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Responding to the BC government’s new regulatory framework for LNG

The BC government today outlined its proposed regulatory framework for LNG proponents such as LNG Canada. In particular, the BC government sent a letter on Monday to Mr. Andy Calitz, CEO of LNG Canada, providing specific details. While the BC Green Caucus has not seen a copy of the letter that the BC Government sent, we were consulted on the government’s high level policy objectives as outlined in their media briefing and release today.

Given that the BC Green caucus believes in the importance of giving industry certainty as to our positions and intentions, we also sent Mr. Calitz a letter that is reproduced in text form below. In our letter we are very clear that:

  1. The B.C. Green Caucus does not, and will not, support exempting new LNG companies from carbon tax increases as this defeats the purpose of the carbon pricing.
  2. Extending the carbon tax to fugitive emissions is a core component of our confidence and supply agreement with the BC NDP.
  3. The confidence and supply agreement requires government to implement a climate action strategy to meet B.C.’s legislated emissions reduction targets of not less than 40% below 2007 levels by 2030 and 80% below 2007 level by 2050

Our firm position is that it is incumbent upon government to assess the LNG Canada project through the lens of meeting these greenhouse gas reduction targets and specifically identify a pathway to meet them. This should be done in a manner that protects existing industries that provide jobs and economic activity that British Columbians rely on.

As it stands, and despite being in office for 8 months, the BC Government still has not identified any concrete measures to reduce greenhouse gas emissions. As I pointed out in February, it is not possible to on the one hand claim you have a plan to meet our targets and then on the other hand start promoting the expansion of LNG.

As noted in the essay I wrote, in 2016, British Columbia actually lost $383 million from exploration and development of our resource. That’s because the tax credits earned exceeded the sum of the income received from net royalties and rights tenders combined. In the fiscal year ending March 31, 2017, British Columbia earned total revenue of only $3.7 million, a 99.9% drop from 2010 (BC earned 1000 times more revenue in 2010 from natural gas than we did in the last fiscal year).

It makes no sense to continue the generational sellout and further extend the government handout to a hypothetical LNG industry by offering ratepayer-subsidized electricity (read Site C) of 5.4 ¢/kWh (less than half what you or I pay and less than half of what it will cost to produce the electricity from Site C). It makes no sense to exempt LNG companies from being required to use electric drives for compression of natural gas to achieve this discounted electricity rate.

And in addition, expectations are that the federal government would further exempt LNG Canada from tariffs on fabricated steel imports. This would ensure that most of the infrastructure would be built in Asia and shipped to BC. At the same time, the BC Government will exempt LNG proponents from the Provincial Sales Tax (PST) for construction. So much for the multi-billion dollar investment, revenue and job creator for British Columbia.

Finally, it remains to be seen if LNG demand will increase in light of the fact that Japan, the world’s largest LNG importer, is restarting nuclear reactors that were shutdown following the Fukushima incident. In fact, just this week a major Japanese electric power company is putting its LNG contracts up for sale.

In the ongoing saga of British Columbia’s desperate attempt to land a positive final investment decision from a major LNG proponent, the generational sellout continues. In a typical race-for-the-bottom fashion, the BC NDP are proposing still further subsidies to LNG proponents.

While I appreciate the Premier’s commitment to putting in place a plan to reduce emissions to 40% below 2007 levels by 2030 and 80% below 2007 levels by 2050 and to put a price on fugitive emissions, I cannot see how this is possible if the LNG Canada proposal goes ahead. It would require every aspect of our BC economy (except LNG Canada) to collectively cut emissions by more than half in twelve years and by 95% by 2050.

As outlined in our media release below, there are significant opportunities to grow B.C.’s economy while meeting our climate targets that do not include LNG. For instance, the supercluster funding announced last month is expected to generate 50,000 jobs and $15 billion in economic activity in B.C. in the next 10 years.

In summary, the BC Green Caucus will not support any legislation brought forward to grant the exemptions outlined above.


