B.C. subsidizes fossil fuels to tune of hundreds of millions annually, according to study

November 25, 2019

"I knew that there were subsidies. I had no idea that we were literally giving up billions of dollars …"

— Tzeporah Berman, the International Program Director at advocacy group Stand.earth


B.C.’s provincial government provided at least $830 million in subsidies in 2017-18 for the production and consumption of fossil fuels, according to a new report out of the International Institute for Sustainable Development.

The province’s subsidies are complicated and extensive, often overlooked and not always transparent, and they amount to hundreds of millions of dollars in public cash annually in support of activities that contribute to climate change, the authors of the report found.

Vanessa Corkal, one of the authors of the study, titled Locked In and Losing Out, explained that the report took on B.C. not to single out the province, but rather to get a full sense of the types of provincial fossil fuel subsidies that exist in Canada and that effectively hold back the country’s ability to move forward on its climate goals.

“Much like in the Paris Agreement we need all countries to work together, in Canada we need all provinces and territories to work together with the federal government to deal with this issue,” Corkal said Sunday.

“As long as fossil fuel subsidies exist, it’s going to hold us back from really making lots of progress on climate change.”

B.C.’s subsidies take the form of provincial tax exemptions, royalty reductions, and direct spending commitments, the report found.

Royalty credit programs, which reduce the amount of cash companies must pay to the government, account for the majority of the subsidies, according to the report. In 2018-19, the total amount of allowable royalty reductions hit $631 million, it found. That was up from $447 million in the prior fiscal year. In all, B.C. has at least $2.6 to $3.2 billion in outstanding royalty credits from fossil fuel producers, according to the report.

In 2017-18, at least $268 million in fossil fuel subsidies came through provincial tax exemptions, according to the study. A large proportion of those subsidies were directed at consumers, but others benefited producers. B.C. also provided direct spending supports for compressed natural gas, LNG and even coal mining, according to the authors.

The report included as an annex a four-page list of other provincial fossil fuel subsidies that the authors could not quantify due to lack of publicly available data.

Tzeporah Berman, the International Program Director at advocacy group Stand.earth, said she was surprised by the amount of subsidies the province was providing and shocked that they had increased under the NDP-Green coalition government.

“I track these issues every day. I follow these issues and have been for years. I knew that there were subsidies. I had no idea that we were literally giving up billions of dollars that could be spent in B.C. towards transportation or education or housing in order to support the growth of the most polluting industries,” she said Sunday.

Berman said her group planned to send copies of the report to every MLA in the province and to request meetings with the government.

Fossil fuel subsidies run counter to provincial policies that seek to reduce B.C.’s production of greenhouse gases, and they come at a cost to other programs and industries, according to the report.

“They pull vital government resources away from effective climate change strategies, not to mention other important priorities such as healthcare and education. This means that other sectors of the economy must compensate for the vast amounts of government revenue spent on subsidies — which is neither fair nor efficient,” it stated.

The authors made several recommendations, including publicly releasing all data related to government spending on fossil fuel subsidies each year. They also recommended the government create an action plan to end the subsidies, coordinate its subsidy reform efforts with the federal government, and avoid creating new ones.

mrobinson@postmedia.com