Political parties have long abused your tax dollars for political purposes. It’s become accepted practice for the governing party to engage in pre-election partisan advertising, sponsor gala events that only the privileged few can attend, and dole out money in the weeks leading up to an election.

In Opposition, the BC Liberals accused the BC NDP of “shoveling money off the back of a truck” heading into the 1997 election. Over the past couple of weeks, the Liberals have been doing the same thing in an overt attempt to buy back votes with your money.

The hyper-political Bollywood gala this past weekend cost taxpayers over $11 million dollars for little to no benefit. Even the people attending this event showed their disdain for its political nature by booing the Premier during her speech.

The rationale used by various ministers is that the money they’re doling out in advance of the May 14^th election is “year end money” from various ministries. It’s a bizarre rationalization for two reasons: 1) the government books were supposed to be “closed” on March 31^st; and, 2) the government reported a deficit of over $1.2 billion for 2012/13.

There is no “year-end money” when you close your books with a deficit.

Another troubling aspect of this abuse of your tax dollars is that there was no transparency or fairness in deciding which organizations received this money. Calls were made to a few organizations asking if they had “shovel-ready projects,” and photo-ops were quickly arranged.

This isn’t to say that the organizations receiving pre-election cheques weren’t deserving, but there shouldn’t be a dime of taxpayer money spent without a transparent application or bidding process that keeps ministers, MLAs, and political party candidates from playing favorites or using tax money to advance their own political aspirations.

Maybe it’s time BC had a Legislative Budget Officer to keep tabs on party politicians and to publicly report on any political abuses of your tax dollars. We may never be completely rid of this vote-buying farce every election year, but additional oversight could go some way toward keeping parties in check when they get control of the public purse.

 
With all the propaganda surrounding LNG and the Enbridge pipeline, it’s easy to be convinced by the Premier’s claim that we could be entering a new era of economic prosperity that would wipe out all our debt and substantially reduce our taxes.

However, if these megaprojects come to pass, it will more than likely have a negative impact on your pocketbook.

First, you’ll be impacted by the direct and indirect subsidies your government will give these companies to make these projects economically viable. The fossil fuel industry lives off subsidies — trillions of dollars in subsidies each year from governments worldwide, billions here in Canada and BC.

These massive subsidies to some of the world’s most profitable companies take money away from public programs and services. They mean you have to pay more for MSP premiums, insurance deductibles, and other government fees and licenses.

Second, most of the jobs associated with these projects will go to Albertans or temporary foreign workers; the Albertans will pay income tax in Alberta and foreign workers will send the bulk of their earnings home rather than spending it in BC. The rapid and massive exploitation of BC’s natural resources proposed by both the BC Liberals and the BC NDP will mean significantly less return to the BC government than if we developed our resources in a more measured way with BC workers. You’ll have to pay more for public services or get less from your government.

Third, you’ll have to help cover the costs of any catastrophic events that occur as a result of these environmentally risky ventures. Any cleanup costs associated with the inevitable environmental side effects of these projects will be borne not just by the companies responsible, but by government; that is, you and every other taxpayer.

Finally, if the companies racing to get oil and LNG to Asia actually get a higher “Asian premium” price, it just means you’ll pay more for your own resources here at home — that higher Asian market price will raise all fossil fuel consumer costs here, negatively impacting your pocketbook.

Instead of continuing to subsidize an unsustainable industry with taxpayer dollars, Canadian citizens need to demand that our federal and provincial governments develop energy self-sufficiency strategies and support the growth and development of renewable energy sources.

By Vaughn Palmer, The Vancouver Sun
April 2, 2013

After mauling the Pacific Carbon Trust repeatedly over the past two years, Independent MLA Bob Simpson Tuesday urged the B.C. Liberals to decapitate the troubled entity by ousting the CEO and the entire board of directors.

“A necessary first step toward dismantling the trust,” Simpson called it. “An interim administrator should be appointed to facilitate the winding down of it in the most expeditious and fair manner possible.”

The scorched-earth call capped a week of embarrassing developments regarding the trust, vehicle for the B.C. Liberals’ attempt to make the public sector carbon-neutral by investing tax dollars in projects to reduce greenhouse gas emissions.

The launch point was a damning report from auditor-general John Doyle, who examined two private emission-reduction projects that had received millions in public funds and found both wanting in credibility.

As damning in political terms was the government-led attempt on Doyle’s own credibility, including the revelation that the trust hired a public relations firm with ties to its own board of directors to spearhead the effort.

This had Simpson firing off an open letter to Finance Minister Mike de Jong — “I ask that you fulfil your fiduciary obligation and immediately dismiss the board and CEO of the PCT” — salted with accusations so combustible as to almost need a carbon offset of their own.

But the pent-up anger is readily understandable because the former New Democratic Party MLA turned independent is no newcomer to this file. While sympathetic to the goal of reducing greenhouse gas emissions, Simpson has been sharply critical of the chosen mechanism for making the public sector carbon-neutral.

The concept, grounded in the Liberal climate plan of 2008, was that government agencies would offset their production of greenhouse gases by paying into the trust, which would then invest in projects, both public and private, to reduce emissions.

But the drawbacks of that approach were well outlined by Simpson in a February 2011 letter to John Yap, then the cabinet member in charge of the climate plan.

“I have serious concerns about directing public dollars toward the trust for private-sector projects,” he wrote. “It’s shocking to many taxpayers to learn that public dollars, which have been allocated to school districts to educate our children, are being re-directed, by government legislation, to assist resorts and greenhouses to become more energy-efficient.”

He noted how the Liberals had bowed to pressure from mayors and councillors and made an exception for local governments. They were given leeway to offset their emissions by “buying carbon offsets from a list of approved providers, participating in a green communities committee supported project or developing their own local project.”

Other public agencies should be given access to the same sort of escape hatch, urged Simpson. He further recommended that no public funds be diverted to private-sector projects, but rather “to fund projects solely within the public sector.”

Simpson would go on to expand on his critique via interviews, opinion pieces, speeches and letters over the next two years. Nor was he alone in airing serious reservations about the trust.

The Canadian Taxpayers Federation has been a persistent critic. Ben Parfitt of the Canadian Centre for Policy Alternatives has outlined a number of abuses.

A year ago The Vancouver Sun published the results of an investigation by reporter Gordon Hoekstra, who found that 22 of the 25 projects being funded by the trust were already underway when they were given millions of dollars in incentives by the trust to reduce emissions.

The auditor general raised much the same concern in his report last week.”Would the project have happened in the absence of carbon finance? Regarding the projects examined, the answer is a straightforward ‘yes.’ ”

…

In that regard, one of the more telling comments came from Marc Jaccard, the Simon Fraser University resource economist who was very much present at the creation of the Liberal climate plan.

Though a father of the carbon tax, and still one of its strongest defenders, Jaccard is no fan of government buying its way to supposed carbon neutrality.

Indeed, he once mocked the practice by comparing it to the medieval church selling “dispensations” to wealthy sinners to square up their accounts with the Almighty.

So it was that after the auditor-general’s report, the Liberals continued to rail against the unbelievers: Doyle, Simpson, et al., all faulted for lacking the necessary expertise in the self-serving business of bankrolling private emission reductions with public dollars.

…

Read the full column here.

Re: Immediate Dismissal of Pacific Carbon Trust Board and CEO

Dear Minister de Jong:

As you are aware, I have long advocated for the repeal of the carbon neutral legislation that forces the public sector to buy carbon offsets from the Pacific Carbon Trust (PCT). I have never been convinced that the PCT’s offset purchases have represented legitimate, credible, and incremental GHG reduction projects. In short, I do not believe that 700,000 tonnes of CO₂e in incremental GHG reductions are available in BC every year that would allow the PCT to source enough legitimate offsets to neutralize public sector emissions. The PCT has expressed this concern in every annual report it has issued since its inception in 2008.

It came as no surprise to me that the Auditor General’s office reached the same conclusions as many of us who have been investigating the PCT: government is not carbon neutral, and the PCT’s offset purchases do not meet the basic test that public money was essential to make these projects happen. My research led me to conclude that only one of the PCT’s projects needed offset money to proceed, while the remainder of the PCT’s portfolio consists of projects that either had already taken place or would have happened without any public offset money.

It was also not a surprise to me that the CEO of the Pacific Carbon Trust, with the full sanction of its Board of Directors, carried out an early and sustained attack on the credibility of the of the Auditor General’s office, including an attack on the personal credibility of members of the audit team. I encountered direct evidence of this attack when I was looking into the PCT’s Great Bear offset purchases (where I found that public money was used to buy back carbon sinks already owned by the Crown). That evidence, along with the results of a Freedom of Information request from my office, led me to ask questions about the appropriateness of a Crown Corporation using public money to attack an Independent Officer of the Legislature during Question Period in early March.

What was a surprise to me was the over-the-top nature of the PCT’s continued attack on the Auditor General’s office and his report immediately before and after its release. The PCT has admitted that it hired a public relations firm, and that third-party correspondence was issued to the press with the sole intent of discrediting the Auditor General of British Columbia. It was disturbing to learn that a senior member of this PR firm is also a member of the PCT Board of Directors (a clear conflict of interest) and that the firm has direct ties to the BC Liberal Party.

This latest revelation, coupled with the obvious failure of the PCT to meet its objectives, is sufficient cause for the Minister of Finance, as the sole shareholder of the Pacific Carbon Trust, to dismiss the entire PCT Board and its CEO. Both the Board and CEO have clearly breached the public trust and misappropriated public funds.

I believe that this is a necessary first step toward dismantling the PCT. After the Board and CEO have been dismissed, an interim administrator should be appointed to facilitate the winding down of the PCT in the most expeditious and fair manner possible. We would be better served by shifting our focus to taxing industrial emissions not captured under the current carbon tax.

As a Member of the Legislative Assembly of British Columbia, I ask that you fulfill your fiduciary obligation as Minister of Finance and immediately dismiss the Board and CEO of the PCT, which has clearly violated its own financial obligations to the province.

Sincerely,

Bob Simpson

Independent MLA, Cariboo North

Cc:       Honourable Christy Clark, Premier of British Columbia
Honourable Adrian Dix, Leader of the Official Opposition
Bruce Ralston, MLA Surrey-Whalley
Standing Committee on Public Accounts

In the past several days, and even before his report on Carbon Neutral Government was released, the expertise and authority of BC’s Auditor General was called into question by the Ministry of Environment, the Pacific Carbon Trust, and other groups with a vested interest in BC’s carbon offset scheme.

“Who audits the auditor?” asks Minister Lake. Let British Columbians be the judge. The problems identified in the report aren’t difficult to understand. Read the Auditor General’s report here, and decide for yourself if the Auditor General’s office is commenting on issues beyond its capabilities.

The Auditor General wasn’t the first or only one to speak up about the potential problems with BC’s carbon offset scheme. Here’s a timeline with links to what I’ve been saying for years.

2011

By Mike Smyth,The Province
March 28, 2013

In some ways, I think everyone should be grateful to Bill Barisoff for suppressing the release of a bombshell report into the dubious workings of the government’s “carbon offset” program.

Although Barisoff, the Speaker of the legislature, finally released the report Wednesday, his attempt to keep it under wraps only whetted the public’s appetite to see its contents.

And all B.C. taxpayers should know the results of Auditor General John Doyle’s probe of a program that funnels millions of their tax dollars into the pockets of wealthy corporations — all in the name of saving the planet from climate change.

Taxpayers should be mad as hell about it, too. At a time when B.C. schools, hospitals and universities should spend every penny wisely, this program is a wasteful farce.

It all started in 2007, when then-premier Gordon Campbell announced B.C. would be the first “carbon-neutral” government in North America.

The government created a Crown corporation, the Pacific Carbon Trust, and began buying “carbon credits” to “offset” their greenhouse-gas emissions.

Here’s the theory: Carbon-spewing government entities like schools and hospitals pay non-government organizations taxpayers’ money to not pollute the atmosphere with carbon dioxide.

But, as Doyle points out, the program only makes sense if the purchase of the carbon credits creates a “tipping point” for a company to proceed on a carbon-reduction project.

“Would the project have happened in the absence of carbon finance?” Doyle asks.

