Carbon offsets hurt schools, help Encana

School districts across B.C. are chopping budgets because they don’t have enough money.

At the same time, they’re being forced to fork over millions for global-warming carbon offsets – and some of the money is handed over as subsidies to profitable corporations.

It might be clever policy if you’re sitting in the premier’s office.

Not so much if you’re a sitting in a elementary school in Big Lake, in the Cariboo.

Independent MLA Bob Simpson told the legislature that students from eight grades are in one classroom, including kindergarten and special needs students. The school district doesn’t have enough money to provide another teacher.

But it still has to send $87,000 to the Pacific Carbon Trust, a Crown corporation, to buy credits to offset the greenhouse gases it produces busing students and heating schools.

Across the province, school districts have been forced to buy some $6 million worth of carbon credits this year from the Crown corporation under the Liberal plan to cut greenhouse gases.

The theory is sound. Organizations – businesses, municipalities, school districts – would be issued permits allowing a specific level of emissions. If an organization could cut its greenhouse emissions to a level under that limit, it could sell the unused capacity to some other organization that couldn’t meet its cap.

That would encourage investment in new equipment and innovation in areas like increasing the number of people working from home.

But there are problems.

The market can be gamed, for example. If I owned a failing greenhouse business, I could shut down and sell my carbon credits to a company that wants to keep on pouring out greenhouse gases. I make money and emissions aren’t really reduced.

And huge windfalls are possible for some companies or sectors, depending on how the original emissions quotas are set.

That’s where things have gone wrong in B.C.

When Gordon Campbell decided climate change was a threat to life on Earth in 2007, he promised a coherent plan, including the carbon tax and a cap-and-trade system to create a market for emissions.

Government, including school districts and health authorities and municipalities, would be carbon neutral, he said. They would cut emissions as much as they could and buy offsets to cover the rest.

The carbon tax is in place. The public sector has been required to buy offsets. Pacific Carbon Trust, the Crown corporation, is collecting those payments and providing money to companies for projects that reduce their emissions – the offsets. The Four Seasons Hotel, for example, got money from the trust to put in a new, more efficient heating system. It calculated the emission reduction – 1,963 tonnes over three years – and the trust paid an undisclosed amount per tonne.

But the government hasn’t introduced the cap and trade system for business and industrial users (although a few companies have voluntarily bought credits).

Three years after the planned implementation in 2008, there are no caps for business or industry.

Companies can get money from the Pacific Carbon Trust -at this point, mostly taxpayers’ money – if they promise to do something to reduce emissions. Effectively, a subsidy for their emission-reduction plans.

But they don’t have to buy any credits if they make changes that increase their emissions. It’s a sweet deal.

So Encana, a big player in the province’s natural gas sector, can increase its emissions without penalty.

But if it can convince the Pacific Carbon Trust that it has a valid plan to reduce them, it can claim a subsidy. And it did, telling the trust that a new way of drilling gas wells would reduce emissions. The trust won’t say what it paid the corporation, but figure more than $2 million.

It benefits from the credits cash-pressed school districts have been forced to buy.

A transparent, well-managed and widely applied cap-and-trade system is an excellent way to put a value on emissions, making it worthwhile to find ways to reduce them. Without it, B.C. has little chance of meeting its greenhouse-gas reduction targets.

But until such a plan is in place, it’s wrong to expect schools, hospitals and municipalities to cut services to cover the costs of carbon credits that are only mandatory for taxpayer-funded entities.