• New report finds G7 nations have been pumping more money into fossil fuels than clean energy between January 2020 and March 2021, despite pledges to “build back better” 
• Coal, oil and gas received US$189 billion in support, compared to $147 billion for clean forms of energy, since the start of the pandemic
• More than 8 in every 10 dollars committed to fossil fuels came with no ‘green strings’ attached: they benefited the dirtiest sectors with no requirements for reducing pollution
• Only 1 in every 10 dollars committed to the Covid-19 response benefited the ‘cleanest’ energies measures, like renewables or energy efficiency
• As the UK prepares to host the G7 Summit, a new report reveals how G7 nations have - so far - missed major opportunities to green their response to Covid-19. The analysis finds that G7 countries’ energy-intensive investments since the start of the pandemic are at odds with the G7’s own net-zero targets, and with the steep decline in emissions needed to limit global warming to 1.5°C.  

The UK’s recent track record highlights the tension between the government’s green ambitions and the Treasury’s actual spending decisions: it made the highest per capita commitments to fossil fuels of the G7, with only 4 per cent of this support having any ‘green strings’ attached.  However, the UK has also made several world-leading policy changes since the start of the pandemic, including ending public support for fossil fuel projects overseas and issuing a 2030 ban on new petrol and diesel cars.     

The report, Cleaning up their act?, has been published by international relief and development agency Tearfund in collaboration with the International Institute for Sustainable Development (IISD) and the Overseas Development Institute (ODI), who worked with research organisations in each country to analyse 517 policies approved since the start of the pandemic. 

While countries are still battling against Covid-19, Boris Johnson and other G7 leaders have committed to ‘build back better’, using the economic recovery to create a fairer, greener world. 

Paul Cook, Head of Advocacy at Tearfund said:

“Every day, Tearfund witnesses the worsening consequences of the climate crisis for communities around the world - farmers’ crops failing; floods and fires engulfing towns and villages; families facing an uncertain future.  Choices made now by the G7 countries will either accelerate the transition towards a climate-safe future for all, or jeopardise efforts to date to tackle the climate crisis.”

“The G7 nations rank among the most polluting countries in the world, representing only a tenth of the global population but almost a quarter of CO2 emissions.  Their actions can set the scene for success or failure at the UN Climate talks being hosted by the UK in November.”

Recent signals show that there is hope:  Eight out of 11 countries attending the G7 Leaders’ Summit– including Australia, India, Republic of Korea and South Africa – have substantially improved the greenness of their plans over the last year. Yet more progress is required: only four (Canada, France, Germany and the UK) have so far approved plans that will cause more environmental good than harm.

Lucile Dufour, Senior Policy Advisor at IISD said: 

"Investing in renewable energy and energy efficiency should be a top priority to decarbonise the G7 economies. But it will not pay off as long as G7 countries continue propping up the fossil fuel industry. At the G7 summit, all countries must shift international as well as domestic support away from fossil fuels, towards a just and fossil free recovery."

Angela Picciariello, Senior Research Officer at ODI said: 

“G7 countries’ failure to green their Covid-19 recovery is a major missed opportunity, both in terms of achieving a fast decarbonisation of their economies and creating jobs. Investments with no ‘green strings’ attached are highly problematic, as they end up benefiting fossil-fuel intensive activities without requirements for any climate targets or reductions in pollution.”

The report recommends that the G7:

• Adopt a ‘do-no-harm’ principle by ending any support to the production of fossil fuels and by attaching significant ‘green strings’ to any remaining support to fossil fuel intensive sectors
• Dedicate a minimum of 40 per cent of total Covid-19 recovery spending to green policies and measures (the current figure is 22%, according to the Global Recovery Observatory) 
• Enable a green recovery for all by continuing to ease the debt burden faced by a rising number of low- and middle-income countries, by doubling climate finance pledges, ending overseas finance to fossil fuels, and by using the G7’s influence on multilateral development banks to align their activities with the Paris Climate Agreement
   

Net-zero is the new normal, claim the authors of 10 Ways to Win the Global Race to Net-Zero, released today. This is demonstrated by a growing body of research, modelling, and on-the-ground efforts that are starting to paint a picture of how to achieve this goal—both in theory and in practice.

Keys to success: First, energy efficiency and electrification, which have the capacity to deliver the greatest contribution; second, a reduction in GHG emissions such as methane in addition to carbon dioxide; and third, the decarbonization of heavy industry, where hydrogen could be a valuable player.

Sweden, for example, is punching above its weight in the race to produce green steel, and Germany has the pole position in deploying a comprehensive strategy to ramp up production and use of hydrogen. The European Battery Alliance has launched a continental battery industry and is making rapid strides toward battery self-sufficiency for its rapidly growing electric vehicle industry.

In all three cases, governments articulated the objective, collaborated with business leaders to develop a roadmap, and provided significant resources to kickstart the journey. Getting to net-zero also requires changes in governance, as exemplified by President Biden’s “all-of-government” approach.

In New Zealand, the government is advancing reconciliation by elevating Māori voices as equal partners in climate action. And, recognizing that no region or person can be left behind in the energy transition, the European Union (EU) is forging new ground with its Just Transition Mechanism.

While these examples of leading and innovative approaches can’t simply be copied and pasted into a Canadian context, they can be used to inform a made-in-Canada road map.

The report’s authors put forth five solutions and five strategies to accelerate action toward net-zero.

Above all, this ambitious goal will demand wide-reaching, systemic transformation and cooperation across all sectors. If Canada is to achieve net-zero emissions and prosper in the process, the pace of its efforts will need to accelerate—and there’s no time to lose.

Media inquiries:

Vanessa Farquharson
Director, Communications
[email protected]
(613) 238-2296 ext. 114

Winnipeg, MB (May 26, 2021) – A combination of market forces, international climate policies, and geopolitics will push Alberta’s oil sector beyond a tipping point and drive its long-term decline by the end of this decade. That’s the key finding of a new report and modelling by the International Institute for Sustainable Development.

The report identifies eight key factors that will affect the future of Alberta’s oil sector. It finds that five of the factors will apply downward pressure on the sector over the long term. The biggest factor is the global transition away from internal combustion vehicles and toward electric and alternative-fuel vehicles, which will sap the 44% of demand for crude oil currently coming from transportation.

According to the report, the only factor that will apply upward pressure on Alberta’s oil sector over the long term is increased global demand for plastics. Domestic climate change policies, such as a carbon price, were excluded from the assessment in order to focus on factors outside of Canada’s immediate control.

The report predicts a steady long-term decline in Alberta’s oil sector beginning by the end of the decade. Geopolitical dynamics, particularly in relation to the behaviour of OPEC+ members after peak oil, will make this a volatile decline.

New modelling in the report shows how volatility poses a much greater threat than low prices to the Alberta economy. A conservative outlook on price volatility finds that its damage to Alberta’s economy could be more than five times worse than the effect of just low prices.

The report concludes that, unless there are innovations in the uses of oil for non-combustion, also known as "bitumen beyond combustion," the oil sector will contribute less and less to Alberta’s prosperity. The report models a potential drop in employment from the oil sector of 24,300 full-time jobs per year on average toward 2050, as well as a potential 43% drop in royalties from the sector to the Alberta government.

"After a temporary rebound this decade, the long-term outlook for Alberta’s oil sector is bleak," said report author and economist, Aaron Cosbey. "Governments need to focus investments not on propping up a shrinking sector but on diversifying the economy and advancing new growth opportunities."

View the full report here.

Media inquiries:

Vanessa Farquharson
Director, Communications
[email protected]
(613) 238-2296 ext. 114

New Delhi, April 28, 2021—As millions of Indians await the government’s response to a record increase in the price of liquefied petroleum gas (LPG), experts warn that poor households may benefit two times less than better-off consumers from LPG support if the government doesn’t change the design of the LPG subsidy policy.

According to a new report (How to Target LPG Subsidies in India from the International Institute for Sustainable Development and the Initiative for Sustainable Energy Policy, at Johns Hopkins University),  the poorest 40% of households in rural and urban parts of Jharkhand received less than 30% of government LPG support in FY2019, when LPG subsidies comprised nearly 28% of all central government energy subsidies. 

The government halted LPG subsidies in May 2020 due to low oil prices and consequently lowered domestic LPG cylinder rates. However, LPG cylinder prices have recently increased from INR 594 in May 2020 to INR819 in March 2021, leaving millions of Indians struggling to afford the cooking fuel. Experts warn that LPG price support for poor households is vital and needs to be reintroduced urgently, but the existing policies need redesign to support those who need it the most.

“It's clear that poor households need LPG subsidy so when the government reintroduces LPG subsidies, it should avoid repeating old mistakes and channel benefits toward poor households, who are otherwise compelled to rely on less-clean biomass-based solid fuels,” says the report author, Shruti Sharma. “Rationalizing subsidies will be crucial for steering away from a regressive subsidy regime and saving the government crores during these tough economic times.”

According to the experts, the main bottleneck in improving subsidy distribution is high consumption of subsidized LPG cylinders by better-off households. The majority of India’s rural households continue to use more of the freely available wood and biomass-based fuels instead of subsidized LPG, while better-off households with higher consumption of subsidized LPG end up receiving a larger share of the subsidies. 

Experts highlight that the lack of data on the efficiency of the LPG subsidies has prevented the government from recognizing the inequity in distribution. “Jharkhand’s case study shows clearly that there is a knowledge gap in identifying poor households accurately,” says Sharma. “If we want to fix the problem of unaffordability, targeting is key.”

Experts recommend that focusing subsidy benefits on a narrower subset of beneficiaries can not only support the poorest consumers but also lower the overall program cost. 

The study estimates that poor households in Jharkhand with a Pradhan Mantri Ujjwala Yojana (PMUY) connection consumed only 5.6 cylinders annually—far lower than the current annual limit (or quota) of subsidized cylinders set at 12. Until poor households can increase their LPG cylinder consumption, the government can consider further reductions in the annual limit from 12 to 9 cylinders. The study estimates that this could reduce subsidy expenditure by 14% in rural areas and 19% in urban areas without significantly changing the average distribution of benefits. 

The study also found that there was no good link between poverty and whether or not households were PMUY beneficiaries: there was a mix of low-income and higher-income households among both PMUY and non-PMUY households. This means that trying to focus the subsidy only on PMUY beneficiaries—a commonly aired suggestion over the past several years—might create more problems than solutions. 

In the short term, the Centre must invest in mapping the knowledge gap and identifying the equity of LPG subsidies across India. In the medium term, experts recommend that state governments should consider testing smarter indicators like vehicle ownership to better identify well-off households and restrict their LPG subsidy. “Poverty is contextual, and this report tested interventions for Jharkhand, a state with high poverty, so findings might not be the same for states with lower poverty levels,” said Christopher Beaton, a study co-author. 

The COVID-19 crisis has severely affected the incomes of poor households, further stressing the need to increase their support for LPG subsidies. “The lack of clarity on LPG subsidies may push poor households who cannot afford unsubsidized LPG to using unclean biomass, severely impacting the health of women and young children—already, we found that the poorest households had to dedicate 9%–11% of their monthly expenditure, compared to only 3% among better-off households. The government should consider better targeting of LPG subsidies to increase affordability for the poorest,” said Beaton.

There will be two new research projects kicking off this year—both of which had been planned but ultimately postponed last year under the strict limitations imposed due to the COVID-19 virus.

The first project will explore what happens to all elements of a lake—from its zooplankton to its fish—when microplastics are introduced. Plastics are used in all aspects of contemporary life, but little is known about what happens when they break down and reach our precious water supplies.

The second project will discover what happens when one of the most prescribed drugs in Canada—venlafaxine, a common antidepressant—is flushed out from humans and reaches our lakes. How does it affect how fish swim and interact? Does it have an impact on fish populations?

“Thanks to careful planning and a dedicated team, we are thrilled to be able to start new research this year after a challenging, yet successful, 2020,” said Matthew McCandless, executive director, IISD Experimental Lakes Area.

“Last year, we worked hard to keep one of the world’s longest environmental datasets running; this year we are starting critical new research into the impacts of plastics and antidepressants on our freshwater supplies. We are also maintaining existing projects exploring how best to clean up oil spills and how we can treat harmful algal blooms.”

