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Tackling fossil fuel "subsidies"

Tackling fossil fuel "subsidies"

Canada's Auditor General released their latest review of fossil fuel subsidies as part of the G20's commitment "to phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest." Fossil fuel producers include the oil and gas sector, as well as thermal coal miners.

Canada's official stance is that "inefficient subsidies for fossil fuels undermine efforts to deal with climate change, encourage wasteful energy consumption, reduce energy security, and impede investment in clean energy sources." The last review was conducted in 2012.

Fossil fuel "subsidies" in Canada are generally in the form of tax credits for exploration, development expenses and depreciation of capital costs. Last year, Canada, the US and Mexico agreed to eliminate all subsidies by 2025.

Among the Auditor's key conclusions:

  • Six tax credits were reformed or eliminated since 2009, including accelerated deductions for mining exploration and capital cost depreciation for all Canadian mines. Accelerated capital cost depreciation for new LNG facilities will be phased-out by 2025.
  • Canada's commitment to eliminate all subsidies by 2025 lacked details around what exactly constitutes a "subsidy," a plan on how those subsidies would be eliminated and a clear timeline for phase-out.
  • The federal Department of Finance refused to provide the Auditor with information requested on tax measures specific to fossil fuel producers. The Auditor concludes the federal government therefore has no way of knowing the "social, economic, and environmental aspects" of these subsidies, leaving it unable to fully implement its G20 commitment.

The report did not address the issue of economic competitiveness versus other big oil producers in the G20, which include the US, Russia, Saudi Arabia and China.

Enbridge's 2.5 km pipeline patch goes under the microscope

Enbridge's 2.5 km pipeline patch goes under the microscope

A federal backstop on carbon

A federal backstop on carbon