As part of former premier Gordon Campbell’s climate change agenda, this tax policy was flipped on its head. Under the guise of achieving a “carbon neutral government,” Campbell established a tax on public sector operating budgets. Beginning in 2010, it takes $25 million of your tax money that should be used to fund classrooms, operating rooms, seniors’ care and other public programs, to give to the Pacific Carbon Trust (PCT) to buy carbon forgiveness. It is then made available exclusively for the use of the private sector to, supposedly, reduce their greenhouse gas emissions.
I use the term “supposedly” for good reason, as the practice of carbon offsetting is questionable, with some analysts referring to it as voodoo economics. One recent purchase by the PCT illustrates the questionable nature of taking your tax money away from schools and hospitals to buy carbon offsets.
In May, the PCT purchased, for an undisclosed amount, 84,000 tonnes of carbon emissions from EnCana, a highly profitable company and one of British Columbia’s largest emitters. EnCana’s greenhouse gas reduction was reportedly obtained between 2008 and 2011 from a technological improvement in its extraction operations.
However, in the same region of the province that this reduction was supposedly achieved, the Horn River basin, EnCana is building its Cabin Gas processing plant without using carbon sequestration as originally promised. At full production, this one plant alone will add 2.2 million tonnes per year of new carbon emissions to the province’s total emissions. This is more than double the greenhouse gas emissions produced by the entire public sector on an annual basis, and represents 6.5 per cent of the emissions reductions needed to meet B.C.’s legislated targets by 2020.
How can we justify taking tax money away from cash-strapped public agencies under the guise of achieving a “carbon neutral government” only to give that money to a company whose activities may make it impossible for B.C. to meet its overall legally required climate change targets?
The PCT has also used your tax money to fund energy retrofits for luxury resorts and hotels, energy retrofits the public sector cannot afford to carry out themselves. Over the past three years, the provincial government provided funding for the public sector to undertake energy efficiency projects; however, that funding ended this fiscal year.
But the PCT will accrue up to $35 million in retained earnings by 2013, money it will never need for its operations. This accrual is partly a result of the province giving it too much startup money and partly because it can buy offsets at considerably lower prices than the $25/tonne the public sector must pay to the Trust.
For example, in its latest purchase, it appears the PCT paid under $6/tonne for a large volume of carbon offsets. If the Vancouver school board was able to buy its carbon forgiveness at $6/tonne then, rather than sending a cheque to the PCT for over $400,000 a year, it could meet its carbon neutral objectives for $97,000 a year and put the other $300,000 back into classrooms.
Education Minister George Abbott mused last week that there may have to be changes to the way school districts are required to achieve carbon neutrality. That’s a good sign. I’ve had discussions with Finance Minister Kevin Falcon who also seems interested in finding different, less punitive mechanisms to enable the public sector to reduce its greenhouse gas emissions.
There is an easy way to fix this distortion of the tax system and stop the taxing of public sector operating budgets for questionable projects in the private sector.
First, all accrued earnings with the PCT should be immediately reclaimed and used to restore funding for public sector energy efficiency projects. This simply requires a letter from the finance minister to the PCT to make it happen.
Second, public sector agencies should be allowed the same freedoms that were given to municipalities to achieve their carbon neutrality. Municipalities can self-fund approved projects or buy offsets in the open market; they are not mandated to cut annual cheques to the PCT at $25 a tonne.
Our tax money should be used for the public good and public projects. These simple changes to the way the provincial government achieves its carbon neutrality will reverse Campbell’s distortion of that basic principle in the form of the Pacific Carbon Trust.