B.C. LNG Setor: New Legislation and a New Report

In the week of October 20, British Columbia introduced the Greenhouse Gas Industrial Reporting and Control Act and the Liquefied Natural Gas Income Tax Act. The former requires liquefied natural gas plants to purchase carbon offsets and punishes those who fail to limit their carbon emissions to 0.16 tonnes per tonne of LNG – the strictest standards in the world, according to B.C. Environment Minister Mary Polak.

However, Merran Smith of Clean Energy Canada criticized the Act for focussing exclusively on port facilities, at the end of the supply chain. Matt Horne of the Pembina Institute asserted that 70% of the industry’s emissions would be released before reaching the ports. See “B.C.’s New LNG Emissions Regulations A Good Start, But Not Enough” from Desmog Canada at: http://www.desmog.ca/2014/10/22/bc-new-lng-emissions-regulations-good-start-but-not-enough, and Pembina’s comments at: http://www.pembina.org/media-release/pembina-reacts-to-tabling-of-bc-lng-carbon-pollution-legislation.

The new tax legislation imposes a 3.5% rate on operating income, half the amount B.C. had initially planned. Read the government press release at: http://www.newsroom.gov.bc.ca/2014/10/bc-to-have-worlds-cleanest-lng-facilities.html, and for details on the Act, see the government’s website at: http://www2.gov.bc.ca/gov/topic.page?id=75BD4BF2B6B5493FB8A36DB05EBA764D. Jack Mintz, from the University of Calgary, states: “the B.C. shale gas royalty is one of the most distortionary systems developed in industrialized countries”.

For his financial and policy critique, see “Jack M. Mintz: Why B.C.’s LNG tax policy sets a bad precedent” in the Financial Post at: http://business.financialpost.com/2014/10/22/jack-m-mintz-why-b-c-s-lng-tax-policy-helps-neither-the-province-nor-the-industry/. For a broader view, see Marc Lee’s reaction in “A B.C. Framework for LNG, part 2: The LNG income tax” at Rabble.ca at: http://rabble.ca/blogs/bloggers/policynote/2014/10/bc-framework-lng-part-2-lng-income-tax.

And the last word: Pembina will release a new report on October 27th, LNG and Climate Change: The Global Context.

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