[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."