Regan Brown
Canada's energy use is highly dependent on fossil fuels, and the country has been slow to transition to clean energy sources. In 2023, Canadian provinces and territories provided billions in fossil fuel subsidies, which delay the transition to renewable energy sources and work against other climate change actions. To reduce fossil fuel use, Canada must end these subsidies and reallocate public financial support to renewable energy sources. Additionally, Canada should invest in research and development to reduce technology costs, improve energy efficiency in buildings, and enhance the capacity and flexibility of the electricity grid to support electrification and reduce dependency on fossil fuels.
| Characteristics | Values |
|---|---|
| Fossil fuel subsidies | Billions in tax breaks and handouts |
| Fossil fuel industries | Oil, gas, coal, mining |
| Clean energy transition | Reallocate public financial support from fossil fuels to renewable energy sources |
| Carbon pricing | Encourage less pollution |
| Energy efficiency | Reduce GHGs, lower energy bills, promote innovation and clean job opportunities |
| Construction material | Increase use of wood for construction to reduce emissions |
| Clean electricity infrastructure | Distributed energy systems, renewable energy microgrids, grid connections, hybrid systems |
| Research and development | Reduce technology costs |
| Building codes | Improve energy efficiency |
| Labelling | Provide transparent information on energy performance |
| Tax credits and reductions | Reduce public revenue |
| Tax breaks | Lower cost of producing fossil fuels |
| CCUS technologies | Carbon Capture, Utilization, and Storage |
| Public finance | Publish a plan to end domestic public finance for fossil fuels |
| Natural gas | Allowed under certain circumstances |
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What You'll Learn
- End fossil fuel subsidies and redirect funds to renewable energy sources
- Reform existing subsidies and prevent new subsidies from being created
- Reduce fossil fuel dependency by investing in renewable energy infrastructure
- Improve energy efficiency in buildings through retrofitting and fuel switching
- Develop clean energy solutions for Indigenous and remote communities
End fossil fuel subsidies and redirect funds to renewable energy sources
Canada has committed to ending fossil fuel subsidies and redirecting funds to renewable energy sources. However, there are still gaps in these commitments, and the country continues to provide billions in subsidies to the fossil fuel industry. To effectively end fossil fuel subsidies and redirect funds, Canada should take the following steps:
Publish a comprehensive inventory of all financial support for the fossil fuel industry
Canada should disclose all forms of financial support provided to the fossil fuel sector, including those that are not labelled as "efficient". This inventory should be regularly updated and include clear timelines for phasing out existing subsidies.
Address domestic public finance for fossil fuels
Canada should tackle the significant financial support provided by Canadian crown corporations to the fossil fuel industry, amounting to billions of dollars annually. By redirecting this funding towards renewable energy projects, Canada can drive the energy transition and promote sustainable finance regulations for the private sector.
Close loopholes in existing policies
Canada's policies on international public finance and fossil fuel subsidies have been praised for their strong definition aligned with the World Trade Organization. However, loopholes related to natural gas and CCUS technologies jeopardize the effectiveness of these policies and Canada's commitment to the Paris Agreement. By closing these loopholes and ensuring that all support is clearly defined and time-bound, Canada can avoid future lock-in of fossil fuel infrastructure.
Increase transparency and accountability
Canada has not yet published a list of tax and non-tax subsidies, which is a critical step towards ensuring accountability. The government should provide details on the implementation and enforcement of its policies, as well as guidelines for interdepartmental coordination. Transparency and accountability are essential to ensuring that Canada's commitments to ending fossil fuel subsidies are realized.
Redirect funding towards renewable energy projects
Canada should not only focus on phasing out financing for fossil fuels but also provide clear plans for redirecting recovered funds towards renewable energy initiatives. This includes scaling up public clean electricity support and investing in energy-efficient housing, renewable energy expansion, and critical infrastructure for Indigenous communities.
