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BC government is not carbon neutral, finds auditor general

The British Columbia government has been buying carbon offsets that are not credible and therefore the government's claim to being carbon neutral is inaccurate, Auditor General John Doyle concluded in a report released today.

Doyle also noted in his report An Audit of Carbon Neutral Government that "vested interests" targeted his office and delayed the report.

The government created the Pacific Carbon Trust to take money from public sector bodies including schools and hospitals to buy carbon offsets from the private sector. The idea was to reduce the public service's carbon footprint to zero by buying emission reductions.

"The credibility of carbon offsets is the crux of the entire concept," wrote Doyle. "Within a complex system of dense terminology and calculations is mired a common sense test: Would the project have happened in the absence of carbon finance?"

Doyle's office took a close look at two projects that accounted for 70 per cent of the offsets the government bought in 2010, the first year it claimed to be carbon neutral: the Darkwoods Forest Carbon project in southeastern B.C. and the Encana Underbalanced Drilling project near Fort Nelson.

"This claim of carbon neutrality is not accurate, as neither project provided credible offsets," wrote Doyle. Both projects would have happened without the money for the carbon offsets, he said.

"Neither project was able to demonstrate that the potential sales of offsets were needed for the project to be implemented," he wrote. "Encana's project was projected to be more financially beneficial to the company than its previous practices, regardless of offset revenue, while the Darkwoods property was acquired without offsets being a critical factor in the decision."

Doyle also went into detail on the interference with his office during the audit. "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 said.

"The orchestrated letter-writing campaign from domestic and foreign entities which followed this disclosure demanded considerable staff time, and resulted in the delay of this report. I cannot sufficiently express my surprise and disappointment that a public sector entity, with a fiduciary duty to the people of British Columbia, chose to expend its time and energy in this manner, rather than addressing the concerns raised in the audit –- and that they did so with the knowledge of their governing board," he wrote.

Environment Minister Terry Lake questioned Doyle's expertise. "We reject entirely his conclusion that the offsets he examined are not credible," said Lake. "We fundamentally reject the auditor general's conclusion that government has not met its objective of achieving carbon neutral public sector."

Updated, 5:08 p.m.: The board of the Pacific Carbon Trust released a detailed statement in response to Doyle's report. "The board of directors takes its governance responsibilities extremely seriously and we are concerned by the findings and statements in this report," it said. "We are most concerned that the conclusions are contrary to the auditing opinions provided by eight other independent expert bodies that reviewed these carbon offset projects which assert that both the Encana and Darkwoods projects are credible and comply with the BC regulation."

The PCT board criticized the lack of expertise on carbon offsets in Doyle's office and said he had decided at the outset that the carbon credits were not credible.

PCT CEO Scott MacDonald said in a phone interview that while he was aware of people sending letters to Doyle's office about the audit, there was no orchestrated campaign. "We certainly have encouraged the industry participants if they have concerns concerns with the audit to contact the office of the auditor general."

Independent Cariboo North MLA Bob Simpson applauded Doyle's common sense approach to the issue. "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," he said in a column released today.

"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," he said. "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?

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

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