Liberal government still plans to eliminate fossil fuel subsidies, McKenna says

OTTAWA — The federal government still intends to do away with subsidies to fossil fuel companies, Environment Minister Catherine McKenna said Wednesday — even as Ottawa prepares to put cash on the table to get the Trans Mountain pipeline expansion off life support.

Canada subsidizes the search for and production of fossil fuels to the tune of more than $3 billion a year in various tax credits, deductions and grants, while Export Development Canada routinely provides financing to oil and gas companies.

That EDC spending alone has added up to $12 billion since the Liberals took office, say environmental groups, a number of which gave Ottawa a failing grade Wednesday on fossil fuel subsidies in a report card on Liberal progress to date on the party’s environmental promises.

“The federal government has not yet defined, reviewed or publicly released a list or assessment of its remaining fossil fuel subsidies, nor does it have a plan to achieve its commitment to the G20 to phase-out fossil fuel subsidies by 2025,” says the report from a dozen of Canada’s biggest, most influential environment groups.

“We know we need to do that,” McKenna said. “We’re committed to doing that.”

A review of the subsidies intended to help inform the government’s approach has been underway for months and is supposed to complete its work this spring.

At the same time, Finance Minister Bill Morneau is negotiating some sort of financial arrangement with Kinder Morgan to offset the risk to investors nervous about the protests, court action and uncertainty surrounding the Trans Mountain project.

Canada has not said how much money it’s willing to put on the table but the pipeline’s current budget sits at around $7.4 billion.

In March, several environment advocacy groups met with the government to push it on fossil fuel subsidies. Those groups, including Environmental Defence and Oil Change International, say the Liberals need to define what it means by “inefficient” fossil fuel subsidies, release a national plan to get rid of them by 2025 before next month’s G7 summit, and push the other G7 nations to commit to their own timely national plans.

Wednesday’s report card also listed areas where the government has made progress, including phasing out the use of greenhouse-gas emitting hydrofluorocarbons in refrigeration and air conditioning, and giving the public and scientific experts a bigger role in developing policy.

But the report cites particular concern with the lack of a plan to actually hit emissions targets, and a stalled promise to change tax laws so charitable groups are no longer limited to spending 10 per cent of their budget or less on non-partisan political advocacy.

Many of these groups, such as Environmental Defence, were audited over allegations they were spending too much money arguing against government policies, and believe they were targeted by the former Conservative government.

The Liberals campaigned on a promise to change the laws; an independent review more than a year ago outlined how such a change should be done.

More than a year later, confidence is waning the government will actually do it, said Environmental Defence executive director Tim Gray.

A spokesman for National Revenue Minister Diane Lebouthillier said Wednesday the government is still committed to making the change, but is still reviewing the 2017 report. As of now, however, there is no timeline for when legislation might be introduced.

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