Is BC's Public Sector Really 'Carbon Neutral'?

[Editor's note: This is the fifth article in an in-depth Tyee Solutions Society series, "BC's Quest for Carbon Neutrality: Reports from Canada's Climate Policy Frontier." Find the series so far here.]

The University of British Columbia (UBC) prides itself on reducing its carbon footprint. Long before Gordon Campbell got climate change religion, UBC was looking for ways to reduce its greenhouse gas (GHG) emissions.

Now the university would like to build more student housing on its Point Grey campus. This would be good for the environment; students who currently commute long distances would instead be able to walk to class. GHG emissions would drop.

But if UBC builds the student housing, the provincial government will force it to pay a penalty. And the penalty would be levied under a highly touted carbon-neutral government strategy that is supposed to be fighting climate change.

Turns out there's more to being carbon neutral than meets the eye.

The B.C. government declared itself carbon neutral on June 30 -- "a first for North America," as the press release proclaimed. The declaration marked "an achievement that places British Columbia on the leading edge of climate action and growth in the clean-energy and clean-technology sectors."

Questions have been raised, however, about whether B.C.'s public sector is in fact carbon-neutral and what, exactly, that term means.

The term carbon-neutral suggests that an organization is not adding carbon dioxide or other climate-altering gases to the atmosphere. In practice it usually means that the organization has made an effort to reduce its emissions and has bought carbon offsets -- credits supposed to represent reductions elsewhere in the economy -- to neutralize the organization's remaining emissions.

Critics, however, question how much of the B.C. government's emissions are actually being offset.

"The government is not carbon-neutral and will not achieve true carbon neutrality anytime soon," Independent MLA Bob Simpson said in the legislature in October.

To declare itself carbon-neutral, he said, the government exempted a number of operations, including BC Ferries. (A government spokesperson said Victoria exempted the Crown-owned corporation because it "has no operational control over BC Ferries.")

Less is more

There are other kinds of emissions that aren't counted, as well, which brings us back to UBC.

A study by Kim Lau, a UBC PhD student, and Hadi Dowlatabadi, a physicist with UBC's Institute for Resources, Environment and Sustainability, discovered that the government's carbon-neutral accounting scheme covers only 53 per cent of the total direct and indirect emissions associated with UBC's Vancouver campus. And, while the UBC emissions covered by the strategy dropped by about one per cent between 2007 and 2009, emissions that aren't covered actually increased by 2.4 per cent.

Lau and Dowlatabadi reviewed the carbon-neutral government initiative in a paper for the Pacific Institute for Climate Solutions. They calculated that, if UBC builds the 8,000 new units of student housing it wants, the reduced commuting would cut overall GHG emissions in the Lower Mainland by 7,700 tonnes per year. That's because, as Dowlatabadi said in an interview, "Commuting to and from UBC is huge compared to what energy consumption is actually going on inside UBC."

But the carbon-neutral strategy gives organizations no credit for reducing emissions from commuting. Instead, because increasing the amount of student housing on campus would increase UBC's direct emissions, the university would have to spend an extra $145,000 per year on offsets.

That's despite the fact that the students' housing emissions would simply be moved from one place in the Lower Mainland to another. And the new UBC housing would be more energy efficient than students' current homes.

Not all government organizations will have as low a proportion of uncovered emissions as UBC, Dowlatabadi said. A hospital, for example, would have less commuting associated with it.

Still, the study shows that many things government does that affect climate aren't being counted, he said.

Dowlatabadi said that it's understandable that the original carbon neutral strategy did not include most indirect emissions because they are more complicated to measure. But it would be wise for the government to review its rules and correct the unintended anomalies, he said.

The government has a "really genuine" interest in fixing this problem, he said. "The challenges in implementing a new paradigm always lead to good steps and bad steps. We're dealing with new concepts. We need to think carefully about them. We need to roll them out, learn, then roll them out again with modification and improvement."

Living in a hypothetical future

Even if the government fixes this unintended consequence, it will have to deal with a wave of other controversies attached to the program.

A fundamental question is whether offsets even work.

A carbon offset represents a reduction in greenhouse gases by a company or organization. When you buy an offset to cancel out your emissions, you pay so much a tonne to the organization that's reducing its emissions. Carbon neutrality means that you have purchased enough offsets to compensate for all your emissions.

