The Government of Canada announced on Monday a series of initiatives aimed at reducing government support for the fossil fuel sector, including the release of a new framework and guidelines, effective immediately, to eliminate “inefficient” fossil fuel subsidies.

According to a government statement announcing the launch of the new framework, the initiative forms part of Canada’s commitment under the Glasgow Statement, a 34-nation agreement signed at the 2021 COP 26 summit, to shift public finance away from fossil fuels and in support of the energy transition.

The new “Fossil Fuel Subsidies Government of Canada Self‑Review Assessment Framework,” – the first of its kind globally, according to the government – details a set of criteria to determine that subsidies to the energy sector must meet in order to not be considered inefficient. Criteria include enabling significant greenhouse gas emissions reductions, supporting clean energy, clean technology, or renewable energy, providing essential energy service to a remote community or short-term support for emergency response, supporting Indigenous economic participation in fossil fuel activities and supporting abated production processes such as carbon capture, utilization, and storage or projects with a credible plan to achieve net zero emissions by 2030.

The guidelines released alongside the framework provide a standardized methodology to ensure that future government support is aligned with the country’s climate and energy priorities, and precludes funding of discretionary programs not aligned with the framework.

Canada’s Environment and Climate Change Minister Steven Guilbeault said:

“By eliminating inefficient fossil fuel subsidies, we are encouraging smart and efficient government investment decisions that can increase Canada’s competitiveness in a decarbonizing global economy, while avoiding creation of stranded assets. Phasing out fossil fuel subsidies in Canada will ensure government programs and spending support an energy sector that is aligned with our ambitious climate goals.”

The government also announced that it will work to identify current public financing by 2024, and develop an implementation plan by fall 2024 to phase out public financing of the fossil fuel sector, beyond the scope of the new subsidy elimination commitment.

Environmental groups welcomed the Canada’s announcement, while urging the government to go farther in its commitment, noting that subsidies only account for a small portion of public financing to the energy sector, and that the announcement leaves the door open to some fossil fuel financing.

Laura Cameron, Policy Advisor at think tank the International Institute for Sustainable Development (IISD) said:

“This is a significant step forward and sets a strong example for Canada’s G20 peers. But gaps in the framework mean public money could continue to flow toward oil and gas production at a time when the country must swiftly move to renewable energy. With these gaps closed, Canada can ensure public funds are advancing climate solutions.”