BIODIESEL SUBSIDIZES THE PETROLEUM INDUSTRY IN BC

As of January, 2010, gasoline and petroleum diesel fuel were given a shocking partial exemption from the Carbon Tax [1].

At the same time, biodiesel faced a sudden and debilitating 22.5% combined tax hit, almost instantly destroying the BC biodiesel industry. Since biodiesel pays the full Carbon Tax, and petrodiesel receives an exemption, we conclude that "Biodiesel now subsidizes the petroleum industry in B.C."
We, the board of the Island Biodiesel Co-op, invite interested members of the public and the media to attend this event.

For more info contact:

Kenji Fuse
Board of Directors, Island Biodiesel Co-op
Principal Viola, Victoria Symphony Orchestra
Tel: 250.381.6502
Email: yk120@victoria.tc.ca


Thanks to our friends and sponsors: Ebizu, Victoria Spirits, Barb's Place, Zambri's, Coast Industrial, Willie Dodge, The Victoria Conservatory of Music, Marcus Pollard, Chikara Sushi, Green Cuisine, Wilson & Proctor, BCSEA

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I. Overview of Taxation on Biodiesel in BC

Biodiesel enjoyed an exemption from the "Motor Fuel Tax Act" until this past January, and has been hit with the imposition of the Carbon Tax as well. This amounts to a sudden 22.5% tax increase on a dollar of biofuel, which understandably has impacted our commercial activity, since we went from providing the fuel for less than pump prices, to now charging over $0.25 more per litre than petrodiesel at the pump.

During this same budget, petroleum fuels have received a 5% exemption from the Carbon Tax [1]. This astounding flaw - both logically and morally - does not even take into consideration the fact that biodiesel already has significant GHG reductions, being mostly renewable carbon content [2].

Central to our argument that this new taxation policy will negatively impact revenue collection for the BC Finance Ministry is the fact that the majority of a petro-dollar (40-70%, [3]) will leave the province - as BC has only two crude oil refineries, compared with 8 in Alberta [4], all with vastly superior capacity - and the majority of crude comes from the tarsands or other out-of-province sources. This is in contrast to a made-in-BC biofuel dollar, which stays in the province to be HSTed over and over.

The suddenness and high rate of taxation on biodiesel may very well kill the industry here in BC, after a decade of funding has created the beginnings of a biofuel infrastructure. This will result in loss of jobs, and local energy dollars.

GHG levels will rise, but Deputy Finance Minister Graham Whitmarsh may want this to happen, as he was formerly the main force in creating BC's 'Carbon Credit' program, which will profit from increased GHG levels.


Our Proposal

In the "Motor Fuel Tax Act" (June 2010)

under "Part 1 - Definitions and Applications

1. In this act

         -"diesel fuel" includes
                 a) renewable diesel fuel, and"

I would formally request that you adopt the following motion:

The above portion of the Act be changed:

In the "Motor Fuel Tax Act" (June 2010)

("Part 1 - Definitions and Applications")

1. In this act
         -"diesel fuel" includes
                 a) renewable diesel fuel, EXCEPT BIODIESEL (B100)
                         PRODUCED IN BC, and"


Notes:

[1] Hansard - Monday, September 21, 2009 p.m. - Volume 2, Number 9 (p 66 of 377):

Colin Hansen: "As a result of this requirement, effective January 1, 2010, Bill 2 amends the Motor Fuel Tax Act to tax ethanol and biodiesel at the same rates as the fuels with which they are blended or, if sold as pure ethanol or biodiesel, as gasoline or diesel fuels respectively. The Carbon Tax Act is also amended effective January 1 to impose carbon tax on ethanol as if it were gasoline and on biodiesel as if it were diesel or light fuel oil.

However, the intent of the carbon tax is to impose tax on the actual CO2 emissions from the combustion of fossil fuels. Therefore, the
carbon tax rates for gasoline and light fuel oil are reduced by 5 percent to reflect the overall reduction in CO2 emissions which will
result from the renewable fuel standard."

[2] One of our directors, Don Goodeve, has crunched the numbers, and this is our analysis of the inherent unfairness of how the carbon tax applies to biodiesel: Looking at just the carbon tax portion, if you apply it (at 3.84 cents/L) equally to fossil and bio-diesel, then the penalty/cost per tonne of fossil carbon for each fuel works out as follows:

Regular Diesel with 2.68 Kg fossil C/L = $14.31/Tonne Fossil Carbon
Bio-Diesel with 0.15 Kg Fossil C/L = $256.00/Tonne Fossil Carbon

Seems strange that the carbon tax is being applied to fossil diesel and bio-diesel equally if the reason for creating the tax in the first place is supposedly to target and reduce the "anthropogenic" GHGs causing global climate change. The tiny fossil carbon content in B100 will now be penalized at over 17x the rate of fossil carbon in regular diesel. How does this help the province reach its target of carbon neutrality?

[3] Shell Canada Website:
www.shell.ca/home/content/can-en/products_services/on_the_road/pricing/fuel_pricing

[4] www.wikipedia.org/wiki/list_of_oil_refineries#British_Columbia