News and Insights

British Columbia Notice 2011-006, “Notice to Biomethane Sellers”

Tax Development Sep 12, 2011

The province of British Columbia has issued this new notice that explains how carbon tax and the biomethane credit apply to biomethane as a result of changes announced in the 2011 budget.  Biomethane is a carbon-neutral renewable fuel produced from biomass (e.g., agricultural and other organic wastes) that is indistinguishable from natural gas when blended (e.g., in a gas pipeline). 

Purchases of 100% biomethane are not subject to carbon tax.  In addition, the biomethane portion of a blend of biomethane and another fuel is not subject to carbon tax where the actual amount of biomethane in the blend is known. For example, if 100 cubic metres of biomethane was blended with 100 cubic metres of natural gas in a closed container system, carbon tax would only apply to the 100 cubic metres of natural gas of the total 200 cubic meters of gas sold (i.e., 50% of the gas).  Effective February 16, 2011, biomethane in a blend of biomethane and another fuel, where the actual amount of biomethane in the blend cannot be determined, is subject to carbon tax at the rate of tax for the other fuel, unless it qualifies for a biomethane credit.  

Effective February 16, 2011, the province introduced a Biomethane Credit Program. This program provides a benefit to purchasers of biomethane blended with natural gas where the purchase occurs under a qualifying biomethane contract.  A seller must provide a biomethane credit to a person who buys or receives delivery of fuel in British Columbia for their own use, where:

  • natural gas or a blend of natural gas and biomethane is sold where the proportions of biomethane and natural gas cannot be determined; and
  • the natural gas or blend is sold under a biomethane contract.    

BC Notice 2011-006