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Reform existing subsidies and prevent new subsidies from being created
Canada has committed to ending subsidies and public financing for fossil fuels, but progress has been slow. The government has pledged to phase out inefficient fossil fuel subsidies, but there are still large subsidies in place for fossil fuel production. To reform existing subsidies and prevent new ones from being created, Canada should:
- Increase transparency: The government should publicly disclose all subsidies, including tax and non-tax subsidies, and be upfront about how much money is spent on fossil fuel subsidies each year. This transparency will help hold the government accountable and ensure that subsidy reform aligns with international guidelines and best practices.
- Define "inefficient": Canada has committed to phasing out inefficient fossil fuel subsidies, but it has not provided a robust definition of "inefficient." A clear definition is necessary to identify which subsidies are considered inefficient and should be reformed or eliminated.
- End support for fossil fuel companies: Canada should stop providing new subsidies to fossil fuel companies and redirect financial support to renewable energy sources. This includes ending public financing for fossil fuel projects, such as the Coastal Gaslink Pipeline and Cedar LNG, and ensuring that funds for decarbonization and low-carbon initiatives do not go to fossil fuel companies.
- Address loopholes: While Canada's subsidy policy has strengths, it also contains loopholes that could jeopardize its effectiveness. For example, the policy allows support for natural gas-fired power in certain circumstances, which is incompatible with Paris Agreement targets. Canada should ensure that any exceptions to ending fossil fuel subsidies are clearly defined and time-bound.
- Shift to clean energy: Canada should prioritize support for clean energy and renewable energy sources. This includes investing in research and development for renewable energy and energy efficiency, as well as incentivizing the transition to clean energy for communities that currently rely on fossil fuels, such as diesel fuel for electricity and heat.
By reforming existing subsidies and preventing new subsidies from being created, Canada can reduce its support for fossil fuels and accelerate its transition to a clean and renewable energy future.
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Reduce fossil fuel dependency by investing in renewable energy infrastructure
Canada's energy use is highly dependent on fossil fuels, particularly for transportation, home heating, and power. This reliance on fossil fuels has significant implications for energy prices, as costs are subject to the volatility of the international fossil fuel market. To reduce its dependency on fossil fuels, Canada must prioritize investing in renewable energy infrastructure.
One crucial step is reallocating public financial support from fossil fuels to renewable energy sources. This involves ending subsidies and public financing for fossil fuel industries and redirecting funds towards clean energy alternatives. Canada has made commitments in this regard, including signing the Clean Energy Transition Partnership in 2021 and pledging to end domestic public finance for fossil fuels. However, there is still work to be done to ensure these commitments are effectively implemented and enforced.
To accelerate the transition to renewable energy, Canada can invest in clean energy solutions for communities that currently rely on diesel fuel, such as Indigenous Peoples and northern and remote communities. This includes distributed energy systems, renewable energy microgrids, grid connections, and hybrid systems. For example, the Colville Lake Solar Project in the Northwest Territories has installed a solar/diesel/battery hybrid electricity system to reduce diesel dependence.
Additionally, Canada can focus on improving the energy efficiency of buildings, which currently account for a significant portion of national GHG emissions. Federal, provincial, and territorial governments are working towards developing a model code for existing buildings to guide energy efficiency improvements during renovations. This includes supporting fuel switching and the adoption of high-efficiency equipment. Increasing the use of wood for construction can also reduce emissions by storing carbon in the built environment.
Finally, Canada can create favorable investment conditions for renewable energy sources and enhance the capacity and flexibility of the electricity grid. This includes providing financial incentives for renewable energy technologies and ensuring a level playing field for investment in this sector. By supporting the development and competitiveness of clean energy industries, Canada can reduce its dependency on fossil fuels and insulate consumers from volatile energy prices.
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Improve energy efficiency in buildings through retrofitting and fuel switching
Canada has recognized the need for deep retrofits of its building stock, and various schemes and programs have been created by the national government to encourage building retrofits. The Canada Greener Homes Grant initiative offers grants of up to $5,000 to Canadians who make energy-efficient retrofit upgrades to their homes. The Deep Retrofit Accelerator Initiative offers to invest in and facilitate deep retrofits in commercial, institutional, and larger multi-unit residential buildings.
