Policy Analysis

Meeting Canada's Subsidy Phase-Out Goal: What it means in Ontario

IISD examines some of the fossil fuel subsidies in place in Ontario, how the government is responding to them and where more can be done.

By Philip Gass, Ivetta Gerasimchuk, Yanick Touchette on June 8, 2016

In May 2016 the Government of Canada, along with other G-7 countries, committed to a much needed timeline to phase out fossil fuel subsidies.

These countries committed to ending fossil fuel subsidies by 2025, attaching a specific year to the previous commitments to phase out subsidies for fossil fuels.

We have a good picture of the scale of this task at the national level in Canada from a recent IISD/ODI/OCI report, G20 Subsidies to Oil, Gas and Coal Production: Canada. In this report, we identified CAD 2.9 billion in national subsidies for fossil fuel production.

This, however, is only part of the story. In an effort to better communicate the full scale of what it means for Canada to eliminate fossil fuel subsidies, IISD will be taking a look at both production and consumption subsidies through a series of briefing notes, along with a consideration of where action is already taking place and where more can be taken.

We start this examination with Canada’s most heavily populated province, Ontario. Phasing out the use of coal and setting a price on carbon are two major accomplishments in Ontario, but there is a third one needed for a truly low-carbon future for the province and for Canada as a whole. This is the removal of environmentally harmful subsidies that support production and consumption of fossil fuels.

This commentary highlights some of the prominent subsidies in place in Ontario that give preferential tax treatment to the use of fossil fuels, and examines how Ontario stacks up against other provinces.

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