International Best Practices: Estimating tax subsidies for fossil fuels in Canada
-
Tax expenditures and other types of fossil fuel subsidies must be measured and reported transparently by Canadian governments.
-
Of the 128 revenue foregone policies we identified in the fossil fuel sector in Canada, only 50% were quantifiable.
-
Quantifiable revenue foregone policies in the fossil fuel sector in Canada account for around CAD 3.2 billion in fossil fuel subsidies.
Canadian governments provide financial support for fossil fuels through a variety of measures, including direct transfers to fossil fuel producers. Much of this support is provided through the tax system. Tax expenditures reduce government revenue and create incentives for the production and consumption of fossil fuels. A clear understanding of the extent of tax subsidies is necessary to assess their impacts on government budgets—particularly important in the context of the COVID-19 economic recovery—as well as on air pollution and climate change. But the transparency of the cost of Canada’s tax subsidies for fossil fuels is poor. We recommend that all tax expenditures and other types of foregone revenue be measured and reported in line with international guidelines and best practices.
Participating experts
You might also be interested in
Unpacking Canada’s Fossil Fuel Subsidies
Fossil fuel subsidies hold us back and incentivize pollution. How much do Canada's governments subsidize fossil fuels, and why does it matter?
At long last, Canada restricts oil and gas subsidies (except for all the loopholes)
Environment and Climate Minister Steven Guilbeault has unveiled detailed plans to phase out "inefficient" oil and gas subsidies, based on guidelines released yesterday morning that take effect immediately and are meant to fulfill a 14-year-old pledge by G20 countries.
Canada to Cut Oil & Gas Subsidies
The Canadian federal government has implemented a framework to revoke subsidies for fossil fuels that are deemed inefficient. However, the framework lacks details on the specific subsidies to be eliminated and does not provide a dollar amount for the cuts. Canada, as the fourth-largest oil producer in the world, is the first country to comply with a 2009 pledge made by the Group of Twenty (G20) nations. The government plans to exempt oil and gas projects that have plans to reduce emissions and utilize carbon capture and storage (CCS) technology. Federal Environment Minister Steven Guilbeault stated that the objective is for federal support to be directed only towards projects that decarbonize the sector and result in significant greenhouse gas emissions reductions.
Canada Bans Some Fossil Fuel Subsidies, Meeting Decade-Old G-20 Pledge
Canada revealed new rules to ban some fossil fuel subsidies, targeting those that unfairly advantage oil and gas, solely support sector activities or endorse consumption of fuels that worsen climate change.