British Columbia to pump $29 million into LNG development
Over the next three years the British Columbia government will pump $29 million into the liquefied natural gas sector as part of its 2014 Budget, the BC government announced on Tuesday.
The funding is expect to support the development of the BC LNG industry by attracting investments and “supporting a stable environment for investment decisions; facilitating timely processing for regulatory and permitting requirements; and ensuring ongoing environmental protection, management and stewardship.”
The Ministry of Natural Gas Development will receive the largest chunk of cash and the rest will go to the Ministry of Forests, Lands and Natural Resource Operations, the Ministry of Environment, and the Ministry of Aboriginal Relations and Reconciliation.
Natural gas is expected to take up an increasingly larger chunk of the global energy mix over the next two decades and the provincial government sees BC as particularly well-positioned to meet growing demand in Asia.
As expected, the province also announced a planned two-tier income tax for the LNG industry, with a tier one rate of 1.5% and a tier two rate of up to 7%.
“Our LNG income tax revenue framework strikes the right balance between the need to maximize the return to British Columbians, while also ensuring B.C. is an attractive and competitive place to develop LNG, de Jong wrote. “The LNG revenue framework will deliver long-term benefits for British Columbia and provide industry with the certainty it requires to be successful.”
The taxes will be introduced to the legislature by fall this year.
Meanwhile, the independent British Columbia Economic Forecast Council forecasts provincial real GDP growth to be 2.3% in 2014, 2.7 per cent in 2015 and an average of 2.7 per cent over 2016-2018.
“Government’s economic growth forecast is 2.0 per cent in 2014, 2.3 per cent in 2015 and 2.5 per cent in 2016 — a forecast that is prudent relative to the Economic Forecast Council,” the BC government wrote.
As announced last month, the budget extended the flow-through share tax credit which allows resource industry investors to deduct their investments from their income, helping junior companies secure financing.
The Association for Mineral Exploration (AMEBC) released a statement on Tuesday praising the government’s 2014 budget.
“With $476 million spent in 2013, mineral exploration and development is a socio-economic driver of both urban and rural communities and First Nations in all regions of the province, and we thank the provincial government for the recognition of our industry’s contributions across BC,” said Gavin C. Dirom, CEO of AMEBC.
But not every one was applauding. The Sierra Club BC said the BC government was “ignoring” the “inconvenient truth” of pollution from the LNG industry.
“Natural gas resources are non-renewable and increasingly extracted by fracking,” Caitlyn Vernon from the Sierra Club noted in a statement. “The pipedream of LNG fails to account for the costs to BC’s water, farmland and communities of extracting this highly polluting resource.”