Hypothetical offsets may not really be there
In its bid to become a "carbon neutral" government and North American climate change leader, the B.C. government has required that all government institutions, including cash-strapped school boards and health authorities, report their energy consumption and "offset" any greenhouse gas emissions by purchasing credits from Pacific Carbon Trust, a Crown corporation created for that express purpose.
Without access to purchased offsets, it would have been impossible for B.C. Environment Minister Terry Lake to claim recently that every government building in B.C. is now carbon neutral and will be from this day on.
But is forcing public institutions to buy credits from a Crown corporation that holds a monopoly position in an otherwise voluntary market good public policy? Does it actually lower greenhouse gas emissions? A look at one project that accounts for the bulk of offset credits bought and sold by Pacific Carbon Trust suggests not.
PCT's "clients" now pay $25 per tonne of carbon they emit, a rate that is more than four times higher than the majority of the credits that PCT purchased were worth. That's just the beginning of where things get murky as far as Lake's carbon neutral claim goes. A document recently released by PCT shows that fully 55 per cent of its "portfolio" of credits used to achieve carbon neutrality for the B.C. government in 2010 came from a single offset project known as Darkwoods.
Darkwoods is a privately owned forest estate lying between the B.C. communities of Creston, Salmo and Nelson and bordering a scenic stretch of Kootenay Lake. For decades before its sale in 2008, Darkwoods was owned by German aristocrat Duke Carl Herzog von Wurtemberg. A provincial database reveals that between 2001 and 2007 - the last full year under the duke's ownership - an average of 56,631 cubic metres of trees per year were logged at Darkwoods.
In 2008, the Nature Conservancy of Canada, with the assistance of $25 million in federal government funds, purchased the lands for a total projected cost of $125 million. In a surprise to no one, the Conservancy expressly linked its purchase to conservation: business as usual for an organization committed to protecting biological diversity.
The sale was billed then as the largest private land forest acquisition for conservation in North America.
Three years later, it became the source of the continent's largest conservation-based forest carbon credit sale. PCT's portfolio document shows that it purchased 403,112 tonnes of credits from the Conservancy's Darkwoods project, part of a 700,000tonne sale valued at about $4 million.
PCT will not disclose what it paid. But based on an average price of about $5.70 a tonne, its cost was $2.3 million. At a selling price of $25 a tonne, PCT's "clients" forked out $10.07 million for Darkwoods' carbon credits - a profit of $7.7 million for PCT.
Putting aside the important policy question of whether this is a wise use of public funds, the bigger question is whether there was any demonstrable reduction in greenhouse gas emissions. PCT itself notes that projects it supports should result in "additional" carbon stores through projects that go beyond "business as usual."
But at Darkwoods it is questionable just how much "additional" carbon has been stored.
That's because the whole Darkwoods offset project is based on a hypothetical situation that sees the good German duke selling his lands not to the Conservancy but to a rapacious logging and land development company that embarks on a liquidation logging operation and subdivides lands for subsequent resale to wealthy buyers wanting a slice of lakefront paradise.
The phantom company is then assigned a hypothetical logging rate of 300,000 cubic metres of carbonstoring trees per year. That's more than five times what the duke's company logged and 30 times greater than the 10,000 cubic metres or so that the Conservancy says it might log for "conservation" purposes moving forward. The difference between the hypothetical rate and the Conservancy's rate then serves as the basis for the record-setting forest carbon credit sale.
This hypothetical scenario is outlined in a voluminous "project description" posted on the Verified Carbon Standard website.
Verified Carbon Standard was founded in 2005 "by business and environmental leaders." Its stated mission is to "ensure that carbon credits bought by businesses and consumers can be trusted and have real environmental benefits." The scenario was ultimately given a green thumbs up by Scientific Certification Systems, a third-party "validator" of the Darkwoods carbon project. The company's senior vice-president, Robert Hrubes, hailed the "unique methodology" developed by the carbon project team which he said "will benefit the entire carbon industry."
But what benefits a growing industry of carbon hunters and marketers such as PCT does not necessarily translate into a public benefit. In fact, at the highly inflated prices that PCT charges its public sector clients for carbon credits that may have little demonstrable effect on reducing greenhouse gas emissions, it's looking more and more like poor public policy and one that Lake and his Liberal caucus colleagues would be wise to reconsider.
Ben Parfitt is resource policy analyst with the B.C. Office of the Canadian Centre for Policy Alternatives.