The Canadian Pacific Coast province of British Columbia, once briefly known as the North American centre of liquefied natural gas export development, plans to introduce new legislation on tax credits for LNG ventures to re-launch BC as a potential provider of clean fuel for Asia.
BC provincial Finance Minister Carole James said the proposed changes would bring thousands of jobs to the region and boost the economic prospects for the population.
“British Columbians are counting on us to attract LNG investment that meets strict conditions: delivering jobs and financial benefits to BC, creating economic partnerships with Indigenous peoples and protecting our clean air, land and water,” said James in a statement.
“This legislation completes the process of creating a fiscal framework that invites investment while supporting those conditions,” added James.
The province previously had at least a dozen large-scale projects backed by the world’s leading energy companies then policies pushed by the federal government in Ottawa since 2015 made projects uneconomic and coincided with an oil price slump.
The one surviving large-scale venture in the province is the Royal Dutch Shell-led LNG Canada, which has become the largest private sector investment in Canada's history with planned spending of C$40 billion (US$30.2Bln).
Shell and its four partners, Mitsubishi Corp. of Japan, Malaysian energy company Petronas, Chinese major PetroChina and Korea Gas Corp., agreed in October 2018 to start immediate construction at the brownfield site near Kitimat that had been an energy products terminal before being acquired by Shell in 2011.
Shell is pressing ahead while recognizing that it was likely not possible to get unanimous support for a major infrastructure venture project in BC.
The project includes a US$5-billion pipeline of 670 kilometres being developed by TransCanada Corp. to bring the feed-gas from the Montney shale basin in northeast BC to the Pacific Coast.
Supporters of LNG projects and the jobs they bring believe the opening up of the abundant shale-gas basins will give scope for other ventures to be developed on the BC coast.
The tax measures could particularly help smaller scale LNG export ventures previously proposed by First Nation groups to give their people jobs and security stretching 30 to 50 years into the future.
The Finance Minister said the BC legislation brings together the final fiscal elements of the policy framework for natural gas development set out by provincial Premier John Horgan a year ago.
The provincial government said it was already offering LNG developers performance payment agreements and industrial electricity rates on par with other industrial users in BC.
The legislation proposes to amend the Income Tax Act to implement a natural gas tax credit for LNG development in BC and to repeal the Liquefied Natural Gas Income Tax Act that created barriers for investment in the energy sector.
The tax credit will be available from 2020 and can be used to reduce BC’s corporate income tax rate from 12 percent to 9 percent.
“The legislation will repeal the Liquefied Natural Gas Project Agreements Act that left British Columbians vulnerable to footing the bill for special industry tax and regulatory protections,” stated James.
“Once complete, these steps will deliver the fiscal setting needed for LNG Canada’s proposed $40-billion project in northern British Columbia, expected to create 10,000 construction jobs and up to 950 permanent jobs in the Kitimat processing terminal,” said James.
“Additionally, this project is also on track to be the cleanest of its kind in the world, meaning it will fit within the greenhouse gas (GHG) reduction targets of government’s CleanBC climate action plan,” stated the minister.
“Our government’s vision is to make life better for British Columbians in all regions of our province,” said James.
“Along with providing services people need, like affordable child care and interest-free student loans, that also means delivering new jobs and opportunities through resource development that is environmentally responsible,” added James.
The province’s Green Party Leader Andrew Weaver said he believed the new legislation sent mixed messages about the government's commitment to addressing climate change.
“Continuing to push for LNG development is short-sighted and works directly against CleanBC objectives,” said Weaver.
He described the decision as “a generational sell-out” that would only serve to increase greenhouse-gas emissions.
