With Canadians dealing with wildfires in many parts of the country and floods in others, environmental groups say the federal government’s plan to phase out fossil fuel subsidies is a welcome step, but one that doesn’t go far enough.
Environment Minister Steven Guilbeault on Monday released a framework to review and phase out inefficient fossil fuel subsidies. Canada is the first G20 country to roll out such a plan.
Unless a fossil fuel company significantly reduces greenhouse gas emissions, supports Indigenous participation, offers essential energy services to remote communities, provides short-term support for an emergency or supports projects that include carbon capture, their subsidies would be deemed “inefficient” and phased out.
The guidelines, which Guilbeault announced in Montreal, were jointly prepared by the Environment Ministry and the Finance Ministry.
“By eliminating inefficient fossil fuel subsidies, we are encouraging smart and efficient government investment decisions that can increase Canada’s competitiveness in a decarbonizing global economy, while avoiding creation of stranded assets,” Guilbeault said.
“Phasing out fossil fuel subsidies in Canada will ensure government programs and spending support an energy sector that is aligned with our ambitious climate goals.”
The minister also announced that they would be phasing out public financing in the fossil fuel sector. But this plan will not be implemented until the fall of 2024.
The plans, though, have drawn criticism from activists who say they do not go far enough — in particular, because the plan to phase out subsidies does not apply to loans, guarantees and equity given to the TransMountain and Coastal GasLink pipelines.
TransMountain was bought by the federal government in 2018 with plans to sell down the road.
The Coastal GasLink pipeline is owned by TC Energy, the Alberta Investment Management Corp. and KKR & Co. Inc., with 20 First Nations holding options agreements for a 10 per cent equity stake.
“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,” Climate Action Network said in a statement.
The group is a coalition of 150 environmental organizations across Canada.
The statement argued the current wording of the plan contains “loopholes,” a feeling echoed by Keith Stewart, senior energy strategist at 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,” Stewart said.
Officials with Environmental Defence and Oil Change International offered similar perspectives, and urged more action to close off more public financing.
The Canadian Association of Petroleum Producers, on the other hand, welcomed the carve-outs for programs that could reduce emissions from industry.
“(The group) is generally aligned with the framework on inefficient fossil fuel subsidies released today,” association president Lisa Baiton said in an email. “We are pleased to see the recognition that partnering with industry to invest in technologies to help decarbonize Canada’s economy remains an important part of reaching the government’s climate change and energy priorities.”
Baiton urged Ottawa to develop regulations under which those technologies could be funded and deployed.
The announcement comes at a time when Canada is facing a record-breaking wildfire season and heavy flooding. Europe and North America have also recorded heat waves this month.
Researchers say the deadly hot spells in the American Southwest and Southern Europe could not have happened without the continuing buildup of warming gases in the air.
These unusually strong heat waves are becoming more common, a recent study has found. The same research found the increase in heat-trapping gases, largely from the burning of coal, oil and natural gas, has made another heat wave — this time in China — 50 times more likely with the potential to occur every five years or so.
A stagnant atmosphere, warmed by carbon dioxide and other gases, also made the European heat wave 2.5 C hotter, the one in the United States and Mexico 2 C warmer and the one in China 1 C toastier, the study found.
Another study published in May showed that 37 per cent of the area burned in wildfires in southwestern Canada and the western United States between 1986 and 2021 was directly linked to carbon emissions that can be traced back to 88 major fossil fuel producers and cement manufacturers.