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Climate Change Emergency: Fossil Fuel Subsidies

"Fossil fuel producer subsidies delay a low-carbon transition" (E1).

Erickson, Peter, et al. "Why Fossil Fuel Producer Subsidies Matter." Nature, vol. 578, 6 Feb. 2020, pp. E1-E4.

"[E]nergy subsidies can be defined as any government action that lowers the cost of energy production, raises the revenues of energy producers or lowers the price paid by energy consumers" (3).

Lessons Drawn from Reforms of Energy Subsidies. World Economic Forum, 2013.

"In September 2015, Canada committed to achieving the United Nations’ 2030 Agenda for Sustainable Development. . . . Goal 12 of the United Nations’ sustainable development goals . . . sets a target to 'rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions, in accordance with national circumstances . . . to reflect their environmental impacts'" (3).

"The Department of Finance Canada is responsible for providing analysis and advice on identifying which tax measures are subsidies that support or encourage the production or consumption of fossil fuels" (3).

"[T]he Department of Finance Canada’s assessments to identify inefficient tax subsidies for fossil fuels were incomplete. . . . The Department’s assessments focused almost exclusively on fiscal and economic considerations and did not consider the integration of economic, social, and environmental sustainability in subsidizing the fossil fuel sector over the long term" (4-5).

Commissioner of the Environment and Sustainable Development. Tax Subsidies for Fossil Fuels—Department of Finance Canada. Office of the Auditor General of Canada, 2019.

"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. Of the 128 revenue foregone policies we identified in the fossil fuel sector, only 50% were quantifiable. Together, these policies accounted for around CAD 3.2 billion in foregone revenue. If the other 50% of policies could be costed, this value would be much higher" (iii).

Laan, Tara, and Vanessa Corkal. International Best Practices: Estimating Tax Subsidies for Fossil Fuels in Canada. International Institute for Sustainable Development, 2020.

"Environment and Climate Change Canada is responsible for providing analysis and advice on identifying which non-tax measures across the federal government are considered subsidies because they support or encourage the consumption or production of fossil fuels, and which of those subsidies are inefficient" (3).

"Environment and Climate Change Canada’s work to identify inefficient non-tax subsidies for fossil fuels was incomplete and not rigorous. . . . Once Environment and Climate Change Canada identified non-tax subsidies for the fossil fuel sector, it assessed whether these were inefficient. We found that the Department identified no inefficient non-tax subsidies. However, it had not defined 'inefficient' to guide its determinations. We also found that in its assessments, the Department did not consider the economic, social, and environmental sustainability of subsidizing the fossil fuel sector" (4-5).

Commissioner of the Environment and Sustainable Development. Non-Tax Subsidies for Fossil Fuels—Environment and Climate Change Canada. Office of the Auditor General of Canada, 2019.

"[I]n fiscal year 2017–18, BC provided over CAD 830 million in fossil fuel subsidies through provincial tax exemptions, royalty reductions and direct spending commitments. BC has also amassed at least CAD 2.6 billion to 3.1 billion in outstanding royalty credits for oil and gas producers, representing significant foregone public revenue for future years. These are conservative estimates since not all data related to provincial spending on fossil fuel subsidies is publicly accessible" (1).

Corkal, Vanessa, and Philip Gass. Locked In and Losing Out: British Columbia's Fossil Fuel Subsidies. International Institute for Sustainable Development, 2019.

"In total, the Canadian government provided at least CAD 1.91 billion in fossil fuel subsidies in 2020, a jump of over 200% from 2019 levels. . . . Direct spending on fossil fuels under non-COVID-19-related federal initiatives appears to have declined (CAD 90 million compared to CAD 600 million in 2019–2020). It is difficult to determine if this is due to concerted measures to reduce subsidies, a lag in reporting, or reduced industrial activity during the pandemic. It is possible all three of these factors influence this decline. The CAD 1.91 billion figure for 2020 is also incomplete. There is insufficient data available to fully document the level of subsidies provided at the federal level" (1).

Corkal, Vanessa. Federal Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development, 2021.