BC Hydro

Duped by fossil fuel barons

Carol Linnitt of DeSmog Blog pointed out the Brown series was published at their fine site and repeated without permission or attribution at the website I first noted. I apologize for not linking accurately and I’m sorry for the failure because DeSmog Blog always does fine work and deserves our regular support. The link is corrected.

Brown 350The following excerpts are from this piece in DeSmog Blog. It is written  by Martyn Brown, Gordon Campbell’s former Chief of Staff. The linked piece is the fourth of four parts about B.C.’s climate action plan. The entire series is worth the time of anyone seeking a more complete understanding of the intended and unintended directions of BC’s current energy policies. It is excellent work:

  1. B.C.’s GHG reduction targets,
  2. How the plan is at risk of being co-opted by Big Oil,
  3. B.C. Climate Leadership Team’s recommendations for the carbon tax and how the oil and gas industry, and especially the LNG industry, might financially benefit from hidden subsidies,
  4. Rejecting BC’s Carbon Pollution Subsidy Plan.

Like so many other governments around the world, British Columbia’s Liberal government led by Premier Christy Clark has been duped by the barons of Big Oil.

Beguiled by the petroleum industry’s promises of new investment and jobs, the Clark government has repeatedly proved itself a patsy in acceding to the LNG industry’s every demand.

In the process, it has subjugated B.C.’s global-leading 2008 climate action plan to its misguided vision for the unchecked exploitation of non-renewable natural gas.

It has broken its own law, in failing to meet B.C.’s legislated targets for provincial greenhouse gas reductions.

And it has tugged its forelock, at every turn, to meet each new industry demand for special treatment and locked-in subsidies and tax concessions that are fully underwritten by B.C. taxpayers.

As I have explained in previous installments, B.C.’s greenhouse gas reduction plan is woefully off-track. The CLT [Climate Leadership Team] has suggested a plan to help remedy that situation, mainly through a long-term commitment to a 12-fold increase in B.C.’s carbon tax.

Several other recommended measures that I address below are largely aimed at subsidizing B.C.’s worst carbon polluters, to help them offset the added carbon emissions they hope to impose upon B.C. in the name of economic development.

Underlying that project is the Clark government’s abiding obsession with LNG as B.C.’s principal driver of new resource development.

It intends to further aggravate B.C.’s GHG emissions challenges with a forthcoming climate “action” plan — more accurately, a climate action avoidance plan — that is sure to be tailor-made for the province’s largest industrial polluters.

Whenever that plan is released, it will be grounded in a vision for a massive expansion in fossil fuel development.

More drilling rigs and roads. More scars on our land base. More fracking and seismic instability. More water waste and groundwater poisoning. More pipelines. More energy burned in B.C. to produce still more non-renewable energy destined to be burned in far-flung places. And many, many times more greenhouse gas emissions.

The most rational response to any problem is to first address it by doing less of the thing that is the problem, not the opposite. So why on Earth would anyone think that the way to solve our global warming crisis is to intensify fossil fuel developments in Canada…?

…The CLT suggested several actions that would especially benefit the LNG industry, the oil and gas industry, and more broadly, carbon intensive industries.

To appreciate the scope of those suggested hidden subsidies for LNG in particular, it helps to know a little about the incredibly generous tax arrangements that the Clark government has already extended to those huge firms, in furtherance of its LNG strategy.

Key among those is the infrastructure royalty credit program, which was introduced in 2004 by the Campbell administration to encourage natural gas exploration and development.

For a great analysis of the true hidden cost of that program, check out this piece from blogger Norman Farrell, who has written extensively on the subject.

The royalty credit program grants companies deductions from the royalties they would otherwise have to pay on the natural gas they extract. It is a well-hidden subsidy that is really a tax expenditure and that has poured billions into the pockets of the oil and gas industry over the last 12 years.

It was arguably a defensible trade-off for government back in the days when that royalty credit was at least partially offset by the billions of dollars in natural gas revenues that that industry returned to the provincial treasury from its investments.

But today, it is harder than ever to justify.

