Federal Fossil Fuel Subsidies in Canada: COVID-19 edition

The Canadian government provided at least CAD 1.91 billion in federal fossil fuel subsidies in 2020, representing a jump of over 200% from 2019 levels. This increase was primarily driven by COVID-19 recovery measures, specifically funding for orphan and abandoned well reclamation and support for Newfoundland's offshore oil industry. The report argues that these subsidies are inconsistent with Canada's net-zero emissions by 2050 target and G20 commitments to phase out inefficient fossil fuel subsidies. It highlights significant data gaps regarding tax-related subsidies and public finance provided through Export Development Canada (EDC). The author recommends a transparent roadmap for subsidy phase-out by 2025, the alignment of EDC policies with climate goals, and the inclusion of subsidy reform in Canada's next Nationally Determined Contribution to the Paris Agreement.

• In 2020, the Canadian federal government provided at least CAD 1.91 billion in fossil fuel subsidies, which is an increase of more than 200% compared to 2019.
• The majority of the quantified 2020 subsidies resulted from two COVID-19 response measures: a direct transfer to Newfoundland’s offshore oil industry and federal funding for abandoned and orphan wells.
• Specific quantifiable non-tax subsidies in 2020 included CAD 1.52 billion for orphan and inactive well reclamation in Alberta, British Columbia, and Saskatchewan, and CAD 320 million for the Newfoundland & Labrador offshore oil industry.
• The report identifies several non-tax subsidies that could not be quantified due to lack of data, including the Emissions Reduction Fund (up to CAD 675 million for onshore and CAD 75 million for offshore companies), the Bank of Canada corporate bond purchase program, and the Trans Mountain Pipeline expansion.
• Export Development Canada (EDC) provides an average of CAD 13.2 billion annually in public finance to the fossil fuel sector, though the specific subsidy portion is difficult to identify due to low transparency.
• While some tax-related subsidies are being phased out, others remain, such as flow-through shares (valued at CAD 20 million in FY 2020/21) and the Accelerated Investment Incentive (CAD 3.28 billion in FY 2020/21 across multiple sectors).
• The report argues that fossil fuel subsidies contradict Canada's climate goals, noting that Canada ranked last among G20 OECD countries regarding progress on phasing out fossil fuel support.

APA

Corkal, V. (2021). Federal Fossil Fuel Subsidies in Canada: COVID-19 edition. International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-02/fossil-fuel-subsidies-canada-covid-19.pdf

Chicago

Corkal, Vanessa. Federal Fossil Fuel Subsidies in Canada: COVID-19 edition. International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-02/fossil-fuel-subsidies-canada-covid-19.pdf.

Wikipedia

{{cite report |last1=Corkal |first1=Vanessa |title=Federal Fossil Fuel Subsidies in Canada: COVID-19 edition |publisher=International Institute for Sustainable Development |date=February 2021 |url=https://www.iisd.org/system/files/2021-02/fossil-fuel-subsidies-canada-covid-19.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{corkal2021federal, author = {Corkal, Vanessa}, title = {{Federal Fossil Fuel Subsidies in Canada: COVID-19 edition}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = feb, url = {https://www.iisd.org/system/files/2021-02/fossil-fuel-subsidies-canada-covid-19.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }