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Last week, some big climate news hit the press: The Canadian government announced that it would end all “inefficient” subsidies to the fossil fuel industry. Currently, Canada hands out about $11 billion in public money each year to oil and gas companies (which, by the way, made a combined profit of nearly $40 billion last year). This compares to $1 billion in public funding for renewable energy.

Public subsidies for fossil fuels prop up an industry that is responsible for the vast majority of our country’s climate emissions, and limit our ability to invest properly in the future energy security, jobs and economic benefits that renewables are expected to deliver. 

So, this announcement is a critical step forward in achieving our emissions reductions goals, and puts Canada ahead of many developed countries who are still no closer to ending government hand-outs to polluting industries. POW Canada was a signatory to a campaign led by Environmental Defence, which was influential in getting these measures passed, and we’re stoked to see the efforts of the climate community bearing fruit. 

It’s not often we get to celebrate good climate news, so let’s collectively take a minute to soak it in. This is good stuff.

Did you soak for a bit? Good. Now let’s dive into the nitty gritty, because like all big policy announcements, there’s some important ifs, buts and maybes. Here’s what you should know.


There are some big loopholes for ‘clean’ tech and gas

The government has left room to provide funding for fossil gas (so-called natural gas) projects, a major source of methane emissions, as well as clean-tech projects such as carbon capture, which are yet to be proven effective and have been criticised as a licence to continue fossil fuel extraction. 


Fossil fuels destined for overseas markets aren’t included

Canada exports much of its oil sands products to international markets, and crown corporations like Export Development Canada will still be allowed to provide unfettered subsidies for fossil fuels destined for export. The government did announce that all subsidies would be eliminated by Fall 2024, so we can look forward to more progress in the coming year. With Canada producing some of the world’s most polluting fossil fuels, this is great news, but expect lots of kicking and screaming from the industry - there will still be work to be done.


We don’t know how the rules will be implemented or enforced

Minister Guilbeault didn’t share how the new rules (sexily called the Inefficient Fossil Fuel Subsidies Assessment Framework and Guidelines) will work in practice. First of all, what exactly does “inefficient” mean in this context? Who gets to define that and how is it decided in the project approvals process?

We do know that the rules apply across all government departments, and that to justify new fossil fuel subsidies, federal departments will have to prove that any new spending doesn’t hinder the transition to renewable energy and aligns with a pathway consistent with limiting global heating to 1.5°C. The main thing will be ensuring that the framework is unequivocal and enforceable, with mechanisms for independent oversight and review.


This is still good stuff

Although the new rules come with some important concessions, we have good reason to be optimistic. Analysis from Environmental Defence has found that the elimination of subsidies will rule out any spending on new oil, gas or coal projects. The International Energy Agency has made it clear that to achieve the world’s climate targets, there can be no new fossil fuel projects, so the new rules will position Canada as a global leader and, we can hope, encourage other developed countries to follow.

With billions of dollars in subsidies freed up, we can look forward to an increased public focus on investment in renewable energy. Despite the disappointing moratorium on project approvals from Alberta (Canada’s clean energy capital) this week, the country is on a positive trajectory to see serious clean energy development. In fact, in conversations with POW, Minister Wilkinson has said that his biggest concern is finding enough people to fill the jobs in this growing industry. And that seems like a good problem to have.


For those of you out there who’ve wondered if your voice makes a difference - this is proof that it does. Please keep showing up, signing petitions, calling your MPs and generally getting loud. It works.

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