But Mark Jaccard, a Simon Fraser University resource economist and a special advisor to the government's Climate Action Team, calls carbon-neutral government "a delusion."

Offset buyers would be truly carbon-neutral if the offsets represented gases that were sucked out of the atmosphere and stored away permanently, like nuclear waste, Jaccard said.

"Not making it into trees, that's no good," he said. "It's got to be in the earth's crust or in big steel boxes or something that are millions of years stored away."

That's pretty expensive, though, so most offsets don't work that way. Instead, organizations like the B.C. government's Pacific Carbon Trust buy carbon credits from emitters who intend to emit less in the future. Say the owner of a warehouse would like to supplement his natural gas heating system with solar power. But he says he can't afford the capital cost of putting in solar panels. The PCT steps in and subsidizes the conversion.

When the PCT decides how much to give the warehouse owner, it calculates the level of emissions the building would emit in the future if it continued to use natural gas for all its energy. Then it calculates the emissions with solar panels in place. It then pays the building owner so much per tonne for the difference: the "reduced" emissions.

But basing offsets on a hypothetical future is uncertain. Skeptical economists have a saying that the "offset market is based on the lack of delivery of an invisible substance to no one."

"We can't run history twice," said Jaccard, so we don't know for sure whether the emissions we're paying to eliminate would ever have been created at all. Someone selling offsets might say they wouldn't have cut their emissions without the payment, but we'll never know for sure.

"You cannot assess an offset on an individual basis," Jaccard said. "It's what's called the asymmetric information problem."

Free riders

For example, if someone offers you money to buy a Prius, you might claim that if they hadn't come along with that incentive you would have bought a gas-guzzling land yacht instead. But maybe you would have bought a Prius anyway. You're the only one who really knows.

"In all cases, some critical information will only be known by the person who's going to get the money," Jaccard said.

He said large statistical studies suggest that a huge proportion of offset money goes to people who would have cut their emissions anyway -- what economists call "free riders." This is a major problem with all subsidy programs: governments often spend a lot of money rewarding people for what they would have done anyway.

Studies of climate-related subsidy programs have found that 50 per cent, 80 per cent, sometimes as high as 99 per cent of the participants in such programs are free riders, Jaccard said.

In 2008, Michael W. Wara and David G. Victor, of Stanford University, looked at the world's largest offset market, the Kyoto Protocol Clean Development Mechanism (CDM). After studying greenhouse gas reduction projects in China, Wara and Victor found "an urgent need for reform."

Well-designed offsets markets can play a small role in getting developing countries engaged in reducing emissions, the authors concluded. "However, in practice, much of the current CDM market does not reflect actual reductions in emissions, and that trend is poised to get worse."

Added Wara and Victor: "Our paper focuses on international offsets, but we caution that these problems are unlikely to be substantially different for a domestic offsets program...."

Their conclusions were reinforced by a recently leaked diplomatic cable that, according to Nature magazine, "reveals that most of the CDM projects in India should not have been certified because they did not reduce emissions beyond those that would have been achieved without foreign investment."

Similarly, a study of a project in Costa Rica that paid landowners to conserve forests found that the payments made a difference in less than one per cent of the forest lots that participated in the program.

Some offsets are 'excellent'

Other experts, though, argue that offsets can work. There are plenty of offsets out there that are "rubbish," said UBC's Dowlatabadi. But some, he insists, are "excellent."

Dowlatabadi said ground source heat pumps, which use one-third the energy of conventional home heating and cooling equipment, would make a good offset. Because those systems cost more -- an investment that takes longer to recover -- developers don't install them, he said.

If you can pay a developer enough to make installing ground source heat pumps worth his while, "Then what is wrong with that?" Dowlatabadi asked.

He stresses that he thinks the B.C. government is doing its best to make carbon-neutral government work. But he's not wild about some of the offsets that the PCT has sponsored.

In particular, he's skeptical about offsets that subsidize switching from fossil fuels to electricity. If BC Hydro drops its plans for clean energy self-sufficiency, Dowlatabadi said, some of the electricity that powers projects funded with offset money could end up coming from coal- or gas-fired plants in Alberta.

If that happens, the project "becomes a (carbon) liability, not an offset."

Then there are forestry offsets. Trees absorb carbon dioxide, so paying someone to not chop them down can qualify as an offset. Sixty per cent of the PCT's offsets in 2010 came from two forest projects: the Darkwoods project in the Nelson-Creston area and an improved forest management project on private land owned by TimberWest on Vancouver Island.

