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Wrong to Make Public Pay for EnCana's Pollution Fix, Say Critics

BC schools, hospitals must buy carbon offsets. Some underwrote gas giant's emissions controls.

By Andrew MacLeod, 9 May 2011, TheTyee.ca

Well near Farmington, B.C.

Using carbon offsets to cut gas well flaring is progress, says Pacific Carbon Trust. This well is near Farmington, B.C. Photo: Alaska Highway News.

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With one way of looking at it, Pacific Carbon Trust's purchase of carbon offsets from EnCana Corporation will cut greenhouse gas emissions and help public bodies and other offset purchasers become carbon neutral.

By another, the deal represents a massive transfer of public money from British Columbian schools, hospitals and taxpayers to an already profitable private gas company.

"This is a project that we initiated and works very well in terms of accomplishing a number of goals for both EnCana and the Pacific Carbon Trust," said Carol Howes, a spokesperson for EnCana.

On May 5, the company and the PCT announced that the B.C. Crown corporation bought 84,000 tonnes of carbon offsets from EnCana. The purchase helped EnCana, a company whose former CEO Gwyn Morgan was a key advisor to Premier Christy Clark, complete a project that reduced greenhouse gas emissions by 85 per cent from a project near Fort Nelson in northeastern B.C.

The project uses natural gas instead of nitrogen as a drilling lubricant. As the press release described it, "The natural gas used to facilitate drilling is conserved through onsite recovery and captured, then streamed directly into a pipeline, eliminating the need for routine flaring."

The technique has been used in 84 wells now, said Howes.

Deal worth millions

The money for offsets made EnCana's project economically viable, said Scott MacDonald, the CEO for PCT. The project was audited by both KPMG and Ruby Canyon Engineering, and it's clear EnCana did something with the money that it would not have done without it, he said. "They've proven what we call in the offset world 'additionality,'" he said.

Both MacDonald and Howes said the price PCT paid for the offsets is confidential. But with PCT charging $25 per tonne when it sells offsets, the value of the deal would likely be in the range of $2 million.

The deal is among the largest for PCT, which a spokesperson said is set to make further announcements in the next few weeks, and has critics again asking questions about how PCT is structured. They now have a prime illustration of why the agency's business needs a skeptical look.

"It essentially takes offset payments from schools and hospitals and gives them to industrial emitters," said New Democratic Party environment critic Rob Fleming. "To think we're going to drive private sector innovation by transferring money from schools, hospitals and public sector organizations is absurd."

The PCT is using public money to pay EnCana to do something they should already be doing on their own, he said.

Independent Cariboo North MLA Bob Simpson issued a press release criticizing the EnCana deal: "Subsidies are not the only tool available for us to encourage corporations to reduce their carbon footprint. We need to explore other options that do not include using money intended for classrooms."

Schools could use money

The Pacific Carbon Trust began selling offsets in 2007, mostly to the public sector. The province legislated that the core of the government would be carbon neutral by 2010, with local governments to follow by 2012. Public bodies have been working to reduce their emissions, but as long as they are above zero, they'll have to pay for offsets to balance them.

For the Victoria school district, which is as financially strapped as other boards of education in the province, that meant a $170,000 expense in the 2010-11 fiscal year, said Seamus Howley, director of facilities for the district.

"We could all do without it," said Howley. "We would very much like to see that money going back to school districts to improve our facilities, thereby reducing our carbon footprint."

Howley said he expects other school districts had to spend similar amounts of money on carbon offsets. "We have a lot of older, very old schools, and they tend to be not that efficient," he said. Districts like Vancouver would be in a similar situation, while districts like Surrey where the schools are newer might be a bit better off, he said.

"We have a number of projects underway... that we hope will reduce it next year," he said. To do that, it would be helpful to have the money for offsets to spend on those projects, he said.

Neither Finance Minister Kevin Falcon, who is responsible for the PCT, nor Environment Minister Terry Lake were available for an interview.

An Environment ministry spokesperson said in an email that public sector expenditures on offsets will be reported in June.

PCT CEO MacDonald said the public sector requires something like 800,000 tonnes of carbon offsets a year. At $25 a tonne, that would give PCT some $20 million in government money to spend.

'Price signals work': Pembina

Asked about the optics of money from schools and hospitals going to EnCana, spokesperson Howes said, "I think you'll have to have the Pacific Carbon Trust respond to that."

She did allow, "We feel very strongly that this has been a very good project for us."

