• Canadian government releases new framework to narrow fossil fuel subsidies

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      Patrick Lavery

      Combustion Industry News Editor

Canada’s government has released a framework for eliminating inefficient fossil fuel subsidies, with the only subsidies to continue being mostly those that aim at decarbonising the energy sector.

Remarkably, in releasing the framework, Canada becomes the first G20 country to act on a commitment made in 2009 to rationalise support for fossil fuels, perhaps a reflection of the lobbying power of the sector, if not a fear of the impacts on consumers, or even just a kind of regulatory lethargy. There are no details on the financial value of the support that is ending, although existing subsidy schemes will not be affected, but rather ‘grandfathered out”.

Projects that will continue to be eligible for subsidies will be those:

  • enabling significant carbon emissions reductions
  • supporting clean energy
  • providing essential energy to a remote community or short-term support for an emergency response
  • supporting Indigenous participation in fossil fuel activities
  • that have a credible plan to reach net-zero by 2030.

Such criteria mostly appear sensible, though one could see how certain provisions could be exploited to perpetuate higher emissions. Federal Environment Minister Steven Guilbeault perhaps elided over some of those possibilities when he told reporters that the framework “ensures that the only federal support for oil and gas goes to projects that decarbonize the sector and result in significant greenhouse gas emissions reductions.”

Reaction to the framework has been mostly positive, though some environmental groups have criticised the pathway for subsidies for carbon capture and storage projects, and also the fact that the framework will not apply to the fossil fuel projects of government-owned corporations.