By Sven Biggs
Premier Horgan announced last month an overhaul to the royalty system for the extraction of natural gas in British Columbia. As part of that announcement, B.C. cancelled the largest fossil fuel subsidy known as the Deep Well Royalty Credit, which cost the government $1.1 billion in lost revenue in 2021 alone.
However, buried deep within the government's announcement was the creation of a brand new fossil fuel subsidy. This one uses a so-called “capital cost recovery mechanism”, meaning that fossil fuel companies can deduct the cost of drilling new wells from the amount they pay the public to access gas. It also caps their royalty payments at five per cent of revenues generated by the well until the producer completely covers the upfront costs of drilling.
The Horgan administration has created a new subsidy designed to incentivize fracking companies to keep drilling new wells—and over 80 percent of the natural gas wells in B.C. are fracking wells.
This isn’t the only way that the Horgan administration is giving public resources to fracking companies. For example, let's take a look at how the province regulates freshwater used by the oil and gas sector. Fracking is an incredibly water intensive process: it uses up to 600 Olympic-sized swimming pools of freshwater at some fracking sites. For the use of that water, the province collects less than $6 per Olympic swimming pool, which is significantly less than any other industrial water users are charged. Worse still: once water has been used for fracking it is so toxic that it can never be safely returned to the water cycle.
Which is why when all the fanfare from the premier's announcement passes, B.C. will still have some of the highest provincial fossil fuel subsidies in the country, second only to Jason Kenney’s Alberta. It is also the reason B.C. 's emissions are still rising despite all the province’s high-minded talk about CleanBC, its plan to tackle climate change.
The irony of the province’s continued commitment to more public dollars and more harmful fracking is that it came less than 24 hours after the United Nations’ five-point plan called on countries to shift energy subsidies from fossil fuels to renewable energy.
The reality is that the collective efforts of many residents of B.C. to reduce their climate footprint can be wiped out by a single industry. The oil and gas sector is responsible for more than 19 percent of B.C.’s climate pollution, while creating 0.5 per cent of the jobs in the province, and three percent of GDP.
Simply put, we cannot fight climate change while we are expanding fracking. Which is why the U.N’s Intergovernmental Panel on Climate Change and the International Energy Agency have called on governments to immediately stop expanding fossil fuel extraction to avoid the worst impacts of climate change.
But Premier Horgan continues to be a cheerleader for the LNG Canada terminal, which if completed will be the largest single source of climate pollution in B.C., and lead to tens of thousands of new fracking wells being drilled in this province. Worryingly, the project is due to come online in 2025, the same year of B.C.’s next legislated climate target, all but guaranteeing the Horgan government will miss another major climate milestone.
This past year, we have all had a climate wake up call. Atmospheric rivers swept away highways and inundated farms; a heat dome took the lives of several hundred people, and a wildfire wiped an entire town off the map.
Climate change is here and its impacts are painful. British Columbia can’t keep propping up unviable projects like fossil fuel extraction with taxpayers’ money. We need leaders who are willing to challenge the power of the oil and gas lobby and tell them that their free ride at the expense of taxpayers is over.
We must continue to call on Premier Horgan to cancel all fossil fuel subsidies.