Fossil fuel subsidy reform is urgently needed in Canada


Addressing climate change through measures such as carbon pricing requires special attention. Unfortunately, governments around the world, including in Canada, are subsidizing the carbon-emitting fossil fuel industry while fighting climate change. According to a recent estimate, Canada’s federal and provincial governments provide at least $4.8 billion in subsidies to the fossil fuel sector.

Another study puts the figure closer to $14 billion, with Canada providing about 14.5 times more financial support to the fossil fuel industry than to the renewable energy sector. The average for G20 countries is 2.5 times more support for the fossil fuel sector. Another study indicates that Canada has the highest oil and gas production subsidies per unit of GDP in the G7.

Canada also turned out to be the second worst in the G7 when it comes to government reporting on the fossil fuel subsidies it provided. The fight against climate change, like the COVID-19 pandemic, must be seen as an emergency, and we cannot afford to take one step forward and another step back at the same time. Fossil fuel subsidy reform is urgently needed in Canada to make renewable energy a more viable alternative.

Canada’s fossil fuel subsidies should not be seen as just a national issue. The burning of fossil fuels extracted in Canada that are exported (and a large amount are) is not part of Canada’s climate emissions. Indeed, international agreements require that only the emissions produced on the territory of a country be taken into account in the total emissions of the country. This means that emissions from Canada’s oil and gas exports do not count as Canada’s emissions, even though we benefit from those exports. By one estimate, burning all of Canada’s proven oil reserves would result in emissions reaching almost a third of the global carbon emissions budget to keep warming below dangerous levels. So we need to recognize the use of our fossil fuels in the global carbon budget and not just our national emissions. This means eliminating fossil fuel subsidies to those who extract these resources for export or domestic purposes.


Current fossil fuel subsidies in Canada include tax breaks for producers, funding for infrastructure projects, and grants for research and development. Canada pledged to eliminate “inefficient” fossil fuel subsidies in 2009, but the subsidies persist more than a decade later, and there is no widely accepted definition in Canada of what a fossil fuel really is. inefficient fossil fuel subsidy. Canada is committed to eliminating inefficient fossil fuel subsidies by 2023.

At the 2021 Glasgow Climate Change Summit, Canada’s Environment Minister Steven Guilbeault said “Canada is in favor of having text that says we need to eliminate fossil fuel subsidies” and that a “time frame should be set” for eliminating these subsidies. . Some next steps for Canada are outlined below.

In 2019, the Office of the Auditor General of Canada determined that existing subsidies “assessments did not consider the economic, social or environmental sustainability of the fossil fuel sector subsidy.” An important step in reducing fossil fuel subsidies is to have subsidy assessments that consider long-term sustainability in addition to determining where and how the money is spent. These subsidy assessments need to consider all subsidies (not just those deemed ineffective) from all levels of government so that we have a complete picture of this problem. We also need to stop subsidizing the fossil fuel industry at all levels of government and shift that support to the renewable energy sector. Government programs should exist to ensure that poorer households and workers in the fossil fuel industry are helped to absorb the pain of fossil fuel subsidy cuts.

We must push for the goal of keeping warming below dangerous levels and not undermine ourselves by supporting industries that oppose that goal.

Ramu Narayanan is an active member of York Region’s Blue Dot Chapter. Ramu holds a master’s degree in Earth and Space Sciences. You can check out his website on the United Nations Sustainable Development Goals at

The Blue Dot movement is a national grassroots campaign based on the idea that everyone in Canada deserves the right to a healthy environment, including clean air and water, and a voice in decisions that affect our health and well-being.


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