B.C. Cancels Province’s Largest Fossil Fuel Subsidy

May 19, 2022

Earlier today, British Columbia’s Premier and the Ministry of Energy, Mines and Low Carbon Innovation released the outcome of the provincial Natural Gas Royalty Review. 

Unceded Coast Salish Territories (VANCOUVER, BC) — Earlier today, British Columbia’s Premier and the Ministry of Energy, Mines and Low Carbon Innovation released the outcome of the provincial Natural Gas Royalty Review. Today’s decision includes the cancellation of Deep Well Royalty Credits, identified by Stand.earth as the province’s largest single fossil fuel subsidy, costing the B.C government $1.2 billion in lost revenue in 2021 alone.

Environmental groups, including Stand.earth, have long highlighted this subsidy–which is designed to incentivise the drilling of fracking wells–as a key roadblock to the province being able to meet its climate targets. The oil and gas sector produces 19 per cent of B.C.’s emissions, but creates just half a percentage of jobs in the province, and contributes only three per cent to provincial GDP.

“We are glad to see the end of the outdated Deep Well Royalty Credit,” said Sven Biggs, Canadian Oil and Gas Program Director for Stand.earth. “Today’s announcement is a clear acknowledgement by Premier Horgan that fracking companies in this province have been getting a free ride at the expense of taxpayers and the environment. This is a step towards fixing that imbalance.”

The Deep Well Credit was such a generous subsidy that it allowed fracking companies to accumulate a surplus of credits, which the Office of the Comptroller General estimates will top $3.4 billion this year.

However, today’s announcement is not all good news because it also includes the creation of new fossil fuel subsidies that would continue to use public revenue to incentivise the drilling of new fracking wells. These capital cost recovery measures clearly meet the WTO’s internationally recognized definition of a fossil fuel subsidy. 

“In a province that is still cleaning up and rebuilding from last year’s record floods and fires, there is no such thing as an efficient fossil fuel subsidy,” said Biggs. “New fossil fuel subsidies will only lead to new fracking wells, which will in turn make the impacts of climate change that much worse. Our Premier needs to firmly put the interests of the residents of communities like Lytton and Hope and the lives of the senior citizens who died in last year’s heat dome, ahead of the profits of oil and gas companies.”         

This year, the provincial government spent $2.1 billion to help communities impacted by extreme weather events rebuild and prepare for the effects of future events caused by climate change. Unfortunately, as long as this government continues to subsidize the expansion of fossil fuels, these costs will continue to mount and more lives and communities will be lost.   

Despite the government’s leadership in areas like carbon pricing and the adoption of electric vehicles, B.C.’s climate emissions have continued to rise. A plan for tackling the emissions from oil and gas, which was absent in the provincial government’s CleanBC: Roadmap to 2030 released in October 2021, continues to be a glaring omission from the Province’s plan to address climate change. 

Stand.earth continues to call on the NDP government to end all fossil fuel subsidies as part of a larger plan to meet their sectoral target for the oil and gas sector of 33-38 per cent emissions reductions, below 2007 levels, by 2030.     


Media contacts: 

Ziona Eyob, Media Director – Canada, canadamedia@stand.earth, +1 604 757 7279 (Pacific Time)