Canada’s Fossil Fuel Subsidy Framework Is a Big Step Forward, but Gaps Must Be Closed to Align With Climate Commitments

The International Institute for Sustainable Development (IISD) evaluates Canada's Fossil Fuel Subsidy Framework, noting its alignment with World Trade Organization definitions and its transparency regarding 'inefficiency'. However, the IISD warns that exemptions for 'abated' fossil fuel production, including carbon capture and storage and fossil-derived hydrogen, may allow public funds to continue flowing to the oil and gas sector, undermining climate targets.

• Canada's framework for identifying fossil fuel subsidies is a significant advancement because it uses a definition aligned with the World Trade Organization, covering direct transfers, foregone revenue, transfer of risk, and the provision of goods and services. It is also among the first to provide a detailed, transparent definition of 'inefficiency'.
• The framework contains gaps that could allow continued public funding for the oil and gas sector, specifically through exemptions for 'abated' fossil fuel production involving fossil-derived hydrogen and carbon capture and storage. The IISD asserts that carbon capture and storage in this sector is not a net-zero solution and that such support is expensive and inefficient.
• The Canadian government has announced a timeline to end domestic public financing for fossil fuels in 2024, which is considered a critical step since public financing constitutes the majority of Canada's financial support for fossil fuels.
• To ensure transparency and accountability, the IISD recommends that the government publish a full inventory of identified subsidy measures and the rationale for any exemptions this year, while establishing standardized enforcement mechanisms across departments.

APA

International Institute for Sustainable Development (2023). Canada’s Fossil Fuel Subsidy Framework Is a Big Step Forward, but Gaps Must Be Closed to Align With Climate Commitments. https://www.iisd.org/articles/statement/canadas-fossil-fuel-subsidy-framework-big-step-forward-gaps-must-be-closed-align

Chicago

International Institute for Sustainable Development. Canada’s Fossil Fuel Subsidy Framework Is a Big Step Forward, but Gaps Must Be Closed to Align With Climate Commitments. 2023. https://www.iisd.org/articles/statement/canadas-fossil-fuel-subsidy-framework-big-step-forward-gaps-must-be-closed-align.

Wikipedia

{{cite press release |author=International Institute for Sustainable Development |title=Canada’s Fossil Fuel Subsidy Framework Is a Big Step Forward, but Gaps Must Be Closed to Align With Climate Commitments |date=24 July 2023 |url=https://www.iisd.org/articles/statement/canadas-fossil-fuel-subsidy-framework-big-step-forward-gaps-must-be-closed-align |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@misc{internationalinstituteforsustainabledevelopment2023canadas, author = {{International Institute for Sustainable Development}}, title = {{Canada’s Fossil Fuel Subsidy Framework Is a Big Step Forward, but Gaps Must Be Closed to Align With Climate Commitments}}, publisher = {International Institute for Sustainable Development}, year = {2023}, month = jul, url = {https://www.iisd.org/articles/statement/canadas-fossil-fuel-subsidy-framework-big-step-forward-gaps-must-be-closed-align}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }