Canada's Low-Carbon LNG Tax Incentive: Subsidy or Transition Tool?

Canada has introduced an accelerated capital cost allowance for LNG facilities that meet specific emissions intensity thresholds. While the government frames this as a way to replace coal globally and diversify exports, environmental advocates argue it is a fossil fuel subsidy that ignores upstream methane leaks and transport emissions. The policy creates a debate over the definition of low-carbon gas. Critics point out that the 0.20 tonnes of CO2 equivalent threshold only applies to on-site liquefaction, excluding the broader impact of the supply chain and the long-term economic viability of high-cost Canadian LNG in a decarbonizing global market.