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Bill Bennett, minister responsible for core review, at a ceremony announcing the B.C. Liberals’ cabinet in Vancouver on June 7, 2013.Jonathan Hayward/The Canadian Press

British Columbia's much-maligned Pacific Carbon Trust will be eliminated and the province's profitable greenhouse-gas offset program brought into the government fold, as the provincial government attempts to slash $50-million to meet the promise of a balanced budget next year.

Bill Bennett, the minister responsible for a core review of government services, said Tuesday that winding down the controversial Crown carbon offset agency will trim $5.6-million annually.

"I recognize the significance of this change but, again, I want to make it really clear we are committed to carbon neutrality in the public sector and achieving our greenhouse-gas emissions targets," Bennett said.

"We have simply found a way to deliver these benefits more efficiently for less money."

Transferring the carbon offset program to the Climate Action Secretariat within the Environment Ministry will mean a reduction in staff from 18 to five. Employees will be given an opportunity to transfer to other jobs within government.

Environment Minister Mary Polak said the activities of the trust, established in 2008, will continue from within government – a disappointment to some of its most ardent critics.

"We've accomplished the first set of objectives, and that was establishing a market that involved carbon offsetting in British Columbia," Polak said.

"We still have that record of being the first carbon-neutral jurisdiction in all of North America, and we will continue to be carbon neutral."

In order to be "carbon neutral," public sector agencies purchase carbon offsets, or credits, from the trust from other, more environmentally beneficial projects to compensate for their greenhouse-gas emissions.

A report by provincial Auditor-General John Doyle last March found that government agencies were buying offsets from the trust at a cost more than double the amount on the open market. It also found that the trust was purchasing carbon credits from projects that were not eligible.

Jordan Bateman, B.C. director of the Canadian Taxpayers Federation, said Tuesday that the program is "hopelessly flawed." He welcomed the decision to scrap the agency, but had hoped government would go further.

"Taxpayers are spending millions on buying carbon credits for these facilities rather than providing frontline services," Bateman said, adding that Interior Health spent $1.24-million purchasing offsets from the trust last year.

"It doesn't address the core issue there... but we'll take wins where we can get them with any government."

The controversial program made for strange political bedfellows, as both the Opposition New Democrats and the fledgling B.C. Conservative party promised to eliminate the carbon credit scheme during the provincial election earlier this year.

The agency is a money-maker for the province, with a projected surplus of $3.8-million for 2014-15. By 2015-16, it has a projected accumulated surplus of $37-million – before the $5.6-million in administrative savings announced Tuesday.

Polak said the carbon offset program will continue, but the province is looking at expanding an exemption to health agencies and post-secondary institutions that was put in place for elementary and high schools.

Bennett also announced the elimination of the Provincial Capital Commission, the Crown agency that organizes special events and manages several government properties and heritage buildings in the capital region.

Cutting the commission, whose duties overlap with several other government programs, will save an estimated $1-million a year as Bennett and his core review team look at 90 government agencies in an effort to find the $50-million in savings by the next fiscal year.

Bennett said he's confident they will achieve that goal, though not easily.

"There isn't a lot of low-hanging fruit out there in government and the longer this core review process goes along, the more truth I find there is to that statement," he said.

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