New report shows fossil fuel subsidies have doubled since B.C. NDP took power

Tuesday June 15, 2021


Runaway tax break for fracking fuels growth in subsides, sabotaging provincial climate targets

səl̓ílwətaʔɬ (Tsleil-Waututh), xʷməθkwəy̓əm (Musqueam), and Skwxwú7mesh (Squamish) Territories (Vancouver, BC) — A new report released today from Stand.earth shows that B.C. Premier John Horgan will give away more than twice the amount of fossil fuel subsidies given out in the final year of Christy Clark’s government. The report is based on a line by line analysis of the B.C. government’s 2021 budget using the World Trade Organization’s definition of fossil fuel subsidies. It found that this year, the Horgan government will give away a record breaking $1.3 billion in fossil fuel subsidies. 

The largest increase comes in the form of Deep Well Royalty Credits, a tax credit for fracking wells, which is budgeted at $421 million this year. However, more troubling is the fact that for at least five consecutive years, the government has given out more royalty credits than the companies can claim, leading to surplus of credits totaling $3.1 billion, which the companies can claim in the future, which means lost revenue for future governments.

“Premier Horgan was elected on a promise that he was working for us, but looking at these numbers makes it seem more like he works for big fracking corporations,” said Sven Biggs, Canadian Oil and Gas Program Director for Stand.earth “What other explanation can there be for allowing subsidies to double on your watch, or to give out tax breaks and incentives totaling five times the amount this industry contributes to provincial treasury through royalties?”

The report also shows that fossil fuel subsidies have continued to grow much faster than what the oil and gas sector pays in royalties, which the government estimates to be $378 million in 2021. Meaning that this year subsidies will be five times what the oil and gas sector contributes to the province in royalties. Furthermore, the analysis also reveals that over the last five budgets, the government has consistently over estimated royalty revenue, while consistently underestimating the true costs of fossil fuel subsidies. 

The findings reveal that revenue from oil and gas royalties account for a tiny source of revenue for the province. For example, oil and gas royalties were less than net revenues from the Liquor Distribution Branch at $1.09 billion, and less than British Columbians paid in vehicle licencing and registration at $578 million.  

“British Columbians who put their trust in John Horgan to deliver an effective climate plan are going to be incredibly disappointed to see handouts to oil and gas companies ballooning while clean energy investments get slashed,” said Alexandra Woodsworth, Campaigns Manager with Dogwood. “As long as the government keeps funding the main industry fuelling emissions, B.C.'s climate plan will keep failing -- it's like trying to get a smoker to quit by giving them more packs of cigarettes every day.”    

Once again, this year, subsidies for fossil fuels will cost the B.C. government more than they will spend on their plan to fight climate change, which totals around $1.1 billion in 2021. This is a trend that is predicted to increase dramatically through 2024, as spending on climate is actually projected to peak this year and then fall off in future budgets.

B.C.’s fossil fuel subsidies are simply not economically viable, and they deter from critical climate action that the province claims to be committed to. If the Horgan government fails to address its subsidies problem, budget projections indicate that subsides could reach up to $1.8 billion by 2023 – 24, including a 150 per cent increase in the Deep Well Royalty Credit. With the provincial government set to review B.C.’s oil and gas royalties, Stand.earth is calling on the NDP to use this opportunity to cancel royalty credits and begin the phase out of fossil fuel subsidies.  

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Media Contact:

Ziona Eyob, Canadian Communications Manager, canmedia@stand.earth, +1 604 757 7279 (Pacific Time)