B.C. funding caribou extinction through fossil fuel subsidies and tax breaks: study

Using government data, University of British Columbia researchers linked provincial spending through subsidies and royalty credits to oil and gas activity in federally designated critical caribou habitat

The connection between caribou and money goes deeper than the iconic creature’s depiction on Canada’s 25-cent coin; the B.C. government is funding the extinction of endangered caribou through fossil fuel subsidies, according to a University of British Columbia study published on Friday.

“B.C. has committed a lot of money, a lot of resources and talks a lot about the priority of caribou habitat restoration, but on the other hand is actively subsidizing an industry that is encouraging caribou declines in the very area that B.C. wants to protect,” Adriana DiSilvestro, one of the lead authors of the study, told The Narwhal in an interview.

There are more than 3,000 active oil and gas wells in federally designated critical caribou habitat and more than half of those are operated by companies that received credits and subsidies in the past three years, according to the study. 

“The province’s legitimacy to claim any kind of intent to actually restore habitat or do any kind of conservation in line with Treaty Rights or [Species at Risk Act] is severely compromised by continued spending on royalty credits and subsidies,” DiSilvestro said. “I think one or the other needs to be altered because you can’t have it both ways.”

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“Government is undertaking a comprehensive review of B.C.’s oil and gas royalty system to ensure it meets the province’s goals for economic development, a fair return on our resources and environmental protection,” the Ministry of Energy, Mines and Low Carbon Innovation told The Narwhal in an emailed statement, adding the review will start soon and will include a public consultation process.

But even if the province cancels all subsidies next year, B.C.’s Deep Well Royalty Credit program alone will continue to support the industry for a few years because fracking companies have banked credits to the tune of $3.1 billion, according to a recent analysis.

B.C.’s northeast is an area deeply impacted by industry and development, from the W.A.C. Bennet dam on the Peace River and the controversial Site C dam, currently under construction, to logging, mining and oil and gas operations. The cumulative impacts of industrial activity on the landscape has contributed to a steep decline in caribou herds that once numbered in the tens of thousands.

Indigenous communities in the region, like the Saulteau First Nations and West Moberly First Nations, who relied on caribou as a food source and for tools and clothing, have had to resort to creating maternity pens to ensure the survival of local populations as nearby herds are declared extirpated. In other parts of the province, provincial biologists are teaming up with Indigenous Guardians to acquire information about herds before it’s too late.

The Ministry of Forests, Lands, Natural Resources and Rural Development told The Narwhal in an email the province spent around $27.5 million over the past three years on caribou recovery and added the federal government and other sources make significant contributions to the program.

“Even though our study is focusing on the subsidies and oil and gas wells, my understanding from talking to biologists and other environmental planners who are involved, is this will be a 100-year effort,” Audrey Irvine-Broque, co-author of the study, told The Narwhal in an interview. “I hope it lights a fire under everyone’s butts at the very least to not continue to make this problem worse and at the very best to put significant resources towards trying to improve it.”

‘This is public money’: B.C.’s oil and gas subsidies estimated at $421 million in 2020-21

Unlike most academic research, the study is presented in an accessible format, with interactive maps that illustrate the overlap of oil and gas activity on critical caribou habitat. Peer-reviewed versions of the work will follow.

“We call it critical applied research,” Irvine-Broque explained. “How can we use our time and resources as researchers to produce stuff that is publicly accessible and is also speaking directly to questions that the public may be asking?”

Researchers developed interactive maps to illustrate the extent of industrial activity in federally designated critical caribou habitat. Map: Adriana DiSilvestro, Audrey Irvine-Broque and Yardain Amron

The research team stressed that the habitat depicted is the most important habitat for recovery efforts, not all habitat.

“The vast majority of the province was caribou habitat — this is just what we have left to work with,” DiSilvestro said.

While the federal government has defined habitat areas critical to recovery plans for the species, most development happens on lands that are under provincial jurisdiction, which leaves the federal government with few tools to enforce protections. 

“Provinces and territories have the primary responsibility for managing terrestrial wildlife (including caribou) and their habitat on provincial and territorial lands, though the Species at Risk Act encourages collaboration by all levels of government,” Environment and Climate Change Canada spokesperson Cecelia Parsons told The Narwhal in an emailed statement.

Critics point to B.C.’s lack of standalone endangered species legislation as a key gap in protecting habitat.
“In the absence of federal enforcement, and due to B.C’s notable continued lack of provincial endangered species legislation, there is little policy recourse for protecting critical habitat,” the study noted.

The study collated data from federal and provincial records obtained from publicly available sources or through Freedom of Information requests. 

“This is a unique project because pretty much all of our data is coming directly from the government,” Irvine-Broque said.

DiSilvestro said they had mixed success in getting access to the data. For example, while they were able to get disaggregated numbers related to the province’s Infrastructure Royalty Credit program, which encourages new developments by providing credits that amount to “as much as 50 per cent of the cost of building roads or pipelines,” the province rejected requests for data on its Deep Well Royalty Credit program. 

“They refused to give us the information,” DiSilvestro said. “They argued that the disclosure might be harmful to the financial interests of a public body or could be harmful to the business interests of a third party.”

The researchers were able to calculate a total amount the province is spending through the deep well program — an estimated cost of $421 million for the 2020-2021 fiscal year, projected to increase to $657 million annually by 2024 — but she said the lack of transparency is problematic.

“It’s directly related to taxpayer spending. To understand impacts you can’t just have a total number. And to understand the flow of subsidies, you kind of have to know where they’re going.”

In the absence of government data on which companies are receiving those credits, the researchers profiled one of the major players in the sector.

“Canadian Natural Resources Ltd. owns a very large proportion of the active wells that ended up on our map,” DiSilvestro said. “We looked at how much money they have gotten and then looked at their shareholder dividend payouts.” 

Between 2016 and 2020, the company amassed $5 million through the infrastructure credit program and paid out a 4.53 per cent dividend yield to its shareholders.

“The bottom line is that they’re getting royalty credits, they’re holding on to them and are profiting in a major way,” DiSilvestro said.

The Narwhal requested information from Canadian Natural Resources Ltd. but did not receive a response prior to publication.

“This is public money,” Irvine-Broque added. “Citizens of British Columbia should be able to have input over where it goes.”

Critical habitat left unprotected as oil and gas sector prepares for growth

The Canadian Association of Petroleum Producers told The Narwhal B.C.’s oil and gas sector has generated $24 billion in provincial revenue since 2003.

“These royalties are paid in addition to corporate, property and sales taxes, which over the years account for billions of additional dollars to the government,” Elisabeth Besson, media relations advisor for the association, wrote in an email. 

B.C.’s natural gas production is projected to nearly double by 2040, according to the Canada Energy Regulator, a branch of the federal government that oversees the oil and gas sector, among other responsibilities. That growth is linked to global demand and the projected demands of LNG Canada, currently under construction in Kitimat. The liquefaction facility’s feeder pipeline, the contentious Coastal GasLink pipeline, will be capable of moving 2.1 billion cubic feet per day when it comes online, with a potential to expand to 5 billion cubic feet daily as demand increases.

“The rapidly growing global demand for natural gas should be met by resources from Canada rather than other countries that are not making the same efforts to drive down their emissions,” Besson wrote, citing International Energy Agency forecasts.

The projected increase is tied to a narrative of LNG as a transition fuel and climate solution but experts argue natural gas is far more damaging to climate targets than other energy sources, such as coal. Regardless of global demand, B.C. will have to assess the sector’s growth in light of the recent Supreme Court ruling in favour of the Blueberry River First Nation, which argued successfully that B.C. infringed on its Treaty Rights by permitting industrial activity on such a scale that the Nation can no longer hunt and fish.

“Blueberry’s knowledge and its ability to successfully hunt, trap, fish and gather depends on the health and relative stability of the environment. If forests are cut, or critical habitat destroyed, it is not as simple as finding another place to hunt,” B.C. Supreme Court Justice Emily Burke wrote in the ruling.

A 2016 report noted that Blueberry River First Nations’ territory is home to over 110,000 linear kilometres of roads, pipelines and transmission and seismic lines. Those disturbances create ideal corridors for caribou predators, such as wolves — habitat fragmentation has long been linked to declining caribou populations.

The implications of the ruling have yet to be determined and Burke gave the province six months “while the parties expeditiously negotiate changes to the regulatory regime that recognize and respect Treaty Rights.”

The researchers said the connection between fossil fuel subsidies and caribou habitat is only one aspect of a much more troubling problem. 

“On the surface, it kind of seems like a really specific issue,” DiSilvestro said. “But I think that it speaks to so many larger problems of governance, when we’re dealing with an environmental crisis, public accountability, species management, the economy at large… There are a ton of different issues wrapped up in this problem.”

She added at minimum, the province should be held accountable for continuing to subsidize an industry that is contributing to the demise of caribou.

“There’s a lot of money in subsidies and it’s really important for us to have this map that shows these companies are getting money to operate in these areas that the federal government has proclaimed as critical habitat and that B.C. knows is critical for caribou.”

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