Why Such Secrecy About Great Bear Carbon Offsets?
Project uses Crown lands and so far taxpayers are main customers. Public deserves more transparency.
The provincial government, First Nations and environmental organizations alike have all hailed it as an ecological triumph and a shining beacon of a new economic order based on conservation principles.
Yet when it comes to talking openly about one of the hallmarks of that emerging economy -- a project that cashes in on the carbon-storing capacity of trees in the Great Bear Rainforest -- not one of the principles is anxious to talk.
Neither the Pacific Carbon Trust -- a Crown corporation that buys carbon offsets from third parties using our tax dollars to help the B.C. government and all public institutions including schools and hospitals become "carbon neutral" -- nor a single provincial government ministry, nor the First Nations involved in the scheme, nor the company that helped the First Nations design the plan, issued a single press release unveiling any details of the plan.
Instead, feeding information to select media outlets has been the preferred choice for getting the story out wherein project proponents either deliberately or unintentionally misrepresent key aspects of the project. In a Globe and Mail story earlier this week, for example, readers were told that First Nations in the Great Bear Rainforest are "gearing up to promote and sell carbon credits" and that under the plan any revenues generated by the sale of such credits "would be split" between First Nations and the provincial government.
Pacific Carbon Trust already a buyer
In point of fact, the First Nation consortium has already sold 315,815 such credits for undisclosed millions of dollars to Pacific Carbon Trust (PCT), almost all of which were sold eight months ago, and the provincial government is sharing not one iota in any of the revenues generated. And now they're gearing up to sell more.
The reticence to talk openly is understandable. In a month or so, BC Auditor General John Doyle is expected to release a report that will be highly critical of the Pacific Carbon Trust or PCT. The Auditor General's report has been fueled, in part, by hard questions raised about the validity of the offsets.
The Vancouver Sun's Gord Hoekstra, for example, has written numerous stories critical of PCT-supported projects. Hoekstra noted in one such piece that PCT guidelines stipulate that the Crown corporation is supposed to buy offsets from companies engaged in climatically beneficial projects that would not have got off the ground were it not for financial assistance. Yet 22 out of 25 projects Hoekstra examined last year involved companies that had already made significant investments in the projects before PCT gave them cash, including companies with deep pockets such as energy giant, Encana Corporation.
Echoing Hoekstra's critique, Bob Simpson, Independent MLA for Cariboo North, has long called for a wholesale rethink of the provincial government's carbon neutral objectives. In 2011, shortly after the PCT published its first comprehensive list of carbon offset projects it had financially supported, Simpson noted:
"In order to justify taking money away from classrooms and hospitals to give to the private sector, the PCT must prove that every project they funded would not have proceeded without our tax money subsidizing it. But, I don't believe any of the projects our tax money subsidized resulted in a decrease in carbon emissions that wasn't already happening or would have happened without the PCT's involvement."
How much do offsets really offset?
In the two years prior to the PCT's purchases of carbon offsets from the Great Bear Rainforest (GBR) project, the single largest offset purchases made by the PCT to help the provincial government achieve its "carbon neutral" status were also from so-called "forest conservation" projects. Yet both purchases -- one from a leading Canadian conservation organization, the other from one of the largest private-land logging companies in the province -- raised serious questions about the alleged climatic benefits associated with the purchases.
In the first case, the Nature Conservancy of Canada was paid an estimated $2.3 million from the PCT for doing what conservation groups do -- conserving a tract of privately owned forestland in B.C.'s southern interior that had been logged for decades. The money came on top of $25 million that the NCC received from the federal government toward the purchase cost, later estimated at $125 million.
The NCC was able to convince the PCT to buy the offsets using a purely hypothetical scenario that involved what would have happened had another buyer succeeded in purchasing the lands. Under the imaginary scenario, the other buyer would have logged the lands at a rate five times greater than what had historically occurred. The difference between the purely hypothetical rate and the new and allegedly "innovative" land-use practice employed by the NCC was what was eventually marketed as carbon offsets.
In the second case, TimberWest, one of the most active logging companies on Vancouver Island, convinced PCT to pay it an undisclosed but likely even larger sum of money than that paid to the Nature Conservancy. In that case, the logging company received tax dollars for allegedly "conserving" remnant patches of old-growth forest bordering Strathcona Provincial Park. The trouble was, in publicly available documents the company had told its own shareholders it did not intend to log such lands. Not for five or more years anyway, given their marginal economic value. Furthermore, the company indicated that it intended to increase its logging elsewhere, thus offsetting any of the alleged offsets that B.C. taxpayers were now on the hook for.
The PCT has refused to disclose what it pays third parties such as TimberWest and the NCC for their offsets on the grounds that such information is proprietary. But in the case of the GBR carbon storage project there are numerous reasons why the Crown corporation ought to be compelled to fully disclose all aspects of the project, including the amount of money that has exchanged hands.
First, the project would not have happened had the provincial government not enacted legislation that created a raft of new parks and that reduced logging rates in the GBR, without which any offset claims could not possibly have been made.
Second, the alleged offsets were generated on Crown lands over which the government has jurisdiction, albeit lands that also are the traditional territories of the six First Nations involved.
And lastly, the provincial government and the First Nations involved expressly agreed in a signed "Atmospheric Benefit Sharing Agreement" two years ago that the provincial government, on behalf of British Columbians, had a partial ownership interest in the offsets.
Shroud of secrecy
In response to written questions, the Coastal First Nations Great Bear Initiative, on behalf of the six First Nations involved in the offset sale -- the Nuxalk, Wuikinuxv, Metlakatla, Kitasoo, Heiltsuk and Gitga'at -- said that the revenues received from PCT were not something that the nations wished "to share publicly as we are still in the process of working with prospective buyers from the private sector."
For reasons unexplained in the Atmospheric Benefits Sharing Agreement, the provincial government agrees that in the first two years of the agreement, which expires in 2025, the six First Nations will be entitled to sell 77 per cent of all available offset credits associated with the project.
In two signed "transfer agreements" between PCT and the six First Nations in the GBR, a total of 315,815 were sold last year, 300,000 of which changed hands on May 15.
"The majority" of those purchased offsets, PCT confirmed in an email Thursday, "will be used to meet the carbon neutral government commitment for 2012." If that proves to be the case, in a document that should be released by the PCT midway through this year, the GBR carbon project will be the single largest project used to meet the government's carbon neutral commitments in the most recent year.
The PCT's combined purchases from the six coastal First Nations to date work out to exactly 77 per cent of the estimated net reductions in greenhouse gas emissions from the GBR area once various risks are taken into account, says Carbon Credit Corp., the company that helped the First Nations develop the project. The company has since been taken over by Offsetters.
The document is a summary of a much larger 250-page Project Design Document. It has not been posted on-line, even though it served as the foundation for the project being independently verified by KPMG. KPMG's Michael Armstrong, a registered professional forester and chartered accountant who signed the verification letter, refused to answer questions about the larger document, referring questions to Offsetters.
In written responses to questions about the larger document, Offsetters and the First Nations involved said:
"The Project Design document is not being released for two reasons: 1) It would require the consent of all the member first nations in the GBR, since they are the beneficiaries; and 2) it contains significant Intellectual Property that GBI [the Great Bear Initiative] has paid for and could be taken for free by another party."
As a result, members of the public must rely on a very generalized description of how all those alleged "atmospheric benefits" were calculated, benefits that oddly enough the provincial government, despite signing a "sharing" agreement, is refusing to take advantage of.
"The government has not sold and received any money from its share," Tim Lesiuk, executive director of business development with the provincial government's Climate Action Secretariat, confirmed earlier this week.
Rationale for Great Bear Rainforest changed
So what forms the basis of all the credits that the First Nations benefit from, but the province curiously is absenting itself from?
According to Offsetters and the First Nations involved, the basis for the "carbon project" is very simple. It is legislation brought in by the provincial government in 2009 that formally created new protected areas in the GBR covering nearly 1.6 million hectares of land and that will reduce logging by as much as half a million cubic metres annually.
On the surface, this seems straightforward enough. If more trees are protected and less logging occurs, then those trees will pull more carbon out of the atmosphere and store that carbon for decades to come.
But the big question is whether those new protected areas and new approaches to logging were driven from the get-go by organizations and individuals with a clear design on improving carbon stores.
Clearly, 15 years ago when the first official land-use processes began on British Columbia's coast, there was no carbon market and there was no talk about one occurring any time soon.
Twelve years ago in 2001 when then premier Ujaal Dosanjh made a landmark announcement that set in motion the protected areas process and the beginning of the push toward "ecosystem-based management" in coastal forests, no one was talking about a coastal forest carbon project either.
In the intervening years, and in particular since 2004-2005 when logging rates began to fall, the push to protect more forests in the GBR has been almost solely about protecting biological diversity and instituting new, more ecologically friendly rates and forms of logging.
"This never was a carbon project," Simpson says, adding that even when new parks and new ecosystem-based logging areas were delineated following the provincial government's 2009 legislation "carbon money was not required" to make them so.
If carbon money wasn't required to make them so, then the "project" such as it is would not qualify for financial support from the PCT, Simpson says. Furthermore, if the expectation existed before 2007 when BC's Emission Offsets Regulation came into effect, then the project would also not qualify for PCT's financial support.
Offsetters and the First Nations in the GBR say, however, that it is more important to focus on the "government-to-government" negotiations that have been underway between the six First Nations and the province for some time.
"While government‐to‐government conversations began before Nov. 29, 2007, the final agreement that enabled the project was not finalized until March 31, 2009. Extended negotiations between First Nations and the Provincial Government resulted in the changes to legislations and regulations for land use planning in the area resulting in the Forest Carbon Project. Revenue from carbon credits was considered a critical factor to the full implementation and long‐term success of this land use planning, and was a key component in the agreement."
Offsetters CEO James Tansey, says that the GBR carbon project is an "iconic project" that holds the promise of forming the "economic foundation for First Nations for generations." He adds that previous stories that cast "skepticism" on earlier projects supported by PCT persuaded the various proponents of the GBR carbon project to decline issuing press releases.
He believes, as well, that the "charismatic story" of the GBR will allow local First Nations to actively court more carbon buyers in the months and years ahead, and that 400 companies have been identified as possible purchasing candidates.
Yet the biggest purchaser to date is a Crown-owned entity. The offsets were generated on Crown lands. Yet the public apparently does not deserve to know the transaction costs.