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Terry Lake, B.C.’s Minister of Environment, makes an announcement in Vancouver on March 13, 2013. (Rafal Gerszak for The Globe and Mail)
Terry Lake, B.C.’s Minister of Environment, makes an announcement in Vancouver on March 13, 2013. (Rafal Gerszak for The Globe and Mail)

Auditor stands by report on B.C.'s carbon-offset program, as critics lambaste fairness Add to ...

When Auditor-General John Doyle began to investigate British Columbia’s carbon-offset program he soon found himself under attack from some of those directly involved in the market, which is worth an estimated $1-billion.

On Wednesday the government joined that attack, with B.C. Environment Minister Terry Lake calling a press conference in Vancouver to dismiss Mr. Doyle’s report only an hour after it was officially released.

“We fundamentally reject the Auditor-General’s conclusions,” said Mr. Lake, who claimed Mr. Doyle simply didn’t have the expertise needed to understand and critique carbon-offset projects.

“I guess the question is: who audits the auditor-general? And in this case, you know, he’s come to conclusions we feel that are not backed up by the data,” said Mr. Lake.

Companies that trade in carbon offsets and the Pacific Carbon Trust, a Crown agency set up by the government for that purpose, made similar points in statements Wednesday.

The effort to undermine Mr. Doyle, however, began months earlier, when a flood of letters to the Auditor-General and to the Attorney-General raised concerns that the audit was biased and needed to be vetted by government before it was released.

The audit report was initially withheld by government and was only released after The Globe and Mail obtained a copy Tuesday.

Mr. Doyle’s critics say they wrote the letters because they were concerned the report could unfairly damage the carbon-trading market and perhaps destroy the Pacific Carbon Trust.

But in his report Mr. Doyle complains he was the target of a campaign that was clearly meant to throw him off track and ruin his credibility.

“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 states in the report.

The Pacific Carbon Trust did not respond to a request for an interview, but issued a statement saying the audit wasn’t fair.

“Never before have we seen an audit where the lead auditor states at the outset … that he did not believe that the projects were … credible,” it says.

The statement said industry experts began to fear the audit “could have a far reaching impact on their credibility and reputation” and so they wrote more than 20 letters to government, raising issues about the audit team’s expertise and challenging its findings in advance.

James Tansey, CEO of Offsetters, a private company, said there was no conspiracy to discredit the Auditor-General or stop his report from being released.

“I’ve been saying for weeks, just get the report out,” Mr. Tansey said Wednesday.

“I wrote to [Attorney-General] Shirley Bond … not to say please block the report, but to say they might want to review it before it was released to make sure there is nothing in it that is written in bad faith and leaves the province open to being sued,” he said.

“All of us who had been invited in to meet the Auditor-General started sitting down and comparing notes and got to the point where we realized there were some serious flaws in the methodology and that the report was very negative, in particular of Darkwoods,” he said.

In the report, Mr. Doyle says the audit examined two projects which account for nearly 70 per cent of the offsets purchased by the government through Pacific Carbon Trust.

In the Darkwoods project the government bought offsets from the Nature Conservancy of Canada for setting aside timber in southeast B.C. The government also bought offsets from the Encana Underbalance Drilling project, in which the company reduced gas flaring near Fort Nelson.

The audit concludes that both of those projects would have proceeded without the $6-million in carbon offsets purchased by the government.

“The Pacific Carbon Trust has not purchased credible offsets,” states the audit, which also concludes government paid far higher than open market prices.

In its efforts to be carbon neutral, B.C. requires all government agencies, including schools and hospitals, to offset greenhouse gas emissions with purchases made by the Pacific Carbon Trust.

Bob Simpson, an independent MLA who has repeatedly questioned the practice, said it’s clear vested interests are trying to destroy Mr. Doyle’s credibility.

Mr. Simpson said last year several organizations told him Pacific Carbon Trust officials had asked them “to write a letter to the Auditor-General decrying the audit.”

NDP environment critic Rob Fleming said the audit reveals “massive problems” with the carbon-offset program introduced by the Liberals.

“The audit shows that the government took funds from cash-strapped school districts and hospitals to pay an oil and gas company to do a project they were going to do anyway,” he said in a statement.

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