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B.C. Enables Billions in Tax Subsidies for LNG Development

British Columbia has introduced tax changes that confirm billions of dollars in fossil fuel subsidies for liquefied natural gas (LNG) development.

“Finance Minister Carole James says the change was introduced in legislation [Monday], and is meant to bring jobs and other financial benefits to the province through economic partnerships with Indigenous Peoples while also protecting the environment,” The Canadian Press reports. The tax credit would be calculated at 3% of the cost of natural gas, and could be used to reduce corporate income tax on qualifying projects from 12 to 9%.

The provincial government says the measure will provide the fiscal framework required to support the C$40-billion LNG Canada megaproject in Kitimat. Environmental groups see the announcement as a complication or far worse for the province’s greenhouse gas reduction plan.

In a release, Sierra Club BC said the announcement “confirms multi-billion dollar giveaways to foreign multinationals that make it impossible to meet meaningful climate targets.”

“Why is our government spending billions to subsidize fossil fuel corporations when the resulting extreme weather will put B.C. communities at risk of increasing wildfires and drought, and rob our young people of a livable future?” asked Campaigns Director Caitlyn Vernon. “We have just 11 years to limit climate pollution and defend our life support systems Yet instead of doubling down on the energy efficiency retrofits and public transportation infrastructure needed to fulfill the important CleanBC program, this government is throwing fuel on the flames of the climate crisis.”

The Sierra Club BC release says the tax changes enable more than $5 billion in provincial subsidies to LNG Canada, including cut-rate electricity, a provincial sales tax exemption during construction, elimination of a previous income tax on LNG, and a tax credit once the project goes into production.

“This massive giveaway can’t be squared with the provincial government’s commitment to reducing climate pollution,” Vernon said. “It’s like digging a hole and trying to fill it at the same time. There is nothing ‘clean’ about fracked gas, and we could be creating more jobs and security for our communities by investing in green, renewable energy instead.”

The Pembina Institute said the tax cut complicates B.C.’s efforts to hit its climate targets.

“With today’s legislation meant to attract LNG investment, it now becomes more important than ever to look at all options to reduce carbon pollution from such development,” said B.C. Regional Director Karen Tam Wu. “The natural gas sector is already B.C.’s largest source of industrial carbon pollution, and is poised to become even bigger. To have any credible chance of achieving B.C.’s climate targets, carbon pollution from the gas sector must be significantly reduced.” The province “has asserted that all new LNG development must fit within B.C.’s climate plan, but to date it has not demonstrated how this is possible,” Tam Wu added. “With the provincial government doubling down on attracting and securing LNG investments, it must also double down on taking bold action to reduce carbon pollution.”

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2 Comments To "B.C. Enables Billions in Tax Subsidies for LNG Development"

#1 Comment By Murray Reiss On March 27, 2019 @ 11:29 AM

The government proposes spending billions of dollars to bring jobs to BC. Just like New York City tried to do with Amazon. Just like Wisconsin tried to do with Foxconn. Shovel billions of dollars at the richest corporations in the world. Yet somehow all those jobs never materialize. When will governments wake up and just eliminate the middle man? Oh, wait, that would be socialism.

#2 Comment By Randal Hadland On March 28, 2019 @ 12:02 PM

One very large issue that is often overlooked is that the BC Government is also sacrificing an important part of BC in it’s attempt to make this development of an LNG industry as clean as possible. The Government through BC Hydro is constructing a third dam on the Peace River at a possible cost of 15 Billion dollars, with resulting interest charges around 50 more billion dollars so that the industry appears to be reducing carbon pollution.

The financial aspect of that boondoggle is bad enough for the people of BC because of course the rates that LNG would pay are only a third of the cost of a new dam, but even worse is the point that the construction would cause the destruction of an amazing asset, a beautiful valley, productive carbon sinks in forests and even more productive farmland, a major part of Treaty 8 territory, fisheries from methylmercury poisoning, wildlife biodiversity, and it would have negative impacts a thousand kilometers downstream.

And a dam is not the best way for the Province to meet its energy needs anyway. The BCUC found that equivalent benefits could be had from geothermal, wind, and conservation, and that was when Site C was still expected, by BC Hydro, to cost 8.3 Billion. The subsidies to LNG are far larger than a 3% reduction in income tax which the LNG companies would probably not end up paying.