The (Public) Cost of Pollution: Ontario’s fossil fuel subsidies

The report identifies that Ontario provided nearly CAD 700 million in public subsidies for fossil fuel consumption in 2018/19. These primarily consist of tax exemptions for aviation, railway, and agricultural fuels, as well as direct spending on natural gas infrastructure. The authors argue that these subsidies distort the market and hinder climate goals, recommending a transparent provincial self-review to identify more sustainable alternatives for energy affordability and industry competitiveness.

• In 2018/19, Ontario provided nearly CAD 700 million in public subsidies for fossil fuel consumption.
• Fuel tax exemptions in Ontario totaled at least CAD 288 million in 2018/19, with the most significant being exemptions for coloured fuels, which have ranged between CAD 215 million and CAD 270 million annually over the last four years.
• The reduced tax rate for aviation fuel resulted in a value of at least CAD 260 million in foregone revenue for 2018/19, despite Ontario having the highest aviation gasoline tax rate in Canada.
• Railway diesel benefits from a reduced fuel tax rate of 4.5 cents per litre, representing an annual economic value of approximately CAD 60 million.
• Ontario has invested in natural gas infrastructure through the Natural Gas Grant Program, with a CAD 100 million budget allocation and 11 projects announced in 2018 totaling roughly CAD 75 million.
• The province has provided direct funding for a liquefied natural gas (LNG) plant on the north shore of Lake Superior, with CAD 27 million for the first phase and CAD 3.4 million for the second phase via the Northern Ontario Heritage Fund Corporation.
• Bill 32 introduced a cross-subsidy mechanism through rate protections that allow some consumers to access natural gas at a rate below the cost of service, with costs borne by other selected classes of consumers.

APA

Corkal, V., & Gass, P. (2019). The (Public) Cost of Pollution: Ontario’s fossil fuel subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/public-cost-of-pollution.pdf

Chicago

Corkal, Vanessa, and Philip Gass. The (Public) Cost of Pollution: Ontario’s fossil fuel subsidies. International Institute for Sustainable Development, 2019. https://www.iisd.org/system/files/publications/public-cost-of-pollution.pdf.

Wikipedia

{{cite report |last1=Corkal |first1=Vanessa |last2=Gass |first2=Philip |title=The (Public) Cost of Pollution: Ontario’s fossil fuel subsidies |publisher=International Institute for Sustainable Development |date=July 2019 |url=https://www.iisd.org/system/files/publications/public-cost-of-pollution.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{corkal2019public, author = {Corkal, Vanessa and Gass, Philip}, title = {{The (Public) Cost of Pollution: Ontario’s fossil fuel subsidies}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = jul, url = {https://www.iisd.org/system/files/publications/public-cost-of-pollution.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }