Let’s get serious about canceling fossil fuel subsidies in British Columbia

The current royalty system, which gives out significantly more royalty credits to oil and gas companies that it takes in revenue from the industry, is B.C.’s largest single fossil fuel subsidy.

By Sven Biggs, Canadian Oil & Gas Campaign Director, Stand.earth

Photo credit: Shutterstock

Bruce Ralston, B.C.’s Minister of Energy, Mines and Low Carbon Innovation, recently wrote an editorial called Let’s Talk Fossil Fuel Subsidies in BC, which was published in the Tyee. Minister Ralston makes a number of big claims in that piece, including challenging Subsidizing Climate Change, a report produced by my organization, Stand.earth.

Let’s take a look at each of his claims one by one and see how serious he and his government are about addressing fossil fuel subsidies.

B.C. royalty system

First off, Minister Ralston claims that his Ministry is “undertaking an urgent and comprehensive review” of B.C.’s natural gas royalty system. The current royalty system, which gives out significantly more royalty credits to oil and gas companies that it takes in revenue from the industry, is B.C.’s largest single fossil fuel subsidy and was created by the previous B.C. Liberal government.

Since the B.C. NDP took power, this program has continued to spin out of control. The cost of royalty credits have increased by over 55 per cent since NDP formed government, and, according to the most recent provincial budget, will cost the province $492 million in foregone revenue this year alone.

Worse still, because oil and gas companies have been allowed to collect more royalty credits than they can use in a single year, the companies are now sitting on a surplus of $3.1 billion in outstanding credits — a figure which has increased by over half a billion dollars on the NDP’s watch.

While it is true that the B.C. Liberals created this problem, it is also true that NDP inaction on this file has allowed oil and gas companies to make off with hundreds of millions of dollars of royalty payments, which rightly should have gone into the provincial treasury.

I’m not sure how Minster Ralston defines “urgent,” but for me — and many other British Columbains — this simply does not cut it.

And it doesn’t stop there. The discussion paper released by Mr. Ralston’s Ministry as part of the Royalty Review suggests replacing the current royalty system with one that allows oil and gas companies to recoup the capital costs of drilling wells before they start paying royalties. Essentially, this would be replacing old fossil fuel subsidies with new ones.

PST exemptions

Secondly, Minister Ralston claims that our organization considers a PST exemption on electricity to be a fossil fuel subsidy. Nothing could be further from the truth. We support a rapid transition from fossil fuels to electricity, especially when it comes to our homes and buildings. We do however, object to PST exemptions for fossil fuels like natural gas and heating oil.

Unfortunately the province’s budget documents that we use to produce our report don’t differentiate how much of these tax credits are for electricity and how much are for fossil fuels.

Public funds

Finally, Minister Ralston objects to our inclusion of programs that give public funds to fossil fuel companies to reduce their emissions as fossil fuel subsidies. We argue that giving public funds to heavy emitters is the worst possible way to tackle climate change and that they should only be used as a last resort.

In this case, the alternatives are pretty clear, Minister Ralston’s Ministry has regulatory oversight over the oil and gas sector. If you want this industry to electrify or take other steps to reduce their emissions, there is no need to give them taxpayers money to do it, your government has the authority to require this industry to make those changes. Use them.

The oil and gas sector is responsible for 19.5 per cent of BC’s climate emissions, but generates just three per cent of our GDP, and directly creates just half of one per cent of the jobs in the province. Clearly our province can’t address climate change without dealing with oil and gas, and ending fossil fuel subsidies will be an important part of doing that.

Rather than fighting over exactly how many hundreds of millions of dollars our Provincial Government is using to prop up this industry, it is time for people like Minister Ralston to get serious about canceling fossil fuel subsidies.

TAKE ACTION: Click here to submit a comment to the Royalty Review. The consultation closes December 10, 2021.

Stand.earth is an international nonprofit environmental organization with offices in Canada and the United States that is known for its groundbreaking research and successful corporate and citizens engagement campaigns to create new policies and industry standards in protecting forests, advocating the rights of indigenous peoples and protecting the climate. Visit us at www.stand.earth and follow us on Twitter @standearth.

We challenge corporations and governments to treat people and the environment with respect, because our lives depend on it. www.stand.earth