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Carbon offsets 'not credible,' auditor says

By TOM FLETCHER
March 27, 2013 · Updated 10:08 AM
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Darkwoods, a 55,000 hectare forested area near Nelson purchased by the Nature Conservancy of Canada. Pacific Carbon Trust purchased 450,000 tonnes of carbon offsets from the carbon sequestered from 2008-2010. / Pacific Carbon Trust

VICTORIA – Two carbon capture projects that were the largest beneficiaries of B.C.'s multi-million-dollar "carbon neutral government" program did not provide credible carbon offsets for emissions from government operations, Auditor General John Doyle concludes.

In a report released Wednesday, Doyle said a West Kootenay forest reserve called Darkwoods and a flaring elimination project by EnCana Corp. at its Fort Nelson natural gas operations accounted for nearly 70 per cent of carbon credits paid by the government's agency, the Pacific Carbon Trust.

"Encana's project was projected to be more financially beneficial to the company than its previous practices, regardless of offset revenue, while the Darkwoods property was acquired without offsets being a critical factor in the decision," Doyle's report states. "In industry terms, they would be known as 'free riders' – receiving revenue ($6 million between the two) for something that would have happened anyway."

Darkwoods, a 55,000-hectare property near Kootenay Lake, was purchased as a forest reserve by the Nature Conservancy of Canada in 2008. Doyle notes that the decision to buy the land was made in 2006, and a carbon offset feasibility study was not completed until January, 2009.

EnCana's project diverted gas from flares to drilling. The audit found that "the company started the project in 2008 and had already converted many gas wells by the time they met with the Pacific Carbon Trust in 2009." The offset payments "were not a factor in the decision to proceed."

B.C.'s "carbon neutral government" initiative has been controversial since it was launched as part of former premier Gordon Campbell's climate change program in 2008. Provincial and local governments, health authorities and school districts were required to buy carbon offset credits equal to the greenhouse gas emissions from their buildings and vehicles, with the money invested in carbon-reducing projects.

According to the Canadian Taxpayers' Federation, B.C. universities paid $4.46 million into the Pacific Carbon Trust in 2011. B.C.'s 60 school districts paid a total of $5.36 million the same year, and the province's six health authorities paid $5.79 million.

Environment Minister Terry Lake said the government "fundamentally rejects" Doyle's conclusions, and stands by the outside experts who were called on to validate the carbon offset investments.

NDP environment critic Rob Fleming said the report adds to earlier criticisms of a program that diverts taxpayer funds from schools and hospitals to finance industrial projects by profitable companies.

The government responded to earlier criticism by diverting $10 million taken from school districts in the past two year into a fund to improve energy efficiency in school buildings and vehicles.