Canada continues to provide billions of dollars each to year to support fossil fuels – new study
Canada is the largest provider of government support for oil and gas production per unit of GDP, providing more than any other country in the G7, despite repeated pledges to end fossil fuel subsidies, new research has revealed.
As the country prepares to host the 44th G7 summit in Charlevoix, Quebec, from June 8 to 9, a major new study has for the first time ranked G7 countries’ progress in meeting their pledge to phase out fossil fuel subsidies by 2025.
Researchers from the Overseas Development Institute (ODI), Oil Change International (OCI), the International Institute for Sustainable Development (IISD) and the Natural Resources Defense Council (NRDC) ranked Canada third overall but highlighted serious concerns over its lack of transparency on spending as well as the vast sums provided to support oil and gas production.
The report found that while Canada does appear to have ended public finance for coal-fired power, it is still the largest provider of support for oil and gas production per unit of GDP than any other country in the G7.
Yanick Touchette, Policy Advisor at IISD, said: “Canada has performed relatively well in our ranking, but this does not mean it can be complacent. It should go ahead with a peer review of its fossil fuel subsidies and other supports. This would be the right opportunity to review and reform some of the fiscal policies that currently make the business case stronger for investors to stay in the fossil fuels industry.”
“Canada has made progress by setting the course for a national transition away from coal-fired power plants. A next logical step would be to address how oil and gas will need a similar strategy in line with the Paris Agreement goals.”
Alex Doukas, Stop Funding Fossils Program Director at OCI, said: “While Canada has taken some initial steps toward phasing out fossil fuel subsidies, the Trudeau government has a long way to go to prove that they’re serious about their promise to end wasteful handouts to the oil and gas industry. Canada must produce a concrete plan to phase out its fossil fuel subsidies in the next few years, and it can use its G7 presidency as an opportunity to pressure its peers to do the same.”
The study, published ahead of the G7 Summit in Canada, for the first time ranks each G7 country on their transparency, commitments and progress made on ending support for the production and use of oil, gas and coal.
Overall, the paper finds G7 governments are still providing at least USD 100 billion each year to support the production and consumption of oil, gas and coal despite repeated pledges to end fossil fuel subsidies by 2025.
Researchers found that in 2015 and 2016 G7 governments provided at least USD 81bn in fiscal support and USD 20bn in public finance for the production and consumption of fossil fuels at home and abroad.
Researchers used seven indicators to track G7 progress toward the phase out of fossil fuel subsidies and ranked each country on the findings.
The paper highlights several key findings from Canada including:
- It is the biggest provider of government support within the G7 for oil and gas production per unit of GDP.
- It no longer provides public finance for coal-fired power projects but still provides significant volumes for oil and gas production through Export Development Canada.
- While the government has taken some positive steps to reduce Canada’s biggest federal subsidies to oil and gas production, it hasn’t completed subsidies peer review under the G20 process.
Ahead of the summit in Quebec, researchers have called on the G7 overall to:
- Publish comprehensive fossil fuel subsidy peer reviews no later than 2019
- Establish country-level plans for fossil fuel subsidy phaseout, starting with subsidies that have negative social and environmental impacts
- Ensure subsidies for energy transition do not support fossil fuels, and any remaining support goes to facilitating a “just transition” and prioritizes vulnerable communities and households.
Notes to editors
- The G7 2018 Summit will be held in Charlevoix, Quebec, from June 8 to 9
- The scorecard (Figure 1) uses seven indicators (based on 38 sub-indicators) to track G7 progress toward the phase out of fossil fuel subsidies:
- Indicator 1: Transparency
- Indicator 2: Pledges and commitments
- Indicators 3-7: Progress in ending support for: fossil fuel exploration; coal mining; oil and gas production; fossil fuel-based power; and fossil fuel use
- Each indicator was then scored out of 100 and each country ranked based on these scores.
- The report found that in 2015 and 2016 G7 governments provided at least USD 80.62bn in fiscal support and USD 19.54bn in public finance.
- The G7 and G20 have committed to phase out fossil fuel subsidies every year since 2009. At the 2016 Leader’s Summit in Japan a 2025 deadline was set for meeting this target.
- The report tracks fossil fuel production and consumption subsidies referencing the World Trade Organization’s (WTO) definition of a subsidy which includes: 1) fiscal support (budgetary transfers and tax expenditures), and 2) public finance (grants, loans, equity infusions and guarantees).