Municipalities to keep carbon tax funds

The province supports a proposal to have B.C. municipalities keep carbon tax money for their own emissions reduction projects.

Environment minister Terry Lake says the province supports a Smithers proposal that would see B.C. municipalities keep carbon tax money for their own emissions reduction projects instead of paying for third-party offsets.

“Rather than necessarily look at buying offsets, we are working with them to look at what they’re doing with reduction projects in the community,” the minister said.

As part of its pledge to cut B.C.’s carbon emissions, the province signed a non-binding agreement that would see all B.C. municipalities reduce their own corporate emissions to zero by 2012.

Whether municipalities get to zero by buying offsets or doing their own retrofits isn’t important, said Lake, so long as they meet the objective.

“Houston, for instance, has a geothermal project there that heats their arena,” he said. “It’s a really good example of investing in a fuel-switching project that reduces emissions and also saves them money.”

The minister noted that the municipal carbon tax is a revenue-neutral program.

“Local governments get all of their carbon tax refunded to them,” he said.

According to the 2011 budget plan, B.C. is expected to take in $1.1 million in carbon tax revenue in 2011/2012.

In 2009, when the B.C. carbon tax was set at $15 a ton, the District of Houston was refunded $5,845 in carbon tax funds. In the same year, the city of Surrey received $176,948.

The B.C. carbon tax is expected to rise to $30 a ton by next year.

Minister Lake said the province is considering a new plan that would allow municipalities to submit plans for local emissions reduction projects, rather than having to buy offsets if they miss the 2012 deadline.

“It’s kind of a softer approach, rather than a hard line,” he said.

Smithers councillor Frank Wray, who made the proposal at the Union of B.C. Municipalities meeting in September, said sending offsets to a third party was a waste of funds.

“Anytime you send a pool of money to one place it has to be administered,” he said, adding that the town can avoid that cost by doing its own projects.

Dr. Hadi Dowlatabadi is a professor of physics and applied mathematics who co-founded the non-profit Offsetters Climate Neutral Society in 2004.

He agrees that B.C. municipalities pay a premium when they buy carbon offsets from a third party.

Groups like the Pacific Carbon Trust, a B.C. offsets agency that has done large-scale retrofits for companies like Canfor, have to cover the cost of borrowing money for large capital projects and the cost of  verifying that their offsets have had a real impact on greenhouse-gas emissions.

“My concerns are that most municipal governments I know do not have the internal know-how of what it is they should be doing,” he said.

If municipalities can’t identify and raise money for local projects that will reduce emissions, he said, they will end up paying a higher premium to contractors who can do that work for them.

“The question is, can these folks actually identify them and implement them without paying a third party?”

As for the move allowing municipalities to submit plans for local projects instead of paying for offsets, Dowlatabadi warned that those plans could come up empty if municipalities don’t have the capital or the know-how to actually implement them.

“Essentially, we’ve given them a way out,” he said.