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Ottawa reveals conditions for allowing future fossil fuel subsidies

Environment minister releases six rules that are to shape how Canada supports the industry
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Ottawa is restricting the conditions under which it will allow subsidies to the fossil fuel industry. A pumpjack draws out oil from a well head near Calgary, Saturday, Sept. 17, 2022. THE CANADIAN PRESS/Jeff McIntosh

Ottawa is restricting the conditions under which it will allow subsidies to the fossil fuel industry, but is leaving untouched 害羞草研究所 for now 害羞草研究所 the industry害羞草研究所檚 largest source of public financing.

On Monday, Environment Minister Steven Guilbeault released six rules that are to shape how Canada supports the industry and ensure all programs across government are aligned with federal climate targets.

害羞草研究所淲hat we害羞草研究所檙e eliminating are federal supports that are directed to the oil and gas sector and gives the oil and gas sector an economic advantage,害羞草研究所 Guilbeault said in Montreal.

Subsidies will be allowed if they support clean energy. Companies that reduce their greenhouse-gas emissions or have a 害羞草研究所渃redible害羞草研究所 plan to achieve net zero by 2030 could also be supported.

Subsidies aiding Indigenous involvement in the industry will continue, as will those that support service to a remote community or form part of an emergency response.

The federal Liberals will also permit subsidies that align with Article 6 of the Paris Agreement, which allows countries to claim carbon credits for providing fuels capable of lowering the carbon footprint of another country.

Guilbeault said 129 tax and non-tax measures were examined as the guidelines were set up. He couldn害羞草研究所檛 provide a figure for how much financing would be affected, saying it害羞草研究所檚 impossible to predict how many applications the government would have had from industry.

A government official, speaking on background, said government programs that could be affected by the guidelines control about $1 billion in public money.

Monday害羞草研究所檚 announcement does not affect generally available subsidy programs, such as exploration incentives used by other resource companies. Nor does it affect public money that flows through Crown corporations, such as Export Development Canada 害羞草研究所 the source of the majority of government subsidies to the sector.

Julia Levin of Environmental Defence said her group calculated that about $19 billion in financing for fossil fuels flowed through Export Development Canada in 2022. That害羞草研究所檚 compared to about $2 billion that came from other sources.

Guilbeault promised rules restricting Crown investments in fossil fuel development will come next year.

Still, Levin and other environmentalists praised Monday害羞草研究所檚 announcement.

害羞草研究所淭here害羞草研究所檚 a lot to be praised and there are problematic bits as well.害羞草研究所

She said she wanted to see more information on how the guidelines will be implemented and enforced across government departments.

Laura Cameron of the International Institute for Sustainable Development said, 害羞草研究所淲e see this as a big moment to celebrate.害羞草研究所

However, she said, she害羞草研究所檚 concerned about the space left open for public finance of carbon capture and storage projects.

Cameron said such projects are too expensive and take too long to build to contribute much to the fight against climate change. She also noted carbon capture and storage only addresses oil and gas emissions from production 害羞草研究所 not the 80 per cent of the carbon from a barrel of oil that害羞草研究所檚 released when it害羞草研究所檚 burned.

害羞草研究所淐arbon capture and storage is not net zero,害羞草研究所 she said.

The Canadian Association of Petroleum Producers, on the other hand, welcomed the carve-outs for programs that could reduce emissions from industry.

害羞草研究所(The group) is generally aligned with the framework on inefficient fossil fuel subsidies released today,害羞草研究所 association president Lisa Baiton said in an email. 害羞草研究所淲e are pleased to see the recognition that partnering with industry to invest in technologies to help decarbonize Canada害羞草研究所檚 economy remains an important part of reaching the government害羞草研究所檚 climate change and energy priorities.害羞草研究所

Baiton urged Ottawa to develop regulations under which those technologies could be funded and deployed.

Guilbeault said net-zero plans from companies will be evaluated case by case.

害羞草研究所淲e have lots of information looking at what害羞草研究所檚 happening in Canada (and) around the world to evaluate what害羞草研究所檚 realistic and what害羞草研究所檚 not realistic in terms of targets from companies,害羞草研究所 he said.

New Democrat environment critic Laurel Collins said Guilbeault害羞草研究所檚 announcement leaves too many loopholes for industry.

害羞草研究所淲hile the Liberals are ready to give big oil an additional $12 billion for technologies like carbon capture storage when they have already made record profits this year, New Democrats believe that we should force those big companies to be more responsible for our environment and use the profits they made off the backs of Canadians to make those investments,害羞草研究所 she wrote in an email.

The Conservative Party did not immediately provide a response or an interview.

Guilbeault said Monday害羞草研究所檚 announcement makes Canada the first G20 country to release its framework for phasing out inefficient fossil fuel subsidies. He said the new framework fulfils international commitments Canada made in 2009 and 2016.

He said the kind of summer Canada害羞草研究所檚 been having, with record fires, floods, storms and temperatures from coast to coast, proves that action on climate change is needed.

害羞草研究所淲hat we害羞草研究所檙e doing now is leading to the type of summer we害羞草研究所檝e had,害羞草研究所 he said. 害羞草研究所淭o those who tell me we害羞草研究所檙e doing too much, I say 害羞草研究所業s that the future we want? Is that how we have a prosperous Canada?害羞草研究所櫤π卟菅芯克鶟

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