Subsidies for oil and gas emission reductions

The author argues that Canada's commitments to phase out fossil fuel subsidies conflict with growing public funding for emission reduction technologies like carbon capture, utilization and storage (CCUS). To manage the risk of stranded assets and inefficient spending, the paper suggests a rigorous framework based on net-zero consistency, economic value relative to alternatives, community vulnerability, and the risk level of the policy tool used. It emphasizes that the burden of proof for public benefit should lie with the companies seeking support.

• Federal efforts to phase out fossil fuel subsidies are contradicted by increasing public financing for emission reduction projects; for instance, the federal tax credit for carbon capture, utilization and storage (CCUS) is projected to cost between $1 billion and $2 billion annually by 2027.
• The Canadian oil and gas sector is highly vulnerable to global market forces, as 80% of its oil and 48% of its natural gas are exported, meaning global demand declines could curtail production regardless of domestic subsidies.
• The proposed analytical framework for public investment consists of four criteria: ensuring the project is consistent with net-zero scenarios to avoid stranded assets, weighing economic value against alternative funding, assessing the impact on worker and community vulnerability, and matching the policy tool to the project's risk level.
• Public investment tools vary in risk; broad-based instruments like contracts for differences are lower risk, while bespoke instruments such as the Strategic Innovation Fund carry the greatest risk of failure due to high government discretion and incomplete information.

APA

Canadian Climate Institute (2023). Subsidies for oil and gas emission reductions. https://climateinstitute.ca/subsidies-for-oil-and-gas-emission-reductions/

Chicago

Canadian Climate Institute. Subsidies for oil and gas emission reductions. 2023. https://climateinstitute.ca/subsidies-for-oil-and-gas-emission-reductions/.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=Subsidies for oil and gas emission reductions |date=12 July 2023 |url=https://climateinstitute.ca/subsidies-for-oil-and-gas-emission-reductions/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2023subsidies, author = {{Canadian Climate Institute}}, title = {{Subsidies for oil and gas emission reductions}}, institution = {Canadian Climate Institute}, year = {2023}, month = jul, url = {https://climateinstitute.ca/subsidies-for-oil-and-gas-emission-reductions/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }