LNG- Getting a fair return for B.C.’s natural resources

July 25, 2018

British Columbians deserve a fair return for our province’s natural resources. Developing an LNG industry in B.C. is the best way to ensure we can add value and get a fair price for our natural gas.

In B.C., the new tax revenue from a modest LNG industry of two larger and one small LNG projects could help the B.C.  government fund 2,500 new nurses, 2,500 new teachers, 900 new family doctors and build 60 new elementary schools as well as a billion-dollar major infrastructure project, such as a new bridge or subway line- every year for 30 years. (Based on dollar estimates in this Conference Board of Canada report.)

British Columbians will miss out on all of these benefits, if B.C. LNG projects aren’t competitive in the global marketplace. Projects become uncompetitive when they are faced with costs that LNG projects in other jurisdictions, like the United States, don’t have to pay.

When the BC government introduced its new framework for LNG in March 2018, it leveled the playing field.  Up until then, there had been nine different levels of taxation on LNG in B.C. compared to other global jurisdictions which had between two and four. B.C. LNG projects do not pay a discounted rate for electricity, under the new framework, they pay the same rate as all other industrial customers in B.C. No other LNG-producing countries have a special tax on LNG projects and no other electric company in the world charged LNG facilities a higher rate than other industrial customers like mines and factories.

B.C. will be one of only two jurisdictions – apart from Norway- with a carbon tax on LNG. Carbon taxes, if applied to funding carbon abatement in B.C., as opposed to general government revenue, could be applied to reducing the province’s overall emissions and providing assistance to multiple sectors in reducing emissions.

Global demand for natural gas is growing. The International Energy Agency predicts demand for natural gas will increase by 40 percent over the next 25 years as more than 40 countries look to natural gas to reduce their emissions and meet their climate targets. When we liquefy and export B.C.’s natural gas, we add value to it and gain access to markets that pay much higher prices for our commodity than our current only customer- the United States.

The Chinese government has mandated switching from coal to natural gas to reduce emissions and provide citizens with cleaner air to breathe. This switch has boosted China to become the world’s largest importer of LNG but even so, China still has a shortage of natural gas. B.C. can be a reliable source of natural gas for China because we have plentiful, responsibly-developed natural gas and a stable political climate, compared to competitors.

If B.C. does not supply the LNG China requires, LNG from other countries will, with much higher emissions. B.C. is positioned to supply LNG to China that has up to 60 percent fewer emissions than other global LNG sources. Our stronger emissions regulations and access to clean hydro-electric power will make LNG from B.C. the lowest carbon footprint LNG in the world which includes accounting for upstream emissions.

We can ensure we receive a fair return for our resources by adding value to B.C.’s natural gas by liquefying and exporting it. If B.C. can compete with the rest of the world’s LNG-producing countries, we can supply the world with the lowest-carbon footprint LNG that will help reduce global emissions while creating local jobs, training, and other economic benefits for British Columbians.


David Keane, President, BC LNG Alliance