“As always, safety will be our first priority, with only a select group of researchers physically working at the site—more than were allowed at the site last year,” said Pauline Gerrard, deputy director, IISD Experimental Lakes Area.

“Of course, those researchers will be required to self-isolate for two weeks before and after they are at the facility and will follow strict protocols whilst working there.”

IISD Experimental Lakes Area is the world’s freshwater laboratory. A series of 58 lakes and their watersheds in northwestern Ontario, Canada, IISD-ELA is the only place in the world where scientists can research on and manipulate real lakes to build a more accurate and complete picture of what human activity is doing to freshwater systems. The findings from over 50 years of ground-breaking research have rewritten environmental policy around the world—from mitigating algal blooms to reducing how much mercury gets into our waterways—and aim to keep fresh water clean around the world for generations to come.

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For more information, and to speak to a researcher, contact:

Sumeep Bath, Editorial and Communications Manager, IISD Experimental Lakes Area,

[email protected] or +1 (204) 599 2595

The exhibition Next Season: Art and Science in the Face of the Climate Future will kick off next Thursday, April 22, at the Costa Rican Museum of Contemporary Art and Design (MADC, its Spanish acronym) in San Jose. Open to the public until June 19, the exhibition will showcase works depicting climate change adaptation and mitigation developed by eight artists during residencies in some of the most important scientific centres in the Central America country.

Undertaken by the Directorate of Climate Change of the Costa Rican Ministry of Environment and Energy (MINAE), in partnership with the International Institute for Sustainable Development (IISD), Next Season aims to explore the intersections of contemporary art research and the sciences in light of climate change along with the concepts of adaptation, mitigation, and climate action. This project is financed in part by the Federal Ministry for Economic Cooperation and Development of Germany via the NDC Partnership Climate Action Enhancement Package (CAEP).

Eight Costa Rican artists, selected in January through a public call, will exhibit their climate crisis work developed during residencies in the scientific centres. From February to April, Elia Arce, Carlos Fernández, Esteban Hidalgo, Sara Mata, Rosella Matamoros, Óscar Ruiz Schmidt, Jonathan Torres, and Christian Wedel developed projects that combined their artistic research interests with climate crisis information and data.

"Our country has been a pioneer in providing ideas and practical solutions to address climate change, but we need to broaden the discussion on the climate crisis to new territories. The eight works exhibited at the Museum of Contemporary Art and Design bring the Costa Rican public closer to climate change issues and offer alternatives beyond technical reports. I hope this is just the first of many Next Season exhibitions and initiatives,"

Andrea Meza Murillo, Costa Rican ministry of Environment and Energy.

Through their artwork, the artists pose urgent questions about the impact of climate change on various aspects of our lives, such as our interactions with ecosystems, in addition to proposing new dialogues between arts and science. With their cross-disciplinary approaches, the eight pieces exhibit different strategies to address the climate crisis, from direct confrontation to a thought-provoking poetic approach.

Watch the video about our project Next Season:

According to the director of MADC, Paz Monge, "hosting interdisciplinary initiatives such as Next Season in the museum allows the exploration of art as a common ground for different disciplines, contributing to the visual arts sector. These projects bring us even closer to the impacts of climate change, creating a collective cultural awareness around it. The MADC becomes an instrument for promoting this fundamental issue for global well-being."

The selection of the projects to be exhibited at MADC was made by an independent selection committee comprised of Daniel Morchain, Policy Advisor in Adaptation at IISD; Daniel Soto Morúa, Chief Curator of MADC; and Ximena Loría, Founder and Executive Director of Asociación Misión 2 Grados (appointed by the DCC), who evaluated the projects from among 60 proposals received during a public call for proposals process.

“The overvaluation of technocratic knowledge at the cost of a more social approach is a gap that has always existed in relation to efforts to adapt to climate change impacts. More is known about the impact of drought on agricultural yields than on gender relations or people's mental health. Next Season contributes to filling this gap and demonstrating that bringing citizens closer to climate issues through art will result in more effective adaptation and mitigation efforts."

Daniel Morchain , Adaptation Policy Advisor, IISD

"The artists intend not only to draw attention to specific problems but to highlight the interconnectedness that underlies those derived from climate change; and thus, they raise our awareness of the complexity of the world that surrounds us and alert us to the ruptures in our relationship with it. Next Season works seek to reveal the ecological, social, economic and political consequences related to climate change," said Fernando Chaves Espinach and Daniel Soto Morúa, curators of the exhibition.