Both projects have been criticized in the media, notably by resource policy analyst Ben Parfitt and MLA Bob Simpson. Dowlatabadi has his own criticisms. The UBC academic co-founded Offsetters Clean Technology Inc., a company that invests in offset projects. He's no longer with the organization, but during his time with Offsetters, Dowlatabadi said, "We never accepted forestry offsets." He still wouldn't do them, he added.

The impact of climate change on forests is not known, Dowlatabadi said. A lot of the trees that the PCT assumes will act as carbon sinks may in fact die and return their carbon to the atmosphere because of a hotter climate, he said.

"I can pretty well guarantee you that we'll have much higher mortality rates," Dowlatabadi said.

A hotter climate could also mean more forest fires, he said. If the trees burn, they give up carbon instead of absorbing it.

Said Dowlatabadi: "I think it's premature to invest in carbon offsets using forestry."

There are some PCT offset projects that Dowlatabadi does like.

He calls a project at Interfor's Adams Lake sawmill that saw a switch from liquefied natural gas to wood waste "a good idea." Interfor uses wood left over from its milling operations to dry lumber and heat buildings at the mill.

He also likes the idea of installing insulating curtains at a number of Lower Mainland greenhouses. The curtains reduce heat loss and lower the greenhouses' natural gas bills.

Scrutiny

The Pacific Carbon Trust defends its portfolio of offsets by stressing the close scrutiny it gives to each project. The Crown corporation says it has developed rigorous protocols to make sure that its offsets represent real reductions.

Every project is reviewed by independent third parties drawn from a list of companies approved by the PCT. The companies must be accredited by the International Accreditation Forum. Each project is reviewed twice. There is a "validation" review that occurs before the project is approved and a "verification" review that happens once the project is operating.

"The independent opinion and professional expertise of the validator and verifier is central to the project development process," a PCT spokeswoman said in an email. (No one from the PCT was available to participate in a live interview.) "The validator and verifier are required to have specific expertise related to the project type and investigate all aspects of the project, including 'additionality' (the requirement that the project would not have happened without the sale of offsets)."

"The validation and verification audits provide the same level of assurance that is provided in a financial audit of a publicly traded corporation."

To qualify a project as an offset, the company or organization must "demonstrate financial, technological or other obstacles that are partially or fully overcome by revenues from offset sales."

As for Dowlatabadi's cautions about the effects of a change in Hydro policy on offsets, the spokeswoman replied in an email that if Hydro changes its policy, the PCT will make the necessary adjustments to its offset procedures.

Accounting for fire and bugs

Forest offsets also have their defenders. James Tansey, a UBC business professor and the president of Offsetters, agrees that there was a time when the company avoided forest offsets. But British Columbia has developed rigorous standards that overcome Dowlatabadi's objections, he said.

There is no doubt forests absorb carbon, Tansey said. The only question is whether offsets conform to the highest standards.

"I am now confident that we have an approach to forest carbon offsets development that's the strongest in the world," he said.

David Rokoss, director of business development for ERA Inc., which helped develop the Darkwoods offset project, said in an interview that B.C.'s forest offset projects have stringent safeguards built into them.

"There's so many assurance mechanisms built in that the likelihood of having a catastrophic reversal that is unaccounted for is practically zero.... The system has backup mechanism after backup mechanism after backup mechanism," he said.

Rokoss said a certain amount of carbon credit is deducted from the total absorbed by a forest project to cover things like fires, infestations and flood. On top of that, each forest project has a "buffer" -- "10, 20, 30 per cent or more of the total volume of carbon that's for sale" -- to cover the possibility of fire.

In other words, he said, a project that preserves forests and removes 100,000 tonnes of carbon a year could be paid for only 70,000 tonnes of offset credits.

"You can have hundreds, thousands of trees actually fall over, be damaged or release carbon over time," Rokoss said. "That is all accounted for."

Critics remain skeptical about the rigour of the PCT's approval process. But beyond the question of whether offsets are reducing emissions as much as advocates claim, the pursuit of a carbon-neutral government has produced other benefits: putting a price on public sector emissions has led to real reductions.

In our next instalment tomorrow, we'll look at some carbon-neutral government success stories.

[Tags: Environment, Labour and Industry, Science and Tech, Politics.]