…oil and gas behemoths have now been guaranteed a special 25-year tax freeze, at rock-bottom tax rates, and a 25-year tax credit that will be six times higher next January than it is today.

It is an outrageous sell-out to the world’s richest oil companies that provides them a 25-year contractual tax benefit and tax certainty that no other industry or individual enjoys.

And it doesn’t stop there.

…Under the new regime, B.C.’s LNG companies can pollute without limit.

…And here’s the capper.

The Petronas precedent also gave those Asian state-oil monopolies a special 25-year indemnity that is underwritten by B.C. taxpayers.

That indemnity will save them harmless from any so-called “discriminatory events.”

It assured the LNG industry that any companies covered under such project agreements would not have to face any industry-specific carbon taxes or any new industry-specific GHG reduction initiatives for at least 25 years.

If any future government changes those locked-in tax rates and benefits at a cost to those companies that is greater than $25 million in any year, or more than $50 million over five years, they will be entitled to full compensation, courtesy of B.C. taxpayers.

Similarly, any changes in government policy that impose new rules or tougher standards specific to the LNG industry, which entail higher costs relating to carbon taxes or to greenhouse gas emissions and reporting requirements, will be fully compensable above that threshold.

…Of all the suggestions made by the CLT, perhaps none would be so costly to taxpayers as its proposal to oblige B.C. Hydro to electrify the LNG industry.

…it makes sense to minimize those additional GHGs by requiring LNG plants to adopt e-drives or other zero emission technologies.

But the ones who should bear the cost for that should be that industry and those companies — not B.C. taxpayers.

Instead, the CLT wants BC Hydro to bear the brunt of that cost.

It wants to transfer those incremental costs and risks associated with electrifying those proposed LNG plants to the rest of us. That’s wrong.

The CLT also wants BC Hydro to incur the added costs of generating the additional electricity capacity and the untold billions of dollars in new costs that would be required to build new transmission lines and to service the added debt of that infrastructure.

It wants to guarantee those LNG companies expedited construction schedules that would transfer the risks of building those transmission lines and of supplying them with the electricity they need in accordance with their project timelines to B.C. Hydro.

…Instead of digging ourselves ever deeper in the hole by inviting an LNG industry that British Columbians will also be expected to subsidize in addressing its added emissions, we should just say, “enough.”

We do not need that industry and do not want its added carbon pollution.

Enough. It is time to develop a serious climate action plan that embraces a low-carbon economy and that duly ensures its largest carbon polluters pay their full share of the cost of reducing those emissions.

Categories: BC Hydro, LNG, Natural Gas

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4 replies »

  1. Is “duped” the right word?

    I don’t even know what to write; this is almost worse than Alberta, and that’s difficult. It is worse.

    Nobody can sign a deal that bad unless they got huge kickback money somewhere.

    It would make more sense to shutter the operations and just pay people to do something else, through direct government expenditures.

    Liked by 2 people

  2. If BC LNG never happens… are we still hooped by these contracts, or does it all just go away?

    As well: are the traditional natural gas providers getting any of these perks and guaranties — other than the royalty credits?


    • I assume that if no substantive work is done, the legislation could be revoked and the proponents would have to prove damages. However, the Liberals are signing huge contracts for Site C well ahead of need just to ensure the financial commitment is large enough that a new government would be unable to cancel the project. (As Premier Clark said: “We’re hurrying to get past the point of no return.”)

      That same kind of thinking may well have shaped the LNG contracts that are, of course, private. Liberals may have planted large liquidated damage clauses that ensure contracts cannot be cancelled without massive payments.

      I believe that faced with doing the right thing or the wrong thing, Clark, Coleman, de Jong and company will always pick the latter. Clark’s entire history is to treat any conflict as justification to cause maximum damage to the opponents. I suspect teachers still suffer because someone in education offended Clark years ago.

      Liked by 1 person

  3. Well, as long as BC Hydro keeps on adding IPP contracts they should have sufficient power to handle the LNG obligations. Whether the taxpayer can generate enough revenue to afford them is another question.

    Me? I’m going OTG but they will somehow find a way to get me.


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