Pacific Carbon Trust; Bloated bills prompt review

Bloated bills prompt review of Pacific Carbon Trust
by Craig McInnes, Vancouver Sun Feb 15th 2013

The ‘next administration’ likely will be taxed with taking action

It took a year, but the Pacific Carbon Trust has finally provided some details about the millions of tax dollars it passes on to private companies for the carbon offsets public agencies are forced to buy.
What the numbers reveal is disturbing enough that B.C. Environment Minister Terry Lake quickly announced a review of the program, even though he concedes it will likely be up to the “next administration” to take action.

The Pacific Carbon Trust was set up in 2008 as part of then-premier Gordon Campbell’s plan to reduce greenhouse gas emissions. The idea is that the trust would encourage carbon trading by creating a market for what are called offsets. Offsets are created when one party does something that reduces carbon emissions by a measurable amount and then sells the credit for that reduction to someone else.

So far, almost all of the "offset" have been from private corporations, including TimberWest and the energy giant Encana.

Most of the purchases have been made by public agencies, which are forced by government regulation to buy enough offsets at the fixed price of $25 a tonne to counter their emissions.
Reaction to the spectre of schools being forced to turn over scarce dollars to the likes of Encana forced the government to provide extra funding last year, but otherwise, Pacific Carbon Trust has operated largely unchecked. That may be about to change.

In response to an Access for Information request from a Business in Vancouver reporter, the trust has published the amount it pays individual companies for carbon offsets. What those numbers show is that there is a wide range in the price per tonne paid. Also, the amount the trust is paying — as little as $10 a tonne — is well below the set price of $25 a tonne it is charging the public sector entities, including health authorities, colleges, universities and school boards that are required to buy them.

The profits are now accumulating, and Lake says the surplus could be used to reduce the costs to the public sector, or to“pay off debt.” That led to an exchange during question period in which NDP environment critic Rob Fleming, who, if polls hold through May 14, may be part of “the next administration” that inherits the problem, wondered with great rhetorical flourish if the trust was
“nothing more than a green-washing fund to hide (the) government’s red ink.”

Oddly, even though the Pacific Carbon Trust is a provincially owned agency, Lake says he only recently became aware of how much less it was paying for offsets than it has been charging.
Lake told Sun Reporter Gordon Hoekstra on Thursday that he had never seen the numbers and neither had the finance minister because the figures were part of the Crown corporation’s “corporate proprietary information.”

“We didn’t expect, when we started this, it would be such a significant difference between the price paid by the public sector and the price paid by (the trust ) for those offsets.”

In a series published in The Sun last year, Hoekstra found several of the projects funded by Pacific Carbon Trust were scheduled to go ahead even without the tax dollars they were getting. That appears to violate one of the requirements for a legitimate offset — that it be produced by an activity that wouldn’t be possible without the infusion of cash from the sale of offsets.

Ben Parfitt, a forestry and resource analyst now affiliated with the Canadian Centre for Policy Alternatives, has also raised serious questions about the real value of millions of dollars worth of offsets sold by forestry companies. His doubts seem to be reinforced in the new information released by the trust .

Significantly, the price paid for carbon offsets varies, not just by what the trust calculates it will cost to create the offset, but also the value of the offset in terms of its ability to achieve its advertised effect, which is to reduce emissions.

Pacific Carbon Trust pays less for forestry-based offsets, which are derived from an agreement to leave trees standing that might otherwise have been cut, than it does from energy efficiency or fuel-switching projects. The rationale is that forestry projects typically cost less to set up and operate and “the risk of reversal is high.”

In other words, trees saved now could be felled later. Yet when offsets derived from forestry are sold, they are marketed as being just as valuable as offsets deemed to be more permanent.

Dubious benefits. High costs. Loose oversight.

Pacific Carbon Trust in MacLean's magazine

The January 14th Maclean's Magazine has an article titled: 

99 Stupid Things Government Did with Your Money Last Year.  

Number 61 is the Pacific Carbon Trust.  Let me quote:

"The B.C. Pacific Carbon Trust was set up in 2008 to buy and sell carbon credits with the aim of reducing carbon emissions, but critics say it has mostly served to transfer taxpayer money from schools and hospitals to corporations.  Over a year virtually all $14 million worth of credits were purchased by school boards, health authorities and other public agencies.  (Agencies like BC Hydro)  Yet as the Canadian Taxpayers Federation noted, huge companies like Encana, Canfor and Lafarge received an estimated $3 million by reducing carbon emissions and selling credits to the trust."

