The recently announced plan by Ottawa to phase out ‘inefficient’ fossil fuel subsidies as reported by CBC News, raises some significant concerns. While the reasons for this move are clearly delineated – to cut wasteful consumption, bolster energy security, encourage investment in clean energy sources, and support climate change actions – they overlook some key facts.
Firstly, one cannot overlook the essential role that fossil fuels play in Canada’s economy. Indeed, the natural gas sector, oil, and related industries constitute substantial contributors to our GDP, and facilitate the creation of thousands of jobs across the country.
Phasing out subsidies prematurely could have a detrimental impact on these sectors. This could lead to massive job losses and businesses closing down, both consequences Canada can ill afford, especially in the current economic climate impacted by the ongoing pandemic.
It also might discourage private capital investment, as Shannon Joseph, a member of the organization’s advisory council mentioned, “these projects are economically viable, and that’s why people are investing their private capital in them.”
Though the guidelines have exemptions for projects that contribute to significant greenhouse gas emissions reductions, promote clean energy and technology, and foster indigenous economic participation, the plan could inadvertently slow down the pace of innovation in carbon capture and abatement within the fossil fuel industry itself.
To sum up, while the intent behind Ottawa’s move – to promote a cleaner, greener future for Canada – is commendable, it’s vital to assess the potential fallouts. A more balanced approach perhaps would be to gradually reduce subsidies over a longer span of time, allowing the fossil fuel industry to adapt and innovate towards cleaner practices and ideally, becoming self-sustaining without the need for subsidies in the long run.