Why climate groups say Ottawa’s plan to end fossil fuel subsidies has loopholes

Environment Minister Steven Guilbeault released a framework to review and phase out inefficient fossil fuel subsidies. Canada is the first wealthy country to roll out such a plan.

With Canadians dealing with wildfires in many parts of the country and floods in others, environmental groups say the federal government’s plan to phase out fossil fuel subsidies is a welcome step, but one that doesn’t go far enough.

Environment Minister Steven Guilbeault on Monday released a framework to review and phase out inefficient fossil fuel subsidies. Canada is the first G20 country to roll out such a plan.

Unless a fossil fuel company significantly reduces greenhouse gas emissions, supports Indigenous participation, offers essential energy services to remote communities, provides short-term support for an emergency or supports projects that include carbon capture, their subsidies would be deemed “inefficient” and phased out.

The guidelines, which Guilbeault announced in Montreal, were jointly prepared by the Environment Ministry and the Finance Ministry.

“By eliminating inefficient fossil fuel subsidies, we are encouraging smart and efficient government investment decisions that can increase Canada’s competitiveness in a decarbonizing global economy, while avoiding creation of stranded assets,” Guilbeault said.

“Phasing out fossil fuel subsidies in Canada will ensure government programs and spending support an energy sector that is aligned with our ambitious climate goals.”

The minister also announced that they would be phasing out public financing in the fossil fuel sector. But this plan will not be implemented until the fall of 2024.

The plans, though, have drawn criticism from activists who say they do not go far enough — in particular, because the plan to phase out subsidies does not apply to loans, guarantees and equity given to the TransMountain and Coastal GasLink pipelines.