Media Release


B.C. Green Caucus releases letter to LNG Canada clarifying position on government’s LNG approach
For immediate release
March 22, 2018

VICTORIA, B.C. – The B.C. Green Caucus released a letter sent to LNG Canada clarifying the Caucus’ position on the government’s proposed LNG regulations. The letter, sent on Monday March 19, came after the Caucus was was made aware of the the details of the government’s proposed LNG regime. The letter is intended to give industry maximum clarity, as the minority government requires the B.C. Green Caucus’ votes for general stability and to pass legislation.

“There are significant opportunities to grow B.C.’s economy while meeting our climate targets,” said Andrew Weaver, leader of the B.C. Green Party. “For instance, the supercluster funding announced last month is expected to generate 50,000 jobs and $15 billion in economic activity in B.C. in the next 10 years. Future development must fit within our climate targets, and the numbers on LNG simply don’t add up.”

The B.C. Green Caucus does not support extending the proposed measures to support existing Emissions Intensive Trade Exposed (EITE) industries as currently conceived to prospective LNG companies – a policy that would in effect freeze the carbon tax at $30/tonne for certain facilities. CASA commits government to extend the carbon tax to fugitive emissions, and the Caucus expects that this will include the natural gas industry. Further, the Caucus is concerned that increasing B.C.’s emissions through LNG developments will place an undue burden on existing industries and the public to reduce their emissions beyond what is already required.

“Not only is a plan to meet our climate commitments a core component of our Confidence and Supply Agreement (CASA) which forms the stability of this government, it is essential for ensuring we do not betray our duty to future generations.” Weaver continued. “When it became clear that the government intended to propose measures that are incompatible with B.C.’s ability to meet our climate targets, we felt it was our responsibility to communicate to LNG Canada that if these measures were to go ahead unamended, we would no longer have confidence in government.

“To be clear – our Caucus is fully committed to working in partnership with the B.C. NDP government to enact a plan to meet our climate targets and in attracting the investments we need to build a 21st century economy. We will continue to hold this government to account on all its promises, including our responsibility to the next generation and our international commitments to act on climate change.”

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Media contact
Jillian Oliver, Press Secretary
+1 778-650-0597 | jillian.oliver@leg.bc.ca


Text of BC Green Caucus Letter


Mr. Andy Calitz
CEO, LNG Canada

March 16, 2018

Dear Mr. Calitz,

We are writing regarding your ongoing discussions with the Government of British Columbia on your proposed project, LNG Canada in Kitimat, B.C.

As you know, British Columbia currently has a minority government, where the votes of our three caucus members provide confidence in Premier Horgan’s NDP government. The basis of our confidence is the Confidence and Supply Agreement (“CASA”) signed May 30, 2017 which binds our two caucuses to act on the principle of “good faith and no surprises.” As such, the government must consult with our caucus on all matters, and it must uphold the agreed-upon policies and initiatives enshrined in it. Our caucus has been consulted on the letter sent from the government to LNG Canada. We are writing to let you know our position on the government’s proposal in order to provide you with the fullest possible scope of information.

First, extending the carbon tax to fugitive emissions is a core component of CASA. We have assurances from the government that this extension is forthcoming pending a determination of the necessary technologies and regulations to measure them. To be clear, it is our expectation that the carbon tax on fugitive emissions will be extended to all sources of these emissions. This will have impacts on a number of industries and future proposed projects, including yours.

Second, CASA requires government to implement a climate action strategy to meet B.C.’s legislated emissions reduction targets. Therefore, all future development must fit within our province’s commitment to the Pan-Canadian Climate framework to meet our emissions reduction targets, as well as soon to be legislated targets for British Columbia specifically. As such, it is incumbent upon government to assess your project through this lens and to specifically identify how it will accomplish the emission reductions required to meet our targets of not less than 40% below 2007 levels by 2030 and 80% below 2007 level by 2050. This must be done in a way that limits harm to other existing industries that provide jobs and economic activity that British Columbians rely on.

Finally, CASA commits government to implement an increase of the carbon tax by $5 per tonne per year beginning April 1, 2018. Our intention was to ensure that across the entire economy a clear market signal was sent that incentivized low GHG producing activity, as well as spurred innovation and investment in the new economy. We were made aware over the course of our consultations with government that the proposed measures to support Emissions Intensive Trade Exposed (EITE) industries would be extended to LNG as well. These measures would have the effect of rebating up to 100% of the carbon tax that was paid beyond the $30 per tonne, based on how the greenhouse gas production intensity compares to the global cleanest benchmark.

