Pembina Institute

Climate Action Network Canada Calls on Finance Minister to Take his Department’s Advice and Phase out Fossil Fuel Subsidies

Published May 26, 2010.

May 26, 2010 - A leaked memo to Finance Minister Jim Flaherty advised the minister to live up to a G20 commitment to phase out tax breaks to the companies that produce coal, oil and gas. With just four weeks left before the G20 summit in Toronto, it's time for Minister Flaherty and Prime Minister Harper to commit to a Canadian plan to end tax breaks to fossil fuel producers.
 
"The leaked memo shows that senior officials at the Department of Finance want to see an end to tax breaks for the fossil fuel sector. We couldn't agree more," said Graham Saul of Climate Action Network Canada. "At a time when we need to be cutting greenhouse gas pollution, tax breaks to polluting companies make no sense. Canada needs to live up to its word and announce a timeline and real plans to phase out fossil fuel subsidies."
 
In a 2005 report, the Pembina Institute estimated that federal tax breaks to the oil and gas sector were worth $1.4 billion/year. Since that report was published, the government has announced that it will phase out some subsidies, including a specific tax break for oilsands companies. But because the sector has also grown significantly, current tax breaks are likely on the order of $2 billion/year.
 
G20 countries committed to "rationalize and phase out" fossil fuel subsidies "over the medium term" at their 2009 summit in Pittsburgh. They also agreed that their energy and finance ministers would report back to them on strategies and timeframes to phase out fossil fuel subsidies at Canada's summit this June.
 
"As the G20 host, Canada has an extra responsibility to lead by example," said Dale Marshall of the David Suzuki Foundation. "The briefing note points out clearly that there's no reason to keep providing tax breaks to a sector that is doing just fine financially. Finance officials are giving the right advice, but so far there's no evidence that Minister Flaherty and Prime Minister Harper are listening."
 
"Phasing out fossil fuel subsidies would provide an important source of new and additional funding for climate action," said Clare Demerse of the Pembina Institute. "Canada needs to make a massive investments in the transition to clean energy, and the government must provide our fair share of support to developing countries as they tackle climate change. The revenues from ending fossil fuel subsidies would go a long way towards those urgent priorities."
 
UN Secretary-General Ban Ki Moon has urged Canada to make climate change an important part of the Muskoka and Toronto summits. Canada is the only developed country that has yet to announce its contribution to "fast start" climate financing under the Copenhagen Accord, which would support emission reductions and adaptation to the impacts of climate change in developing countries.

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For comment:
 
Clare Demerse, 613.762.7449
Dale Marshall, 613.302.9913
Graham Saul, 613.558.3368
 
For further media inquires:
 
Hannah McKinnon 613.276.7791
 
www.climateactionnetwork.ca

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