Five Key Priorities to End Fossil Fuel Subsidies in Canada

The briefing identifies five priority areas for Canada to eliminate fossil fuel subsidies: reforming major tax credits, addressing losses from the Trans Mountain Pipeline expansion, ending support for carbon capture and storage, stopping LNG infrastructure subsidies, and ensuring low-carbon funds do not benefit fossil fuel companies. It highlights a lack of transparency, noting Canada failed to publish a promised inventory of subsidies by December 2024. The document also details provincial-level subsidies, including fuel tax cuts and infrastructure support, and calls for a comprehensive inventory of all financial supports to the sector.

• Canada has failed to meet its commitment to publish a comprehensive inventory of direct and indirect fossil fuel subsidies by December 2024, which hinders the ability to track the phase-out of "inefficient" subsidies.
• Significant public revenue is lost through tax exemptions for the fossil fuel industry; specifically, the Canadian Exploration Expense Deductions (CEE), Canadian development expenses (CDE), Canadian oil and gas property expenses (COGPE), and Foreign Resource Expense Deductions (FRE) resulted in CAD 1.8 billion in foregone revenue in 2021.
• The federal government is operating the Trans Mountain Pipeline expansion (TMX) at a loss because oil companies pay CAD 11.37 per barrel instead of the CAD 25.53 required to recover capital costs, potentially resulting in a subsidy of up to CAD 18.8 billion.
• The federal government has committed over CAD 9 billion to carbon capture and storage (CCS) by 2030, with the CCS investment tax credit estimated to cost taxpayers CAD 491 million in the 2024–2025 fiscal year.
• Federal support for LNG expansion includes direct investments of CAD 275 million in 2019 for LNG Canada, an estimated CAD 1 billion in steel tariff exemptions, and public financing for the Coastal Gaslink Pipeline (CAD 100 million–200 million) and Cedar LNG (CAD 400 million–500 million).
• Canadian provinces and territories provided an estimated CAD 4.6 billion in fossil fuel subsidies in 2023, including BC's estimated CAD 5.4 billion in tax breaks and hydro rate reductions for LNG Canada.
• Provincial governments have used fuel tax cuts to reduce costs for consumers, such as Ontario's gas and fuel tax cuts expected to cost CAD 620 million this fiscal year and Alberta's fuel tax exemptions costing an estimated CAD 295 million in 2024.

APA

Parenteau,, L. C. (2025). Five Key Priorities to End Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development. https://www.iisd.org/articles/insight/five-priorities-end-fossil-fuel-subsidies-canada

Chicago

Parenteau,, Laura Cameron,Serene. Five Key Priorities to End Fossil Fuel Subsidies in Canada. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/insight/five-priorities-end-fossil-fuel-subsidies-canada.

Wikipedia

{{cite report |last1=Parenteau, |first1=Laura Cameron,Serene |title=Five Key Priorities to End Fossil Fuel Subsidies in Canada |publisher=International Institute for Sustainable Development |date=17 January 2025 |url=https://www.iisd.org/articles/insight/five-priorities-end-fossil-fuel-subsidies-canada |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{parenteau2025five, author = {Parenteau,, Laura Cameron,Serene}, title = {{Five Key Priorities to End Fossil Fuel Subsidies in Canada}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = jan, url = {https://www.iisd.org/articles/insight/five-priorities-end-fossil-fuel-subsidies-canada}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }