The province is implementing a new oil and gas royalty system.
“Our province is endowed with abundant resources, which belong to all of us. But for too long, a broken system of fossil fuel subsidies has failed to align with our climate goals or ensure people fully benefit from these resources,” Prime Minister John Horgan said in a statement. Press. “That’s why we’re fixing the outdated oil and gas royalty system by eliminating BC’s largest fossil fuel subsidy. This will give British Columbians a fair return and allow us to invest in their priorities, such as improving services, reducing costs and fighting carbon pollution.
The new system will eliminate the Deep Well Royalty Program, the largest oil and gas subsidy, as well as other outdated and ineffective programs, such as the Marginal Well, Ultramarginal Well, Low Productivity Well Rate Reduction and Clean Growth Infrastructure Royalty programs.
The new system will apply to all new wells. It will be phased in over two years beginning September 1, 2022. In 2017, Alberta announced that it would modernize its royalty system over a 10-year period.
“This new system is long overdue and will replace an outdated system that has been in place for almost three decades,” said Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. “This will support vital public services, like roads and hospitals, while advancing ongoing environmental protection for British Columbians.
A new five percent minimum royalty rate will be in effect, which is a significant increase from the current three percent. This increase will provide more revenue for public services and climate action. It also recognizes the excess credit accumulated by businesses and the need for British Columbians to earn a fair return.
Under the new system, existing credits will expire in four years unless they are transferred to an environmentally focused land healing and emissions reduction pool. Using this pool, companies can use credits to fund land remediation and emissions reduction work, but only if it goes beyond regulatory requirements.