MacDonald said the province has a goal of making the public sector carbon neutral, and offsets are a way to do that. He said to expect a formal announcement in early June saying the goal has been met.

He also noted that PCT is funding some projects in the public sector, including projects at landfills owned by municipalities or regional districts.

The agency's website also shows that while the main customers are the public sector, they are also selling offsets to private companies and individuals.

An Environment ministry spokesperson noted that for projects such as EnCana's "any government or broader public sector offset investment accounts for only about five per cent of the total capital cost." The project will improve local air quality and result in significant greenhouse gas reductions, she said.

"These projects are stimulating the growth of the green economy, creating jobs, helping new technologies take root in our province, while reducing emissions and improving our environment," she said.

Assuming a rigorous verification process, projects such as EnCana's are good for the environment, said Pembina Institute's director of B.C. energy solutions Matt Horne.

"It shows the price signal does work to incentivize projects," he said.

Ultimately, it would be better to pay for such projects through a cap and trade system, where the funding comes from industrial emitters, rather than through an offset program like PCT's, he said.

B.C. is scheduled to enter such a system as part of the Western Climate Initiative in 2012, a commitment recently affirmed by Environment Minister Lake.

"I think B.C. has done the leg work to be ready for the beginning of 2012, and I'd encourage the premier to move forward on that schedule," said Horne.

Doing so would also free the government from having to explain why schools and hospitals are being used to fund EnCana and other company's projects. [Tyee]

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Reach him here.

25 Comments:

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  • RickW

    1 year ago

    When are people going to get it in their heads.......

    ....that, when rightwing governments are elected, paying for corporate screwups is what the people are expected to do?

  • zalm

    1 year ago

    Unleash the hounds!

    Am I the only one who thinks trading carbon credits for permission to pollute is like the Church's 15th-century sales of indulgences for permission to sin?

    Who will be the Martin Luther who will nail the 95 writs of mandamus to the doors of the Legislature? This nonsense has to stop!

    I'm sure we'll hear shortly from snert and mpled and GWest on the idiocy of buying and selling invisble "carbon credits" for a non-existent market but I can't wait...

  • Cool Hand

    1 year ago

    Nitrogen

    Quote:
    The project uses natural gas instead of nitrogen as a drilling lubricant.

    Yet, in July 2010, Ferus Inc. commenced construction of a liquid nitrogen plant in Dawson Creek with a production capacity of 200 tonnes per day.

    The plant isn't even completed yet but the demand is now greater than the original capacity. Ergo, Ferus Inc. is constructing a second nitrogen plnat at the same site to double capacity.

    So much for this one-off carbon off-set.

    http://www.journalofcommerce.com/article/id44028

  • snert

    1 year ago

    zalm

    Gee, zalm, I'm flattered. It just so happens I agree with you so I guess that means that now you're gonna have to rethink your whole argument as I'm always wrong.

  • Frank

    1 year ago

    Schools and hospitals subsidize Encana

    "the deal represents a massive transfer of public money from British Columbian schools, hospitals and taxpayers to an already profitable private gas company. "

    I wake up in the morning and find out the world got stupider. We're now taking money from kids to pad the bottom line of Encana.

    I disagree with Pembina (and the Green Party), any policy based on "sending price signals" will result in profits for those with teams of tax lawyers on their payrolls and higher costs for everyone else.

    For some reason that's never mentioned in the literature.

  • Vox.Pop

    1 year ago

    More Corporate Scams

    We now read that Encana is being paid a secret amount to reduce their carbon emissions through Campbell's "Pacific Carbon Trust". What a pathetic scam; they should have been legislated to improve their emissions, not bribed. It is disgusting that BC's annual gas royalties have dropped by 75% from $2B only six years ago. This has been made up by 'profits' from the gambling sector. It is equally disgusting that the BC government now collects more cash from students today than they do from the giant resource companies. It is obvious where the BC Liberals' political contributions originate.

    These pitiful resource revenues are to be expected from a BC government that has for over 10 years been deeply indebted to behind-the-scenes influence from the likes of Gwyn Morgan (a man made rich by the 'generosity' of Alberta's oil politicians).

    King Gordo really scored on this one; hiding in a 'green' cloak while he sends kickbacks to his 'black' paymaster.

