Story 2: Removing Subsidies for Fossil Fuel Exploration and Development in Canada

This case study by the International Institute for Sustainable Development details the Government of Canada's efforts to reform and phase out fiscal subsidies for fossil fuel exploration and development, primarily through the adjustment of tax expenditures between 2011 and 2022.

• Since 2011, the Government of Canada has reformed or completely phased out seven policies that provided subsidies for the production of oil, gas, and coal, focusing mainly on tax expenditures for exploration and development.
• Specific tax reforms between 2011 and 2022 reduced deduction rates for various expenses. For example, oil sands property expenses saw deduction rates drop from 30 to 10 per cent in 2011, while pre-production expenses for new oil sands and oil shale mines were reduced from 100 to 30 per cent between 2011 and 2016. Other reforms included the complete phase-out of oil, gas, and mining components of the 10 per cent Atlantic Investment Tax Credit between 2012 and 2017.
• The fiscal impact of these reforms includes a combined past value of over USD 900 million from policies reformed between 1990 and 2007, and estimated annual savings of approximately USD 260 million from reforms implemented between 2011 and 2022. These savings were not earmarked for specific programs.
• Reform drivers included the determination that subsidies were no longer necessary because the oil and gas sector had become "robust and growing" between 1990 and 2007, as well as Canada's G20 commitments for reforms announced since 2011.
• The document identifies risks of backsliding and missed opportunities, such as the 2015 introduction of the Accelerated Capital Cost Allowance for Liquefied Natural Gas (scheduled for phase-out in 2025) and the federal government's purchase and planned expansion of the Trans Mountain pipeline.

APA

International Institute for Sustainable Development (n.d.). Story 2: Removing Subsidies for Fossil Fuel Exploration and Development in Canada. https://www.iisd.org/system/files/publications/stories-g20-canada-en.pdf

Chicago

International Institute for Sustainable Development. Story 2: Removing Subsidies for Fossil Fuel Exploration and Development in Canada. n.d. https://www.iisd.org/system/files/publications/stories-g20-canada-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=Story 2: Removing Subsidies for Fossil Fuel Exploration and Development in Canada |url=https://www.iisd.org/system/files/publications/stories-g20-canada-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopmentndstory, author = {{International Institute for Sustainable Development}}, title = {{Story 2: Removing Subsidies for Fossil Fuel Exploration and Development in Canada}}, institution = {International Institute for Sustainable Development}, url = {https://www.iisd.org/system/files/publications/stories-g20-canada-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }