Public pays huge markup for carbon offsets, records show

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School boards, hospitals and other public-sector entities in British Columbia are paying far higher prices for carbon offsets than is justified by the market, according to the financial records of the Pacific Carbon Trust.

Data that the Crown agency has long withheld, but which is to be released by government this week, shows that corporations such as TimberWest Forest Co., Encana Corp., and International Forest Products Ltd., have been selling carbon credits to the Pacific Carbon Trust for prices ranging from $9 to $19 a ton.

At the same time, however, public sector agencies have been paying $25 a ton to buy offsets from the Pacific Carbon Trust.

The discrepancy has sparked an internal government debate over the fairness of the price structure, and outside of government, it's raising questions about whether the Pacific Carbon Trust should be scrapped.

B.C. Environment Minister Terry Lake said Wednesday that his government remains committed to carbon neutrality, but is reviewing the Pacific Carbon Trust.

"Having those numbers now, we need to take a look at options to make sure not only is the Pacific Carbon Trust getting good value, but also the organizations paying into them, the public-sector organizations, are getting good value," he said.

Mr. Lake said cutting the rate paid by the public sector or using the Pacific Carbon Trust surplus to pay down government debt are two possible options.

But he doesn't want the program dropped.

"It's important to show … leadership through example. If we expect people and organizations to reduce their use of carbon, I think it's incumbent on us to do that ourselves," he said.

The Pacific Carbon Trust functions as a go-between. It buys carbon credits from companies that have undertaken projects to reduce their greenhouse gas emissions, and sells offsets to third parties trying to become carbon neutral.

Jordan Bateman, B.C. director of the Canadian Taxpayers Federation, said nearly all of the Pacific Carbon Trust's income comes from offset sales to the public sector.

"Virtually every penny – 99.7 per cent of the income – brought in by the Pacific Carbon Trust comes from taxpayers," said Mr. Bateman. "Whether it's universities, or school boards, or health authorities, or the B.C. government itself, taxpayers are on the hook for that money. So when we are paying them $25 per carbon credit and they are actually only needing $10 per carbon credit, that means taxpayers are overpaying for the right to call ourselves carbon neutral."

The B.C. government set up the Pacific Carbon Trust in 2007 as part of a campaign to reduce the province's carbon footprint.

In order to set an example for the private sector, the government required public-sector agencies to become carbon neutral by buying carbon offsets from the Pacific Carbon Trust. The non-negotiable price: $25 a ton.

But the Pacific Carbon Trust was unable to get prices that high when purchasing carbon credits from private corporations. The records show the Pacific Carbon Trust paid private corporations prices ranging from a high of $19.11 a ton, to Encana, to a low of $9, to the Great Bear Initiative.

The public-sector rate, however, never varied from $25.

Mr. Bateman said the government should shut down the Pacific Carbon Trust. "I think you should just kill it outright."

Ben Parfitt, a researcher with the Canadian Centre for Policy Alternatives, said the financial numbers are disturbing.

"This is just bad public policy," he said. "The way this program was set up, the public sector, hospital boards, school districts had no choice but to buy these offsets. … And the troubling thing is that in the voluntary market right now, if these school boards were free to go and purchase from whoever they wanted, they'd be paying about $10. So there's a huge differential here."

Mr. Parfitt said a carbon tax that was applied to public and private sectors equally would be a better approach.