BC Climate Action Charter speaking notes

I would like to start by thanking the Golden and District Air Quality Committee (GDAQC) for their presentation and for all the work they have done in the past 20 years and I pledge my support for all the work they continue to do. The GDAQC have done more in the past 10 years to improve the quality of the air we breathe in Golden than any other group.

The BC Climate Action Charter on the other hand has done nothing to improve the quality of the air we breathe and is a complete waste of tax payer’s money. 

The UBCM Comment on Fiscal Management in British Columbia’s Municipalities dated May 2011 states;

“The fiscal impact - potential and actual – of downloading on municipalities is more considerable as it relates to ever-increasing senior government environmental regulations, particularly those that are introduced to address greenhouse gas emissions… In some municipalities, cost impacts have been significant”

Not only are the costs significant but the staff time to implement the programs is also significant.

Participation in the BC Climate Action Charter was voluntary and neither a statutory nor regulatory requirement. This would be more accurately described as voluntary uploading and not senior government downloading and results in significant discretionary spending on behalf of the taxpayers. 

If the town continues involvement in the BC Climate Action Charter town staff estimate that Golden taxpayers will need to buy $14,000 of carbon offsets in 2013 from the Pacific Carbon Trust. 

The January 14th Maclean's Magazine has an article titled: 99 Stupid Things Government Did with Your Money Last Year.  Number 61 is the Pacific Carbon Trust.  Let me quote:

"The B.C. Pacific Carbon Trust was set up in 2008 to buy and sell carbon credits with the aim of reducing carbon emissions, but critics say it has mostly served to transfer taxpayer money from schools and hospitals to corporations.  Over a year virtually all $14 million worth of credits were purchased by school boards, health authorities and other public agencies.  (Agencies like BC Hydro)  Yet as the Canadian Taxpayers Federation noted, huge companies like Encana, Canfor and Lafarge received an estimated $3 million by reducing carbon emissions and selling credits to the trust."

The cost of electricity from BC Hydro has also been escalating in part due to the carbon emission reduction initiatives such as the IPP.

On the world stage cap-and-trade schemes have failed; The Clean Development Mechanism (CDM) set up under the Kyoto protocol has been an unmitigated economic disaster. The CDM was established to facilitate trading in carbon offsets. The trouble is that the supply of credits has far outstripped demand. CDM have accumulated billions of dollars of carbon credits but there is no one to buy them.

The largest carbon emitters either did not ratify the Kyoto protocol (America), were not obliged to cut emissions (China and India),or have now withdraw (Japan, Canada, and Russia).

Consequently carbon prices have collapsed, falling from $20 per tonne established as the benchmark in August 2008 to below $5 at the end of 2012. Some economists have stated that for the CDM to function as anticipated, carbon prices would have to be over $350 per tonne.

The Pacific Carbon Trust is British Columbia’s version of the CDM. It too is doomed to fail and should be closed. An oversupply of carbon offset (permits to pollute) will require government subsidies to function at a time when the money would be much more effectively spent helping BC families endure this economic downturn.

The irony of course is that America, whose is not a signatory to the Kyoto protocol, has done more to reduce its reliance on coal, whereas Europe, which likes to see itself as a world leader on climate change, is burning more and more coal.

The following was extracted from a briefing article in The Economist January 5^th 2013.

“At its peak, in 1988, coal provided 60% of America’s electricity. By 2010, when the shale-gas boom was well underway, it accounted for 42%, and in 2012 coal accounted for only 33% of power generation.

In Europe, the amount of electricity generated from coal is rising at annualized rates of as much as 50% in some European countries. This is making a mockery of European environmental aspirations! But why did it happen?

As American utilities shifted into gas, American coal miners had to look for new markets at the same time that slowing Chinese demand was pushing down world coal prices. Low coal prices make European utilities willing buyers. European purchases of American coal rose by a third in the first six months of 2012. Compared to the rock-bottom price of gas in America, coal is a bargain compared to the price of gas in Europe. In the summer of 2012, gas prices in Europe were more than three times the American gas price and more expensive than coal.

