Natural gas is flared from collection and processing facility near Dawson Creek. (Tom Fletcher/Black Press)

Carbon tax, sales tax breaks finally make B.C. LNG happen

Electric cars, home heat pumps promoted to lower emissions

The B.C. government is adamant it will meet its ambitious greenhouse gas reduction targets while greatly expanding natural gas production to feed a new plant that will burn some of its gas to cool and liquefy the rest for shipment to Asia in tankers.

Not only will the $40 billion LNG Canada project burn gas, it will greatly increase gas production and processing in northeast B.C. Asian sales will free the vast shale gas reserves now trapped in a North American market so oversupplied that the B.C. and Alberta gas spot price sometimes dips into negative territory, meaning producers must pay to ship it.

RELATED: B.C. carbon tax now costs more than natural gas

LNG Canada is estimated to add another 3.4 megatonnes of greenhouse gas to B.C.’s annual emissions, now mostly coming from vehicles, building heat and traditional industries. That increase set off a testy exchange in the legislature Tuesday between B.C. Green Party leader Andrew Weaver and NDP Environment Minister George Heyman.

“Do you not see the grand hypocrisy that is unfolding before us today?” Weaver asked, calling carbon tax and other incentives to LNG Canada a “sellout” worse than that offered by the B.C. Liberals to an earlier proposal at Prince Rupert.

Heyman replied that he is preparing “a clean growth strategy for a diversified, modern economy that meets emission reduction targets, full stop.” Those targets, part of Canada’s commitment to the 2015 Paris climate change agreement, are a 40 per cent reduction by 2030, 60 per cent by 2040 and 80 per cent by 2050.

Background information from B.C. officials indicates there will be a heavy emphasis on electric vehicles and replacing home natural gas furnaces with electric heat pumps that capture heat from outside air, even in winter.

RELATED: B.C. adds $10 million to electric car subsidy fund

The government also aims to electrify the oil and gas industry itself to reduce its emissions. That includes measures to reduce “fugitive emissions” of methane, a powerful greenhouse gas that is the main component of natural gas. It leaks raw to the atmosphere from gas wells and other field infrastructure in amounts that are not yet accurately measured.

The NDP government’s revised tax incentive package for the LNG industry, released in March, included a freeze on carbon tax increases that applied to all other carbon fuel use starting this spring. Rebates would mean the rate for LNG Canada remains at $30 a tonne, while carbon tax for all other fuel use is set to rise each year by $5 per tonne until it reaches $50 per tonne by 2021.

RELATED: NDP offers tax breaks to jump-start LNG Canada

The NDP deal also gives LNG producers the same electricity rate as charged to other industrial users, and exempts LNG construction from provincial sales tax, the same policy that applies to construction of a sawmill or other industrial plant in B.C.

The carbon tax rebate is on the condition that LNG Canada comes on stream as the lowest-emission producer in the world, a rule that would apply to any future LNG plant proposed for B.C.

The carbon tax rebate was a deal-breaker for Weaver, who confirmed this week his three-member caucus will vote against any legislation enabling the tax measures. That won’t happen soon. Legislation to repeal the B.C. Liberal government’s 3.5 per cent “LNG income tax” doesn’t have to be passed until LNG Canada is ready to begin production, expected in 2023-24.

The PST exemption for construction was enacted by a cabinet order signed Tuesday by Horgan, as LNG Canada began dredging work at the Kitimat harbour while company officials gathered in Vancouver to announce the project.


@tomfletcherbc
tfletcher@blackpress.ca

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