Minister McKenna announces consultations on eliminating inefficient non-tax fossil fuel subsidies
March 29, 2019 – Ottawa, Ontario
The transition to a clean economy is good for our health, our environment, and for growing good business opportunities and middle class jobs across Canada. That’s why the Government of Canada is taking concrete actions to help Canadians make a clean and affordable transition, including by investing in energy efficiency, building more public transit, phasing out the pollution from coal power, and supporting clean technologies.
The Government of Canada is also eliminating inefficient fossil fuel subsidies at the federal level by 2025. Canada has made important progress on that commitment with the rationalization of eight tax expenditures for the fossil fuel sector to date that eliminate preferential tax treatment for the sector.
To ensure Canada continues to show leadership in eliminating inefficient fossil fuel subsidies, the Minister of Environment and Climate Change, Catherine McKenna, today announced a consultation on the government’s draft framework to review non-tax measures.
To inform that consultation, Minister McKenna released the department’s draft assessment framework for inefficient non-tax fossil fuel subsidies as well as the initial results of applying that framework to federal government measures.
The consultation launched today invites comments with respect to:
- The definition of “fossil fuel subsidy” used in the draft assessment framework
- The definition of “inefficient” used in the draft assessment framework
- Additional considerations that are not currently in the framework that should be included
The consultation will run until June 30, 2019.
Targeted consultations with key stakeholders will be conducted by Michael Horgan, former Deputy Minister of Finance and Deputy Minister of Environment for the Government of Canada. The results of the consultations will be used to inform Canada’s report as a part of the peer review with Argentina, which will be made public once the peer review is finalized.
“By taking action to fight climate change, we can protect our health and create good jobs in a clean economy. We stand by our commitment with our international partners to phase out inefficient subsidies that give fossil fuels an unfair advantage over cleaner solutions. It’s important to hear directly from Canadians to ensure we are using the right definitions and criteria needed to confidently move forward in eliminating inefficient fossil fuel subsidies.”
– Catherine McKenna, Minister of Environment and Climate Change
In 2009, the G20 Leaders committed to phase out and rationalize inefficient fossil fuel subsidies while providing targeted support for the poorest.
Both the Minister of the Environment and Climate Change and the Minister of Finance are mandated to fulfil our G20 commitment. The Minister of Environment and Climate Change is working on non-tax measures while the Minister of Finance is working on tax measures.
At the 2016 North American Leaders’ Summit, Canada, the United States and Mexico made a commitment to phase out inefficient fossil fuel subsidies by 2025 and called on other members of the G20 to do the same.
In June 2018, Canada and Argentina committed to undergo peer reviews of inefficient fossil fuel subsidies under the G20 process. This process will enable both countries to compare and improve knowledge and push forward the global momentum to identify and reduce inefficient fossil fuel subsidies.
Environment and Climate Change Canada’s preliminary review assessed 36 ongoing measures undertaken across 11 federal departments, six regional development agencies and seven arm’s-length organizations.
The four non-tax fossil fuel subsidies identified in ECCC’s review include support for electricity prices in Indigenous communities, electric and alternative fuel vehicle infrastructure, and oil and gas clean technology research. The draft assessment framework used in the review did not find any of the four to be inefficient.
Fossil fuel subsidies in Canada may exist at the federal, provincial, or territorial level. However, the G20 commitment was made at the federal level, so the public consultation is focused on the federal level.
To date, Canada has eliminated eight tax preferences for the fossil fuel sector, including accelerated capital cost allowance for oil sands and reducing the deduction rates for intangible capital expenses in oil sands projects to align with rates in the conventional oil and gas sector.
Office of the Minister of Environment and Climate Change
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