Fossil fuel subsidy reform in Canada: A post-partisan issue
Almost unnoticed in Canada’s federal election campaign is the fact that all national political parties have agreed on the need to reform fossil fuel subsidies.
The Greens, Liberals and New Democratic Party (NDP) have all made public statements to this effect ahead of elections on October 19th. Meanwhile, the Conservative Party, acting as the Government of Canada, has been party to G20 and G7 statements on fossil fuel subsidy reform (FFSR) and has made some limited progress on this agenda in recent years.
When parties agree, it means not only that they all feel that an issue must be addressed, but that the best solution is known, and that you can expect improvement no matter who you elect. To have an agreement on an issue of fiscal policy and climate change, topics where the parties are normally at odds, makes the commitment on FFSR even more notable.
There are certainly differences among the parties in degree of the reform they see as necessary, and the specific subsidies they propose to reform, but the fact that all four national parties running in the Canadian election have committed to FFSR is no small feat.
The table below provides a quick look at what the parties are saying. Where possible, party platforms have been referenced, but where these are not available, or could not be found, the most recent statements on FFSR have been identified. The statements and sources are included in the table.
Canadian Political Party and Leader Statements on FFSR
| Party | Position | Source | Date |
|---|---|---|---|
Conservative | “We remain committed to the elimination of inefficient fossil fuel subsidies” | Originally Published June 8, 2015 Last Referenced August 31, 2015 | |
Green | “The Greens will also eliminate large corporate subsidies and grants programs. It makes no sense to subsidize the wealthiest companies on Earth to make the world’s most profitable product − a barrel of oil. The 2010 report of the International Energy Agency called for the removal of fossil fuel subsidies. Globally, they amount to over $300 billion a year, while renewables received approximately $30 billion. These perverse subsidies must be removed.” | Green Party Vision Green Section 1.1.2 “Get the prices right” | Last Referenced August 31, 2015 |
Liberal | “We will fulfill Canada’s G-20 commitment to phase out subsidies for the fossil fuel industry. The next step will be to allow for the use of the Canadian Exploration Expenses tax deduction only in cases of unsuccessful exploration. The savings will be redirected to investments in new and clean technologies. | Liberal Party Campaign Plan Real Change: A New Plan for Canada’s Environment and Economy | Last Referenced August 31, 2015 |
New Democratic Party | “We will eliminate the billion-dollar subsidies to the fossil-fuel industry and reinvest this money in environmentally sustainable initiatives.” | Toronto Star Commentary | Originally published December 4, 2014. Last Referenced August 31, 2015 |
For the most part these statements are very general, and there is a need for specific details on all of the pledges. The only record we can truly judge is that of the Conservative Party, which has announced and enacted reforms to subsidies for oil sands property expenses, oil sands pre-production development, and the Atlantic Investment Tax Credit. While these are positive moves, they are a small part of the subsidy picture, and much work remains to be done.
So what comes next? The scale of subsidies has already been estimated by multiple sources including in a 2010 report by IISD. The previous Commissioner of the Environment and Sustainable Development (and IISD’s current president, Scott Vaughan), the Pembina Institute, and international agencies such as the OECD and IMF have also produced estimates.
IISD is looking at this very issue, and in November will provide the next Canadian government (whoever may end up leading it) with detailed assessment of the types of transitionary policies that are needed to ensure smooth subsidy reform: the opportunities to help companies invest in cleaner and greener energy sources; training programs for workers in transitioning sectors; and reinvestment strategies for diversifying the funding base.
It is heartening to see that FFSR has been adopted by all national parties running in the Canadian federal election. This is an indication that the issue has moved, at least partially, past a debate over whether or why subsidies must be reformed, and on to the next question of how they must be reformed. On this count, the parties still differ, but IISD and others will continue to provide research and suggest solutions to help answer the question of how, providing the eventual Canadian governing party with the research and tools to undertake the reforms they have already committed to.
You might also be interested in
The Hidden Clauses That Can Hinder Tax and Investment Policy Reform
Stabilization clauses should no longer automatically be included in contracts between states and investors. If they are, they should, at a minimum, build on the latest international standards on stabilization to avoid being a barrier to sustainable development.
Coalition against fossil fuel subsidies expands but misses initial targets
The UK, Colombia, and New Zealand have signed on to a coalition of governments aiming to phase out fossil fuel subsidies, joining 13 other mainly European nations in the alliance. IISD's Vance Culbert said that half a dozen more countries—including "a few larger economy developing countries"—are talking privately to them about joining too.
Europe’s Dash for Gas in Africa puts Private Profits First
Europe’s demand for gas is contributing to expansion of LNG projects in Mozambique, Nigeria, and Senegal. This favours the interests of European oil and gas companies over those of African countries, a new report shows.
The United Kingdom, New Zealand, and Colombia Join Coalition to Phase Out Fossil Fuel Subsidies
Today on the sidelines of the UN Climate Conference in Baku (COP 29), the United Kingdom, New Zealand, and Colombia joined the international Coalition on Phasing Out Fossil Fuel Incentives Including Subsidies (COFFIS).