Fourteen years ago, Canada joined other G20 nations in pledging to pull fossil fuel companies out of government subsidies that drive wasteful consumption and undermine efforts to slow climate change.
Next week, that promise will finally be fulfilled.
Environment Minister Steven Guilbeau will issue policy guidelines to govern the circumstances under which future federal investments can still flow into Canadian oil and gas companies.
“Canada will no longer support subsidies that directly target the oil and gas sector and give it an edge over other sectors, or subsidies that support fossil fuel production,” Guilbeau said. I said this when I released it to the media prior to the maintenance. A ministerial meeting was held in Belgium on Wednesday.
Guilbeau said in an interview from Brussels on Friday that the policy would be similar to the Canadian government’s announcement last year that ended most of Canada’s public financing of international fossil fuel projects.
This means that going forward, new fossil fuel projects in the country will only receive federal funding if the government is consistent with Canada’s commitment to climate change.
He said tax credits and federal aid to help companies reduce emissions, including fossil fuel companies, will continue.
This means that new tax credits for carbon capture and storage systems are unlikely to materialize.
The policy on international fossil fuel projects, announced in December, calls for a new direct approach to most “undiminished fossil fuel investments,” i.e. projects that do not prevent greenhouse gas emissions from ultimately being released into the atmosphere. Prohibited public funding.
There are limited exceptions where projects can demonstrate that they are consistent with the goal of keeping global warming as close to 1.5 degrees Celsius as possible and will not slow the transition to renewable alternatives.
This applies to loans from government departments, government agencies and Crown Corporations, including the Canadian Business Development Bank and the Canadian Export Development Bank.
Canada has already eliminated nine different tax regimes that benefit the oil and gas industry. Opinions vary as to what subsidies will remain.
Canada and Argentina initiated mutual reviews of each other’s fossil fuel subsidies in 2018 to obtain a more relevant and somewhat independent view of what is being implemented. The review, which was supposed to take place in 2020, has not yet been completed, Guilbeau said Friday.
The Organization for Economic Co-operation and Development announced in 2021 that Canada’s domestic subsidies include $3.4 billion in tax policy and $600 million in direct subsidies.
Advocacy group Environmental Defense argues that the figure should include much more, such as the $10 billion loan guarantee approved by Export Development Canada for the Trans Mountain Pipeline expansion in 2022. there is
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Environmental defense groups and the International Institute for Sustainable Development have also called for Canada to include tax credits, government loans and grants to help fossil fuel producers reduce emissions among the subsidies targeted by the upcoming policy. environmental group.
But Guilbeau said that will not happen.
When Canada first agreed to phase out fossil fuel subsidies in 2009 under the former Conservative government, the promise was targeted at “inefficient” financing. When the Liberals reaffirmed the pledge in 2016, they set the deadline to 2025, but it has since moved it up to 2023.
However, 14 years after the first pledge, neither Canada nor the G20 reached a definition of “inefficiency.” As recently as May 2022, Canadian Environment and Climate Change officials said the definition was still being finalized.
Guilbeau did not specify on Friday what that definition would be, but made it clear that he does not consider funding to help companies cut emissions “inefficient.”
Also, the tax credit for carbon capture is not specific to oil and gas companies, so it won’t give them an advantage over other industries, he said.
Environmental groups want to get rid of such technology, saying anything that encourages continued fossil fuel production is harmful.
They also noted that carbon capture systems are a new technology that has not yet proven its worth, and even if it worked, it would not reduce emissions caused by burning fossil fuels to power cars and heat homes. also pointed out.
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