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Back to the Drawing Board for Carbon Neutral Government

As BC Liberals revisit their approach to a carbon neutral public sector, some advice they'll likely get.

This week world leaders wrapped up a mammoth session on the Kyoto Protocol at the UN Climate Change conference in Durban, South Africa. In reality it was a ground-breaking session to do nothing for now except keep talking. It also saw Canada state that it will not be bound to any second stage Kyoto commitments. Views on climate change and what can be done about it are in flux. Just four years ago this province announced its own plan to reduce carbon emissions. But it was a different world then — now we live in a time of economic challenge and some are asking if spending on climate change initiatives should be front-and-centre. In May of 2013 Premier Christy Clark, and her equally untested rival, NDP Opposition Leader Adrian Dix, must face British Columbia voters in a general election. For both, the millions of dollars in government revenue, public spending, and future tax hikes and disbursements at stake in B.C.'s climate strategy present irresistible, or perhaps inescapable, targets to define their opposing campaigns. In this Tyee feature by Tom Barrett, Tyee Solutions Society, he looks at some of the advice the BC liberals might get as they revisit their approach to carbon neutral policies.

The B.C. government is reviewing its controversial carbon neutral government strategy and Environment Minister Terry Lake says "everything is up for discussion."

He'll get lots of advice. Critics have complained that the strategy uses tax dollars to pay profitable corporations to cut their greenhouse gas emissions and they've questioned whether public money was needed to make those cuts. Some, like Independent MLA Bob Simpson, have called the strategy a "sham" and want the carbon neutral legislation repealed.

It's uncertain how far the government is prepared to go to answer these charges. Nor do critics and stakeholders agree on what Lake should do instead. The consultations will largely take place in private, but here's a peek at some of the proposals — both solicited and unsolicited -— Lake is likely to hear:

Scrap it

The most radical solution, this is also the least likely to be followed by the government. It's the answer put forward by those who believe that the problems with carbon neutral government are more than growing pains.

The idea that the B.C. government is carbon neutral — a net-zero emitter of greenhouse gases (GHGs) — is largely based on the purchase of carbon offsets. If you believe, like Simon Fraser University economist Mark Jaccard, that carbon offsets are an illusion, it's hard to imagine what else can be done with the program except ditch it.

The program works this way: for every tonne of greenhouse gases a government organization emits, it must pay $25. That money goes to a Crown corporation called the Pacific Carbon Trust (PCT), which uses it to buy offsets from B.C. companies and organizations. Offsets represent emissions that these companies and organizations would have produced, but have decided instead to eliminate.

The total emissions reductions are supposed to match, tonne for tonne, the emissions put out by the public sector, which allows the government to declare itself carbon neutral.

The principle behind the scheme is that the private sector emissions cuts would not have happened if the government had not bought the offsets. But Jaccard argues that there's no way to be sure that's true.

He said programs like this tend to attract what are known as "free riders," participants who would have reduced their emissions even if they hadn't been paid. And, if the cuts would have happened without the government's help, then you can't claim they offset the government's own emissions.

(The government and its supporters argue that the PCT's offsets are genuine because they are examined closely by independent consultants who reject any free riders.)

BC Conservative Party Leader John Cummins has promised to kill the province's "carbon bureaucracy," including the carbon tax and the PCT. On the other side of the political spectrum, Independent MLA Simpson, one of the carbon neutral strategy's most persistent critics, has introduced a private member's bill called the Carbon Neutral Government Repeal Act. If passed — and private member's bills rarely become law — public sector organizations would still have to track and report their GHG emissions, but they would not have to buy offsets from the PCT.

Don't subsidize, tax

This option could be done with or without scrapping public sector offset payments. In this scenario, rather than paying corporations to reduce their emissions, government would make those emissions more expensive.

Currently, the carbon tax covers emissions caused by burning fossil fuels. That's about three-quarters of the province's total emissions. The other quarter comes from a number of sources, including landfills, gas pipelines and industrial processes like cement making.

Lake said the government is looking at putting a price on these emissions, but critics complain that the government is moving too slowly.

Ian Bruce, a climate specialist with the David Suzuki Foundation, said industrial emissions should be regulated or taxed.

"Instead of being part of the (PCT) offset portfolio, they should be required like other sectors in British Columbia to be contributing to reducing their own greenhouse gas emissions through regulations or through the carbon tax," Bruce said. "That would help shift responsibility back to industrial polluters to reduce their own pollution. And in the long run it would make B.C.'s industry leaders in energy efficiency."