These are the exhibition's artists and their projects:

Next Season is a complement to the actions on climate change carried out by the Costa Rican government, including instruments such as the National Adaptation Policy, the National Decarbonization Plan, and the Nationally Determined Contribution. These instruments establish a way forward, and efforts such as Next Season seek alternatives and new ideas.

This exhibition is also part of the cultural activities celebrating 200 years of Costa Rica independence.

Photos:  Pablo Cambronero

SUMMARY

Next Season: Art and Science in the Face of the Climate Future

Collective exhibition curated by Daniel Soto Morúa and Fernando Chaves Espinach.

Rooms 2 and 3 of the Museum of Contemporary Art and Design (MADC) at the National Culture Centre (CENAC), San José, Costa Rica

From 22 April to 19 June 2021, Tuesday to Saturday, from 10 a.m. to 4:55 p.m.

For media inquiries, please contact:

• Cesar Henrique Arrais | [email protected]
• Diego Arguedas Ortiz | [email protected]
• Randall Serrano Torres | [email protected]

The City of Cape Town’s drive to procure or generate their own electricity is one of the first steps in solving South Africa’s energy crisis, according to a new study by the International Institute for Sustainable Development (IISD). 

In Power by All: Alternatives to a privately owned future for renewable energy in South Africa, researchers look at how different business models might increase the share of renewable energy in South Africa’s electricity sector. The report analyses four successful international case studies, identifying potential opportunities and challenges in applying these models in South Africa.

“The study clearly shows that allowing municipalities to procure or generate their own electricity will reduce pressure on the strained South African electricity system, diversify the country’s energy mix, and lessen fiscal pressure. It is a step in the right direction and needs to be given the opportunity to succeed,” says Richard Bridle, a lead author of the study.

Locally, the City of Cape Town has been trying to obtain the right to procure their own renewable energy through years of court cases. In October 2020, Minister of Mineral Resources and Energy Gwede Mantashe amended the electricity regulations to allow municipalities to develop or procure their own power. This is a pivotal stride toward increasing renewable energy in the country while also retaining public ownership of the energy sector.

One of the case studies looks at the successes of German municipalities since evolving into providers of a range of public goods such as electricity, water, gas, basic infrastructure, and services.

“Looking at Germany, we see that municipal ownership of renewable energy can allow public entities at the subnational level to tap into existing customer, legislative, and infrastructural networks to create regional webs of renewable energy projects,” says Bridle.

This model is not without its flaws and South African municipalities are obviously different from those in Germany. However, researchers say the pursuit of municipal ownership is still a critical step toward a just transition. 

In Germany, the electricity sector was liberalized in 1998, creating a favourable environment for municipalities to take control of their electricity supply and for consumers to freely choose their electricity supplier. Municipal investments in renewables proliferated and installed renewable electricity increased 143% in five years.

The IISD study shows that municipalities, given a supportive and enabling context, have the potential to play a key role in the electricity system by delivering a distributed model of publicly owned electricity generation. It also shows that South Africa does not face a binary choice between public ownership through Eskom and private ownership through Independent Power Producers—instead, the country will need an all hands on deck approach to transform its electricity system.

A new study by the International Institute for Sustainable Development (IISD) suggests that Eskom holds the key to fundamentally transforming the country’s electricity sector. At present, Eskom’s heavy reliance on aging and unreliable coal-fired power stations has led to ongoing rolling blackouts across South Africa that have cost the country more than R120 billion over the past two years—yet the rollout of new generation capacity has been slow.

“At the moment Eskom is seen as a barrier to renewable energy deployment, but it doesn’t have to be,” says Chido Muzondo, a lead author of the study. “What this research shows is that with the right business model—and sufficient political support—it is entirely possible for a state-owned utility to pivot out of fossil fuels and into more cost-effective and reliable renewable energy.”