Germany has an ambitious plan to shift from fossil fuels and nuclear power to renewable like solar and wind. Electricity from renewable gets priority on the grid. That has allowed wind and solar to grab market share from fossil fuels during the most profitable times of the day. By displacing conventional forms of energy this way, renewable has undermined utilities finances. In response, utility companies are switching from gas to coal as fast as they can, so the renewable are in fact displacing gas but not coal. 

Germany needs new capacity because it is closing down its nuclear plants and is building several new coal-fired power stations. Even in countries that are not building new coal-fired power stations, the amount of coal burned is going up. In April 2012 coal took over from gas as Britain’s dominant fuel for electricity for the first time since 2007.

This coal surge is making nonsense of the EU environmental policies, which politicians like to claim are a model for the rest of the world. European countries had hoped gradually to squeeze dirty coal out of electricity generation. Instead its market share is growing.

In theory, Europe’s carbon price, provided by a cap-and-trade system, the emissions trading scheme (ETS), should have stopped all this from happening. However, EU energy policy is boosting usage of coal, the most polluting fuel, increasing carbon emissions, damaging the creditworthiness of utilities and diverting investment into energy projects elsewhere.”

It’s time to UNLOAD the BC Climate Action Charter.

The BC Climate Action Charter was signed voluntarily and as emphasized in clause 9 of the charter “This Charter is not intended to be legally binding or impose legal obligations on any Party and will have no legal effect”.

Far more value to the Golden community would be derived by granting the $14,000 to the GDAQC for the wood stove exchange program. Removing old wood-burning stoves not only reduces carbon emissions but also improves the quality of the air we breathe by lowering particulate matter in Golden.

Reducing carbon emissions wherever economically feasible is a sensible endeavour. The replacement of the swimming pool boiler is a classic example of how replacing a piece of equipment at the end of its useful life with a new high efficiency boiler consequently reduced the town’s carbon footprint. The carbon emission reduction was a consequence of good financial and engineering practice and not the driving force behind the boiler replacement.

Proposed resolutions;

1.       That the town withdraw from the BC Climate Action Charter;

2.       That the town withdraw from the Carbon Neutral Kootenay project;

3.       That the Select Committee on Community-wide Energy and Emissions Reduction be disbanded;

4.       That no funds are to be used to purchase carbon offsets;

5.        That the Golden & District Air Quality Committee (GDAQC)be recognised as a community liaison committee with one councillor appointed and;

6.       That the town grant the GDAQC with $14,000 in 2013 in support of the woodstove exchange program.

Keith W Hern, Councillor

2013.01.22

The town receives 100% refund of the carbon taxes the town pays (CAIRP rebates) which was reported to be $25,190 from 2008-2011 ($6,297.50 per year) in the staff report dated 2012.08.24 from Mr Love. Hence the town would be $8000 per year better off to forgo the carbon tax refund and not have to purchase carbon offsets.

Golden Star Stingers

In the Golden Star last week, there was a stinger "to the Councillor and his unprofessional behavior towards a staff member in a meeting that even caught the attention of our MP". Some people have asked if this relates to me and I can only state that my behavior has always been exemplary.

The meeting I think the stinger is referring to was the regular open council meeting on Jan 22nd. At that meeting Mr Love the manager of strategic initiatives for the town gave a presentation on the Climate Action Charter stating that the issues were very complex.

After he was finished I began my speech relating to my proposal to withdraw from the Climate Action Charter. I commenced by stating the issues were in fact not complex but quite simple.

Mr Love, unable to contain himself roared across the council chamber "Are you calling me a liar".

The council chamber fell silent as I looked toward Mr Allen, his boss, and the mayor. After a short pause Mr Allen asked Mr Love to refrain and Mr Love withdrew his comments.

I then completed my presentation without interruption. That evening I received a phone call from the mayor apologizing for the incident and informing me that she had told Mr Allen that she thought Mr Love's behavior was unacceptable.

At the council meeting on Feb. 5^th, Mr Allen indicated that he had received a letter of apology from Mr Love that he then proceeded to read aloud.

As far as I am concerned the apology has been accepted, the incident is over and in subsequent meetings Mr Love and I have treated each other cordially.

To the author of the stinger I would ask that he/she does not distort the truth and hide behind the anonymity of the stinger. If you want to make inflammatory comments at least have the courage to sign your name.