Editor:
Richard Corbet offered some useful clarifications about royalties and subsidies in his Oct. 15 letter (“Subsidy is not the word”). The fact remains that B.C. subsidizes new fossil fuel extraction. This flies in the face of caribou recovery and climate science. A recent expert report commissioned by the province concludes the gas royalty regime is broken. A complicated scheme of credits and concessions – subsidies – means industry pays pennies on the dollar to B.C. for the gas it profits from.
The Deep Well Royalty credit is one way the government subsidizes fossil fuels. The credit was developed when fracking was a new, expensive technology with potential to improve the industry. Today, fracking is standard procedure. Gas exploration and development remains a habitat problem and the industry has “banked” deep well royalty credits of approximately $3.765 billion that can be applied against future royalty payments. Credits and other concessions make the effective royalty rate – the net percentage of natural gas revenues that government keeps – fall from a high of 8.4 percent in 2013 to 2.4 percent in 2020.
This encourages exploration and drilling where the costs to society are greater than the benefits, all while harming caribou and the climate. Now is a perfect time to tell the B.C. government that we need to focus on ending the climate emergency, recovering species and habitats at risk and reconciling with Indigenous nations. Subsidies should be eliminated and the royalty regime should support winding down the fracked gas industry. A larger portion of net royalties should flow directly to Indigenous nations on whose territory the gas is extracted and the ecological damage visited.
Jay Ritchlin, Gibsons
Director-General Western Canada, David Suzuki Foundation
