Setting the record straight on the day’s top anti-oil and gas media stories.
ACTIVIST CLAIM: Using misleading redefinitions of the words subsidies and liabilities, Stand Earth says B.C.’s deep well exploration credit for natural gas production is sabotaging the province’s climate change plans and creating liabilities for British Columbians
THE FACTS: If a store has a 50% off promotion did it subsidize yu or did you still have to pay for what you bought. If you paid for the item in installments does the store have a future liability to you or is it you who has to make the payments? Deep well credits are a tax reduction to encourage companies to drill wells so the Province can receive more revenue while creating jobs. The companies do not receive money from the government and there is no liability to them, they still have to pay.
Here are some talking points and sources to have a reasonable conversation about deep well credits and the benefits of natural gas production.
- This report by the foreign-funded organization Stand.earth claims that the B.C. government gave away $1.3 billion in oil and gas subsidies in 2020/2021. However, the report only talks about $545 million which are mostly tax reductions, not subsidies.
- Even the bulk of their $545 million is $421 million Deep Well Royalty Credits, which are a particular tax treatment common to the natural resources as a whole. Developing natural resources is a financially intensive process and these measures level the playing field across the sector to ensure they remain competitive.
- Their so-called subsidies also included tax credits from B.C.’s Clean Infrastructure Royalty Program which spurs investment into emissions reduction technology.
- Royalties and income taxes are not the only way that natural gas development generates revenues for B.C.
B.C. collected $2.6 billion in carbon and fuel taxes during the 2020/2021 fiscal year.
- Despite producers claiming $421 million in credits in 2020/21, they still paid a net $543 million in royalties and fees to the government that would otherwise have not been paid if the wells were not drilled. This also does not include corporate income and other taxes paid by the industry
- B.C.’s support of the natural gas industry could actually help reduce global emissions. Independent studies have found that switching to Canadian LNG can be 62% cleaner than Chinese coal power in a country that represents 28% of total global emissions.
Stories that get it right.
With calls for net-zero, activists have decried that it would be the end of oil and gas. However, technology will be the key driver of reaching net-zero with oil and gas still going to be an important part of the energy mix by 2050. The CEO of Baker Hughes is just the latest of many in the oil and gas industry to echo this view.