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Canada to stop financing fossil fuel projects abroad by end of 2022

24 countries make the pledge, including the United States

The federal government announced Thursday morning it will cut subsidies that 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.

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 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.

“Our support for the oil and gas sector overall has decreased 35 per cent over the past three years, from $12.5 billion of business facilitated in 2018 to $8.1 billion business facilitated in 2020,” said EDC president Mairead Lavery, in an emailed statement.

“Our business volume to the oil and gas continues to decrease this year, with $2.7 billion provided to the oil and gas sector as of June 30, 2021.”

Source: CBC