  • Vox.Pop

    1 year ago

    The Shy Princess & the Wicked Uncle

    "Christy Clark is too busy for all-candidates' debates and radio talk shows" illustrates the fear that the behind-the-scenes handlers (like Glyn Morgan) have that Princess Prissy-Chrissy will demonstrate that there's very little going on inside her head. Yes, she's great on TV with a 10 second sound bite (written by someone else) but don't ask her to think on her feet, she's likely to end up with both of them in her mouth. People will soon realize that our little cute princess hasn't got 1/10th the smarts of her evil predecessor (King Gordon). This will make Dix's job so much easier to chop her down to size & replace the whole rotten gang of BC Liberals with a populist party at the next election.

  • mopled

    1 year ago

    How long are we going to put up with this expensive outrage?

    The warming stopped years ago.

    http://www.c3headlines.com/2011/05/noaa-reports-that-15-year-us-cooling-trend-jumps-to-32f-versus-marchs-29f.html
    "This chart represents the 15 years (180 months), starting May 1, 1997 and ending April 30, 2011. Per the latest NOAA/NCDC U.S. temperature data records, the 12-month period ending April was the 5th coldest April-ending period for the last 15 years. In terms of a single month, April 2011 was 79th coldest April in the past 117 years."

    "The Univ. of Colorado's satellite data sources confirm that the hysterical IPCC and NASA "climate scientists" claims of current, dangerous, "accelerating" sea level increases are entirely without merit. In actuality, these claims were past predictions generated from the failed "expert" climate models."
    http://www.c3headlines.com/2011/05/us-ocean-experts-confirm-rapid-decline-in-sea-level-increases-over-last-decade.html

    Yes, the climate is changing. No, humans are not doing it!

    It’s the Sun, Stupid!
    By Willie Soon, solar and climate scientist
    http://www.iceagenow.com/Its_the_Sun_stupid.htm

  • GuyinVic

    1 year ago

    Another Liberal Scam

    When was the last time Encana did anything for you ? This means that I'm helping out some multi-million dollar company reduce it's emissions. This is a complete joke and must be stopped. What right do the Liberals have spending our tax dollars to support these huge companies who no doubt are laughing all the way to the bank. Another reason to send a message on Wednesday. Send Christy packing.

  • elbillug

    1 year ago

    this is not cap-and-trade

    From the sound of this article, Encana can sell carbon credits, but they don't have to buy carbon offsets for their significant amount of emissions ?
    This is not what cap-and-trade is supposed to do - companies such as Encana should start with a substantial deficit for their existing emissions.
    I can't believe that Encana can sell offsets without themselves having to be in the cap-and-trade program (and as a resulting owing lots into the system). I wish I could choose only the good half of my commitments. "Yes, Mr Bank. I want the money, but I choose not to pay it back ok?"

  • mopled

    1 year ago

    Oh, it looks like you are starting to get it, elbillug!

    Both the Fed. Liberals and the Fed. and BC NDP just love cap and trade. The experience of various carbon trading scandals in the EU meant nothing to them.
    http://www.reuters.com/article/2011/01/20/us-carbon-scandals-idUSTRE70J4M120110120?pageNumber=2

    Actually, this is exactly what Cap and Trade was meant to be!

    Don't you just love how municipalities and Regional districts are on the hook. I warned you all a while back that schools and hospitals were going to have to buy carbon credits.

    What is even sweeter about the Crown Corp which trades "carbon" is that we have an internal market when the rest of
    the North American market for this hot air disappeared last year. Then, price of carbon fell to 10 cents a ton.

    We are paying how much to Encana per ton?
    Only $25.00, you say!

    Now also remember the Carbon Tax goes up to 7% this July.

    Keep believing in "Man-Made Global Warming" and keep getting fleeced.

  • jgg017

    1 year ago

    EDITED

    EDITED FOR LEGAL CONCERNS -- MODERATOR
    PCT is incompetent *and* EDITED

    They are supported by tax payer dollars, which means we have no say in how they are spent.
    Taxpayers are supporting EnCana, who does not need financial support in any way.
    Schools are also paying in blood to support EnCana.

    @zalm: In this case, you are absolutely correct. However, there are some very good projects with very real benefits out there. You might want to drop the broad brush look past the emotional rhetoric.

  • zalm

    1 year ago

    snert

    I prefer to think of you as a stopped clock - right twice a day.

    I just never know when... ;>)

  • zalm

    1 year ago

    Fleecing 101

    "@zalm: In this case, you are absolutely correct. However, there are some very good projects with very real benefits out there. You might want to drop the broad brush look past the emotional rhetoric."

    Can and/or will the projects be done without the sale of indulgences?

  • snert

    1 year ago

    zalm

    Twice a day, around here, is better than most. Keep up the compliments. ;>)

  • pwlg

    1 year ago

    taxation

    How about stripping back the tax breaks given corporations by both the feds and BC based on their pollution?

    In France the social democrats are campaigning to take back all the tax breaks given corporations over the years and linking any tax breaks to actual job creation, reinvestment of capital back into France and environmental initiatives.

    The EU farm subsidies are pegged to land stewardship (care of the farmland, quality of food, etc).

    So let's strip the tax breaks from corporations and set proper terms by which corporations receive tax breaks. We should not be using failed Friedman ideology to grant tax breaks to corporations.

    The fed corporate tax breaks are now @ 25%, the BC gov't tax breaks @ 42%! How much more public money do they need?

    Thanks for the information Andrew.

  • pwlg

    1 year ago

    checked out Pacific Carbon Trust

    PCT advertises that they have retired 54,000 tonnes of carbon which equals the carbon emissions of 14,000 cars for one year.

    The problem with this hyped example of their success is that vehicles in Europe and North America have an average life span of 12-15 years. So really, the amt of retired CO2 means only 1,000 vehicles have been removed from the road.

    In the metro Vancouver region, the number of registered vehicles continues to increase well beyond 1,000 or even 14,000 vehicles a year.

    In fact, the number of registered vehicles in the metro region between 1999 and 2009 increased by over 300,000! Between 2007 and 2008 the number increased by 60,000 vehicles!

    These 60,000 vehicles gave off 270,000 tonnes of carbon.

    For every tonne of carbon "retired" by the efforts of PCT almost 5 more tonnes were emitted into the atmosphere by the number of additionally registered vehicles in the metro Vancouver region.

    Me thinks PCT needs a better example of their success. Perhaps equating dollars to each tonne of carbon "retired" would be a better way of measuring the effectiveness or lack of effectiveness.

  • mopled

    1 year ago

    How about that effectiveness,eh?

    Humans produce about 3% of all the CO2 in the atmosphere. There is less than 0.04% of CO2 IN ALL THE ATMOSPHERE.... all 390 PARTS PER BLEEDING MILLION. " Dry air contains roughly (by volume) 78.09% nitrogen, 20.95% oxygen, 0.93% argon, 0.039% carbon dioxide, and small amounts of other gases." wiki

    There is less CO2 than there is Argon, for heaven sake.

    How much temperature change do you think "retiring" a ton of "carbon" effects?

    http://wattsupwiththat.com/2009/10/25/what-does-a-reduction-to-350-ppm-of-co2-get-you/

  • OwlRol

    1 year ago

    Article about Encana subsidy, not truth of GW

    Mopled, I've read your climate change, so called denial evidence for too long now not to respond.
    I rarely go down this road, but...

    a. Your sources are taken out of context from NOAH and the U. of Colorado by your source, C3 headlines, to push your, amongst other, agendas. Better check to see who funds and propagates your sources, and then cite the original docs from other sources..

    b. this single source of rather short term temperature stats, if you read carefully, only applies to the continental U.S.A., a relatively small part of the globe, despite some Yankee disbelievers of this fact.

    c. Both alpine and continental glaciers all over the planet are receding rapidly, notably during the years you cite. Some of that water goes to ground, but much melts and runs into the oceans. THIS IS OBSERVABLE FACT all over the planet. If you don't believe the satelite data, take a trip to Tuk, or the Columbia icefield, or... the Larsen ice shelf off Graham peninsula, to use your sophisticated observation skills and then interview long term residents of those regions.

    d. PLease consider this logic carefully. If all that ice melts and most runs into the ocean, but, (as your single source suggests, and very recent research does not confirm), sea levels are not rising, then there really is only one rational possibility for that analysis, that being an increase in global sea surface temperatures so as to evaporate more liquid H2O. Surely that is Global Warming, unless you think that your god opened a vent through the crust to drown the flames of Hades.

    Get your head out of the coastal sands before it becomes submerged.

  • OwlRol

    1 year ago

    Concentrated effects rather than amounts alone

    Good grief. One gram of turds don't contaminate an entire pool full of drinking water, unless you're unlucky, but one gram of certain petrochemicals do.

    The near 80% of nitrogen, nor the near 20% of oxygen, nor the near 1% of argon have any significant effect on long wave radiation (infra red or heat) from earth surface back to space.

    Liquid H2O, as in clouds, and water vapour have a greenhouse effect (good fortune, or we'd be a Martian style ice ball). Water vapour in the atmosphere varies between near 0.5% and 4.5% or more. The more humid, the more heat is trapped, barring wind. Likewise clouds. Remember the small percentages.

    Carbon dioxide, and much moreso, methane, along with small amounts of other gasses add to that greenhouse effect. These have large impacts despite their small percentages. We add these in hundreds of parts per million.

    How about I give you a beverage with one hundred parts per million of plutonium? Or even ten?

  • Countrytype

    1 year ago

    Yes to pwlg

    Backing away from the denial troll...

    Yes, the tax breaks and lack of caps on fossil fuel extraction companies and forest companies are incongruous once those companies start selling offset credits. Schools should pay into an infrastructure improvement trust, with PCT selling credits to companies investing in school heater, lighting, and insulation upgrades to build the trust up. Encana should not be the recipient of school carbon holdback funds.

    I don't buy the indulgence argument, offsets can be well-managed if they are channelled into things that are unpopular to do, by strapped parts of the community. Profitable business cannot be considered strapped, no matter what the bonus schedule of the leadership. There should be, like tax, a way of estimating an acceptable slush in corporate profit that goes back to society directly without having to just wish for the trickledown. Public service jobs are jobs too, and may be better for workers than private sector ones in many average cases.

  • Fish-counter

    1 year ago

    Time for some CREATIVITY, folks

    Look at Dover Bay Secondary School in Nanaimo, for example. They won a contest for a solar panel to generate juice for their school. It works! The school - and therefore the School District - save money every year.

    Solar panels work, and all schools have roofs. Well last time I looked, anyway. Why don't all schools have solar panels, so they can share the juice? Why don't all buildings have solar panels?

    It takes thinking outside the box and creativity to see that we are all surrounded by tremendous opportunities cunningly disguised as insurmountable problems.

    If you want to know more, Google the Dover Bay Eco Club and you will learn. Children will indeed show us the way.

    Unfortunately, most adults are too stupid to follow. Meh!

  • OwlRol

    1 year ago

    CREATIVITY continued

    Fish-counter, you're right on. most kids know & care.

    During the OPEC oil drought and gas cost of the 1970s, many wanted to move to solar & other renewable energy technologies. Compact cars were only one response. But cynics (backed by big auto & big oil) said it would cost too much to go that route. Now, here we go again. $2 a litre or more to come, although prices will yo yo.

    At the time solar technology was very expensive, but with time & some national or state incentives (rare in our country) these technologies have become much improved and prices have dropped steadily. If given a chance, these will be competitive with, or better than, fossil fuel or nuclear, outright costs, let alone hidden, externalized costs.

    Had we put into place an ongoing installation of such systems, from residential rooftops to large projects, we would not be scrambling now. We would still use fossil fuels, but in much less quantity. Tar sands and gas fracking would not be issues, because their need would not be as pressing; too bad for investors in such sunset industries.

    Every system has an energy footprint, one of several eco footprint factors, but some systems have considerably more impacts than others. (Think tar sands or the immense amounts of mostly non recoverable water required by fracking, let alone dealing with the side effects and waste from these systems).

    The problems arise in how we apply added, up front costs. On new, well designed & built structures it makes good sense, but why spend that money on schools or other public buildings, shortly to be sold, closed or demolished? Never mind most of the private sector.

    Then comes available funding. One school to be replaced in the province was well planned, with input from students, staff and the community, only to be scaled back, and such concepts eliminated, due to provincial funding cuts and demands for P3 involvement that refused to increase up front construction costs to meet these goals. Short sighted, but...

    It can be done but there needs to be a change in general mindset. Pay now or pay more later.

  • Fish-counter

    1 year ago

    How does BC cut GHG's by 30% (of 2007 levels ) by 2020?

    That is the goal set by the provincial government and the answer is that we don't. We don't, because we are not yet ready to change. Not until sea levels have risen another 30 cm will we be ready to change.

    It is not enough to see Manitoba and Mississippi under water. Nor is it enough to see the US midwest torn apart by the worst tornado in history. We have to see it over and over again.

    Our kids might just get it, but they will hold us to account for our transgressions. In the 1970's, during the oil crisis, for example, it would have been all but unthinkable to even conceive of building a Hummer. The law of slow learning and fast forgetting applies equally to marketing, politics and the environment.

    We should all be driving cars that go 50 mpg or 15 kpl, instead of gas-guzzling SUV's, but we are not.

    "There's the way it ought to be, then there's the way it is".
    (Sgt Barnes, Platoon).

    Amen to that.

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    1 year ago

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