While our caucus is supportive of these measures for the many existing industries in B.C. that already provide jobs and economic activity for our province – many of whom made their investment decisions in a previous regulatory environment – our caucus does not support extending the EITE as currently conceived to a proposed LNG industry.

If such a measure goes forward without amendment we do not see how a climate action plan, as agreed to in CASA, would have any legitimate pathway forward to reach our GHG reduction targets. As such, our caucus would no longer have confidence in government, as they would not be living up to their commitments laid out in CASA.

We believe that British Columbia must make its GHG reduction targets and climate action plan the centerpiece of its economic strategy. Our focus must be on prioritizing innovation within our economy and seeing new investments that ensure we are leaving the next generation with real opportunities to prosper. We are deeply encouraged that the companies engaged in your joint venture are investing heavily in renewable energy and other clean technologies. B.C. has a highly educated workforce, world-class research institutions and a wide range of innovative companies. We would welcome the opportunity to work with you in a manner that builds on these opportunities while helping us meet B.C.’s GHG reduction targets, as committed to under the Paris Climate Accord.

We would be happy to discuss our position in detail with you.

Sincerely,
Andrew Weaver
MLA, Oak Bay Gordon Head and Leader, B.C. Green Party

Sonia Furstenau
MLA, Cowichan Valley and Deputy Leader, B.C. Green Party

Adam Olsen,
MLA, Saanich North and the Islands

12 Comments

  1. Mike StClair-
    March 26, 2018 at 6:25 pm

    The time has come to pull the plug on the current alliance of the Green and NDP parties. Your list of dissatisfaction with the NDP’s decisions is long, and the only way to correct it is to put them down. I thought you were an honourable man and an honest politician. You have failed to do what is right for British Columbians. My vote, and I’m certain many more will never again move in your direction should you not do what has to be done. Self interest now appears to be the platform of the Green Party of BC. You have let me down, and I am both saddened and maddened.

  2. Michael Irwin-
    March 25, 2018 at 12:21 pm

    I read your concerns and share them. However, while tough talk may be necessary to keep the Green vision before the public, the ‘big picture’ goals must dominate strategic policy goals. Therefore, have a good and public row with the NDP but remember if you bring the government down now we will face an election under the FPTP rules. I know it requires lip biting but don’t bring the government down until we have secured proportional voting for the next election. Then feel free to defeat them no matter how annoying they are now.

  3. Terry Robinson-
    March 24, 2018 at 10:23 pm

    I don’t understand a lot of what you’ve said but I do understand that pursuing the development of another fossil fuel is a generational sell-out. Next Horgan will approve the Massey bridge. What a disappointment and the NDP are.

  4. R.A.St.Louis-
    March 24, 2018 at 7:36 pm

    My personal belief you Mr.Weavever are one of the utmost honorable MLAs in British Columbia although your commitments are not totally mine I give you respect and this thought . Many have wondered how a separatist party won 2 terms in Quebec and the majority did not want separation . The answer is GOOD GOVERNMENT and that was what they got . To achieve you will have to show you will be capable and committed to supply it Keep your existing integrity putting your abilities to all requirements of the public not only the environment Good Luck and watch your back .

  5. Terry Bradshaw-
    March 23, 2018 at 1:05 pm

    Apparently the only person who did not see this coming was …..Andrew Weaver.

    The NDP told you how important you are and you believed them until they decided you weren’t important. How long did that take?

    Mr. Weaver you are now on record as supporting an asset tax on BC homeowners, a property purchase tax that is fundamentally racially biased and now horror of horrors a fossil fuel terminal plus hundreds of miles of pipeline through …. get ready for it… the Great Bear Rain Forest. To that add hundreds of tankers in the salmon steelhead spawning grounds.

    Can you hear the Orca’s crying Andrew?

    And the only plausible reason you are selling your soul is your hope that you will gain party status and money based on a referendum to change the way we vote.

