Question Period Note: Fossil Fuel Subsidies

Canada has taken substantial action with respect to tax preferences available for the extraction of oil and gas and coal by phasing out:
• accelerated capital cost allowance for tangible assets in oil sands projects (Budget 2007; completed in 2015).
• deduction rates for intangible capital expenses in oil sands projects, to align with rates for conventional oil and gas (Budget 2011; completed in 2016).
• Atlantic Investment Tax Credit for investments in the oil and gas and mining sectors (Budget 2012; completed in 2017).
• accelerated capital cost allowance for tangible assets in mines (including coal mines) (Budget 2013; to be completed by 2021).
• incentives that allows small oil and gas companies to reclassify certain development expenses as more favorably treated exploration expenses (Budget 2017; to be completed by 2020).
• accelerated capital cost allowance for LNG facilities (Budget 2016; set to expire in 2025).
Canada has also taken steps to:
• reduce the deduction rate for pre-production intangible mine development expenses (including coal mines), to align with rates for the oil and gas sector (Budget 2013; completed in 2017).
• rationalize of the tax treatment of expenses for successful oil and gas exploratory drilling (Budget 2017; to be completed by 2021).
In March 2019, the Minister of ECCC launched a public consultation on the Government’s draft framework to review non-tax measures, which invited comments from all Canadians. At the same time, targeted consultations with key stakeholders were also undertaken. The results of the consultations will inform Canada’s self-review report as a part of a broader peer review with Argentina on inefficient fossil fuel subsidies, which will be made public.

• Our government is committed to innovation and to building a clean energy future to strengthen the economy, create good jobs and support the natural resource sectors.
• We have made significant progress towards meeting our G20 commitment to phase out inefficient fossil fuel subsidies and intend to fulfill this commitment by 2025.
• All tax expenditures have been reviewed and actions have been taken to phase out or rationalize fossil fuel subsidies by 2025.
• Measures are being taken to enable industry to adapt, while supporting Canada's broader environmental objectives.
• The Minister of Environment and Climate Change is working with the Minister of Finance in fulfilling this commitment, by leading a review of measures outside of the tax system that support the fossil fuel sector.

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