Mr. Speaker, as part of its effort to fulfill Canada’s G20 commitment to phase out or rationalize inefficient fossil fuel subsidies, on July 24, 2023, the Government of Canada released the “Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework” and the “Inefficient Fossil Fuel Subsidies Government of Canada Guidelines”. The framework provides a definition of a fossil fuel subsidy and the methodology for assessing efficiency, while the guidelines are meant to avoid the creation of any new inefficient subsidies. The framework and guidelines were jointly developed by Environment and Climate Change Canada and the Department of Finance Canada and apply to all federal departments and agencies.
Consistent with the “Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework”, the Government of Canada has phased out or rationalized the following nine tax measures supporting the fossil fuel sector: phase-out of the accelerated capital cost allowance for the oil sands, announced in budget 2007; reduction in the deduction rates for intangible capital expenses in oil sands projects to align with rates in the conventional oil and gas sector, announced in budget 2011; phase-out of the Atlantic investment tax credit for investments in the oil and gas and mining sectors, announced in budget 2012; reduction in the deduction rate for pre-production intangible mine development expenses to align with the rate for the oil and gas sector, announced in budget 2013; phase-out of the accelerated capital cost allowance for mining, announced in budget 2013; allowing the accelerated capital cost allowance for liquefied natural gas facilities to expire as scheduled in 2025, announced in budget 2016; rationalizing the tax treatment of expenses for successful oil and gas exploratory drilling, announced in budget 2017; phase-out tax preference that allows small oil and gas companies to reclassify certain development expenses as more favorably treated exploration expenses, announced in budget 2017; and phase-out of flow-through shares for oil, gas and coal activities, announced in budget 2022.
Of the 129 federal non-tax measures that were assessed, none were determined to be inefficient fossil fuel subsidies.
The Government of Canada has committed to undergoing a voluntary peer review of its assessment of federal inefficient fossil fuel subsidies under the G20 process. As part of the peer review process, Canada will prepare a self-review report, which will include information on federal fossil fuel subsidies and be examined by an international peer review panel. The self-review and peer-review reports will be published once the peer review is complete.