He determines that, in at least two key cases, the answer to that crucial question is yes.

In other words, Doyle concludes, the government paid money to private companies to reduce carbon emissions that the companies would have reduced anyway, even without taxpayers enriching their corporate coffers.

“In industry terms, they would be known as ‘free riders’ — receiving revenue for something that would have happened any way,” Doyle concludes.

“It’s absolutely bogus and the public should be angry about it,” said Independent MLA Bob Simpson, who’s been debunking the government’s carbon-offset racket for years.

Simpson said it’s especially galling that public schools, universities and hospitals have been forced to buy the vast majority of carbon credits.

“In my district alone, it means two remote rural schools could not hire extra teachers for special-needs kids,” he said.

…

Simpson points out that many of the private-sector recipients of the payments also happen to be generous donors to the B.C. Liberal Party.

The Pacific Carbon Trust paid out $13 million to companies that donated $2.5 million to the Liberals. So-called “verification companies” — responsible for approving the validity of carbon offsets — gave another $375,000 to the Liberals.

The government defended its carbon-offset program Wednesday. What they should do instead is simple: Shut the thing down, and stop wasting taxpayers’ money.

Read the full column here.

The vested interests attacking the Auditor General’s report on the BC Liberals’ “carbon neutral government” claim and the activities of the Pacific Carbon Trust (PCT) argue that BC’s Auditor General has no “expertise” with which to judge carbon offset projects.

Frankly, I’m glad someone who isn’t an “expert” in carbon trading schemes is examining, with a skeptical eye, this highly controversial and questionable activity.

An “expert” in carbon offsets is someone who has already bought into the legitimacy of these schemes and, as such, is merely interested in whether the rules of this newest shell game are being followed. An “expert” would not ask the fundamental question that needs to be asked: are carbon offset projects a legitimate, credible way to address climate change?

Experts already believe offsets are de facto legitimate.

The experts that are currently validating carbon offset schemes, including BC’s, are the same type of companies that created the savings and loan and Enron scandals. They are also the same type of companies that validated and sanctioned financial derivatives; what we now refer to as the “toxic assets” that caused the financial meltdown in 2008.

These experts also enjoy direct financial benefits from the promotion and promulgation of carbon offsets – they are an integral part of the so-called carbon offset industry. An industry that in reality involves trading carbon ownership certificates in a manner that enables private companies to obtain millions of dollars of public money that ought to have been spent in classrooms, hospitals and seniors care facilities.

It’s also important to note that carbon offset trading schemes are being questioned beyond BC’s borders. The European police force has a carbon fraud team that at one time estimated some European carbon trading schemes were 90 per cent fraudulent. There are similar warnings about fraud in the fledgling Australian carbon market.

The United Nations and reputable climatologists and carbon economists are also questioning the validity and efficacy of carbon offsets, and a recent study by the University of Victoria called one of the forest carbon offset projects examined by the Auditor General a “smoke and mirrors game.”

Only a true outsider can answer questions about the fundamental legitimacy and credibility of the BC Liberals’ carbon offset scheme, and BC’s Auditor General is fully capable of giving us his unbiased and expert findings.

A detailed background piece on the PCT and the Auditor General’s report is available here.

By Andrew MacLeod, The Tyee
March 27, 2013

Pacific Carbon Trust part of ‘orchestrated campaign’ to delay findings on offset issues: AG Doyle.

The Crown corporation Pacific Carbon Trust was part of an “orchestrated campaign” that has delayed his report on carbon neutral government, said auditor general John Doyle.

“We’ve had great difficulty getting this report to the publication stage,” Doyle told The Tyee in an interview. “I’m talking about the number of letters and what I call the ‘corporate immune system’ pushing back on the audit team.”

While working on the report, which was to examine the carbon offsets the PCT purchases to make the provincial government carbon neutral, Doyle’s office received many letters on the subject, he said. The audit team took the letters into consideration and responded to them, but found nothing in them that would change the conclusions of the report, he said.

“We noticed a lot of the letters had similar themes within them,” said Doyle. The team asked for certain files as part of the audit and discovered an “orchestrated campaign” to push back against the audit with the apparent strategy of trying to delay its publication, he said. “The longer they delay it, the less likely they have to face the consequences of what may be in the report.”

The PCT was party to that campaign, he said, adding he could not share further details as the matter is touched on in the body of his report.

Cariboo North MLA Bob Simpson said during question period on March 7 that he had evidence from a freedom of information response of an “active letter-writing campaign” involving the PCT aimed at undermining Doyle’s report.

Calls to the PCT were not returned.

…

In an interview he said he followed the same procedure with this report that he has with every other report for six years and that his predecessors also followed.

Preemptive attack letters

The breach Barisoff was talking about may, however, have been elsewhere.

The Canadian Press reported yesterday morning that it had obtained three letters from carbon-reduction experts who raised concerns about the report.

…

The letters leaked to CP included: one from Attorney General Shirley Bond to James Tansey, chief executive officer of Vancouver-based Offsetters Climate Solutions; one from University of Ottawa law Prof. Stewart Elgie to the PCT’s Chief Executive Officer Scott MacDonald; and one to Doyle from David Antonioli, the CEO at Verified Carbon Standard in Washington.

…

MLA Simpson said these projects needed a “sniff test” from someone independent like Doyle and it’s not surprising people involved in the offset market feel threatened.

Barisoff should release the report immediately, he said.

“I don’t believe he has discretion and if he does he’s stalling a report the substance of which is being challenged in public because of procedural issues,” he said. “The procedure issues have nothing to do with the substance of the report.”

Read the full article here.

By Mark Hume, The Vancouver Sun
March 27, 2013

A scathing report by B.C.’s Auditor-General concludes that the provincial government has failed in its efforts to achieve a carbon-neutral public sector.

B.C. has long bragged it was the first government in North America to become carbon neutral by requiring schools, hospitals and other government institutions to spend millions buying carbon offsets to make up for their greenhouse-gas emissions.

Those purchases all had to be made through the Pacific Carbon Trust, a Crown agency set up by the government to drive its carbon-neutral program.

But Auditor-General John Doyle – whose report was withheld from release Tuesday by the Speaker of the legislature – says that the Pacific Carbon Trust has been paying too much, often double the free- market price, and that the offsets do little to reduce B.C.’s greenhouse-gas emissions.

The Globe and Mail obtained a copy of the report from other sources.

One project examined involved a forest that was not going to be cut because it had been purchased by the Nature Conservancy of Canada.

Another was a gas project in which the company pursued an energy-saving program it intended to implement anyway.

Instead of releasing the document as scheduled Tuesday, Speaker Bill Barisoff issued a brief statement saying it is being withheld.

…

He said it is unfortunate the report is tangled up in a procedural issue, because it is an important document that should be shared with all MLA’s and the public.

Mr. Simpson declined to discuss the contents of the report until it has been publicly released.

In the document, Mr. Doyle states that his office examined two projects that accounted for nearly 70 per cent of the offsets purchased by the government in its attempt to achieve carbon neutrality.

One was the Darkwoods Forest Carbon project, which set aside forest land in southern B.C., and the other was the Encana Underbalanced Drilling project near Fort Nelson, which reduced flaring.

Mr. Doyle writes that the government’s claim of achieving carbon neutrality using those two projects “is not accurate, as neither project provided credible offsets,” and that both projects would have happened in the absence of the government’s carbon financing.

“In industry terms, they would be known as ‘free riders’ – receiving revenue ($6-million between the two) for something that would have happened anyway,” says Mr. Doyle.

He also complained the Pacific Carbon Trust leaked information about his audit while it was under way, which resulted in an “orchestrated letter-writing campaign” to government by supporters of the carbon program.

“Of all the reports I have issued, never has one been targeted in such an overt manner by vested interests, nor has an audited organization ever broken my confidence, as did the senior managers at PCT by disclosing confidential information to carbon market developers and brokers,” he stated.

Ben Parfitt, of the Canadian Centre for Policy Alternatives, has long been a critic of the government’s carbon program.

“It’s a damning indictment of the province’s whole carbon neutral policy,” he said when asked to comment on Mr. Doyle’s findings. “It sounds like the Auditor-General has found the vast majority of the offsets sold by the Pacific Carbon Trust turn out to be bogus credits … it’s shocking.”

…

Read the full article here.

What is the Pacific Carbon Trust (PCT)?
Public sector organizations, such as school districts and health authorities, must pay the PCT $25/tonne for their GHG emissions each year. Over the past three years this amounts to over $50 million that has been clawed back from public sector operating budgets. This public money is then given to private companies and organizations, supposedly to enable emission reduction projects that would not have happened without that money. The BC government has used this scheme to declare itself carbon neutral, beginning in 2010.

Who receives money from the PCT?
Companies that received public money include TimberWest ($5.6 million), Offsetters ($2.1 million), and Encana ($1.6 million). Offset payment totals are available here. The PCT also partners with third-party validators and verifiers to verify the legitimacy of these offset projects. Many of these verification companies also “verified” the legitimacy of financial derivatives. (For more on validators, see Bob’s follow-up post)

A significant number of the organizations that have benefitted from the PCT and the project validators are Liberal donors. The PCT paid out $13 million in public funds to companies who have donated over $2.5 million to the Liberal party. Project validators such as KPMG, Ernst & Young, and other organizations involved with the PCT also donated $375,000 to the BC Liberal Party.

A partial list of recipients and donors can be found below.

How did the PCT respond to the Auditor General’s investigation?
While pursuing questions about the PCT’s Great Bear Rainforest carbon offset purchases, Bob uncovered an orchestrated effort by the PCT and their partners aimed at discrediting the Auditor General’s report before it was released. This effort included having vested third parties send letters to the Attorney General and asking various organizations to send letters to the Auditor General challenging his expertise in this area.

A Freedom of Information request from Bob’s office revealed that the PCT was worried about criticism from the media and the Auditor General’s review, which PCT officials said was “spending way more time on the PCT … and glossing over the rest.” Bob raised these questions in the Legislature during Question Period on March 7.

The PCT used public money to defend itself from scrutiny, spending over $100,000 in 2012 for consultants to review their practices and pre-empt criticism from the Auditor General’s office. The money for those reports came from public sector organizations that have paid into the PCT’s $25 million surplus.

James Tansey, of Offsetters Ltd., has played an active role in the campaign to criticize the Auditor General’s report. Offsetters has received over two million dollars from the PCT. (Source)

Who is raising concerns about carbon offset schemes?
While the Auditor General’s report may call into question the legitimacy of the BC government’s carbon offset scheme, his office wouldn’t be the first to do so.

The Vancouver Sun’s Gordon Hoekstra identified numerous PCT offset projects that would have proceeded without PCT money. Projects that would have gone ahead without these funds violate the PCT’s criteria of “additionality” – i.e., projects must not have been able to proceed without PCT funding in order to qualify as offsets. (Source)

A 2012 report by the University of Victoria’s Resource Economics & Policy Analysis Research Group discusses “problems related to additionality” in forestry offsets. (Source)

In March 2013, the Vancouver school district claimed that the compensation it received for paying into the PCT was less than one quarter of what it had paid out.

Finally, there have been confirmed instances of carbon credit fraud throughout the world.

Is the BC government carbon neutral?
The BC government is not carbon neutral. Aside from the lack of credibility of the PCT’s offset purchases, emissions from BC Ferries, school buses, P3s (public private partnerships), BC Hydro’s deforestation activities, and emissions from not-for-profits and private companies that deliver government programs and services are not counted in the carbon neutral calculations.

What needs to be done to reduce carbon emissions in BC?
The focus should be on reducing the 99 per cent of BC’s emissions that are being produced outside the public sector. “Carbon neutral government” gives the false impression that BC is a leader in reducing provincial GHG emissions, when the government’s industrial strategy will ensure we won’t meet BC’s legal requirements for total GHG emission reductions by 2020. Carbon neutral government is a dangerous distraction.

Donations to Liberal Party from Organizations Receiving PCT Offset Money

*Offsetters is not listed as a donor in Elections BC’s database. Donations are from Ledcor Group, which holds a “substantial equity stake in Offsetters.” (Source)

Donations to Liberal Party from Organizations Involved with PCT