|Passage of new laws establishing climate and tax rules for British Columbia’s nascent LNG industry were highlights of the B.C. Legislative session, which ended last Thursday.
B.C. Lieutenant Governor Judith Guichon gave royal assent to Bill 2, the Greenhouse Gas Industrial Reporting and Control Act, and Bill 6, the Liquefied Natural Gas Income Tax Act, making them law.
Bill 2 establishes a greenhouse gas emissions intensity benchmark of 0.16 carbon dioxide equivalent tonnes per tonne of LNG produced. Environment Minister Mary Polak says that means B.C. will have the cleanest LNG facilities in the world. The bill passed despite opposition from the BC NDP and Greens. They say the bill is flawed because it only applies to LNG liquefaction facilities and not pipelines and drill sites.
Bill 6 establishes the tax regime for LNG, including a 3.5 per cent corporate income tax rate for LNG effective January 1, 2017, increasing to five per cent in 2037. The initial tax rate will be lower – 1.5 per cent creditable against the higher tax – while LNG companies’ initial capital investment is being deducted.
Finance Minister Mike de Jong says Bill 6 delivers the competitive tax environment and certainty B.C. needs to develop an LNG industry. The BC NDP criticized the B.C. Liberals for exaggerating LNG’s potential benefits to win votes in the last provincial election. They supported the bill, however, saying it’s what B.C. can realistically expect to get from LNG. Only BC Green MLA Andrew Weaver opposed the bill.
MLAs will return to Victoria early next year for the introduction of the 2015-2016 budget.