Federal environment officials quietly abandoned efforts to phase out thermal coal exports years ago without notifying the public, providing records of official direction, or assessing the implications of the reversal, according to a federal audit report tabled Thursday.
The audit, from the office of the auditor general, revealed that Environment and Climate Change Canada halted work on the proposed ban entirely in November 2024 following lobbying from the coal industry. The department’s decision to drop the initiative was not formalized until August 2025 during a government search for cost-saving measures.
In 2021, Canada committed to banning thermal coal exports by 2030, a pledge that aligned with its position as co-chair of an international alliance assisting countries in transitioning away from coal. Burning coal remains one of the most polluting methods of generating electricity, yet thermal coal exports from Canada were actually higher in 2025 than they were when the policy was announced.
Investigators found that between October 2021 and February 2024, department officials explored regulating thermal coal as a toxic substance under existing laws, mirroring current regulatory efforts regarding single-use plastics. By February 2024, that approach shifted toward non-regulatory measures, including voluntary options, before all enforcement work ceased in November 2024.
The auditor general’s report criticized the lack of transparency surrounding the file, noting that the department produced no evidence of an official directive to stop the work and provided no clear records showing that the minister received an assessment of the policy reversal’s impacts. The audit emphasized that public information and policy updates are vital for provincial and territorial governments, coal mining companies, transportation authorities, shipping terminals, and the labor force to plan for a transition.
The findings also highlighted cross-border dynamics, revealing that 61 per cent of the thermal coal shipped from Canadian ports in 2025 originated in the United States—primarily from Washington, Oregon, and California. U.S. mines transport the coal north by train to British Columbia shipping terminals because stricter regulations make expanding export infrastructure along the American Pacific coast difficult.
Prior to the audit’s release, former British Columbia premier David Eby suggested in August that Ottawa leverage its role in facilitating U.S. coal exports during trade negotiations, while apparently unaware that federal officials had already abandoned work on the export ban.
Separately, Thursday’s audits reviewed Global Affairs Canada’s management of $16 billion in commitments directed toward international coal transition programs. This included a $15 billion pledge to the Women-Led Coal Transition Mechanism and $1 billion in low-interest loans—representing 42 per cent of total funding—toward the Climate Investment Funds’ Accelerating Coal Transition investment program, which is co-funded by the United Kingdom, Germany, and Denmark.
The audit noted that Global Affairs Canada’s $1 billion contribution stood as one of the department’s largest single project investments ever made, designed to finance country-led plans extending up to 2047 to accelerate coal retirement, scale up clean energy, and support affected workers. Investigators discovered that Environment Canada never notified Global Affairs Canada of the decision to halt work on the domestic export ban in November 2024.
