British Columbia’s recently updated climate plan, Roadmap to 2030, promises to integrate emissions goals into the oil and gas royalty system. But the province’s current royalty system review doesn’t include a design with environmental or climate outcomes in mind.
The policies proposed in the natural gas royalty discussion paper and the expert panel’s report follow an outdated policy approach that’s out of step with B.C.’s climate goals. The review is supposed to align royalties with the province’s revenue, sustainability and climate goals, but the five design objectives arbitrarily exclude the environment. As well, not one of the proposed royalty reforms addresses environmental objectives.
The public consultation phase of the natural gas royalty review process ends Dec. 10 and the outcome of the review is to be released in February.
As an economist studying royalties and emissions from the oil and gas industry in the U.S., I couldn’t help comparing the approaches across the two countries. The U.S. House of Representatives just took a step forward by passing a bill raising oil and gas royalties on public lands from the current 12.5 per cent to 18.75 per cent, which is closer to market rates.
B.C. has stronger climate policies than most American states, so one would expect the province to have a reasonable return for publicly owned oil and gas reserves. I thought 12.5 per cent was a low rate – private U.S. landowners typically get nearly 20 to 25 per cent – but B.C.’s rate was just 2.4 per cent last year, as determined by the recent independent assessment of the natural gas royalty program…
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