In January, a deal was struck between the Pacific Carbon Trust (the provincial Crown corporation responsible for buying carbon “offsets”) and one of British Columbia’s biggest logging companies –– a deal that would allegedly result in hundreds of thousands of tonnes of additional carbon being stored in trees.
In exchange, PCT subsequently agreed to pay undisclosed millions of tax dollars to TimberWest Forest Corporation for offsets that PCT would then sell as credits to captive public sector “clients,” thus enabling the BC government to lay claim to being North America’s first “carbon neutral” government.
The trouble is that the offsets don’t exist. Nor will they until at least October, if and when a third party independently verifies the project. Yet PCT has booked 31,621 credits from the unverified project and applied them to 2010, the year when PCT says the BC government “made history” with its claim to be a continental leader in efforts to combat climate change.
And that’s but the least of the problems associated with this mysterious deal. As important are questions about the worthiness of the offsets themselves and whether channeling tax dollars to corporations with significant carbon footprints of their own constitutes wise public policy.
By government fiat, public entities, including cash-starved school districts and health boards, must report their greenhouse gas emissions. The emissions are then allegedly wiped away through “high quality” offsets purchased by PCT from entities ranging from environmental organizations to continental energy industry giants like Encana Corporation, and then sold by PCT at often highly inflated prices to its captive public sector clients.
A case in point occurred in June when PCT paid the Nature Conservancy of Canada to – hold onto your hats – conserve forests. For this alleged “innovation” PCT paid NCC about $2.3 million. PCT then charged schools, hospitals and the like roughly $10.07 million for the credits, representing a tidy mark-up of more than 400 per cent. (The estimates are based on a published price for all credits sold by NCC and PCT’s published charge to its clients of $25 per credit.)
So what of PCT’s deal with TimberWest? How much will PCT pay? The answer is we don’t know because PCT won’t say. But what we do know isn’t pretty.
PCT is committed to buy 600,000 offsets over three years from TimberWest. But what is it buying and at what public benefit? Here’s where things get murky.
According to a PCT summary that distills a larger document produced by Cortex Consulting in support of TimberWest’s offset project, the company will conserve pockets of older trees. Because the trees won’t be logged, their carbon will allegedly be available to market as offsets.
This sounds plausible if there is a corresponding reduction in logging. But according to PCT’s own summary, TimberWest’s overall logging rates “will be accelerated” to meet “emerging market demand.” In other words, as remnant older trees are saved, other younger trees will increasingly be logged. Worse, PCT goes on to say, TimberWest recently told its own shareholders that it had little interest in logging the older trees “any time over the next five years,” due to high logging costs and low sales returns.
This prompted the company to seek “more value” for the trees through other means, and it soon hit on a plan. “We may find,” the company presciently said in its 2009 Annual Report, “that these trees are of more value to TimberWest as part of a carbon sequestration project.”
The resulting “conservation” plan apparently does just that and will cost the public untold millions. But TimberWest is withholding the plan on grounds that it contains “proprietary information on prices, costs, and log markets.”
This is a clear contravention of the public’s right to know. If TimberWest’s offsets simply match in price those sold by the Nature Conservancy, PCT will pay the logging company $3.42 million to save trees that the company wasn’t all that interested in logging anyway, while TimberWest accelerates its logging elsewhere. Then schools, hospitals and the like will pay PCT $15 million.
That’s a lot of funds better invested in actual energy-saving projects in the very schools and hospitals that will be out the money.
And it looks more and more like bad policy of questionable public benefit, something that BC’s Auditor General should thoroughly investigate before millions more in public funds are spent buying things that don’t actually exist.
Ben Parfitt is resource policy analyst with the CCPA-BC.