Simpson points to offsets purchased from Encana as an example of what happens under the current policy. The PCT pays Encana an undisclosed amount to reduce emissions at a northeastern B.C. drill site. The PCT says that's a reduction of just under 85,000 tonnes a year. But Encana is also going ahead with the Cabin Gas Plant near Fort Nelson, which will put out 2.2 million additional tonnes of GHGs a year.

That's 25 times the emissions reduction the PCT paid for through offsets. In fact, it's three times the total annual emissions offset by the entire B.C. public sector.

"That's bad public policy," Simpson said.

Keep it and fix it

Not everyone wants to scrap the program. Matt Horne, of the Pembina Institute, argues that B.C.'s carbon neutral government initiative is a "relatively unique" policy. "To expect to have gotten it exactly right on the first pass through probably isn't realistic."

He said he's concerned about calls to drop the strategy because it has put a price on emissions in the public sector and has caused those working in government to think about their carbon footprint.

"It's not universal, but there's certainly lots of people thinking, 'We're paying $25 a tonne — how can we not pay that,' " Horne said. "That's something that other types of green government programs haven't accomplished."

Horne is one of several people following this file who think offsets could be retained, but with a change in emphasis.

Give more weight

to reducing

The B.C. carbon neutral strategy was policy in a hurry. Public sector organizations were given less than three years to cut their emissions before having to buy offsets. A government eager to develop a B.C. offset industry ended up giving much more weight in its strategy to offsets than to emissions-reducing capital projects.

A program of government grants eliminated 35,600 tonnes of annual GHGs, about four per cent of the total government output. But that grant program has been cancelled, and public organizations argue that they don't have the capital funds to make further cuts.

Other jurisdictions have given themselves more time to reach the carbon neutral goal. And they've put emissions cuts before offsets. The U.K. Climate Change Department's Guidance on Carbon Neutrality, the UN and ICLEI - Local Governments for Sustainability all stress reducing emissions before buying offsets.

A report from the Columbia Institute, a Vancouver civic governance think-tank and community group, shows how this approach to carbon neutral government has played out in the Australian state of New South Wales (NSW).

"Rather than setting a short timeline that would almost inevitably lead to high offset purchases, the NSW government in 2008 set a target of public sector carbon neutrality by 2020, giving public sector bodies time to implement real emissions reductions in their own operations," says the report, titled Catch $25. "Under the NSW framework, offset purchases will not even be considered until 2014 (Year 6 of the plan), and only then after 'all other means of reducing emissions have been put in place.' If offsets do become part of the NSW plan, they would not be required until 2020, Year 12 of the program."

Charley Beresford, executive director of the Columbia Institute and a co-author of the report, said in an interview that making real reductions before buying offsets should be the "primary principle" of a carbon neutral strategy.

James Tansey, a University of British Columbia business professor and president of Offsetters, counters that if the government had delayed offsetting it wouldn't have gotten the attention of decision-makers in the public sector.

Hadi Dowlatabadi, a physicist with UBC's Institute for Resources, Environment and Sustainability, said that buying offsets doesn't preclude cutting emissions.

"If I can offset my emissions at a lower cost than the offset price, of course I'll be doing that," he said. And if it costs more than $25 a tonne to offset your emissions, then buying offsets from the Pacific Carbon Trust saves you money, he said.

What's important is whether the public sector is being given the right kind of financial help to cut its emissions, he said. Which leads us to the next suggested solution:

Bring back the grants

From 2008 to 2010, the Public Sector Energy Conservation Agreement (PSECA) gave out $75 million to help the public sector cut carbon. But that money has dried up. Almost everybody involved would like to see it come back.

"If there's a cost-effective project in a school we should make sure the funds are there to make sure that project's happening," said the Pembina Institute's Horne.

This is one solution that seems likely to be adopted by the government. Environment Minister Lake said in an interview that "We recognize that people have concerns with private money going to offset private companies. Ideally, what we would do is have a fund that public sector organizations could access to help them reduce their greenhouse gas emissions."

He mentioned PSECA as an example of such a fund.

In answer to the inevitable question of where the money would come from for such a fund, MLA Simpson makes this suggestion: take it from the surplus of the PCT.

Which is a step toward the next proposed solution:

Keep offset money in the public sector

This is a popular suggestion with public sector organizations and is endorsed by the BC New Democratic Party. The idea is that the money now going into offsets could be pooled into a fund that would pay for public sector emissions cuts.

"Those moneys should be remitted back to districts or to a common pot, as it were, to distribute to those districts that could make best use of the money," B.C. School Trustees Association president Michael McEvoy said in an interview.

The money, he said, "needs to remain in the public system. That's pretty simple. I don't think it takes a gathering of stakeholders to figure that out. Our view would be the minister and the government should just move to resolve the problem."