In Power by All: Alternatives to a privately owned future for renewable energy in South Africa, researchers analysed four international cases of publicly and community-owned renewables. One of these case studies looks at Ørsted, a state-owned energy utility in Denmark which was successfully transformed from a fossil fuel dependent utility into a global leader in renewable energy. This example could provide valuable insights into Eskom’s future, given Eskom’s intention to reach net-zero emissions by 2050.

In 2008, Ørsted, then known as DONG, was an energy utility similar to Eskom, generating around 85% of its power and heat from fossil fuels and only 15% from renewable energy sources. By 2019, Ørsted became the world’s largest offshore wind power generator, with renewables accounting for 86% of its total generation capacity.  

Ørsted’s first step to becoming a renewable power utility was establishing a wind power business unit. In 2006, only two percent of its 4,500 employees worked in the wind energy department. By 2018, half of the 6,000 employees were employed within business units focusing on wind and in 2019, it became the world’s largest offshore wind generator.

“In the Ørsted case study, the development of a small but capable business unit that developed a functional business model allowed the leadership to take the decision to transition the entire utility. This did not happen overnight and the context in South Africa is  obviously different—but this could be the first step towards a transition to clean energy in South Africa,” Muzondo says.

The company initially faced some opposition from the Danish government and parliament due to the fear of job losses from transitioning to renewable energy—fears that have been echoed in South Africa too. Ultimately, the utility addressed these concerns through wide-ranging consultation and clear communication.

In a move similar to Ørsted's, Eskom created a Just Energy Transition (JET) office in 2020. Muzondo says that efforts to create new sustainable business units, like Eskom’s JET office, should be supported as they may one day enable a transition of the entire utility.

“The Ørsted case shows that with support from the government and committed leadership, state-owned enterprise transition has the potential to transform the energy sector of a country and transition jobs from the fossil fuel industry to renewables,” she says.

30 March 2021—Today sees the release of the data on project financing from the nine major Multilateral Development Banks (MDBs) on the Energy Policy Tracker and a new Big Shift Global briefing, showing that, since the beginning of the pandemic, the banks provided at least USD 12 billion to clean energy and USD 3 billion for fossil fuels. 2020 was also the first year where there might be no project financing for coal from the MDBs, although transparency from the banks on their finance flows remains an issue.

The analysis shows that overall project finance spending on fossil fuels fell by 40% in 2018–2020 compared to the period 2015–2017. While this is a welcome step as a result of many of the banks’ exclusion policies on coal and specific areas of oil and gas, experts highlight that the 2020 drop is partially a result of the pandemic-fuelled decline for major oil and gas project approvals as well as less transparent spending towards general recovery packages.

In 2020, the nine MDBs combined provided at least USD 3 billion in support for fossil fuels, a figure that is fundamentally at odds with the many statements of support for a green recovery and a transition to the green economy that all the banks have made.

Gas made up more than 75% of known MDB fossil fuel support in both 2020 and the two years preceding it, marking this as the key area to address for all of the banks. The available data also shows that 2020 may be the first year the nine major Multilateral Development Banks had zero known finance for coal—but as the IsDB has suspended reporting of its project finance, the publicly-available data might be incomplete.

This data has been released ahead of the UK Global Summit on Climate and Development and the Spring Meetings of the World Bank Group and the International Monetary Fund. As the UK, EU, and US move to end their international public finance for fossil fuels, pressure is mounting on the banks to do so as well. This release also follows two letters calling on the World Bank to make a whole-of-institution commitment to end all types of support for fossil fuels at their 2021 Spring Meetings—one from nine executive directors of the World Bank and another from more than 150 civil society organizations and academics.

Lucile Dufour, Senior Policy Adviser, International Institute for Sustainable Development said: “The addition of MDBs to the Energy Policy Tracker allows policymakers to have a clearer picture over the direction of the recovery from COVID-19. The drop in MDBs’ project finance to fossil fuels demonstrates that when there’s a will, there’s a way: the recovery from COVID-19 can help build back better, by supporting clean energy projects in developing countries. However, MDBs still have a long way to go to provide fully fossil-free international support aligned with the Paris Agreement. The shift observed in 2020 should be the first stepping stone to make 2021 the year in which the public finance balance finally tips from fossils to clean.”

