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The federal government announced Thursday morning it will cut subsidies to help oil and natural gas companies operate and expand outside the country by the end of next year.
The United States, New Zealand and Costa Rica are also among a total of 24 countries signing the international statement.
The countries are pledging to direct the funds to clean energy development.
If every one of the countries implements the change, the policy could transfer about $15 billion US ($18.6 billion Cdn.) a year of public money out of fossil fuels and into clean energy, officials said.
“We are in a climate crisis. We need to urgently reduce emissions in every sector of the economy, everywhere in the world. This, of course, applies to the energy sector as to all sectors of the economy,” Natural Resources Minister Jonathan Wilkinson said during the announcement.
“Canada’s signature is significant. We are one of the world’s largest energy producers.”
In an interview on Wednesday evening, Wilkinson said the government has taken the position to end subsidies for the oilpatch and this is a first step in that process.
“During the election campaign, the Liberal Party committed not to a specific date, but to phasing that out domestically as well. That is something we’ll be working on,” he said.
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Japan, Korea and China, which environmental groups say are some of the largest providers of international public fossil fuel finance, were not part of Thursday’s pledge.
Support for overseas coal power plants also ending
In the past week, Canada and the other G20 countries made a similar announcement to end financial support of coal power plants overseas.
“From our perspective and our partners from many civil society organizations, it is rather a historic day,” Richard Florizone, president of the Winnipeg-based International Institute for Sustainable Development, said during Thursday’s announcement.
“After a wave of pledges on coal including from China and others in the past few months, this statement and action today shows that not only is urgent action needed to ensure we can end public finance for fossil fuels, but we can actually achieve it.”
The announcement on international financing will impact Export Development Canada (EDC), a Crown corporation providing a variety of financial supports to help companies operate internationally.
Last year, the organization provided the oilpatch with about $1 billion in support after oil prices crashed to record lows, even turning negative.
By the beginning of December 2020, the EDC’s oilpatch support included:
- About $852 million in bonding support for 43 companies.
- About $350 million in loans either approved or in the process of approval for 10 companies.
- About $15 million in credit insurance for 32 companies.
It’s not yet clear how much of an impact Thursday’s announcement will have on the sector.