Inefficient fossil fuel subsidies

Climate change represents one of the biggest threats to global security, environmental protection and economic prosperity. The Government of Canada is fulfilling both domestic and international climate commitments to support the global transition to cleaner, renewable forms of energy, by transitioning Canada away from its dependency on fossil fuels. Eliminating inefficient fossil fuel subsidies is a key step in building Canada's net-zero economy by 2050.

Phasing Out Inefficient Fossil Fuel Subsidies

The government released an Assessment Framework and Guidelines that deliver on its G7 and G20 commitments to phase out or rationalize inefficient fossil fuel subsidies.

The Assessment Framework and Guidelines specify that the Government of Canada will not have fossil fuel subsidies unless they meet one or more of the following criteria:

  1. Enable significant net GHG emissions reductions in Canada or internationally in alignment with Article 6 of the Paris Agreement.
  2. Support clean energy, clean technology, or renewable energy.
  3. Provide an essential energy service to a remote community.
  4. Provide short-term support for emergency response.
  5. Support Indigenous economic participation in fossil fuel activities.
  6. Support abated production processes or projects that have a credible plan to achieve net-zero emissions by 2030.

Assessment Framework

The Assessment Framework is the tool that Canada has used to determine whether tax and non-tax measures constitute inefficient fossil fuel subsidies. The Assessment Framework is also the tool that Canada will use to assess federal measures in the context of Canada's G20 peer review of inefficient fossil fuel subsidies, including both tax and non-tax measures.

Government of Canada Guidelines

The Guidelines are the government's tool to achieve two objectives related to Canada's G7 and G20 commitments to eliminate inefficient fossil fuel subsidies:

  1. Avoid creating new measures that would be considered inefficient fossil fuel subsidies;
  2. Ensure existing policies and programs no longer support the fossil fuel sector unless it is aligned with the framework.

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