Lighting upgrades are one of the most common types of energy conservation measures and often involve switching to LED light bulbs, the implementation of advanced control systems, and other measures. This alteration is a relatively easy retrofit option, considering the changes are relatively quick and inexpensive to implement. However, improved lighting efficiency can have a significant impact, particularly in commercial and institutional buildings, where 13.5% of energy use is spent on lighting.
Two other major systems that can be upgraded through retrofitting are the HVAC (heating, ventilation, and air conditioning) and the water heating systems of a building. Both of these systems are often improved through fuel switching: machinery using more inefficient fuels like oil or gas is replaced with technologies using more efficient and cleaner fuel sources, like electricity. In Canada's cold climate, space heating is the largest source of energy consumption, constituting 64% of energy use in residential buildings and 56% in commercial buildings. Water heating is another major energy consumption source, accounting for 19% and 8% of energy used in residential and commercial buildings, respectively.
Retrofits can also focus on reducing the loss of energy from buildings to the outside environment. Creating a high-performing building envelope, which is the physical component separating the indoors from the outdoors, reduces energy loss and decreases the need for supplemental energy. Improvements are made to the exterior walls, roof, floor, doors, and windows of a building.
To achieve a 60% reduction in emissions by 2032, Canada would need to renovate all gas customers in 8.5 years, or 706,000 buildings per year. Once that is done, they could change out their mechanical equipment to allow for fuel switching.
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Develop clean energy solutions for Indigenous and remote communities
Canada has been actively investing in clean energy solutions for Indigenous and remote communities. Many Indigenous and remote communities in Canada rely on diesel fuel for electricity and heat. However, diesel fuel is expensive and has a negative impact on the environment and air quality.
Natural Resources Canada's Clean Energy for Rural and Remote Communities program has provided significant funding for various projects, including capacity building, large capital projects, innovation projects, and bioheat projects. The program aims to reduce diesel reliance and promote clean energy solutions in these communities.
The Indigenous Council, consisting of First Nation, Inuit, and Métis representatives, plays a crucial role in program and policy development. They share their knowledge and provide guidance to ensure that Indigenous voices are represented in decisions regarding energy sovereignty and climate action.
Additionally, Indigenous communities are increasingly taking ownership and control of renewable energy projects. The transition to clean energy is important for reconciliation, self-determination, and economic development for Indigenous Peoples.
Some specific examples of clean energy initiatives in Indigenous and remote communities include the Colville Lake Solar Project in the Northwest Territories, which utilizes a solar/diesel/battery hybrid electricity system to reduce diesel dependence. The Yukon Integrated System primarily provides hydropower to most residents, with liquified natural gas and diesel for peaking power. The Snare and Taltson grids in the Northwest Territories supply hydroelectricity to Yellowknife and surrounding communities.
These initiatives and investments in clean energy solutions demonstrate Canada's commitment to supporting Indigenous and remote communities in their transition away from diesel fuel, enhancing their energy security, and contributing to a cleaner and more sustainable future.
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Frequently asked questions
Canada can reduce fossil fuels by ending subsidies and public financing for fossil fuels, and by committing to transparency and reform of existing fossil fuel subsidies. Canada has already made progress in phasing out some tax benefits for the fossil fuel industry, but significant tax reductions still exist. Canada has also committed to ending domestic public finance for fossil fuels and has published an assessment framework for inefficient fossil fuel subsidies.
Canada can reduce fossil fuels by investing in renewable energy sources and creating favourable investment conditions for renewable energy. This includes investing in clean energy solutions for Indigenous Peoples and northern and remote communities, as well as increasing the use of wood for construction to reduce emissions.
Canada can reduce fossil fuels by improving energy efficiency in buildings, which accounted for about 12% of national GHG emissions in 2014. Federal, provincial, and territorial governments are working to develop a model code for existing buildings to guide energy efficiency improvements and require labelling of building energy use.
