B.C. natural gas users pay carbon tax at a rate of $35 per tonne of carbon dioxide emissions. (Flickr)

B.C. carbon tax now costs more than natural gas it is charged on

Price slump continues as hopes raised for LNG exports

A tax increase and a continued slump in the price of natural gas means B.C. customers are paying more for carbon tax than they are for the gas they use.

B.C.’s carbon tax on fossil fuels went up April 1 for the first time since 2013, increasing the charge for natural gas as well as gasoline, diesel, coal and other carbon-based fuels. That coincides with the lowest price of natural gas in more than a decade.

“Natural gas is extremely affordable right now, which is why we’re seeing the carbon tax outpace the cost of gas,” said Sean Beardow, manager of corporate communications for B.C. gas utility FortisBC.

The carbon tax increase doesn’t sit well with Chilliwack resident Wayne Dance, who keeps a close watch on his energy use and sees no viable alternative for natural gas heating.

“We try to do the right thing and two years ago spent more than $5,000 on a new high-efficiency furnace and water heater, which saves a little on our gas bill but not anywhere near enough to recover our costs,” Dance said.

B.C.’s carbon tax is charged on the amount of emission, whatever the price of fuels. This year’s increase, imposed a year earlier than the NDP proposed as a condition of the B.C. Green Party supporting their minority government, brings the carbon tax to $35 a tonne of carbon dioxide or equivalent emissions.

The price of B.C. natural gas has fallen in recent years, as supplies have surged from shale gas development in northeast B.C. As the U.S., Australia and other producers have developed shale deposits and begun exporting liquefied natural gas to Asia, B.C. has seen demand decline for its only export market, the U.S., as pipeline development to the coast has stalled.

Premier John Horgan said this week he is hopeful that a long-sought LNG terminal investment will be made. LNG Canada, an international consortium including Shell and including Malaysian giant Petronas and other Asian investors, is close to a final investment decision on a terminal at Kitimat.

RELATED: All 20 B.C. First Nations agree to gas pipeline route

RELATED: NDP offers new tax breaks to B.C. LNG producers

The NDP government surprised many of its supporters and critics in March, announcing it was doing away with the B.C. Liberal government’s LNG income tax on producers and offering a break on provincial sales tax for construction.

“We were approached by the LNG sector, not just LNG Canada, with a series of challenges they had with respect to their competitiveness, based on the program that the Liberals put in place when they started talking about LNG back in 2011,” Horgan said Tuesday.

“And we have dismantled that package and put forward a new package that’s hopefully going to meet the competitive needs and treating LNG like any other investor. Whether you’re coming to invest in the forest industry, in the mining industry, we want to treat everybody exactly the same.”

Horgan noted gas royalty revenues to the province would increase after a decline in sales and price, helping with health care, education and other rising costs faced by the B.C. government.


@tomfletcherbc
tfletcher@blackpress.ca

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