OTTAWA-
Weeks away from the year-end deadline it agreed to last year, Canada announced it would end new direct subsidies for fossil fuel investments and projects abroad, including those owned by Canadian companies.
The policy released Thursday afternoon applies to the extraction, production, transportation, refining and marketing of crude oil, natural gas or thermal coal, as well as power generation projects that do not don’t use technologies such as carbon capture to drastically reduce emissions.
The rules, which come into effect on January 1, will apply to direct funding of federal departments, agencies and Crown corporations.
Proponents feared Canada would opt for a narrower definition of “international” that would still allow support for Canadian companies abroad, which climate change organization Environmental Defense says accounts for about 78% of support. Canada International for such projects.
But the policy defines “international” as “operations outside the jurisdiction of Canada in the fossil fuel sector, regardless of the domicile of the owner.” This means that the federal government refrains from funding even fossil fuel projects wholly owned by Canadian companies.
“It’s a very strong policy,” said Julia Levin, Environmental Defense’s national climate program manager. “It’s very encouraging that the government obviously listened to the experts and came up with a broad definition.”
Ottawa is making the move just weeks away from the deadline it pledged, along with 38 other countries, in November 2021 at an international climate summit in Glasgow.
Among high-income signatories, the UK, France, Finland, Sweden and the European Investment Bank have already put in place policies hailed by international advocacy groups as hitting the high bar of the Declaration of Glasgow. Although the United States government has introduced policies to respond to the statement, it has released few details on how those policies are being implemented.
Levin said Canada is showing leadership. “We join the group of pioneers aligning international public spending with climate commitments,” she said.
Advocacy groups have hailed the policy, with organizations including the International Institute for Sustainable Development, Center for International Environmental Law, Climate Action Network, Amnesty International Canada and others calling it important. step forward.
“Oil and gas are generally the elephant in the room in Canadian climate policy,” Claire O’Manique, public finance analyst at Oil Change International, said in a statement. “Today’s guidance is a significant departure from that norm.”
The policy is not flawless. An international project could be supported for reasons of national security or humanitarian and emergency response, and a government could decide to adopt a broad definition of one or the other.
But even under such circumstances, the project would have to meet criteria such as meeting the goals of the Paris Agreement and demonstrating that it will not “delay or diminish the transition to renewable energy”. This should also be consistent with the goal of keeping global temperature levels 1.5°C above pre-industrial levels.
A narrow exclusion for natural gas power generation includes the additional criteria that there is no viable renewable alternative to the project and that it replaces a higher-emitting fuel source.
The government defines the criteria around these exceptions as “strict”, and Levin agreed that they are robust. “If these conditions are implemented with rigor and integrity, it really rules out any future fossil fuel financing of natural gas,” she said.
Thursday’s announcement does not cover national projects and, Natural Resources Canada said in a statement, “does not predetermine the Government of Canada’s future national framework on fossil fuel subsidies.”
The ministry says Ottawa intends to eliminate “ineffective” national fossil fuel subsidies and “significant” additional national subsidies by next year, but details are scarce.
“I was hoping with the release of this policy that they would outline the next steps. I was disappointed it wasn’t there,” Levin said. “Projects in Canada are just as destructive as projects overseas. But this policy sets us up nicely for a strong domestic funding policy and I look forward to seeing the next steps in the immediate future.”
Reacting to the policy Thursday night, the federal NDP noted that eliminating international public funding for fossil fuel projects was part of its confidence and supply agreement with the Liberals, in which the party agreed to support the minority government in key votes until 2025.
“This wouldn’t have happened if the NDP hadn’t been at the table pushing for a better climate plan for Canadians. But the Liberals continue to give Canadians’ money to ultra-wealthy CEOs who run huge, profitable oil and gas companies in Canada,” Environment Critic Laurel Collins said in a statement.
Collins said the policy is “too little, too late” and calls on Ottawa to end all fossil fuel subsidies, period, including at home.
This report from The Canadian Press was first published on December 8, 2022.
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