Canada moves to halt new overseas fossil fuel funding

Canada has laid out policy guidelines that will allow departments and agencies to end new public support for international unabated fossil fuel projects by the end of this year.

The guidelines serve to implement the commitment made at the UN Cop 26 climate summit in November 2021. Canada, along with fellow G7 members the UK, the US and Italy, was an original signatory.

Canada's export credit agency EDC, will "continue to advance the transition away from oil and gas and into cleantech growth", the Canadian government said. Business "which has not yet reached maturity" amounting to C$2.5bn ($1.8bn) will not be renewed, it said.

EDC plans to ramp up its financing of clean technology to C$10bn/yr by 2025, from C$6.3bn in 2021.

Canada's guidelines outline a definition for 'unabated' fossil fuels, saying it refers to the absence of "effective" carbon capture "or equivalent" technology. The use of 'unabated' in the Cop 26 pledge sparked concern from some environmental groups that some countries could use the wording as a loophole.

Although Canada's pledge will end new direct public financing of all fossil fuel extraction, refining and marketing, it does leave the door open for some natural gas power-generation projects. Any such projects must meet strict criteria, including the absence of "any viable renewable alternative" and a clearly established role for natural gas in the host country's Paris agreement-aligned 2030 emissions reduction pathway.

Canada continues separately to work "to phase out and rationalise inefficient fossil fuel subsidies", the government said today. It intends to move the deadline for this from 2025 — which other G7 countries have committed to — to 2023.

Canada aims to reach net zero emissions by 2050, with an interim target to cut emissions by 40pc by 2030, from a 2005 baseline.

By Georgia Gratton