Bob Simpson: Will B.C. gas the carbon tax to secure LNG? | The Province

Anyone with a smidgen of common sense should realize by now that B.C. is not going to generate a billion-dollar “Prosperity Fund” from liquefied natural gas. Hopefully, the premier will scrap that bit of propaganda from the throne speech that will be read in the Legislature this week in advance of the government tabling its long overdue LNG tax and regulatory framework.

I suspect, however, the throne speech will still make the claim that B.C. can become debt free through the “cleanest” LNG in the world. Clark has no political room in her own caucus, with the opposition or with voters to back down from that election promise.

But, B.C. cannot pay off its debt and have the cleanest LNG in the world. In fact, as Petronas made perfectly clear last week, and other LNG players have made all too plain before, there’s zero appetite in the LNG industry to have B.C. pay off its public debt on the backs of LNG investors, period. To continue to claim that B.C. will not just pay off its debt from incremental taxes on LNG, it will also put more stringent (and costly) environmental standards on how LNG will be produced here is, simply put, political propaganda of the worst kind.

Petronas alluded to this when it publicly warned the provincial government in late-September that it was frustrated with the environmental-approval process. To date, the Canadian Environmental Assessment Agency has not accepted the state-owned company’s environmental impact statement for its Pacific Northwest LNG project.

However, in the statement that Petronas submitted to the CEAA earlier this year, the company made it clear that it is not happy with the lack of clarity surrounding how B.C. will achieve its stated green-house-gas reduction targets and the potential impact this political promise will have on the operational viability of its LNG project in Prince Rupert.

Petronas’ submission points out that when B.C. set its legislated GHG reduction targets, it “did not take into account the potential scale of the shale-gas resources in Northeast B.C. … nor did it account for the number of LNG export facilities that are being proposed on the west coast.”

Petronas’s environmental impact statement reveals that its Pacific Northwest LNG project alone will add 8.5 per cent more GHGs to B.C.’s total annual emissions. That is just for the completed plant — it does not include the additional GHGs that will be emitted from either the shale gas fracking or the pipeline needed to feed the plant with natural gas. Consequently, Petronas warns that LNG “will challenge B.C.’s commitment” to its legislated 2020 GHG reduction targets and states that “clear guidance on how Canada and B.C. will address this issue has not been communicated” to the company.

So, you can be sure that when the provincial government tables its tax and regulatory framework for LNG later this month, Petronas and other LNG players will not only be looking for clarity about LNG taxes, they’ll also be looking for that “guidance” on how the government will achieve its legislated GHG reduction targets and how it will regulate B.C. LNG into becoming the “cleanest” in the world.

In reality, because Clark has no political room to manoeuvre on her commitment to get LNG up and running before the next election, the Liberals are not only going to have to scrap their Prosperity Fund, they will also have to abandon the premier’s promise that B.C. LNG will be the cleanest in the world.

In order to continue to pretend that the government will be able to pay off the provincial debt with LNG taxes, it’s highly likely the LNG industry will be exempt from the carbon tax that they would have to pay on their significant process emissions.

Since the carbon tax is revenue neutral to the government’s coffers, a windfall carbon tax from LNG would have to be offset with tax reductions elsewhere — it could not be used to pay down the debt. Therefore, absolving the LNG sector from the carbon tax would give the government room to impose an incremental tax on the LNG industry that could, supposedly, be used to pay down the province’s debt in a way that might be palatable to prospective LNG investors who wouldn’t have to pay $30 per tonne on their carbon emissions.

If the Liberals scrap the carbon tax on LNG process emissions, then LNG in B.C. will be just as dirty as in the rest of the world. Any continued claims that B.C. will have the cleanest LNG would be Orwellian doublespeak.

Bob Simpson is a natural resources consultant  and the former MLA for Cariboo North. He is currently running for mayor of Quesnel.


via Bob Simpson: Will B.C. gas the carbon tax to secure LNG? | The Province.