    The NDP have taken your measure and found you wanting. The voters of BC will likely reach the same conclusion.

    “The only guide to a man is his conscience; the only shield to his memory is the rectitude and sincerity of his actions … but with this shield, however the fates may play, we march always in the ranks of honour” Churchill.

    Wither do you march Andrew?

  6. Patrick Ironside-
    March 23, 2018 at 11:51 am

    Good on ya. Your actions since the election have convinced me to vote green instead of my 45 years of voting NDP.

  7. Matthew Hamer-
    March 22, 2018 at 6:46 pm

    Dear Mr. Weaver –

    It astounds me that three people, albeit that they are elected MLAs, would hold a $45 billion investment hostage to dogma. You surely know that every gigajoule of LNG shipped to Asia will displace a gigajoule of coal generation. And your assertion that having the modules fabricated in Asia will mean zero jobs in Canada is not factual. Even with the modules being fabricated overseas, LNG Canada (via their contractors) will be hiring thousands of people to set and connect the modules in Kitimat. This is all set out on their EIA. Also, the development of infrastructure to deliver gas to the facility will create thousands of jobs on Northern BC.

    Sincerely Yours, Matthew Hamer

  8. Carl Olsen-
    March 22, 2018 at 6:15 pm

    This is a betrayal to the voters of B.C. who voted for the Horgan NDP Government. I notice this announcement was made the day after poll results showing John Horgan’s high approval rating. I would hope to see NDP MLAs who are dedicated to the Environment and against the expansion of fossil fuel industries cross the floor to join the Green caucus.

  9. David-
    March 22, 2018 at 4:26 pm

    Horizontal hydraulic fracturing is an integral component of the LNG industry. There is nothing whatsoever green about fracking. It uses millions of gallons of water per well. It pollutes air, ground and water. Mother Nature shows her disapproval by triggering earthquakes from time to time. Horgan will make an excellent Liberal Premier.

  10. Josh McIlmoyle-
    March 22, 2018 at 3:58 pm

    Hi Green Party,

    I work with the Treaty 8 Nations in BC that are directly impacted by the development and extraction of natural gas. My nations have many of the same concerns around air, water, and soil quality. We rely on the environment to provide nourishment and it needs to be healthy. Unfortunately we are faced with the reality that if the natural gas industry did not exist and does not have a future market beyond the US (Who is effectively suppressing our market) many of our hard working and ambitious members would be out of a job and many business owners would go bankrupt. So we support the continued sustainable development of natural gas to supply the LNG market.

    I have some concerns with some of your strategies and would greatly appreciate some clarity. I am deeply involved in my Nations economics and I would really like to know more about superclusters and how much of an impact it is going to have in a resource dependant economy. I would also like to know how the green party is going to help the 10’s of thousands of British Columbians transition out of a resource dependant life style that affords a nice home, multiple vehicles, kids sports, and the option of having one parent stay home and raise their kids. I would also like to know how you plan on recouping tax revenue that will be lost when all these citizens loose their high paying jobs.

    The full economic scope is not as black and white as the debate around your CASA arrangenent. Canada as a whole is carbon neutral, so why are we penalizing ourselves and our economies to appease heavy polluting nations? We should be providing the resources they need to achieve a higher standard and right now the answer to that problem might be our natural gas converted to LNG for shipping. Many more than just my Treaty 8 Nations are hoping to see the economic gains of this industry.

    Looking forward to a bright future for my nations and my family here in BC. Our future is in your hands.

    Sincerely,

    Josh McIlmoyle

    • March 22, 2018 at 4:20 pm

      Hello Josh, we would be delighted to share our plan with you an others and we have and will continue to do so in the future. We understand the importance of the resource sector to British Columbia. Ive given a number of talks on this topic and will be doing more in the near future. Please stay tuned.

  11. Trev-
    March 22, 2018 at 3:32 pm

    Very well articulated AW/LL/team.
    I wonder how “confident” the other Andrew could be in on an LNG item.
    I also.wonder about the methodology of the BC inventory. And I wonder about offsets, ITMOs, with respect to Pan-Canadian Framework and Paris.