Lake seems less enthusiastic about this proposal, however.

"The problem is, if you take that money and don't reduce greenhouse gas emissions elsewhere, you can't call yourself carbon neutral," he said.

The money currently being paid in offsets won't fund enough capital projects to eliminate all of the public sector's emissions, Lake said, although he added that he isn't ruling the proposal out.

Simpson replies that the cuts would at least be real -- no questions about whether offsets are genuine -- and they would save taxpayers money.

Simpson is among those who have put forward another proposal that's popular in the public sector, but unlikely to thrill Lake.

Give the whole public sector the deal local governments get

Municipalities get their carbon tax payments back if they agree to go carbon neutral. But they have a lot more leeway in how they achieve neutrality. They don't have to go through the PCT. Instead they can buy cheaper offsets on the open market, participate in approved GHG reduction projects or start their own projects.

"There's plenty of solutions available," said theDavid Suzuki Foundation's Bruce.

The last proposal on our list deals with the situation mentioned at the beginning of this series on carbon neutral government.

Deal with indirect emissions

UBC wants to build 8,000 new units of student housing. This would lower overall GHG emissions in the Lower Mainland by 7,700 tonnes a year; not only would the students be living in housing that would be more energy efficient than their current off-campus dwellings, but their commuting would be drastically cut.

But, because of a wrinkle in the way the B.C. government counts emissions, UBC would have to buy an extra $145,000 a year in offsets for cutting these GHGs.

In a study for the Pacific Institute for Climate Solutions, PhD student Kim Lau and Dowlatabadi argue that public sector organizations should assess and report indirect emissions such as those associated with commuting. However, they say, organizations shouldn't have to buy offsets for such indirect emissions. Instead, they should be encouraged to reduce them and be allowed to claim the reductions as offsets -- either to sell to the PCT or to balance their own emissions.

Dowlatabadi said the government is genuinely interested in this recommendation.

"I applaud what the Climate Action Secretariat have been doing," he said. "They've been pioneers and they should be applauded for what they've been going. Nothing is perfect the first time out.

"What we should be doing is getting feedback on how to improve it, rather than to bash it so that it goes away altogether."

It's unclear when the government's review of the carbon neutral strategy will be concluded. Lake said he's not going to put a timeline on it, other than to say that "Hopefully, into the new year we'll have a lot of these things wrapped up."

Like much of the B.C. Climate Action Plan, it's difficult to say exactly where carbon neutral government is headed or when it's likely to get there. But given the strategy's symbolic importance, a public debate around these proposed solutions can only be good for overall climate policy.

A symbolic gamble:

Despite the controversies that surround the program, carbon-neutral government is really a bit of a sideshow when it comes to climate policy. Total public sector emissions represent about one per cent of the total GHGs emitted by the province. Public sector organizations spend less than one per cent of their operating budgets on offsets.

But the symbolism of the strategy was always more important to government than the actual emissions or dollars involved. "Our government believes it is important to model and to lead and to show British Columbians that this is an important, critical issue," John Yap, former minister of state for climate action, said in the legislature in October.

But many who follow climate policy note that symbolism cuts both ways. While a successful carbon-neutral government could become a positive icon, if that policy fails, or becomes associated with unpopular messages — that tax dollars are being taken from classrooms and operating theatres and given to profitable corporations or wasted on offsets that don't reduce real emissions — the failure could set back the whole fight against climate change.

The goal of a carbon-neutral B.C. government

was first proclaimed in 2007, as part of then-premier Gordon Campbell's sweeping array of climate change initiatives.

By going carbon neutral, the government vowed, it would accomplish a number of goals. It would lower emissions, publicize the importance of fighting climate change, set an example for the rest of the province, foster the development of green technology and a low-carbon economy, and cash in on an expected boom in carbon trading and carbon offsets.

B.C.'s public sector — schools, colleges, universities, hospitals and Crown corporations as well as core government — were ordered to measure their carbon emissions and reduce them where they could.

As of 2010, public sector organizations must buy carbon offsets to cover their emissions. They must buy these offsets, which cost $25/tonne of emissions, from a Crown corporation called the Pacific Carbon Trust (PCT).

The offsets represent emissions reductions elsewhere in the B.C. economy that, in theory, wouldn't have happened without the sale of the offset. Thanks to these private sector cuts, the public sector's net climate impact is supposed to be zero — its carbon "neutralized."

Tom Barrett is a widely published freelance journalist and Tyee contributing editor. This is the latest in the in-depth Tyee Solutions Society series "B.C.'s Quest for Carbon Neutrality: Reports from Canada's Climate Policy Frontier