Sophie Richmond, Big Shift Global Coordinator, said: “This shift by the MDBs in investing more finance in renewable energy is a welcome step but it is not enough. To tackle the climate crisis, we need to see all finance shifted out of fossil fuels and into sustainable, renewable energy that doesn’t hurt the planet or communities. The MDBs’ current investments are locking in decades of emissions, and damaging the environment in which the most vulnerable people live. We call on all the MDBs to lead the way in urgently shifting all remaining finance out of coal, oil and gas, and invest in sustainable, renewable energy that will help provide energy access for everyone."

Bronwen Tucker, Research Analyst, Oil Change International said: “The MDBs first pledged to align their finance with the Paris Agreement in 2017, and in 2021 we’re still waiting. As the Asian Development Bank and World Bank Group draft new climate and energy policies this Spring, we’re looking to them to join the European Investment Bank, the EU, UK, US, and others who have recently committed to end their public finance for fossil fuels. These first movers should work together to change global norms towards ending public finance for fossil fuels ahead of the UN Climate Summit in November. At this point in the climate emergency, we don’t just need leadership, we need leadership that’s strategically aimed at creating a domino effect across institutions.”

Out of the nine MDBs, the EIB stands out for its clean energy funding: USD 6 billion, almost nine times what it spent on fossil fuels. The World Bank still provides the majority of fossil fuel funding: USD 5.7 billion across the 2018–2020 period. The EBRD and AIIB are the only outliers, as their spending on fossil fuels did not reduce across the 2018–2020 period, despite both banks having clear mission statements on supporting a transition towards clean energy.

February 25, 2021, Ottawa—Canada’s quantified federal fossil fuel subsidies rose to CAD 1.9 billion last year, marking a threefold increase since 2019, according to a new report from the International Institute for Sustainable Development (IISD). The findings indicate that this increase can be largely attributed to fossil fuel funding commitments made in COVID-19 recovery packages. 

“With the Canadian government expected to release its budget for the upcoming year in March, policy-makers need to carefully consider how to spend billions of stimulus dollars in a way that accelerates the transition away from fossil fuels and towards zero emissions while also protecting workers and communities,” says Vanessa Corkal of IISD, lead author of Federal Fossil Fuel Subsidies in Canada: COVID-19 edition. “How recovery funds are spent could make or break the success of Canada’s newly strengthened climate plan, and ultimately, our ability to ensure an equitable and climate-safe future.”

While some of the fossil fuel subsidies provided since the start of the pandemic aim to address environmental or employment-related issues, others do not. To achieve Canada’s climate targets, the report emphasizes that governments must phase out fossil fuel subsidies. 

The report also highlights the importance of applying green strings—clear environmental and social conditions—to all COVID-19 recovery measures. This must be coupled with increased transparency and accountability, experts say, noting that the CAD 1.9 billion total is incomplete since many fossil fuel subsidies are unquantifiable due to a lack of government data.

“The reported $1.9 billion in federal fossil fuel subsidies is only part of the picture in Canada since that figure doesn’t encompass the even higher total for subsidies extended at the provincial level,” says Philip Gass, Transitions Lead at IISD Energy. “The increase in fossil fuel support since the pandemic began is mirrored by some provinces as well, so the upward trend is consistent across different levels of government.”

As Canada reinforces its international climate commitments, the report offers policy-makers concrete steps to realize their promises and bridge the gap between words and action through subsidy reform. The government should avoid introducing new fossil fuel subsidies whenever possible, the report urges. 

The report calls for the federal government to develop a detailed roadmap for fossil fuel subsidy phaseout by 2025, complemented by strong just transition measures for fossil fuel workers and communities. Other actions recommended in the study include completing Canada’s overdue fossil fuel subsidies peer review with Argentina, phasing out public finance for fossil fuels including by aligning Export Development Canada’s policies with the country’s climate ambitions, and employing subsidy reform as a key emissions reduction tool in Canada’s next Nationally Determined Contribution to the Paris Agreement.

“Any serious plan to address the climate crisis must include a phase-out of subsidies and public finance for fossil fuels,” says Corkal. “Among G20 OECD member countries, Canada was recently ranked as the worst performer in terms of the scale of government support for oil and gas production. However, with the right policies and political will, a genuine turning point for Canada’s climate action is within reach.”