In 2007, Interfor started construction on a new $100 million sawmill at Adams Lake and in 2010, the Surrey school board – one of the poorest in the region – was forced to cut a $500,000 cheque to help pay for it.
It will probably have to cut another one this year.
The money goes to the Pacific Carbon Trust (PCT), which takes money from school districts and other public-sector organizations – $18 million so far – and gives it to B.C.’s largest emitters of greenhouse gases (GHGs) to help them fund carbon-reduction initiatives.
Public-sector entities that can reduce their energy consumption don’t have to pay the PCT penalty. But, because of its rapid growth, the Surrey school district is finding it impossible to meet the B.C. government’s carbon-neutral mandate.
With around 300 students per month being added to its school district, Surrey is one of the few B.C. school districts with a growing enrolment. And because the B.C. government isn’t building any new schools in Surrey, more and more of the city’s students are being forced into portable classrooms, which take up a large footprint (the PCT’s formula is based on square footage). Surrey now has 230 portables.
“We want to reduce our carbon footprint, but it’s very difficult to do when you’re adding portables every week, and portables are not the most efficient thing to heat and light,” said Surrey school board chairwoman Laurae McNally.
“We’re not a rich school district. To take just under half-a-million dollars out of your operating budget – it hurts. That could feed a lot of hungry kids in our district.”
But the Surrey school district isn’t the only one feeling the pinch.
Last year, B.C. school districts were essentially fined $4.4 million for failing to hit carbon-neutral targets. Health districts paid even more to the PCT: $5.4 million. And they’ll be paying again this year, unless they can reduce their energy consumption.
The BC School Trustees Association is calling on the province to reinvest the money school districts pay to the PCT back into energy-efficiency upgrades that might help the districts meet their targets, rather than dole it out to large companies such as TimberWest, Canfor (TSX:CFX), Encana (TSX:ECA) and Interfor (TSX:IFP.A).
The PCT was part of former premier Gordon Campbell’s climate action plan. To create a carbon offsets bank, the B.C. government required that all public-sector organizations become carbon neutral. Those that can’t hit their carbon-reduction targets must pay a penalty.
So far, the PCT has collected $18 million from the public sector. The private sector, by contrast, has been buying less than $250,000 a year in offsets, on a voluntary basis.
“Because we made the commitment to be carbon neutral, the biggest customer to buy offsets, of course, was the provincial government,” said Environment Minister Terry Lake.
Independent Cariboo-North MLA Bob Simpson estimates Encana will receive $2.1 million for a natural gas extraction project in the Jean Marie Basin in northeastern B.C. that will reduce the need for flaring .
But neither the PCT nor Encana would confirm how much the company is getting. That underscores another problem with the way the PCT operates: public accountability.
Although public money is being used to fund private-sector carbon-reduction initiatives, information about how much the qualifying projects receive is being withheld from the public.
“We feel that in order to create this market … it’s necessary to keep those prices confidential,” said PCT managing director of business development David Moffat.
According to the B.C. government, its climate action efforts are working. This year, the B.C. government claimed that, thanks to PCT-funded initiatives, it had achieved carbon neutrality by reducing GHGs by 730,000 tonnes in 2010.
But Mark Jaccard, professor of sustainable energy at Simon Fraser University, describes that claim as “bogus.”
He said the problem with the PCT – apart from the ethics of taking money from schools and handing it to the province’s largest polluters – is that any reduction of GHG emissions is impossible to verify.
Jaccard added that companies now receiving carbon credits might have undertaken their carbon-reduction initiatives anyway, because it often makes economic sense.
Interfor’s Adams Lake project and Encana’s Jean Marie Basin natural gas extraction project are two examples.
In both cases, the projects were underway before the PCT came into being in March 2008, which Simpson believes is a breach of the PCT’s own “additionality” requirements.
The additionality provision was included as a kind of guarantee that carbon credits would provide an incentive for projects that would not have occurred otherwise. So the fact that both Interfor’s and Encana’s qualifying projects were already underway before the PCT was created makes Simpson wonder if the credits were handed out as “a quid pro quo for the carbon tax.”
“I don’t buy [that] any of these projects needed carbon trust money to happen,” Simpson said. “They happened anyway.”
In Interfor’s case, the qualifying project – a $22 million fuel conversion that was part of the $100 million Adams Lake project – was approved in March 2006, two years before the PCT was launched.
Ric Slaco, vice-president and chief forester for Interfor, said the company included the fuel-conversion project knowing that it would likely qualify for carbon offsets under some future program.
“Regardless of whether it was the Pacific Carbon Trust or a voluntary market, we believed, by doing the fuel switching, we would be eligible for a credit,” Slaco said. “The idea of carbon credits had been around long before 2007.”
He added that projects approved by the PCT are subject to independent verification.
Jaccard believes there are better ways to achieve measureable carbon emissions reductions and says the PCT should be scrapped.
So does BC Conservative Party Leader John Cummins, although he parts company with Jaccard by arguing that the carbon tax should also be eliminated.
“You’re laying off teachers and nursing staff in hospitals and you’re forking the money out to somehow reduce carbon, and we’re not doing it,” Cummins said. “According to the government’s own records, it hasn’t accomplished what they set out to do, which is to reduce carbon output in the province.”
While some of the projects that have received PCT credits have reduced GHG emissions, others haven’t. Encana’s Jean Marie Basin project reduced emissions because it eliminated the need to flare gas that contained nitrogen. The company now uses a process that doesn’t require nitrogen in the extraction process.
But in other cases, the PCT is using some exotic calculations to arrive at carbon-reduction numbers.
Lafarge Canada Inc., for example, received credits for a fuel switch that resulted in a 20% reduction in the amount of coal burned in its cement plant in Richmond.
The company received credits for a 189,000-tonne “retirement” of carbon. But the company concedes that the plant’s carbon emissions have not decreased.
The “retirement” credits were based on the use of construction and demolition wood waste instead of coal for about 20% of the fuel burned at the plant.
Because Lafarge is burning something that would otherwise have been landfilled, the PCT calculates the fuel switch as though it were reducing the amount GHG going into the atmosphere. It’s just one of a number of fuel-switching projects that has received PCT credits.
“We find that offsets – which is driven by the goal of carbon neutrality – are not guaranteed to be causing net reductions in GHG emissions and, indeed, research suggests that in some cases they may have a very low effect,” Jaccard said. “We therefore recommend that governments not adopt carbon neutrality and offsetting as climate policy and instead stick with regulations and emissions pricing.”