What we examined (see Focus of the audit)

This audit focused on whether Environment and Climate Change Canada provided advice to support decision making on inefficient non-tax subsidies for fossil fuels that was based on analysis of all relevant and reliable information.

Why we did this audit

This audit is important because inefficient fossil fuel subsidies encourage wasteful consumption, undermine efforts to address climate change, and discourage investment in clean energy sources. Without providing decision makers with advice that is based on complete assessments, Environment and Climate Change Canada cannot ensure that it is providing the support needed by ministers for Canada to meet its Group of 20G20 commitment by 2025.

Overall message

Overall, we found that Environment and Climate Change Canada’s work to identify inefficient non-tax subsidies for fossil fuels was incomplete and not rigorous. In our view, this is partially because the Department used unclear definitions.

To identify non-tax subsidies for the fossil fuel sector, Environment and Climate Change Canada considered 23 of approximately 200 government organizations and identified 36 ongoing potential non-tax subsidies that supported the consumption or production of fossil fuels. We found that the Department missed some potential subsidies that in our opinion it should have considered. Of the 36 potential non-tax subsidies identified, it determined that 4 were subsidies for the fossil fuel sector.

Once Environment and Climate Change Canada identified non-tax subsidies for the fossil fuel sector, it assessed whether these were inefficient. We found that the Department identified no inefficient non-tax subsidies. However, it had not defined “inefficient” to guide its determinations.

We also found that in its assessments, the Department did not consider the economic, social, and environmental sustainability of subsidizing the fossil fuel sector. The Department informed us that its assessments were only preliminary.

What we found about …

Identification of inefficient non-tax subsidies

• Environment and Climate Change Canada did not compile a complete inventory of potential non-tax subsidies for fossil fuels

• Environment and Climate Change Canada did not define inefficient non-tax subsidy for fossil fuels but still determined that there were none

Entity Responses to Recommendations

The audited entity agrees with our recommendations and has responded (see List of Recommendations).

Related Information

Report of the	Commissioner of the Environment and Sustainable Development
Type of product	Performance audit
Topics	Climate Change Environment
Entities	Environment and Climate Change Canada
Completion date	1 March 2019
Tabling date	2 April 2019
Related audits	Fossil Fuel Subsidies

For more information

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