil fuel companies are among the biggest spenders on Google ads, and these ads often resemble search results, making it difficult for users to distinguish between paid-for listings and organic results. This allows these companies to influence the information that people receive when trying to educate themselves about climate issues.
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Canada's international climate commitments
Canada has made several international commitments to combat climate change. Notably, Canada ratified the United Nations Framework Convention on Climate Change in 1992 and signed the Kyoto Protocol in 1998, committing to reducing its greenhouse gas emissions. In 2015, Canada adopted the Paris Agreement, a legally binding international treaty on climate change. To support this agreement, Canada committed $2.65 billion in international climate finance from 2015 to 2021 to help developing countries tackle climate change and reduce greenhouse gas emissions. This commitment has been extended to $5.3 billion, with a focus on four main areas: energy, general environmental protection, agriculture, and forestry.
Canada has also contributed to the $100 billion climate finance goal, which was met for the first time in 2022, along with Germany. Canada's international climate finance contributions are primarily directed through multilateral development banks (MDBs), multilateral trust funds, United Nations agencies, and Canadian climate funds. These funds are allocated to various sectors, including energy, environment protection, agriculture, and water and sanitation. Canada has also shown support for ending plastic pollution by 2040 and is actively involved in developing a global legally binding agreement on this issue.
Despite these commitments, Canada's climate policies and actions have been rated as "Insufficient" by the Climate Action Tracker, indicating that substantial improvements are needed to align with the Paris Agreement's temperature limit. Canada's contributions to climate finance have been rated as "Highly insufficient," as they fall short compared to other countries. Additionally, Canada continues to support fossil fuel developments abroad, which contradicts its climate commitments.
To improve its rating and effectively address climate change, Canada needs to increase its climate finance contributions further, cease funding fossil fuel projects overseas, and implement additional measures to reduce greenhouse gas emissions. Canada has committed to reducing emissions by 40% to 45% below 2005 levels by 2030 and achieving net-zero emissions by 2050. Achieving these targets will require continued efforts and dedication to Canada's international climate commitments.
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Frequently asked questions
No, Canada has not outlawed fossil fuels. However, it has committed to ending subsidies and public financing for fossil fuels at home and abroad.
Canada has delivered on its G20 commitment to phase out inefficient fossil fuel subsidies and is the only G20 country to do so ahead of the 2025 deadline. The Government of Canada has also committed to ending public financing for the fossil fuel sector and is taking steps to identify current public financing by 2024.
Canada needs to close the loopholes in its existing policies that allow support for natural gas and expensive, unproven technologies such as CCUS. It should also improve the transparency and accountability of its policies, including publicly disclosing subsidies.
By ending new direct public support for the international unabated fossil fuel energy sector, Canada ensures its investments abroad are aligned with its domestic and international climate goals, including the Paris Agreement and its commitment to reach carbon neutrality by 2050.
