441-01553 (Environment)

On December 8, 2022, the Government of Canada published policy guidelines to implement its commitment to the Statement on International Public Support for the Clean Energy Transition, which Canada signed at the United Nations Climate Change Conference of the Parties (COP26) (November 2021) alongside 38 other countries and institutions and was one of only two net-exporters of energy to sign.

These guidelines will ensure that Canada meets — and in some cases exceeds — the ambition announced at COP26.  The guidelines will:

• End new, direct public support for international unabated fossil fuel energy projects via federal departments, agencies, and Crown corporations, and federal support programs;
• Guide Canada’s voting on the boards of multilateral development banks; and
• Inform Canada’s positions in multilateral forums such as the G7, G20, and The Organization for Economic Cooperation and Development (OECD).

By ending new direct public support for the international unabated fossil fuel energy sector, Canada has met its commitments under the Glasgow Statement and will ensure its investments abroad are coherent with its domestic and international climate and development goals, which means investing in clean energy and renewables.

Decarbonisation is an economic opportunity for Canada that will also provide co-benefits such as improved health outcomes, improved energy security and price stability, and green job creation.

The federal government made investments in clean energy in Budget 2023 such as $16.4 billion in tax credits for clean technology manufacturing, clean electricity, and hydrogen over the next five years and $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada. The federal government also made investments aimed at speeding the energy transition (e.g., 2023 investment for Volkswagen to build a battery plant in St. Thomas, Ontario, and the 2021 investment to phase out coal-fired processes at Algoma Steel in Sault Ste. Marie, Ontario).

On July 24, 2023, the Government of Canada released the Inefficient Fossil Fuel Subsidies Government of Canada Self Review Assessment Framework and the Inefficient Fossil Fuel Subsidies Government of Canada Guidelines, which were jointly developed by Environment and Climate Change Canada and the Department of Finance Canada. Eliminating inefficient fossil fuel subsidies and redoubling our focus on clean energy is a key step in building Canada’s net-zero economy by 2050 and supporting good-paying jobs for Canadians for generations to come.

The Government of Canada’s commitment to eliminating inefficient fossil fuel subsidies signals both greater support for clean technology as well as emission reductions across the economy from traditional sectors. This will help create and secure middle-class jobs from coast to coast to coast while protecting the environment.

The Assessment Framework builds on Canada’s commitment under the 2021 Glasgow statement to end new direct public support for the international unabated fossil fuel energy sector. Putting the Assessment Framework and Guidelines into force will ensure any government supports for the sector will not delay the transition to renewables, are in compliance with the goals of the Paris Agreement to limit warming to 1.5 °C, and account for the availability of credible alternative energy sources.

Canada is also committed to phasing out public financing of the fossil fuel sector. This refers to financing beyond the scope of today’s fossil fuel subsidies commitment. The Government’s work will identify current public financing by 2024 and announce by fall 2024 the implementation plan to phase out public financing of the fossil fuel sector.

Canada is the only G20 country to phase out inefficient fossil fuel subsidies ahead of the 2025 deadline. It is the first country to release a rigorous analytical guide that both fulfills its commitment and transparently supports action. By eliminating inefficient fossil fuel subsidies, the Government of Canada is enabling greater support for clean technology, clean growth, and accelerated efforts to decarbonize important Canadian industries, including the oil and gas sector, which continues to play an important role in the Canadian economy.